UNIVERSITY OF SAN CARLOS

SCHOOL OF LAW AND GOVERNANCE

LABOR STANDARDS
_______________________________________________________________

CASE DIGEST (S.Y. 2016-2017)

SUBMITTED BY:

COMPRA, ERLENE M. - LLB 2 (EH 401)

SUBMITTED TO:
ATTY. JEFFERSON M. MARQUEZ
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TABLE OF CONTENTS

Basic Principles
1. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004

2. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]

3. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]

4. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006

5. Francisco vs. NLRC, 500 SCRA 690 [06]

6. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006

7. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007

8. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008

9. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March 4, 2009

10. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622, January 25, 2011

11. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011

12. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011

13. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012

14. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012

15. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012

16. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014

17. Royale Homes Marketing Corp., vs. Alcantara, GR No. 195190, July 28, 2014

18. Fuji Television Network Inc. vs. Espiritu, GR No. 204944-45, December 3, 2014

19. Cabaobas et al., vs. Pepsi Cola GR No.176908, March 25, 2015

20. Begino et al., vs. ABS-CBN Corp., GR No. 199166, April 20, 2015

21. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015

HIRING OF EMPLOYEE
28. PT&T vs. NLRC, 272 SCRA 596 [1997]
29. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., G.R. No. 162994, Sept. 17, 2004
30. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
31. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007
32. Yrasuegui vs. Phil Air Lines, G.R. No. 168081, October 17, 2008

4. VIOLATION OF WAGE ORDER

33. S.I.P. Food House et al., vs. Batolina, GR No. 192473, Oct 11, 2010
34. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011
35. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013
36. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No. 198783, April 15,
2013
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37. The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor et al., GR
No. 150326, March 12, 2014
38. David/Yiels Hog Dealer vs. Macasio, GR No. 195466, July 2, 2014
39. Our Haus Realty Development Corp., vs. Parian et al., GR No. 204651, August 6, 2014
40. Milan et al., vs. NLRC GR No. 202961, February 4, 2015

WAGE ENFORCEMENT AND RECOVERY

41. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141, Feb. 26, 2010
42. Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652, March 6, 2012
Resolution on the main Decision of May 8, 2009
43. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012

WAGE PROTECTION PROVISION & PROHIBITIONS REGARDING WAGES

44. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010
45. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November 28, 2011
46. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013
47. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014
48. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No. 181806,
March 12, 2014
49. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing2011 Nina
Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
50. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014
51. PLDT vs.Estranero,GR No.192518, Oct 15, 2014
52. Milan et al., vs. NLRC GR No. 202961, February 4, 2015

PAYMENT OF WAGES
53. Congson vs. NLRC, 243 SCRA 260 [1995]
54. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]
55. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006

CONDITIONS OF EMPLOYMENT
56. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]
57. Simedarby vs. NLRC, 289 SCRA 86 [1998]
58. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]
59. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007
60. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
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MINIMUM LABOR STANDARD BENEFITS
61. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
62. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002
63. Lambo vs. NLRC, 317 SCRA 420
64. Asian Transmission vs. CA, 425 SCRA 478 [2004]
65. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
66. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005
67. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
68. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October
19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R.
No. 147420, June 10, 2004
69. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195
SCRA 533 [1998]
70. PNCC Skyway Traffic Management and Security Division Workers Organization, GR No. 171231, Feb.
17, 2010
71. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012
72. Robina Farms Cebu vs. Villa, GR No. 175869, April 18, 2016

10. OTHER SPECIAL BENEFITS

73. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs. Dela Serna,
228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]

74. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R.
No. 170734, May 14, 2008

75. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008

76. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010

77. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September 12, 2012

78. Padillo vs. Rural bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013

79. Grace Christian High School vs. Lavandera, GR No. 177845, August 20, 2014

80. Banco De Oro Unibank vs.Sagaysay,GR No. 214961, Sept 16, 2015
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Basic Principles
Jose Y Sonza vs. ABS-CBN Broadcasting Corporation
GR No 138071, June 10, 2004

Facts:
In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement
("Agreement") with the Mel and Jay Management and Development Corporation ("MJMDC"). ABS-
CBN was represented by its corporate officers while MJMDC was represented by SONZA, as President
and General Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in the
Agreement as "AGENT," MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as
talent for radio and television. The Agreement listed the services SONZA would render to ABS-CBN, as
follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays. 3

ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year
and P317,000 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.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay
his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option Plan ("ESOP").

On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee
relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996.
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Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at
PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the
same bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the
Agreement.

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

Held:
Applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor.29 This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well the less control the hirer exercises, the more
likely the worker is considered an independent contractor.30

We find that ABS-CBN was not involved in the actual performance that produced the finished
product of SONZAs 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-CBNs 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 SONZAs
work

SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over
the means and methods of the performance of his work. Although ABS-CBN did have the option not to
broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees... Thus, even if
ABS-CBN was completely dissatisfied with the means and methods of SONZAs performance of his
work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline
SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but ABS-CBN must still pay
his talent fees in full.35

Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to
continue paying in full SONZAs talent fees, did not amount to control over the means and methods of
the performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the
means and methods of performance of his work - how he delivered his lines and appeared on television -
did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of
SONZAs work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay
SONZAs talent fees in full until the expiry of the Agreement.

SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment
and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel
& Jay" programs. However, the equipment, crew and airtime are not the "tools and instrumentalities"
SONZA needed to perform his job. What SONZA principally needed were his talent or skills and the
costumes necessary for his appearance. 38Even though ABS-CBN provided SONZA with the place of
work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not
supervise and control his work. ABS-CBNs sole concern was for SONZA to display his talent during the
airing of the programs.39

A radio broadcast specialist who works under minimal supervision is an independent

contractor.40 SONZAs 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.
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The Agreement stipulates that SONZA shall abide with the rules and standards of performance
"covering talents"41 of ABS-CBN. The Agreement does not require SONZA to comply with the rules
and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on
SONZA under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of
Ethics."42 The KBP code applies to broadcasters, not to employees of radio and television stations.
Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and
standards of performance referred to in the Agreement are those applicable to talents and not to
employees of ABS-CBN.

In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former.43 In this case, SONZA failed to show that these rules controlled his performance.
We find that these general rules are merely guidelines towards the achievement of the mutually desired
result, which are top-rating television and radio programs that comply with standards of the industry. We
have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the other party
in relation to the services being rendered may be accorded the effect of establishing an employer-
employee relationship

Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of
control which ABS-CBN exercised over him.

This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an
employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to
the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control.

The hiring of exclusive talents is a widespread and accepted practice in the entertainment
industry.46 This practice is not designed to control the means and methods of work of the talent, but
simply to protect the investment of the broadcast station. The broadcast station normally spends
substantial amounts of money, time and effort "in building up its talents as well as the programs they
appear in and thus expects that said talents remain exclusive with the station for a commensurate period
of time."47 Normally, a much higher fee is paid to talents who agree to work exclusively for a particular
radio or television station. In short, the huge talent fees partially compensates for exclusivity, as in the
present case.

MJMDC as Agent of SONZA

In a labor-only contract, there are three parties involved: (1) the "labor-only" contractor; (2) the
employee who is ostensibly under the employ of the "labor-only" contractor; and (3) the principal who is
deemed the real employer. Under this scheme, the "labor-only" contractor is the agent of the
principal. The law makes the principal responsible to the employees of the "labor-only contractor" as if
the principal itself directly hired or employed the employees. 48 These circumstances are not present in
this case.

As SONZA admits, MJMDC is a management company devoted exclusively to managing the

careers of SONZA and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business,
not even job contracting. MJMDC does not have any other function apart from acting as agent of
SONZA or TIANGCO to promote their careers in the broadcast and television industry.49

Policy Instruction No. 40

Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of
law. There is no legal presumption that Policy Instruction No. 40 determines SONZAs status. A mere
executive issuance cannot exclude independent contractors from the class of service providers to the
broadcast industry. The classification of workers in the broadcast industry into only two groups under
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Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis
either in law or in fact.
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Lazaro vs. Social Security Commission
435 SCRA 472, (2004)

Facts:
Private respondent Rosalina M. Laudato (Laudato) filed a petition before the SSC for social
security coverage and remittance of unpaid monthly social security contributions against her three (3)
employers. Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of
Royal Star Marketing (Royal Star), which is engaged in the business of selling home appliances.
[3]
Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star
from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC
for compulsory coverage or remit Laudatos social security contributions. [4]

Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a
mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato
was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an
employee of Royal Star.[5]

Issue:
Whether or not Laudato is an employee thus entitled to coverage under the Social Security Law

Held:
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the
determination of employer-employee relationship warrants the application of the control test, that is,
whether the employer controls or has reserved the right to control the employee, not only as to the result
of the work done, but also as to the means and methods by which the same is accomplished. [14] The SSC,
as sustained by the Court of Appeals, applying the control test found that Laudato was an employee of
Royal Star. We find no reversible error.

Lazaros arguments may be dispensed with by applying precedents. Suffice it to say, the fact that
Laudato was paid by way of commission does not preclude the establishment of an employer-employee
relationship. In Grepalife v. Judico,[17] the Court upheld the existence of an employer-employee
relationship between the insurance company and its agents, despite the fact that the compensation that
the agents on commission received was not paid by the company but by the investor or the person
insured.[18] The relevant factor remains, as stated earlier, whether the "employer" controls or has
reserved the right to control the "employee" not only as to the result of the work to be done but also as to
the means and methods by which the same is to be accomplished. [19]

Neither does it follow that a person who does not observe normal hours of work cannot be
deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat,[20] the employer similarly denied
the existence of an employer-employee relationship, as the claimant according to it, was a supervisor on
commission basis who did not observe normal hours of work. This Court declared that there was an
employer-employee relationship, noting that [the] supervisor, although compensated on commission
basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the
number of sales he makes.[21]

It should also be emphasized that the SSC, also as upheld by the Court of Appeals, found that
Laudato was a sales supervisor and not a mere agent. [22] As such, Laudato oversaw and supervised the
sales agents of the company, and thus was subject to the control of management as to how she
implements its policies and its end results. We are disinclined to reverse this finding, in the absence of
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countervailing evidence from Lazaro and also in light of the fact that Laudatos calling cards from Royal
Star indicate that she is indeed a sales supervisor.
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Philippine Global Communications Inc vs. Ricardo de Vera
GR No 157214 June 7, 2005

Facts:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the
business of communication services and allied activities, while respondent Ricardo De Vera is a
physician by profession whom petitioner enlisted to attend to the medical needs of its employees. At the
crux of the controversy is Dr. De Veras status vis a vis petitioner when the latter terminated his
engagement.

It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981, 3 offered his services to the
petitioner, therein proposing his plan of works required of a practitioner in industrial medicine, to include
the following:

1. Application of preventive medicine including periodic check-up of employees;

2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for
consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization including
emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no additional medical
fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative function such as accomplishing medical forms,
evaluating conditions of employees applying for sick leave of absence and subsequently issuing proper
certification, and all matters referred which are medical in nature.

The parties agreed and formalized respondents proposal in a document denominated

as RETAINERSHIP CONTRACT4 which will be for a period of one year subject to renewal, it being
made clear therein that respondent will cover "the retainership the Company previously had with Dr. K.
Eulau" and that respondents "retainer fee" will be at P4,000.00 a month. Said contract was renewed
yearly.5 The retainership arrangement went on from 1981 to 1994 with changes in the retainers fee.
However, for the years 1995 and 1996, renewal of the contract was only made verbally.

The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a
letter6 bearing on the subject boldly written as "TERMINATION RETAINERSHIP CONTRACT",
informed De Vera of its decision to discontinue the latters "retainers contract with the Company
effective at the close of business hours of December 31, 1996" because management has decided that it
would be more practical to provide medical services to its employees through accredited hospitals near
the company premises.

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

Held:
In a long line of decisions,15 the Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test, to wit: [1] the selection and engagement of the
employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the
employees conduct, or the so-called "control test", considered to be the most important element.

Applying the four-fold test to this case, we initially find that it was respondent himself who sets the
parameters of what his duties would be in offering his services to petitioner. The letter written by
respondent was substantially the basis of the labor arbiters finding that there existed no employer-
employee relationship between petitioner and respondent, in addition to the following factual settings.

The tenor of this letter indicates that the complainant was proposing to extend his time with the
respondent and seeking additional compensation for said extension. This shows that the respondent
PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is
proposing his own schedule and asking to be paid for the same. This is proof that the complainant
understood that his relationship with the respondent PHILCOM was a retained physician and not as an
employee. If he were an employee he could not negotiate as to his hours of work.

After more than ten years of services to PHILCOM, the complainant would have noticed that no SSS
deductions were made on his remuneration or that the respondent was deducting the 10% tax for his fees
and he surely would have complained about them if he had considered himself an employee of
PHILCOM. But he never raised those issues. An ordinary employee would consider the SSS payments
important and thus make sure they would be paid. The complainant never bothered to ask the respondent
to remit his SSS contributions. This clearly shows that the complainant never considered himself an
employee of PHILCOM and thus, respondent need not remit anything to the SSS in favor of the
complainant."18

Clearly, the elements of an employer-employee relationship are wanting in this case. We may add
that the records are replete with evidence showing that respondent had to bill petitioner for his monthly
professional fees.19 It simply runs against the grain of common experience to imagine that an ordinary
employee has yet to bill his employer to receive his salary.

We note, too, that the power to terminate the parties relationship was mutually vested on both.
Either may terminate the arrangement at will, with or without cause. 20

Finally, remarkably absent from the parties arrangement is the element of control, whereby the
employer has reserved the right to control the employee not only as to the result of the work done but
also as to the means and methods by which the same is to be accomplished. 21

Here, petitioner had no control over the means and methods by which respondent went about
performing his work at the company premises. He could even embark in the private practice of his
profession, not to mention the fact that respondents work hours and the additional compensation
therefor were negotiated upon by the parties. 22 In fine, the parties themselves practically agreed on every
terms and conditions of respondents engagement, which thereby negates the element of control in their
relationship. For sure, respondent has never cited even a single instance when petitioner interfered with
his work.
 Page 13 of 153
Going back to Art. 280 of the Labor Code, it was made therein clear that the provisions of a written
agreement to the contrary notwithstanding or the existence of a mere oral agreement, if the employee is
engaged in the usual business or trade of the employer, more so, that he rendered service for at least one
year, such employee shall be considered as a regular employee. Private respondent herein has been with
petitioner since 1981 and his employment was not for a specific project or undertaking, the period of
which was pre-determined and neither the work or service of private respondent seasonal. (Emphasis by
the CA itself).

We disagree to the foregoing ratiocination.

The appellate courts premise that regular employees are those who perform activities which are
desirable and necessary for the business of the employer is not determinative in this case. For, we take it
that any agreement may provide that one party shall render services for and in behalf of another, no
matter how necessary for the latters business, even without being hired as an employee. This set-up is
precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed,
Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the
existence of an employment relationship. As it is, the provision merely distinguishes between two (2)
kinds of employees, i.e., regular and casual. It does not apply where, as here, the very existence of an
employment relationship is in dispute.23

With the recognition of the fact that petitioner consistently engaged the services of respondent on a
retainer basis, as shown by their various "retainership contracts", so can petitioner put an end, with or
without cause, to their retainership agreement as therein provided. 27

We note, however, that even as the contracts entered into by the parties invariably provide for a 60-
day notice requirement prior to termination, the same was not complied with by petitioner when it
terminated on 17 December 1996 the verbally-renewed retainership agreement, effective at the close of
business hours of 31 December 1996.
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ABS-CBN v. Nazareno
GR No 164156, September 26, 2006

Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business
and owns a network of television and radio stations, whose operations revolve around the broadcast,
transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the
airtime it generates from its radio and television operations. It has a franchise as a broadcasting company,
and was likewise issued a license and authority to operate by the National Telecommunications
Commission.

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

Their respective working hours were as follows:

Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly
to Leo Lastimosa.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and
13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the
parties to submit their respective position papers. Upon respondents failure to file their position papers
within the reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated April 30, 2001,
dismissing the complaint without prejudice for lack of interest to pursue the case. Respondents received
a copy of the Order on May 16, 2001. 7 Instead of re-filing their complaint with the NLRC within 10 days
from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to
Admit Position Paper and Motion to Submit Case For Resolution. 8 The Labor Arbiter granted this
motion in an Order dated June 18, 2001, and forthwith admitted the position paper of the complainants.

Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be
given specific assignments at its discretion, and were thus under its direct supervision and control
regardless of nomenclature.

Issue:
Whether or not PAs are considered regular employees?

Held:
We agree with respondents contention that where a person has rendered at least one year of service,
regardless of the nature of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason being that a customary
appointment is not indispensable before one may be formally declared as having attained regular status.

ART. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement

to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
 Page 15 of 153
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.

Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or broken, with respect to
the activities in which they are employed. 35

The principal test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time the employees were
engaged for that project.39

The presumption is that when the work done is an integral part of the regular business of the
employer and when the worker, relative to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such employee and not an independent
contractor.45 The Court will peruse beyond any such agreement to examine the facts that typify the
parties actual relationship.46

It follows then that respondents are entitled to the benefits provided for in the existing CBA between
petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits
granted to all other regular employees of petitioner under the CBA. 47 We quote with approval the ruling
of the appellate court, that the reason why production assistants were excluded from the CBA is precisely
because they were erroneously classified and treated as project employees by petitioner:

As earlier stated, it is not the will or word of the employer which determines the nature of
employment of an employee but the nature of the activities performed by such employee in relation to
the particular business or trade of the employer. Considering that We have clearly found that private
respondents are regular employees of petitioner, their exclusion from the said CBA on the misplaced
belief of the parties to the said agreement that they are project employees, is therefore not proper.
Finding said private respondents as regular employees and not as mere project employees, they must be
accorded the benefits due under the said Collective Bargaining Agreement.
 Page 16 of 153
Francisco vs. NLRC
500 SCRA 690, 2006

Facts:
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs
of the company. She was also designated as Liaison Officer to the City of Makati to secure business
permits, construction permits and other licenses for the initial operation of the company. 5

Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate Secretary. However, on some occasions,
she was prevailed upon to sign documentation for the company.6

In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as
accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all
employees and perform management administration functions; represent the company in all dealings
with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security
System (SSS) and in the city government of Makati; and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated by Kasei Corporation. 7

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her
salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation. 8

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she
was required to sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all
employees of Kasei Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR
matters. 9

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her
mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did
not receive her salary from the company. She made repeated follow-ups with the company cashier but
she was advised that the company was not earning well. 10

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. 11

Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.

Issue:
Whether there was an employer-employee relationship between petitioner and private respondent
Kasei Corporation; and if in the affirmative, (2) Whether petitioner was illegally dismissed.
 Page 17 of 153
Held:
We held in Sevilla v. Court of Appeals 18 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.

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

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which the work is
to be accomplished; and (2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship between the
parties. This is especially appropriate in this case where there is no written agreement or terms of
reference to base the relationship on; and due to the complexity of the relationship based on the various
positions and responsibilities given to the worker over the period of the latters employment.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the extent to which the services performed
are an integral part of the employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers
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. 23

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. 24 In the United States, the touchstone of
economic reality in analyzing possible employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25 By analogy, the benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code ought to be the economic dependence of the
worker on his employer.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal, receiving
check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well
as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. 26 When
petitioner was designated General Manager, respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioners 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.
 Page 18 of 153
It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latters line of business.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.

Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank
or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. 35 In Globe Telecom, Inc. v. Florendo-Flores, 36 we ruled that where an
employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation
arises which creates an adverse working environment rendering it impossible for such employee to
continue working for her employer. Hence, her severance from the company was not of her own making
and therefore amounted to an illegal termination of employment.
 Page 19 of 153
Nograles et al vs. Capitol Medical Center
GR No. 142625, December 16, 2006

Facts:
Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting
Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining
Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical Center ("CMC").

On 26 May 1976, Corazon was admitted at 2:30 a.m. at the CMC after the staff nurse noted the
written admission request8 of Dr. Estrada. Upon Corazon's admission at the CMC, Rogelio Nogales
("Rogelio") executed and signed the "Consent on Admission and Agreement" 9 and "Admission
Agreement."10 Corazon was then brought to the labor room of the CMC.

Dr. Rosa Uy ("Dr. Uy"), who was then a resident physician of CMC, conducted an internal
examination of Corazon. Dr. Uy then called up Dr. Estrada to notify him of her findings.

Based on the Doctor's Order Sheet, 11 around 3:00 a.m., Dr. Estrada ordered for 10 mg. of valium to
be administered immediately by intramuscular injection. Dr. Estrada later ordered the start of intravenous
administration of syntocinon admixed with dextrose, 5%, in lactated Ringers' solution, at the rate of eight
to ten micro-drops per minute.

According to the Nurse's Observation Notes, 12 Dr. Joel Enriquez ("Dr. Enriquez"), an
anesthesiologist at CMC, was notified at 4:15 a.m. of Corazon's admission. Subsequently, when asked if
he needed the services of an anesthesiologist, Dr. Estrada refused. Despite Dr. Estrada's refusal, Dr.
Enriquez stayed to observe Corazon's condition.

Due to the inclement weather then, Dr. Espinola, who was fetched from his residence by an
ambulance, arrived at the CMC about an hour later or at 9:00 a.m. He examined the patient and ordered
some resuscitative measures to be administered. Despite Dr. Espinola's efforts, Corazon died at 9:15 a.m.
The cause of death was "hemorrhage, post partum." 14

Issue:
Whether CMC is vicariously liable for the negligence of Dr. Estrada

Held:
On the Liability of CMC

CMC alleges that Dr. Estrada is an independent contractor "for whose actuations CMC would be a
total stranger." CMC maintains that it had no control or supervision over Dr. Estrada in the exercise of
his medical profession.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There
is, however, an exception to this principle. The hospital may be liable if the physician is the "ostensible"
agent of the hospital.44 This exception is also known as the "doctrine of apparent authority." 45 In Gilbert
v. Sycamore Municipal Hospital,46 the Illinois Supreme Court explained the doctrine of apparent
authority in this wise:
 Page 20 of 153
[U]nder the doctrine of apparent authority a hospital can be held vicariously liable for the negligent
acts of a physician providing care at the hospital, regardless of whether the physician is an independent
contractor, unless the patient knows, or should have known, that the physician is an independent
contractor. The elements of the action have been set out as follows:

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

The element of "holding out" on the part of the hospital does not require an express representation by
the hospital that the person alleged to be negligent is an employee. Rather, the element is satisfied if the
hospital holds itself out as a provider of emergency room care without informing the patient that the care
is provided by independent contractors.

The element of justifiable reliance on the part of the plaintiff is satisfied if the plaintiff relies upon
the hospital to provide complete emergency room care, rather than upon a specific physician.

The doctrine of apparent authority essentially involves two factors to determine the liability of an
independent-contractor physician.

The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry
whether the hospital acted in a manner which would lead a reasonable person to conclude that the
individual who was alleged to be negligent was an employee or agent of the hospital. 47 In this regard,
the hospital need not make express representations to the patient that the treating physician is an
employee of the hospital; rather a representation may be general and implied. 48

The doctrine of apparent authority is a species of the doctrine of estoppel. Article 1431 of the Civil
Code provides that "[t]hrough estoppel, an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against the person relying thereon." Estoppel
rests on this rule: "Whenever a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any
litigation arising out of such declaration, act or omission, be permitted to falsify it." 49

In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through
CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to
believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority.

The records show that the Spouses Nogales relied upon a perceived employment relationship with
CMC in accepting Dr. Estrada's services. Rogelio testified that he and his wife specifically chose Dr.
Estrada to handle Corazon's delivery not only because of their friend's recommendation, but more
importantly because of Dr. Estrada's "connection with a reputable hospital, the [CMC]." 55 In other words,
Dr. Estrada's relationship with CMC played a significant role in the Spouses Nogales' decision in
accepting Dr. Estrada's services as the obstetrician-gynecologist for Corazon's delivery. Moreover, as
earlier stated, there is no showing that before and during Corazon's confinement at CMC, the Spouses
Nogales knew or should have known that Dr. Estrada was not an employee of CMC.
 Page 21 of 153
Further, the Spouses Nogales looked to CMC to provide the best medical care and support services
for Corazon's delivery. The Court notes that prior to Corazon's fourth pregnancy, she used to give birth
inside a clinic. Considering Corazon's age then, the Spouses Nogales decided to have their fourth child
delivered at CMC, which Rogelio regarded one of the best hospitals at the time. 56 This is precisely
because the Spouses Nogales feared that Corazon might experience complications during her delivery
which would be better addressed and treated in a modern and big hospital such as CMC. Moreover,
Rogelio's consent in Corazon's hysterectomy to be performed by a different physician, namely Dr.
Espinola, is a clear indication of Rogelio's confidence in CMC's surgical staff.
 Page 22 of 153
Coca-Cola Bottlers Phil. vs. Dr Cimaco
GR No 146881 February 15, 2007

Facts:
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola
Bottlers Phils., Inc. by virtue of a Retainer Agreement that stated:

WHEREAS, the COMPANY desires to engage on a retainer basis the services of a physician and the
said DOCTOR is accepting such engagement upon terms and conditions hereinafter set forth;

The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one
expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent
continued to perform his functions as company doctor to Coca-Cola until he received a letter 4 dated
March 9, 1995 from petitioner company concluding their retainership agreement effective 30 days from
receipt thereof.

It is noted that as early as September 1992, petitioner was already making inquiries regarding his
status with petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President
and Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In
response, Dr. Sy wrote a letter 5 to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City,
stating that respondent should be considered as a regular part-time physician, having served the company
continuously for four (4) years. He likewise stated that respondent must receive all the benefits and
privileges of an employee under Article 157 (b) 6 of the Labor Code.

Petitioner company, however, did not take any action. Hence, respondent made another inquiry
directed to the Assistant Regional Director, Bacolod City District Office of the Department of Labor and
Employment (DOLE), who referred the inquiry to the Legal Service of the DOLE, Manila. In his
letter7 dated May 18, 1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed
that an employer-employee relationship existed between petitioner and respondent based on the Retainer
Agreement and the Comprehensive Medical Plan, and the application of the "four-fold" test. However,
Director Ancheta emphasized that the existence of employer-employee relationship is a question of fact.
Hence, termination disputes or money claims arising from employer-employee relations
exceeding P5,000 may be filed with the National Labor Relations Commission (NLRC). He stated that
their opinion is strictly advisory.

An inquiry was likewise addressed to the Social Security System (SSS). Thereafter, Mr. Romeo R.
Tupas, OIC-FID of SSS-Bacolod City, wrote a letter 8 to the Personnel Officer of Coca-Cola Bottlers
Phils., Inc. informing the latter that the legal staff of his office was of the opinion that the services of
respondent partake of the nature of work of a regular company doctor and that he was, therefore, subject
to social security coverage.

Respondent inquired from the management of petitioner company whether it was agreeable to
recognizing him as a regular employee. The management refused to do so.
On February 24, 1994, respondent filed a Complaint 9 before the NLRC, Bacolod City, seeking
recognition as a regular employee of petitioner company and prayed for the payment of all benefits of a
regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive
Leave Pay, and Christmas Bonus. The case was docketed as RAB Case No. 06-02-10138-94.
 Page 23 of 153
Issue:
Whether or not there is an employer-employee relationship pursuant to Article 280 of the Labor
Code

Held:
The Court, in determining the existence of an employer-employee relationship, has invariably
adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the so-called
"control test," considered to be the most important element. 18

The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this
case show that no employer-employee relationship exists between the parties. The Labor Arbiter and the
NLRC correctly found that petitioner company lacked the power of control over the performance by
respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which
contains the respondents objectives, duties and obligations, does not tell respondent "how to conduct his
physical examination, how to immunize, or how to diagnose and treat his patients, employees of
[petitioner] company, in each case."

The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent
was on call during emergency cases did not make him a regular employee. He explained, thus:

Likewise, the allegation of complainant that since he is on call at anytime of the day and night makes
him a regular employee is off-tangent. Complainant does not dispute the fact that outside of the two (2)
hours that he is required to be at respondent companys premises, he is not at all further required to just
sit around in the premises and wait for an emergency to occur so as to enable him from using such hours
for his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his
private practice in the city, where he services his patients, bills them accordingly -- and if it is an
employee of respondent company who is attended to by him for special treatment that needs
hospitalization or operation, this is subject to a special billing. More often than not, an employee is
required to stay in the employers workplace or proximately close thereto that he cannot utilize his time
effectively and gainfully for his own purpose. Such is not the prevailing situation here.1a

The Court also notes that the Retainership Agreement granted to both parties the power to terminate
their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power
of dismissal or termination.

Considering that there is no employer-employee relationship between the parties, the termination of
the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary
damages granted by the Court of Appeals to respondent due to his alleged illegal dismissal.
 Page 24 of 153
Calamba Medical Center vs. NLRC et al
GR No 176484, November 25, 2008

Facts:
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of
medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha)
in March 1992 and August 1995, respectively, as part of its team of resident physicians. Reporting at the
hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly retainer
of P4,800.00 each.1 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.2

The work schedules of the members of the team of resident physicians were fixed by petitioners
medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issued identification cards 3 by
petitioner and were enrolled in the Social Security System (SSS). 4Income taxes were withheld from
them.5

On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital,
inadvertently overheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee,
Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscala were
discussing the low census or admission of patients to the hospital.6

On March 14, 1998,11 the rank-and-file employees union of petitioner went on strike due to
unresolved grievances over terms and conditions of employment. 12

On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension 13 before the National
Labor Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha
subsequently filed a complaint for illegal dismissal. 14

Denying the existence of such relationship, petitioner argues that the appellate court, as well as the
NLRC, overlooked its twice-a-week reporting arrangement with respondents who are free to practice
their profession elsewhere the rest of the week. And it invites attention to the uncontroverted allegation
that respondents, aside from their monthly retainers, were entitled to one-half of all suturing, admitting,
consultation, medico-legal and operating room assistance fees. 28 These circumstances, it stresses, are
clear badges of the absence of any employment relationship between them

Issue:
Whether or not there exists an employee-employee relationship between petitioner and the spouses-
respondents

Held:
Under the control test, an employment relationship exists between a physician and a hospital if the
hospital controls both the means and the details of the process by which the physician is to accomplish
his task.29
Where a person who works for another does so more or less at his own pleasure and is not subject to
definite hours or conditions of work, and is compensated according to the result of his efforts and not the
amount thereof, the element of control is absent. 30
 Page 25 of 153
As priory stated, private respondents maintained specific work-schedules, as determined by
petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours each
week and which were strictly to be observed under pain of administrative sanctions.

That petitioner exercised control over respondents gains light from the undisputed fact that 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 petitioner or its medical director, no operations can be undertaken in those areas. For control test to
apply, it is not essential for the employer to actually supervise the performance of duties of the
employee, it being enough that it has the right to wield the power.31

With respect to respondents sharing in some hospital fees, this scheme does not sever the
employment tie between them and petitioner as this merely mirrors additional form or another form of
compensation or incentive similar to what commission-based employees receive as contemplated in
Article 97 (f) of the Labor Code, thus:

Wage paid to any employee shall mean the remuneration or earning, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the
employee. x x x (Emphasis and underscoring supplied),

Respondents were in fact made subject to petitioner-hospitals Code of Ethics, 32 the provisions of
which cover administrative and disciplinary measures on negligence of duties, personnel conduct and
behavior, and offenses against persons, property and the hospitals interest.

More importantly, petitioner itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the payslips 33and BIR W-2 (now 2316)
Forms which reflect their status as employees, and the classification as salary of their remuneration.
Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this
juncture that mandatory coverage under the SSS Law 34 is premised on the existence of an employer-
employee relationship,35 except in cases of compulsory coverage of the self-employed. It would be
preposterous for an employer to report certain persons as employees and pay their SSS premiums as well
as their wages if they are not its employees. 36

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,37 assigned at the emergency rooms and
ward sections.
 Page 26 of 153
Escasinas et al vs. Shangrila Mactan Island Resort
GR No 178827, March 4, 2009

Facts:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999
and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at
respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained
physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) Regional
Arbitration Branch No. VII (NLRC-RAB No. VII) a complaint 1 for regularization, underpayment of
wages, non-payment of holiday pay, night shift differential and 13th month pay differential against
respondents, claiming that they are regular employees of Shangri-la. The case was docketed as RAB
Case No. 07-11-2089-02.

Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor whom
it retained via Memorandum of Agreement (MOA) 2 pursuant to Article 157 of the Labor Code, as
amended.

Respondent doctor for her part claimed that petitioners were already working for the previous
retained physicians of Shangri-la before she was retained by Shangri-la; and that she maintained
petitioners services upon their request.

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

Held:
The resolution of the case hinges, in the main, on the correct interpretation of Art. 157 vis a vis Art.
280 and the provisions on permissible job contracting of the Labor Code, as amended.

The Court holds that, contrary to petitioners postulation, Art. 157 does not require the
engagement of full-time nurses as regular employees of a company employing not less than 50
workers.
In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist
who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those
engaged on part-time basis, and not less than eight (8) hours in the case of those employed on full-time
basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on
retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate
availability of medical and dental treatment and attendance in case of emergency. (Emphasis and
underscoring supplied)

Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to
"furnish" its employees with the services of a full-time registered nurse, a part-time physician and
dentist, and an emergency clinic which means that it should provide or make available such medical and
allied services to its employees, not necessarily to hire or employ a service provider. As held in
Philippine Global Communications vs. De Vera:8
 Page 27 of 153
The term "full-time" in Art. 157 cannot be construed as referring to the type of employment of the
person engaged to provide the services, for Article 157 must not be read alongside Art. 280 9 in order to
vest employer-employee relationship on the employer and the person so engaged. So De Vera teaches:

x x x For, we take it that any agreement may provide that one party shall render services for and in
behalf of another, no matter how necessary for the latters business, even without being hired as an
employee. This set-up is precisely true in the case of an independent contractorship as well as in an
agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the
yardstick for determining the existence of an employment relationship. As it is, the provision merely
distinguishes between two (2) kinds of employees, i.e., regular and casual. x x x10 (Emphasis and
underscoring supplied)

The phrase "services of a full-time registered nurse" should thus be taken to refer to the kind of
services that the nurse will render in the companys premises and to its employees, not the manner of his
engagement.

As to whether respondent doctor can be considered a legitimate independent contractor, the pertinent
sections of DOLE Department Order No. 10, series of 1997, illuminate:

Sec. 8. Job contracting. There is job contracting permissible under the Code if the following
conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of the work except
as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his business.

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and

(2) The workers recruited and placed by such persons are performing activities which are
directly related to the principal business or operations of the employer in which workers are
habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor
shall be considered merely as an agent or intermediary of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by him.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through
appropriate orders whether or not the contracting out of labor is permissible in the light of the
circumstances of each case and after considering the operating needs of the employer and the rights of
the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection
and welfare of the workers. (Emphasis supplied)
 Page 28 of 153

The existence of an independent and permissible contractor relationship is generally established by

considering the following determinants: whether the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and duration of the relationship; the right to
assign the performance of a specified piece of work; the control and supervision of the work to another;
the employer's power with respect to the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the
mode, manner and terms of payment.11

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate
independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its
employees and guests does not necessarily prove that respondent doctor lacks substantial capital and
investment. Besides, the maintenance of a clinic and provision of medical services to its employees is
required under Art. 157, which are not directly related to Shangri-las principal business operation of
hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS
contributions and other benefits of the staff 13; group life, group personal accident insurance and life/death
insurance14 for the staff with minimum benefit payable at 12 times the employees last drawn salary, as
well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and
70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely
that respondent doctor would report petitioners as workers, pay their SSS premium as well as their wages
if they were not indeed her employees.15

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, "Clinic Policies and Employee Manual"16 claimed to have been prepared by respondent doctor
exists, to which petitioners gave their conformity17 and in which they acknowledged their co-terminus
employment status. It is thus presumed that said document, and not the employee manual being followed
by Shangri-las regular workers, governs how they perform their respective tasks and responsibilities.
 Page 29 of 153
Gregorio V. Tongko vs. The Manufacturer Life Insurance Co (Phils) In et. al
GR No 167622, June 29, 2010

Facts:
The contractual relationship between Tongko and Manulife had two basic phases. The first or initial
phase began on July 1, 1977, under a Career Agents Agreement (Agreement) that provided:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein
shall be construed or interpreted as creating an employer-employee relationship between the Company
and the Agent.

The second phase started in 1983 when Tongko was named Unit Manager in Manulifes Sales
Agency Organization. In 1990, he became a Branch Manager. Six years later (or in 1996), Tongko
became a Regional Sales Manager.4

In 2001, Manulife instituted manpower development programs at the regional sales management
level. Respondent Renato Vergel de Dios wrote Tongko a letter dated November 6, 2001 on concerns that
were brought up during the October 18, 2001 Metro North Sales Managers Meeting.

The issues around agent recruiting are central to the intended objectives hence the need for a Senior
Managers meeting earlier last month when Kevin OConnor, SVP-Agency, took to the floor to
determine from our senior agency leaders what more could be done to bolster manpower development.
At earlier meetings, Kevin had presented information where evidently, your Region was the lowest
performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain
one of the laggards in this area.

On account thereof, Management is exercising its prerogative under Section 14 of your Agents
Contract as we are now issuing this notice of termination of your Agency Agreement with us effective
fifteen days from the date of this letter.7

Tongko responded by filing an illegal dismissal complaint with the National Labor Relations
Commission (NLRC) Arbitration Branch. He essentially alleged despite the clear terms of the letter
terminating his Agency Agreement that he was Manulifes employee before he was illegally
dismissed.8

Issue:
Whether there is the existence of an employment relationship

Held:
That Tongko assumed a leadership role but nevertheless wholly remained an agent is the inevitable
conclusion that results from the reading of the Agreement (the only agreement on record in this case) and
his continuing role thereunder as sales agent, from the perspective of the Insurance and the Civil Codes
and in light of what Tongko himself attested to as his role as Regional Sales Manager. To be sure, this
interpretation could have been contradicted if other agreements had been submitted as evidence of the
relationship between Manulife and Tongko on the latters expanded
 Page 30 of 153
Semblante et al., vs. Court of Appeals, et al.
G.R. No. 196426 August 15, 2011

Facts:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by
respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as
the official masiador and sentenciador,respectively, of the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and
orders the start of the cockfight. He also distributes the winnings after deducting the arriba, or the
commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks' physical condition and capabilities to continue the cockfight, and
eventually declares the result of the cockfight.
They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly
derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last until 12:00
midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had
both been issued employees' identification cards that they wear every time they report for duty. They
alleged never having incurred any infraction and/or violation of the cockpit rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services effective that date.
This prompted petitioners to file a complaint for illegal dismissal against respondents.

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

The respondents filed an Appeal during the 10-day appeal period but was unable to post a cash or
surety bond. Thus for an unperfected appeal the NLRC dismissed the same. It was only on October 11,
2006 they were able to post bond dated October 6, 2006. The NLRC ruled on the Motion for
Reconsideration although there was belated filing of the cash or surety bond. The NLRC held in its
Resolution of October 18, 2006 that there was no employer-employee relationship between petitioners
and respondents, respondents having no part in the selection and engagement of petitioners, and that no
separate individual contract with respondents was ever executed by petitioners.

Issues:

Whether or not the Appeal has been perfected even after a belated filing of the cash or surety bond.

Whether or not there was an employer-employee relationship between the petitioner and respondent.

Held:

Time and again, however, this Court, considering the substantial merits of the case, has relaxed this
rule on, and excused the late posting of, the appeal bond when there are strong and compelling reasons
for the liberality, such as the prevention of miscarriage of justice extant in the case or the special
circumstances in the case combined with its legal merits or the amount and the issue involved. After all,
technical rules cannot prevent courts from exercising their duties to determine and settle, equitably and
completely, the rights and obligations of the parties. This is one case where the exception to the general
rule lies.
While respondents had failed to post their bond within the 10-day period provided above, it is
evident, on the other hand, that petitioners are NOT employees of respondents, since their relationship
fails to pass muster the four-fold test of employment We have repeatedly mentioned in countless
decisions: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners' selection and
management; petitioners' compensation was paid out of the arriba (which is a percentage deducted from
 Page 31 of 153
the total bets), not by petitioners; and petitioners performed their functions
as masiador and sentenciador free from the direction and control of respondents. In the conduct of their
work, petitioners relied mainly on their "expertise that is characteristic of the cockfight gambling," and
were never given by respondents any tool needed for the performance of their work.

Respondents, therefore, could never have been illegally dismissed since they are not employees of
the respondents.
 Page 32 of 153
Jose Mel Bernarte vs. Philippine Basketball Association (PBA), Jose Emmanuel Eala, and Perry
Martinez

G.R. No. 192084. September 14, 2011

Facts:

Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join
the PBA as referees. During the term of Commissioner Eala, however, changes were made on the
terms of their employment. Bernarte, for instance, was not made to sign a contract during the
first conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was
only during the second conference when he was made to sign a one and a half month contract for
the period July 1 to August 5, 2003. On January 15, 2004, Bernarte received a letter from the
Office of the Commissioner advising him that his contract would not be renewed citing his
unsatisfactory performance on and off the court. On the other hand, complainant Guevarra
alleges that he was invited to join the PBA pool of referees in February 2001, and signed a
contract as a trainee on March 1, 2001. Beginning 2002, he signed a yearly contract as Regular
Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to Guevarra
expressing dissatisfaction over his questioning on the assignment of referees officiating out-of-
town games. Beginning February 2004, he was no longer made to sign a contract.
Respondents aver that complainants were not illegally dismissed because they were not
employees of the PBA.
31 March 2005 Decision, the Labor Arbiter declared petitioner an employee whose dismissal
by respondents was illegal, ordering reinstatement of petitioner and the payment of backwages,
moral and exemplary damages, and attorneys fees.
28 January 2008 Decision, the NLRC affirmed the Labor Arbiter's judgment. The Court of
Appeals found petitioner an independent contractor since respondents did not exercise any form
of control over the means and methods by which petitioner performed his work as a basketball
referee.
Issues:
Whether petitioner is an employee of respondents, which in turn determines whether
petitioner was illegally dismissed;
Whether the Labor Arbiter's decision has become final and executory for failure of
respondents to appeal with the NLRC within the reglementary period
Ruling:

SC affirmed CAs decision.

Petitioner failed to present any concrete proof as to how, when and to whom the delivery and receipt
of the three notices issued by the post office was made. The issuance of the notices by the post office is
not equivalent to delivery to and receipt by the addressee of the registered mail. There is no conclusive
evidence showing that the post office notices were actually received by respondents, negating petitioner's
claim of constructive service of the Labor Arbiter's decision on respondents. The Postmaster's
Certification does not sufficiently prove that the three notices were delivered to and received by
respondents; it only indicates that the post office issued the three notices. The ends of justice will be
better served if we resolve the instant case on the merits rather than allowing the substantial issue of
whether petitioner is an independent contractor or an employee linger and remain unsettled due to
procedural technicalities.
We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or decision is to be
made. Respondents or any of the PBA officers cannot and do not determine which calls to make or not to
make and cannot control the referee when he blows the whistle because such authority exclusively
belongs to the referees. Petitioner is required to report for work only when PBA games are scheduled or
three times a week at two hours per game. In addition, there are no deductions for contributions to the
Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees' salaries.
 Page 33 of 153
These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an
employee of respondents. For a hired party to be considered an employee, the hiring party must have
control over the means and methods by which the hired party is to perform his work, which is absent in
this case. The continuous rehiring by PBA of petitioner simply signifies the renewal of the contract
between PBA and petitioner, and highlights the satisfactory services rendered by petitioner warranting
such contract renewal. The non-renewal of the contract between the parties does not constitute illegal
dismissal of petitioner by respondents.
 Page 34 of 153
Cesar Lirio vs. Wilmer Genovia

G.R. No. 169757. November 23, 2011

Facts:

July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or
Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of
moral and exemplary damages. He was employed to manage and operate Celkor and to promote and sell
the recording studio's services to music enthusiasts and other prospective clients. He received a monthly
salary of P7,000.00. They also agreed that he was entitled to an additional commission of P100.00 per
hour as recording technician whenever a client uses the studio for recording, editing or any related work.
He was made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was
required to work half-day only, but most of the time, he still rendered eight hours of work or more.

Respondent stated that a few days after he started working as a studio manager, petitioner
approached him and told him about his project to produce an album for his 15-year-old daughter.
Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would
draft a contract to assure respondent of his compensation for such services. Petitioner later informed
respondent that he was only entitled to the 20% of the net profit and that the salaries he received would
be deducted from the said 20% net profit share. Respondent objected then petitioner verbally terminated
the formers services and instructed the same not to report for work.

On October 31, 2003, Labor Arbiter Renaldo O. Hernandez rendered a decision, finding that an
employer-employee relationship existed between petitioner and respondent, and that respondent was
illegally dismissed.

In a Resolution dated October 14, 2004, the NLRC reversed and set aside the decision of the Labor
Arbiter. NLRC held that respondent failed to proved with substantial evidence that he was selected and
engaged by petitioner, that petitioner had the power to dismiss him, and that they had the power to
control him not only as to the result of his work, but also as to the means and methods of accomplishing
his work.
On August 4, 2005, the Court of Appeals rendered a decision reversing and setting aside the
resolution of the NLRC, and reinstating the decision of the Labor Arbiter, with modification in regard to
the award of commission and damages. The Court of Appeals deleted the award of commission and
moral and exemplary damages as the same were not substantiated.
Issue:
Whether there existed an employer-employee relationship between petitioner and respondent, and
whether dismissal of respondent is illegal.
Ruling:
SC affirmed CAs decision.
It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted. In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to
March 15, 2002) certified correct by petitioner, which showed that respondent received a monthly salary
of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with
the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash
vouchers, showing the amounts he received and signed for in the payrolls. Petitioner failed to prove that
his relationship with respondent was one of partnership. Such claim was not supported by any written
agreement.
The Court agrees with the Court of Appeals that the evidence presented by the parties showed that an
employer-employee relationship existed between petitioner and respondent.
In termination cases, the burden is upon the employer to show by substantial evidence that the
termination was for lawful cause and validly made. Article 277 (b) of the Labor Code puts the burden of
 Page 35 of 153
proving that the dismissal of an employee was for a valid or authorized cause on the employer, without
distinction whether the employer admits or does not admit the dismissal. For an employee's dismissal to
be valid, (a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process.
Procedural due process requires the employer to furnish an employee with two written notices before the
latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his
dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be
heard on his defense.
Petitioner failed to comply with these legal requirements; hence, the Court of Appeals correctly
affirmed the Labor Arbiter's finding that respondent was illegally dismissed.
 Page 36 of 153
Charlie Jao vs BBC Products Sales Inc.
G.R. No. 163700, April 18, 2012

Facts:

Petitioner offered the following: (a) BCC Identification Card (ID) issued to him stating his name and
his position as comptroller, and bearing his picture, his signature, and the signature of Ty; (b) a payroll
of BCC for the period of October 1-15, 1996 that petitioner approved as comptroller; (c) various bills
and receipts related to expenditures of BCC bearing the signature of petitioner; (d) various checks
carrying the signatures of petitioner and Ty, and, in some checks, the signature of petitioner alone; (e) a
court order showing that the issuing court considered petitioners ID as proof of his employment with
BCC; (f) a letter of petitioner dated March 1, 1997 to the Department of Justice on his filing of a
criminal case for estafa against Ty for non-payment of wages; (g) affidavits of some employees of BCC
attesting that petitioner was their co-employee in BCC; and (h) a notice of raffle dated December 5, 1995
showing that petitioner, being an employee of BCC, received the notice of raffle in behalf of BCC.

But respondent countered the evidences presented by the petitioner by proving that Charlie Jao is not
their employee, as SFC had installed petitioner as its comptroller in BCC to oversee and supervise SFCs
collections and the account of BCC to protect SFCs interest; that their issuance of the ID to petitioner
was only for the purpose of facilitating his entry into the BCC premises in relation to his work of
overseeing the financial operations of BCC for SFC; that the ID should not be considered as evidence of
petitioners employment in BCC; that petitioner executed an affidavit in March 1996, stating, among
others, that he is a CPA presently employed at SFC.

Issue:
WON there exist an employee-employer relationship between the petitioner and respondent.

Held:
The Supreme Court held that there exist no employee-employer relationship between the two based
on the affidavits made by the petitioner that he is an employee of SFC to oversee and supervise SFC's
collection.

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

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

It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his
authority to deliver some 158 checks to SFC. Considering that he contested respondents challenge by
pointing to the existing arrangements between BCC and SFC, it should be clear that respondents did not
exercise the power of control over him, because he thereby acted for the benefit and in the interest of
SFC more than of BCC.

In addition, petitioner presented no document setting forth the terms of his employment by BCC.
The failure to present such agreement on terms of employment may be understandable and expected if he
was a common or ordinary laborer who would not jeopardize his employment by demanding such
document from the employer, but may not square well with his actual status as a highly educated
professional.
 Page 37 of 153
LEGEND HOTEL (MANILA) vs. Realuyo
GR. No. 1999547, July 18, 2012

Facts:

Respondent worked as a pianist at the Legend Hotels Tanglaw Restaurant with an initial rate of 400
pesos per night that was given to him after each nights performance but his rate had increase to 750 pesos
per night. During his employment, he could not choose the time of performance, which had been fixed
from 7:00pm to 10:00pm for three to six times a week. The Restaurant manager required him to conform
with the venues motif. He had also been subjected to the rules on employees representation checks and
chits, a privilege granted to other employees. Meanwhile, the Manager had notified him that as cost-
cutting measure his service as a pianist would no longer be required. He disputed the accused, insisting
that Legend Hotel had been lucratively operating as of the filing of his complaint, and that the loss of his
employment made him bring his complaint.

In its defense, the petitioner denied the existence of an employer-employee relationship with
respondent, insisting that he had been only a talent engaged to provide live music at Legend Hotels
Madison Coffee Shop for three hours/day on two days each week; and stated that the economic crisis that
had hit the country constrained management to dispense with his services.

Issue:
Whether or not there existed an employer-employee relationship between the parties.
Whether or not the Termination of petitioner was valid.

Held:
Yes. The factors that determine that issue include who has the power to select the employee, who
pays the employees wages, who has the power to dismiss the employee, and who exercises control of the
methods and results by which the work of the employee is accomplished. Although no particular form of
evidence is required to prove the existence of the relationship, and any competent and relevant evidence
to prove the relationship may be admitted, a finding of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion. First of all, petitioner actually wielded the power of selection at
the time it entered into a service contract. The power of selection was firmly evidenced by, among others,
the express written recommendation the restaurant manager, for the increase of respondents
remuneration. Secondly, the respondents talent fees are considered as included in the term wage in the
sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration.
Thirdly, the power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This is the so-called the control test,
and is premised on whether the person for whom the services are performed reserves the right to control
both the end achieved and the manner and means used to achieve that end. A review of the records shows,
however, that respondent performed his work as a pianist under petitioners supervision and control.
Specifically, petitioners control of both the end achieved and the manner and means used to achieve that
end was demonstrated by the following wit: a) He could not choose the time of his performance, which
petitioners had fixed from 7:00pm to 10:00pm, three to six times a week; b) He could not choose the place
of his performance; c) The restaurants manager required him at certain times to perform only Tagalog
songs or music, or barong Tagalog to conform to the Filipiniana motif; and d) He was subjected to the
rules on employees representation check and chits, a privilege granted to other employees. Lastly, the
petitioners had the power to dismiss the respondent. The memorandum informing respondent of the
discontinuance of his service because of the present business or financial condition of petitioner showed
that the latter had the power to dismiss him from employment.

The termination of respondent as an employee of the petitioner was not valid. The employer may
 Page 38 of 153
also terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and Employment at least one (1) month before
the intended date thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one
(1) whole year.

In termination cases, the burden of proving that the dismissal was for a valid or authorized cause
rests upon the employer. Here, petitioner did not submit evidence of the losses to its business operations
and the economic havoc it would thereby imminently sustain. It only claimed that respondents
termination was due to its "present business/financial condition." This bare statement fell short of the
norm to show a valid retrenchment. Hence, the SC holds that there was no valid cause for the
retrenchment of respondent.
 Page 39 of 153
The New Philippine Skylanders, Inc., vs. Dakila
G.R. No. 199547, September 24, 2012

Facts:

The respondent was rehired as consultant by the petitioners under a Contract for Consultancy
Services dated April 30, 1997. Thereafter, in a letter dated April 19, 2007 respondent informed petitioners
of his compulsory retirement and sought for the payment of his retirement benefits pursuant to the
Collective Bargaining Agreement. His request, however, was not acted upon. Instead, he was terminated
from service effective May 1, 2007.

Consequently, respondent filed a complaint against the petitioners. Respondent averred, among
others, that the consultancy contract was a scheme to deprive him of the benefits of regularization,
claiming to have assumed tasks necessary and desirable in the trade or business of petitioners and under
their direct control and supervision.

On the other hand, petitioners asserted that respondent was a consultant and not their regular
employee. The latter was not included in petitioners payroll and paid a fixed amount under the
consultancy contract. He was not required to observe regular working hours and was free to adopt means
and methods to accomplish his task except as to the results of the work required of him. Hence, no
employer-employee relationship existed between them. Moreover, respondent terminated his contract in a
letter dated April 19, 2007, thus, negating his dismissal/

Issue:
Whether or not there existed an illegal dismissal made by the petitioner against the respondent.

Held:
Yes. The issue of illegal dismissal is premised on the existence of an employer-employee
relationship.

Based on findings, there was an existence of an employer-employee relationship.

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages
computed from the time he was illegally dismissed. However, considering that respondent Dakila was
terminated on May 1, 2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his
reinstatement is no longer feasible. Accordingly, the NLRC correctly held him entitled to the payment of
his retirement benefits pursuant to the CBA. On the other hand, his backwages should be computed only
for days prior to his compulsory retirement which in this case is only a day. Consequently, the award of
reinstatement wages pending appeal must be deleted for lack of basis.

The computation of backwages should be limited only for a day prior to his compulsory retirement.
 Page 40 of 153
Tesoro et al., vs. Metro Manila Retreaders Inc., et al.,
GR No. 171482, March 12, 2014

Facts:

The petitioners used to work as salesmen for respondents. The latter offered repair and retread
services for used tires. However, they developed a franchising scheme that would enable others to operate
tire and retreading businesses using its trade name and service system.

The petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements
(SFAs) with the respondents for the operation of their respective franchises. Under the SFAs, the
respondents would prove funding support to the petitioners subject to a regular or periodic liquidation of
their revolving funds. The expenses out of these funds would be deducted from petitioners sales to
determine their incomes.

Meanwhile, the petitioners began to default on their obligations to submit periodic liquidations of
their operational expenses in relation to the revolving funds respondents provided them. Consequently,
Bandag terminated their respective SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non-payment of wages, incentive
pay, 13th month pay and damages against respondents with the NLRC. Petitioners contend that,
notwithstanding the execution of the SFAs, they remained to be respondents employees, the SFAs being
but a circumvention of their status as regular employees.

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

Issue:
Whether or not petitioners remained to be Bandags salesmen under the franchise scheme it entered
into with them.

Held:
No. The tests for determining employeremployee relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to
control the employee with respect to the means and methods by which the work is to be accomplished.
The last is called the control test, the most important element.

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

This is not the control contemplated in employeremployee relationships. Control in such

relationships addresses the details of day to day work like assigning the particular task that has to be done,
monitoring the way tasks are done and their results, and determining the time during which the employee
 Page 41 of 153
must report for work or accomplish his assigned task.

This is not the control contemplated in employeremployee relationships. Control in such

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

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer
employee relationship with Bandag. These funds do not represent wages. They are more in the nature of
capital advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners
incomes depended on the profits they make, controlled by their individual abilities to increase sales and
reduce operating costs.
 Page 42 of 153
Royale Homes Marketing Corp. vs Alcantara
GR No. 195190, July 28, 2014

Facts:
In 1994, the petitioners engaged in marketing real estates, appointed the respondent as their
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Petitioners real
estate inventories on an exclusive basis. Petitioners reappointed him for several consecutive years, the last of
which covered the period January 1 to December 31, 2003 where he held the position of Division 5 Vice-
President-Sales.

On December 17, 2013, respondent filed a Complaint for Illegal Dismissal against the Petitioners.
He alleged that he is a regular employee of the said petitioners since he is performing tasks that are necessary
and desirable to their business; that in 2003 the petitioners gave him 1.2 million pesos for the services he
rendered to them; that in the first of November 2013, however, the petitioners told him that they were
wondering why he still had the gail to come to office and sit at his table, and that the acts of the petitioners
amounted to his dismissal from work without any valid or just cause and in gross disregard of the proper
procedure for dismissing employees. Thus, he also impleaded the petitioners who, he averred, effected his
dismissal in bad faith and in an oppressive manner.

On the other hand, the petitioners vehemently denied that respondent is their employee. They argued
that the appointment paper of respondent is clear that they engaged his services as an independent sales
contractor for a fixed term of one year only. He never received any salary, 13th month pay, overtime pay or
holiday pay from them as he was paid purely on commission basis. In addition, petitioners had no control on
how respondents would accomplish his tasks and responsibilities as he was free to solicit sales at any time
and by any manner which he deem appropriate and necessary. He is even free to recruit his own sales
personnel to assist him in pursuance of his sales target.

According to the petitioners, respondent decided to leave the company after his wife, who was once
connected with them as a sales agent, had a formed a brokerage company that directly competed with their
business, and even recruited some of their sales agents. In a special management committee meeting on
October 8, 20013, respondent announced publicly and openly that he would leave the company by the end of
October 2003 and that he would no longer finish the unexpired term of his contract. He has decided to join
his wife and pursue their own brokerage business. Petitioners accepted respondents decision.

Issue:
Whether or not Alcantara was an independent contractor

Held:
Yes. The contract between the petitioners and the respondent conspicuously provides no employer-
employee relationship exists between them. One of the statements of the contract clearly leaves no doubt
upon the intention of the contracting parties: It is understood, however, that no employer-employee
relationship exists between us, that of your sales personnel/agents.

Although power to control is one of the four fold test to determine the existence of an employer-
employee relationship, not every form of control is indicative of such relationship. A person who performs
work for another and is subjected to its rules, regulations, and code of ethics does not necessarily become an
employee. As long as the level of control does not interfere with the means and methods of accomplishing
the assigned tasks, the rules imposed by the hiring party on the hired party do not amount to the labor law
concept of control that is indicative of employer-employee relationship.

The Court agrees with the petitioners that the rules, regulations, code of ethics, and periodic
evaluation alluded to by them do not involve control over the means and methods by which he was to
perform his job.

The respondent has the burden of proof to prove the elements of petitioners power of control over
the means and methods of accomplishing the work but he failed to cite specific rules, regulations or code of
ethics that supposedly imposed control on his means and methods of soliciting sales and dealing with
 Page 43 of 153
prospective clients. Notably, Alcantara was not required to observe definite working hours. Except for
soliciting sales, petitioners did not assign other tasks to him. He had full control over the means and methods
of accomplishing his tasks as he can solicit sales at any time and by any manner which (he may) deem
appropriate and necessary. He performed his tasks on his own account free from the control and direction of
petitioners in all matters connected therewith, except as to the results thereof.

The element of payment of wages is also absent in this case. As provided in the contract,
respondents remunerations consist only of commission override of 0.5%, budget allocation, sales incentive
and other forms of company support. There is no proof that he received fixed monthly salary. No payslip or
payroll was ever presented and there is no proof that petitioners deducted from his supposed salary
withholding tax or that it registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund. In fact, his Complaint merely states a ballpark figure of his alleged salary of
P100,000.00, more or less. All of these indicate an independent contractual relationship.
 Page 44 of 153
Fuji Television Network Inc. vs. Espiritu
GR No. 204944-45, December 3, 2014

Facts:
Respondent was engaged by the petitioner as a news correspondent/producer tasked to report
Philippines news to the latter through its Manila Bureau field office. Respondents employment contract
initially provided for a term of 1 year was successively renewed on a yearly basis with salary adjustment
upon every renewal.

Later, respondent was diagnosed with lung cancer. She informed the petitioner about her condition.
In turn, the petitioner informed the respondent that the company will have a problem renewing her contract
since it would be difficult to her to perform her job. She insisted that she was still fit to work as certified by
her attending physician.

After several communications, the respondent and petitioner signed a non-renewal contract on May
5, 2009 where it was stipulated that her contract would longer be renewed after its expiration on May 31,
2009. The contract was provided that the parties release each other from liabilities and responsibilities under
the employment contract.

In consideration of the renewal contract, the respondent acknowledged receipt of the total amount
of US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year
bonus and separation pay. However, the respondent affixed her signature on the non-renewal contract with
the initials U.P. for under protest.

On May 6, 2009, the day after respondent signed the non-renewal contract, she filed a complaint for
illegal dismissal and attorneys fees with the National Capital Region Arbitration Branch of the National
Labor Relations Commission. She alleged that she was forced to sign the non-renewal contract when the
petitioner came to know of her illness and that the latter withheld her salaries and other benefits for March
and April 2009 when she refused to sign.

Issue:
Whether or not there existed an employer-employee relationship between the herein parties.
Whether or not the dismissal made by the petitioner against the respondent was valid

Held: Yes
Based on the application of the four-fold test, first, the petitioner hired the respondent not because of
latters skills that would distinguish her from ordinary employees. Neither was there any showing that she
had a celebrity status. Her monthly salary appears to be a substantial sum, especially if compared to her
salary when she was still connected with GMA. Indeed, wages may indicate whether one is an independent
contractor. Wages may also indicate that an employee is able to bargain with the employer for better pay.
However, wages should not be the conclusive factor in determining whether one is an employee or an
independent contractor.

Second, the petitioner had the power to dismiss the respondent, as provided for in paragraph 5 of the
her professional employment contract. Her contract also indicated that the petitioner had control over her
work because she was required to work for 8 hours from Monday to Frida, although on flexible time.
Third, on the power to control, the respondent alleged that the petitioner gave her instructions on what to
report. Even the mode of transportation in carrying out her functions was controlled by the petitioner.

The test for determining regular employment is whether there is a reasonable connection between the
employees activities and the usual business of the employer. Article 280 provides that the nature of work
must be necessary or desirable in the usual business or trade of the employer as the test for determining
regular employment. However, there may be a situation where an employees work is necessary but is not
always desirable in the usual course of business of the employer. In this situation, there is no regular
employment.
 Page 45 of 153
Petitioners contract indicating a fixed term did not automatically mean that she could never be a
regular employee. Further, an employee can be a regular employee with a fixed-term contract. The law does
not preclude the possibility that a regular employee may opt to have a fixed-term contract for valid reasons.

For dismissal under Article 284 to be valid, two requirements must be complied with: (1) the
employees disease cannot be cured within six (6) months and his continued employment is prohibited by
law or prejudicial to his health as well as to the health of his co-employees; and (2) certification issued by a
competent public health authority that even with proper medical treatment, the disease cannot be cured
within six (6) months. The burden of proving compliance with these requisites is on the employer. Non-
compliance leads to the conclusion that the dismissal was illegal.

There is no evidence showing that the respondent was accorded due process. After informing her
employer of her lung cancer, she was not given the chance to present medical certificates. The petitioner
immediately concluded that the respondent could no longer perform her duties because of chemotherapy. It
did not ask her how her condition would affect her work. Neither did it suggest for her to take a leave, even
though she was entitled to sick leaves. Worse, it did not present any certificate from a competent public
health authority. What petitioner did was to inform her that her contract would no longer be renewed, and
when she did not agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the finding of
the National Labor Relations Commission that for failure of petitioner to comply with due process, the
respondent was illegally dismissed.
Apart from Arlenes illegal dismissal, the manner of her dismissal was effected in an oppressive
approach with her salary and other benefits being withheld until May 5, 2009, when she had no other choice
but to sign the non-renewal contract.
 Page 46 of 153
PURISIMO M. CABAOBAS, et.al v. PEPSI-COLA PRODUCTS, PHILIPPINES, INC.,

FACTS:

Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in the
manufacturing, bottling and distribution of soft drink products, which operates plants all over the country,
one of which is the Tanauan Plant in Tanauan, Leyte.

In 1999, PCPPIs Tanauan Plant allegedly incurred business losses in the total amount of Twenty-
Nine Million One Hundred Sixty-Seven Thousand and Three Hundred Ninety (P29,167,390.00) Pesos.

To avert further losses, PCPPI implemented a company-wide retrenchment program denominated as

Corporate-wide Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-seven (47) employees
of its Tanauan Plant on July 31, 1999.

On September 24, 1999, twenty-seven (27) of said employees, 5 led by Anecito Molon (Molon, et
al.), filed complaints for illegal dismissal before the NLRC which were docketed as NLRC RAB Cases Nos.
VIII-9-0432-99 to 9-0458-99, entitled Molon, et al. v. Pepsi-Cola Products, Philippines, Inc.

On January 15, 2000, petitioners, who are permanent and regular employees of the Tanauan Plant,
received their respective letters, informing them of the cessation of their employment on February 15, 2000,
pursuant to PCPPI's CRP. Petitioners then filed their respective complaints for illegal dismissal before the
National Labor Relations Commission Regional Arbitration Branch No. VIII in Tacloban City. Said
complaints were docketed as NLRC RAB VIII-03-0246-00 to 03-0259-00, entitled Kempis, et al. v. Pepsi-
Cola Products, Philippines, Inc.

In their Consolidated Position Paper,6 petitioners alleged that PCPPI was not facing serious financial
losses because after their termination, it regularized four (4) employees and hired replacements for the forty-
seven (47) previously dismissed employees. They also alleged that PCPPI's CRP was just designed to
prevent their union, Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU), from
becoming the certified bargaining agent of PCPPI's rank-and-file employees.

In its Position Paper,7 PCPPI countered that petitioners were dismissed pursuant to its CRP to save
the company from total bankruptcy and collapse; thus, it sent notices of termination to them and to the
Department of Labor and Employment. In support of its argument that its CRP is a valid exercise of
management prerogative, PCPPI submitted audited financial statements showing that it suffered financial
reverses in 1998 in the total amount of SEVEN HUNDRED MILLION (P700,000,000.00) PESOS,
TWENTY- SEVEN MILLION (P27,000,000.00) PESOS of which was allegedly incurred in the Tanauan
Plant in 1999.

Aggrieved party appealed and filed it with NLRC. NLRC rendered a decision:

(5) Nullifying, in NLRC Consolidated Case No. V-000071-01 (RAB VIII cases nos. 3-0246-2000 to 3-
0258-2000; Kempis, et al. vs. PCPPI), the Executive Labor Arbiter's Decisions dated December 15,
2000, and DISMISSING the complaints for illegal dismissal, and in its stead DECLARING the
retrenchment program of Pepsi Cola Products Phils., Inc. pursuant to its CRP, a valid exercise of
management prerogatives; Further, ORDERING Pepsi Cola Products Philippines, Inc. to pay the
 Page 47 of 153
following complainants their package separation benefits of 1 & months salary for every year of
service, plus commutation of all vacation and sick leave credits in the respective amounts hereunder
indicated opposite their names:

1. ARTEMIO S. KEMPIS P167,486.80

2. EXUPERIO C. MOLINA 168,196.38
3. GILBERTO V. OPINION 31,799.74
4. PURISIMO M. CABAOBAS 165,466.09
5. VICENTE P. LAURON 167,325.86
6. RAMON M. DE PAZ, JR. - 109,652.98
7. ZACARIAS E. CARBO 160,376.47
8. JULITO C. ABARRACOSO 161,366.44
9. DOMINGO B. GLORIA 26,119.26
10. FRANCISCO P. CUMPIO 165,204.41

Aggrieved, petitioners come before the Court in this petition for review on certiorari assailing the
th
CA 18 Division Decision dated July 31, 2006, and its Resolution dated February 21, 2007.

ISSUE:

Whether or not the dismissal was legal pursuant to PCPPI's retrenchment program.

RULING:

The petition has no merit.

Subsumed cases NLRC-RAB VIII Case Nos. 9-0432-99 to 9-0458-99 pertain to the dismissal of the
complaints for illegal dismissal filed by Molon, et al., the 27 former co-employees of petitioners in PCPPI.
On the issue of whether the retrenchment of the petitioners' former co-employees was in accord with law, the
Court ruled that PCPPI had validly implemented its retrenchment program.

In the present action, the NLRC held that PEPSI-COLAs financial statements are substantial
evidence which carry great credibility and reliability viewed in light of the financial crisis that hit the
country which saw multinational corporations closing shops and walking away, or adapting [sic] their own
corporate rightsizing program. Since these findings are supported by evidence submitted before the NLRC,
we resolve to respect the same. x x x x The notice requirement was also complied with by PEPSI-COLA
when it served notice of the corporate rightsizing program to the DOLE and to the fourteen (14) employees
who will be affected thereby at least one (1) month prior to the date of retrenchment. (Citations omitted)

It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness, the findings of
fact by the NLRC, especially when affirmed by the CA as in this case are binding and conclusive upon
the Court. Thus, given that there lies no discretionary abuse with respect to the foregoing findings, the Court
sees no reason to deviate from the same.

(2) Records also show that the respondents had already been paid the requisite separation pay as
evidenced by the September 1999 quitclaims signed by them. Effectively, the said quitclaims serve inter
alia the purpose of acknowledging receipt of their respective separation pays. Appositely, respondents never
questioned that separation pay arising from their retrenchment was indeed paid by Pepsi to them. As such,
the foregoing fact is now deemed conclusive.
 Page 48 of 153
(3) Contrary to the CAs observation that Pepsi had singled out members of the LEPCEU-ALU in
implementing its retrenchment program, records reveal that the members of the company union (i.e.,
LEPCEU-UOEF#49) were likewise among those retrenched.

Also, as aptly pointed out by the NLRC, Pepsis Corporate Rightsizing Program was a company-
wide program which had already been implemented in its other plants in Bacolod, Iloilo, Davao, General
Santos and Zamboanga. Consequently, given the general applicability of its retrenchment program, Pepsi
could not have intended to decimate LEPCEU-ALUs membership, much less impinge upon its right to self-
organization, when it employed the same.

In fact, it is apropos to mention that Pepsi and its employees entered into a collective bargaining
agreement on October 17, 1995 which contained a union shop clause requiring membership in LEPCEU-
UOEF#49, the incumbent bargaining union, as a condition for continued employment. In this regard, Pepsi
had all the reasons to assume that all employees in the bargaining unit were all members of LEPCEU-
UOEF#49; otherwise, the latter would have already lost their employment. In other words, Pepsi need not
implement a retrenchment program just to get rid of LEPCEU-ALU members considering that the union
shop clause already gave it ample justification to terminate them. It is then hardly believable that union
affiliations were even considered by Pepsi in the selection of the employees to be retrenched.

Therefore, as all the requisites for a valid retrenchment are extant, the Court finds Pepsis rightsizing
program and the consequent dismissal of respondents in accord with law.19cralawlawlibrary

In view of the Court's ruling in Pepsi-Cola Products Philippines, Inc. v. Molon,20 PCPPI contends
that the petition for review on certiorari should be denied and the CA decision should be affirmed under the
principle of stare decisis.

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

There is no dispute that the issues, subject matters and causes of action between the parties in Pepsi-
Cola Products Philippines, Inc. v. Molon26 and the present case are identical, namely, the validity of PCPPI's
retrenchment program, and the legality of its employees' termination. There is also substantial identity of
parties because there is a community of interest between the parties in the first case and the parties in the
second case, even if the latter was not impleaded in the first case. 27 The respondents inPepsi-Cola Products
Philippines, Inc. v. Molon28 are petitioners' former co-employees and co-union members of LEPCEU-ALU
who were also terminated pursuant to the PCPPI's retrenchment program. The only difference between the
two cases is the date of the employees' termination, i.e., Molon, et al. belong to the first batch of employees
retrenched on July 31, 1999, while petitioners belong to the second batch retrenched on February 15, 2000.
That the validity of the same PCPPI retrenchment program had already been passed upon and, thereafter,
sustained in the related case of Pepsi-Cola Products Philippines, Inc. v. Molon,29 albeit involving different
parties, impels the Court to accord a similar disposition and uphold the legality of same program.

However, abandonment of the ruling in Pepsi-Cola Products Philippines, Inc. v. Molon31 on the same
issue of the validity of PCPPI's retrenchment program must be based only on strong and compelling reasons.
After a careful review of the records, the Court finds no such reasons were shown to obtain in this case.

At any rate, the Court finds that the September 11, 2002 NLRC Decision has exhaustively discussed
PCPPI's compliance with the requirement that for a retrenchment to be valid, such must be reasonably
necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real.
 Page 49 of 153
Begino et al., vs. ABS-CBN Corp.
G.R. No. 199166, April 20, 2015

Facts:

The respondent ABS CBN is a television and radio broadcasting corporation which, for its Regional
Network Group in Naga City, employed respondent Villafuerte. Thru Villafuerte, the ABS CBN engaged the
services of petitioners Begino and Del Valle sometime in 1996 as Cameramen/Editors. Petitioners Sumayao
and Llorin were likewise engaged as reporters sometime in 1996 and 2002. With their services engaged by
respondents thru Talent Contracts which, though regularly renewed over the years, provided terms ranging
from three months to one year, petitioners were given Project Assignment Forms which detailed, among
other matters, the duration of a particular project as well as the budget and the daily technical requirements
thereof. In the aforesaid capacities, petitioners were tasked with coverage of news items for subsequent daily
airings in respondents TV Patrol Bicol Program.

However, the petitioners file a complaint against the respondent before the NLRC on the ground of
their claims for regularization, underpayment of overtime pay, holiday pay, 13th month pay, service incentive
leave pay, damages and attorneys fees, with an alleged that the former performed functions necessary and
desirable in latters business. Mandated to wear company IDs and provided all the equipment they needed,
petitioners averred that they worked under the direct control and supervision of Villafuerte and, at the end of
each day, were informed about the news to be covered the following day, the routes they were to take and,
whenever the subject of their news coverage is quite distant, even the start of their workday. Due to the
importance of the news items they covered and the necessity of their completion for the success of the
program, petitioners claimed that, under pain of immediate termination, they were bound by the companys
policy on, among others, attendance and punctuality.

Aside from the constant evaluation of their actions, petitioners were reportedly subjected to an
annual competency assessment alongside other ABS-CBN employees, as condition for their continued
employment. Although their work involved dealing with emergency situations at any time of the day or
night, petitioners claimed that they were not paid the labor standard benefits the law extends to regular
employees. To avoid paying what is due them, however, respondents purportedly resorted to the simple
expedient of using said Talent Contracts and/or Project Assignment Forms which denominated petitioners as
talents, despite the fact that they are not actors or TV hosts of special skills. As a result of this iniquitous
situation, petitioners asseverated that they merely earned an average of P7,000.00 to P8,000.00 per month, or
decidedly lower than the P21,773.00 monthly salary ABS-CBN paid its regular rank-and-file employees.
Considering their repeated re-hiring by respondents for ostensible fixed periods, this situation had gone on
for years since TV Patrol Bicol has continuously aired from 1996 onwards.

In refutation of the foregoing assertions, on the other hand, respondents argued that, although it
occasionally engages in production and generates programs thru various means, ABS-CBN is primarily
engaged in the business of broadcasting television and radio content. Not having the full manpower
complement to produce its own program, the company had allegedly resorted to engaging independent
contractors like actors, directors, artists, anchormen, reporters, scriptwriters and various production and
technical staff, who offered their services in relation to a particular program. In refutation of the foregoing
assertions, on the other hand, respondents argued that, although it occasionally engages in production and
generates programs thru various means, ABS-CBN is primarily engaged in the business of broadcasting
television and radio content. Not having the full manpower complement to produce its own program, the
company had allegedly resorted to engaging independent contractors like actors, directors, artists,
anchormen, reporters, scriptwriters and various production and technical staff, who offered their services in
relation to a particular program.

Respondents insisted that, pursuant to their Talent Contracts and/or Project Assignment Forms,
petitioners were hired as talents, to act as reporters and/or cameramen for TV Patrol Bicol for designated
periods and rates. Fully aware that they were not considered or to consider themselves as employees of a
particular production or film outfit, petitioners were supposedly engaged on the basis of the skills,
knowledge or expertise they already possessed and, for said reason, required no further training from ABS-
CBN. Although petitioners were inevitably subjected to some degree of control, the same was allegedly
 Page 50 of 153
limited to the imposition of general guidelines on conduct and performance, simply for the purpose of
upholding the standards of the company and the strictures of the industry. Never subjected to any control or
restrictions over the means and methods by which they performed or discharged the tasks for which their
services were engaged, petitioners were, at most, briefed whenever necessary regarding the general
requirements of the project to be executed.

Issue:
Whether or not there is an existed employer-employee relationship between the herein parties.

Held: YES
To determine the existence of said relation, case law has consistently applied the four-fold test, to
wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer's power to control the employee on the means and methods by which the work is
accomplished. Of these criteria, the so-called control test is generally regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship is said to exist where the person for whom the services are performed
reserves the right to control not only the end result but also the manner and means utilized to achieve the
same.

It has been ruled that the Article 280 contemplates four kinds of employees, namely: (a) regular
employees or those who have been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer; (b) project employees or those whose employment has been
fixed for a specific project or undertaking, the completion or termination of which has been determined at the
time of the engagement of the employee; (c) seasonal employees or those who work or perform services
which are seasonal in nature, and the employment is for the duration of the season; and (d) casual employees
or those who are not regular, project, or seasonal employees.26 To the foregoing classification of employee,
jurisprudence has added that of contractual or fixed term employee which, if not for the fixed term, would
fall under the category of regular employment in view of the nature of the employees engagement, which is
to perform activity usually necessary or desirable in the employers business.

The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or Project
Assignment Forms and the terms and condition embodied therein, petitioners are regular employees of ABS-
CBN. Time and again, it has been ruled that the test to determine whether employment is regular or not is the
reasonable connection between the activity performed by the employee in relation to the business or trade of
the employer.

As cameramen/editors and reporters, petitioners were undoubtedly performing functions necessary

and essential to ABS-CBNs business of broadcasting television and radio content. It matters little that
petitioners services were engaged for specified periods for TV Patrol Bicol and that they were paid
according to the budget allocated therefor. Aside from the fact that said program is a regular weekday fare of
the ABS-CBNs Regional Network Group in Naga City, the record shows that, from their initial engagement
in the aforesaid capacities, petitioners were continuously re-hired by respondents over the years. To the mind
of the Court, respondents repeated hiring of petitioners for its long-running news program positively
indicates that the latter were ABS-CBNs regular employees.

If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient
evidence of the necessity, if not indispensability of that activity in the business. Indeed, an employment stops
being co-terminous with specific projects where the employee is continuously re-hired due to the demands of
the employers business. The nature of the employment depends, after all, on the nature of the activities to be
performed by the employee, considering the nature of the employers business, the duration and scope to be
done, and, in some cases, even the length of time of the performance and its continued existence. In the same
manner that the practice of having fixed-term contracts in the industry does not automatically make all talent
contracts valid and compliant with labor law, it has, consequently, been ruled that the assertion that a talent
contract exists does not necessarily prevent a regular employment status.
 Page 51 of 153
As cameramen/editors and reporters, it also appears that petitioners were subject to the control and
supervision of respondents which, first and foremost, provided them with the equipments essential for the
discharge of their functions. Prepared at the instance of respondents, petitioners Talent Contracts tellingly
provided that ABS-CBN retained all creative, administrative, financial and legal control of the program to
which they were assigned. Aside from having the right to require petitioners to attend and participate in all
promotional or merchandising campaigns, activities or events for the Program, ABS-CBN required the
former to perform their functions at such locations and Performance/Exhibition Schedules it provided or,
subject to prior notice, as it chose determine, modify or change. Even if they were unable to comply with
said schedule, petitioners were required to give advance notice, subject to respondents approval. However
obliquely worded, the Court finds the foregoing terms and conditions demonstrative of the control
respondents exercised not only over the results of petitioners work but also the means employed to achieve
the same.

Rather than the project and/or independent contractors respondents claim them to be, it is evident
from the foregoing disquisition that petitioners are regular employees of ABS-CBN. This conclusion is borne
out by the ineluctable showing that petitioners perform functions necessary and essential to the business of
ABS-CBN which repeatedly employed them for a long-running news program of its Regional Network
Group in Naga City. In the course of said employment, petitioners were provided the equipments they
needed, were required to comply with the Company's policies which entailed prior approval and evaluation
of their performance.
 Page 52 of 153
SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBAA, Respondent.

Facts:

Respondent alleged that in July 1995, she applied for employment with the petitioner. However, after
passing the examinations and accomplishing all the requirements for employment, she was instead referred
to DBP Service Corporation for "transitory employment." She took the pre-employment examination given
by DBP Service Corporation and passed the same.

On May 20, 1996, she was told to report for training to SSS, Naga City branch, for immediate
deployment to SSS Daet branch. Thereafter, she was made to sign a six-month Service Contract
Agreement7 by DBP Service Corporation, appointing her as clerk for assignment with SSS Daet branch
effective May 27, 1996, with a daily wage of only P171.00. She was assigned as frontliner and thereafter, as
processor.

As Processor, she was paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor
receives a monthly salary of P18,622.00 or P846.45 daily wage.

Her May 28, 1996 Service Contract Agreement with DBP Service Corporation was never renewed,
but she was required to work for SSS continuously under different assignments with a maximum daily salary
of only P229.00; at the same time, she was constantly assured of being absorbed into the SSS plantilla.

Respondent claimed she was qualified for her position as Processor, having completed required
training and passed the qualifying examinations yet she was not given the proper salary.

Because of the oppressive and prejudicial treatment by SSS, she was forced to resign on as she could
no longer stand being exploited, the agony of dissatisfaction, anxiety, demoralization, and injustice.

Petitioner asserted that the claim arose from employer-employee relationship and that RTC did not
have jurisdiction over the case.

Issue:

Whether or not there was an employer-employee relationship between respondent and petitioner?
And which of the two, between the RTC and NLRC, has the jurisdiction over the case?

Ruling:

The Court denies the Petition.

Respondent never became an SSS employee, as she remained an employee of DBP Service
Corporation and SSS Retirees Association - the two being independent contractors with legitimate service
contracts with SSS. Indeed, "[i]n legitimate job contracting, no employer-employee relation exists between
the principal and the job contractor's employees. The principal is responsible to the job contractor's
employees only for the proper payment of wages."

For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire jurisdiction
over a dispute, there must be an employer-employee relation between the parties thereto.chanrobleslaw

There being no employer-employee relation or any other definite or direct contract between
respondent and petitioner, the latter being responsible to the former only for the proper payment of wages,
respondent is thus justified in filing a case against petitioner, based on Articles 19 and 20 of the Civil Code,
 Page 53 of 153
to recover the proper salary due her as SSS Processor.

In this jurisdiction, the "long honored legal truism of 'equal pay for equal work'" has been
"impregnably institutionalized;" "[p]ersons who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid similar salaries."

That public policy abhors inequality and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution in the Article on Social Justice and Human
Rights exhorts Congress to 'give highest priority to the enactment of measures that protect and enhance the
right of all people to human dignity, reduce social, economic, and political inequalities.' The very broad
Article 19 of the Civil Code requires every person, 'in the exercise of his rights and in the performance of his
duties, [to] act with justice, give everyone his due, and observe honesty and good faith'."
 Page 54 of 153

Hiring of Employee
PT&T NLRC
277 SCRA 596, 1997

Facts:
This is a case for illegal dismissal filed by Grace de Guzman against PT&T.

Grace de Guzman is a probationary employee of PT&T. In her job application, she represented that she
was single although she was married. When management found out, she was made to explain. However,
her explanation was found unsatisfactory so she was subsequently dismissed from work.

Grace thus filed a case for illegal dismissal against PT&T with RAB. According to the Labor Arbiter,
Grace, who had already gained the status of regular employee, was illegally dismissed by PT&T.
Moreover, he ruled that Grace was apparently discriminated against on account of her having
contracted marriage in violation of company rules.

On appeal to the NLRC, the decision of the Labor Arbiter was upheld. The Motion for Reconsideration
was likewise rebuffed, hence, this special civil action.

Petitioner argued that the dismissal was not because Grace was married but because of her concealment
of the fact that she was married. Such concealment amounted to dishonesty, which was why she was
dismissed from work.

Issue:
Whether or not the company policy of not accepting married women for employment was discriminatory

Held:
There was illegal dismissal

As an employee who had therefore gained regular status, and as she had been dismissed without just
cause, she is entitled to reinstatement without loss of seniority rights and other privileges and to full back
wages, inclusive of allowances and other benefits or their monetary equivalent.

On Stipulation against Marriage

In the final reckoning, the danger of PT&Ts policy against marriage is that it strikes at the very essence,
ideals and purpose of marriage as an inviolable social institution and, ultimately, of the family as the
foundation of the nation.
 Page 55 of 153
Duncan Association of Detailman-PTGWO and Pedro A. Tecson vs. Glaxo Welcome Philippines
International
GR. 162994, September 17, 2004

Facts:
Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract of employment signed
by Tecson stipulates, among others, that he agrees to study and abide by the existing company rules; to
disclose to management any existing future relationship by consanguinity or affinity with co-employees
or employees with competing drug companies and should management find that such relationship poses
a prossible conflict of interest, to resign from the company. Company's Code of Employee Conduct
provides the same with stipulation that management may transfer the employee to another department in
a non-counterchecking position or preparation for employment outside of the company after 6 months.

Tecson was initially assigned to market Glaxo's products in the Camarines Sur-Camarines Norte area and
entered into aromantic relationship with Betsy, an employee of Astra, Glaxo's competition. Before
getting married, Tecson's District Manager reminded him several times of the conflict of interest but
marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors informed him of conflict of intrest.
Tecson asked for time to comply with the condition (that either he or Betsy resign from their
respective positions). Unable to comply with condition, Glaxo transferred Tecson to the Butuan-Surigao
City-Agusan del Sur sales area. After his request against transfer was denied, Tecson brought the matter
to Glaxo's Grievance Committee and while pending, he continued to act as medical representative in the
Camarines Sur-Camarines Norte sales area. On Nov. 15, 2000, the National Conciliation and Mediation
Board ruled that Glaxo's policy was valid...

Issue:
Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company is valid

Held:
The challenged policy has been implemented by Glaxo impartially and disinterestedly for a long period
of time. In the case at bar, the record shows that Glaxo gave Tecson several chances to eliminate the
conflict of interest brought about by his relationship with Betsy, but he never availed of any of them.
 Page 56 of 153
Star Paper Corporation vs. Simbol
GR No 164774, April 12, 2006

Facts:
Petitioner Star Paper Corporation (the company) is a corporation engaged in trading principally of
paper products. Josephine Ongsitco is its Manager of the Personnel and Administration Department
while Sebastian Chua is its Managing Director.

The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N.
Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. 1

Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee
of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the couple
that should they decide to get married, one of them should resign pursuant to a company policy
promulgated in 1995,2 viz.:

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.

2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one of
them should resign to preserve the policy stated above. 3

Simbol resigned on June 20, 1998 pursuant to the company policy.4

Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee,
whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company policy,
one must resign should they decide to get married. Comia resigned on June 30, 2000. 5

Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker. Petitioners
stated that Zuiga, a married man, got Estrella pregnant. The company allegedly could have terminated
her services due to immorality but she opted to resign on December 21, 1999. 6

The respondents each signed a Release and Confirmation Agreement. They stated therein that they
have no money and property accountabilities in the company and that they release the latter of any claim
or demand of whatever nature.7

Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not
resign voluntarily; they were compelled to resign in view of an illegal company policy. As to respondent
Estrella, she alleges that she had a relationship with co-worker Zuiga who misrepresented himself as a
married but separated man. After he got her pregnant, she discovered that he was not separated. Thus,
she severed her relationship with him to avoid dismissal due to the company policy. On November 30,
1999, she met an accident and was advised by the doctor at the Orthopedic Hospital to recuperate for
twenty-one (21) days. She returned to work on December 21, 1999 but she found out that her name was
on-hold at the gate. She was denied entry.
 Page 57 of 153
Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay
and attorneys fees. They averred that the aforementioned company policy is illegal and contravenes
Article 136 of the Labor Code. They also contended that they were dismissed due to their union
membership.

Issue:
Whether or not the act of the company constituted as an unfair labor practice

Held:
The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar
involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or to stipulate expressly or
tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

Respondents submit that their dismissal violates the above provision. Petitioners allege that its policy
"may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if read
together with the first paragraph of the rule. The rule does not require the woman employee to resign.

The employee spouses have the right to choose who between them should resign. Further, they are
free to marry persons other than co-employees. Hence, it is not the marital status of the employee, per se,
that is being discriminated. It is only intended to carry out its no-employment-for-relatives-within-the-
third-degree-policy which is within the ambit of the prerogatives of management. 16

Petitioners sole contention that "the company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinity" 38 is lame. That the second
paragraph was meant to give teeth to the first paragraph of the questioned rule 39 is evidently not the valid
reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the
job, but were asked to resign when they married a co-employee. Petitioners failed to show how the
marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how
this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting
Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on
the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule
without valid justification, the employer can create policies based on an unproven presumption of a
perceived danger at the expense of an employees right to security of tenure.
 Page 58 of 153
Del Monte Phils vs. Velasco
GR No 153477, March 6, 2007

Facts:
Lolita M. Velasco (respondent) started working with Del Monte Philippines (petitioner) on October
21, 1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as
Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On May 4,
1991, respondent, thru a letter, was again warned in writing by petitioner about her absences without
permission and a forfeiture of her vacation leave entitlement for the year 1990-1991 was imposed against
her. On September 14, 1992, another warning letter was sent to respondent regarding her absences
without permission during the year 1991-1992. Her vacation entitlement for the said employment year
affected was consequently forfeited. In view of the said alleged absences without permission, on
September 17, 1994, a notice of hearing was sent to respondent notifying her of the charges filed against
her for violating the Absence Without Official Leave rule: that is for excessive absence without
permission on August 15-18, 29-31 and September 1-10, 1994. The hearing was set on September 23,
1994. Respondent having failed to appear on September 23, 1994 hearing, another notice of hearing was
sent to her resetting the investigation on September 30, 1994. It was again reset to October 5, 1994. On
January 10, 1995, after hearing, the petitioner terminated the services of respondent effective January 16,
1994 due to excessive absences without permission.

Issue:
Whether or not respondent was illegally dismissed

Held:
In this case, by the measure of substantial evidence, what is controlling is the finding of the NLRC
and the CA that respondent was pregnant and suffered from related ailments. It would be unreasonable to
isolate such condition strictly to the dates stated in the Medical Certificate or the Discharge Summary. It
can be safely assumed that the absences that are not covered by, but which nonetheless approximate, the
dates stated in the Discharge Summary and Medical Certificate, are due to the continuing condition of
pregnancy and related illnesses, and, hence, are justified absences.

In this jurisdiction tardiness and absenteeism, like abandonment, are recognized forms of neglect of
duties, the existence of which justify the dismissal of the erring employee. Respondents rule penalizing
with discharge any employee who has incurred six (6) or more absences without permission
or subsequent justification is admittedly within the purview of the foregoing standard.

The Court agrees with the CA in concluding that respondents sickness was pregnancy-related and,
therefore, the petitioner cannot terminate respondents services because in doing so, petitioner will, in
effect, be violating the Labor Code which prohibits an employer to discharge an employee on account of
the latters pregnancy.11
 Page 59 of 153
Yrasuegui vs. Philippine Airlines
GR 168081, Octorber 17, 2008

Facts:

Petitioner was a former international flight steward of PAL. He had problems meeting the required
weight standards for cabin and crew. He was advised to go on leave without pay several times to
address his weight concerns, to no avail. PAL had him grounded until such time he satisfactorily
complies with the weight standards and he was directed to report every two weeks for weight checks.

On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On June
15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and
considering the utmost leniency extended to him which spanned a period covering a total of almost five
(5) years, his services were considered terminated effective immediately

Issue:

Whether or not the petitioner was illegally dismissed.

Held:

The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code.
[T]he standards violated in this case were not mere orders of the employer; they were the prescribed
weights that a cabin crew must maintain in order to qualify for and keep his or her position in the
company. In other words, they were standards that establish continuing qualifications for an employees
position.

By its nature, these qualifying standards are norms that apply prior to and after an employee is hired.
They apply prior to employment because these are the standards a job applicant must initially meet in
order to be hired. They apply after hiring because an employee must continue to meet these standards
while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for
which an employee can be dismissed

The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.
Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being overwieight impedes
mobility in times of emergencies where seconds are precious.

Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his
regular allowances.
 Page 60 of 153
Wages and Wage Rationalization Act and Violation of Wages

S.I.P Food House et. Al vs. Batolina

GR No 192473, October 11, 2010

Facts :

The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the
Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a
canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the
services of the petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as
concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents) worked as
waiters and waitresses in the canteen.

In February 2004, GMPC terminated SIPs contract as GMPC concessionaire.The termination of

the concession contract caused the termination of the respondents employment, prompting them to file a
complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. NLRC ruled in
favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate courts
ruling that it was the employer of the respondents, claiming that it was merely a labor-only contractor of
GMPC

Issue:

Whether or not SIP was liable to them for their statutory benefits, although it was not made to
answer for their lost employment due to the involuntary nature of the canteens closure

Ruling:

We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants. The free board and lodging SIP furnished the employees cannot operate as a set-off for
the underpayment of their wages. We held in Mabeza v. National Labor Relations Commission [15] that
the employer cannot simply deduct from the employees wages the value of the board and lodging
without satisfying the following requirements: (1) proof that such facilities are customarily furnished by
the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities; and (3)
proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear from the
records that SIP failed to comply with these requirements.

On the collateral issue of the proper computation of the monetary award, we also find the CA ruling to be
in order. Indeed, in the absence of evidence that the employees worked for 26 days a month, no need
exists to recompute the award for the respondents who were explicitly claiming for their salaries and
benefits for the services rendered from Monday to Friday or 5 days a week or a total of 20 days a
month.
 Page 61 of 153
SLL International cables Specialist vs NLRC

GR No. 172161, March 2, 2011

Facts:

Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but
since they were only trainees, they did not report for work regularly but came in as substitutes to the
regular workers or in undertakings that needed extra workers to expedite completion of work. Soon after
they were engaged as private employees for their Islacom project in Bohol. Private respondents started
on March 15, 1997 until December 1997. Upon the completion of their project, their employment was
also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily
wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 and in October of the
same year, the latter was increased to P155.00.

On May 21, 1999, private respondents for the 4 th time worked with Lagon's project in Camarin,
Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on
February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private
respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was
P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that
time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin
project was not completed on the scheduled date of completion. Face[d] with economic problem[s],
Lagon was constrained to cut down the overtime work of its worker[s][,] including private respondents.
Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and
told private respondents that if they insist, they would have to go home at their own expense and that
they would not be given anymore time nor allowed to stay in the quarters. This prompted private
respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a
complaint for illegal dismissal, non-payment of wages, holiday pay, 13 th month pay for 1997 and 1998
and service incentive leave pay as well as damages and attorney's fees

Issue:

Whether or not the respondent should be allowed to recover the differential due to the failure of the
petitioner to pay the minimum wage.

Whether or not value of the facilities that the private respondents enjoyed should be included in the
computation of the "wages" received by them

Held:

As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of
proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims
rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances
and other similar documents -- which will show that overtime, differentials, service incentive leave and
other claims of workers have been paid -- are not in the possession of the worker but in the custody and
absolute control of the employer.

In this case, petitioners, aside from bare allegations that private respondents received wages higher
than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their
defense of payment. Thus, petitioners utterly failed to discharge the onus probandi.

On whether the value of the facilities should be included in the computation of the "wages" received by
private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may
provide subsidized meals and snacks to his employees provided that the subsidy shall not be less that
30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the
wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter,
provided that such deduction is with the written authorization of the employees concerned.
 Page 62 of 153
Moreover, before the value of facilities can be deducted from the employees' wages, the following
requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished
by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the
employee; and finally, facilities must be charged at reasonable value. [20] Mere availment is not sufficient
to allow deductions from employees' wages.[21]

These requirements, however, have not been met in this case. SLL failed to present any company
policy or guideline showing that provisions for meals and lodging were part of the employee's salaries. It
also failed to provide proof of the employees' written authorization, much less show how they arrived at
their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said
facilities.

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

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were
cases of dismissal with just and authorized causes. The present case involves the matter of the failure of
the petitioners to comply with the payment of the prescribed minimum wage.

The Court sustains the deletion of the award of differentials with respect to respondent Roldan
Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.
 Page 63 of 153
Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc.
G.R. No. 176985

Facts:
Petitioner was an employee of respondent until he retired as District Sales Supervisor (DSS). As
stipulated in respondents existing Retirement Plan Rules and Regulations at the time, the Annual
Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement
benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total
performance incentive earned during the year immediately preceding + 12 months) x No. of Years in Service.

Claiming his entitlement to an additional Php474,600.00 as Sales Management Incentives (SMI) and
to the amount of Php496,016.67 which respondent allegedly deducted illegally, representing the unpaid
accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC for the payment
of his Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral
and Exemplary Damages, and Attorneys Fees. However, the parties executed a Compromise Agreement,
whereby petitioner acknowledged full payment by respondent of the amount of Php496,016 covering the
amount illegally deducted.

Issue: Whether or not SMI should be included in the computation of petitioners retirement benefits on the
ground of consistent company practice. (the petitioner insistently avers that many DSSs who retired without
achieving the sales and collection targets were given the average SMI in their retirement package.

Held: Negative.

Generally, employees have a vested right over existing benefits voluntarily granted to them by their
employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is actually founded
on the Constitutional mandate to protect the rights of workers, to promote their welfare, and to afford them
full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which states that all doubts
in the implementation and interpretation of this Code, including its implementing rules and regulations, shall
be rendered in favor of labor.

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is
founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent
and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult
question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial evidence
that the giving of the benefit must be characterized by regularity, voluntary and deliberate intent of the
employer to grant the benefit over a considerable period of time.

Upon review of the entire case records, the SC finds no substantial evidence to prove that the grant
of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company
practice. Despite more than sufficient opportunity given him while his case was pending before the NLRC,
the CA and even to the SC, petitioner utterly failed to adduce proof to establish his allegation that SMI has
been consistently, deliberately and voluntarily granted to all retired DSSs without any qualification or
conditions whatsoever.

Royal Plant Workers Union v. Coca-Cola Bottlers Phils Inc. - Cebu Plant,
 Page 64 of 153
G.R. No. 198783, April 15, 2013

Facts:
The respondent employed bottling operators, who are members of Royal Plant Workers (petitioners).
There are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling operators who
man its bottling Line 2.

The petitioners work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the second shift is from
5 p.m. up to the time production operations is finished. Thus, the second shift varies and may end beyond 8
hours. However, the petitioners are compensated with overtime pay if the shift extends beyond 8 hours. For
Bottling Line 1, 10 petitioners work for each sift while the other 6 to 7 petitioners work for each shift for
Bottling 2.

Each shift has rotations of work time and break time. Prior to September 2008, the rotation is this:
after two and a half hours of work, the petitioners are given a 30-minute break and this goes on until the shift
ends. In September 2008 and up to the present, the rotation has changed and petitioners are now given a 30-
minute break after one and one half hours of work.

In 1974, the petitioners of then Bottling Line 2 were provided with chairs upon their request. In
1988, the petitioners of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their
request was likewise granted. Sometime in September 2008, the chairs provided for the petitioners were
removed pursuant to a national directive. This directive is in line with the I Operate, I Maintain, I Clean
program of respondent for petitioners, wherein every petitioner is given the responsibility to keep the
machinery and equipment assigned to him clean and safe. The program reinforces the task of petitioners to
constantly move about in the performance of their duties and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him, a
petitioner does not need a chair anymore, hence, respondents directive to remove them. Furthermore,
petitioner rationalized that the removal of the chairs is implemented so that the petitioners will avoid
sleeping, thus, prevent injuries to their persons. As petitioners are working with machines which consist of
moving parts, it is imperative that they should not fall asleep as to do so would expose them to hazard and
injuries. In addition, sleeping will hamper the efficient flow of operations as petitioners would be unable to
perform their duties competently.

Issue:
Whether or not the appeal to the CA via a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure a proper remedy to question the decision of the Arbitration Committee.
Whether or not the respondents decision to unilaterally remove the petitioners chairs from the
production/manufacturing lines of its bottling plants is valid.

Held:
1.) Yes. The Court has already ruled in a number of cases that a decision or award of a voluntary arbitrator is
appealable to the CA via a petition for review under Rule 43. Hence, upon receipt on May 26, 2003 of the
Voluntary Arbitrators Resolution denying petitioners motion for reconsideration, petitioner should have
filed with the CA, within the 15 day reglementary period, a petition for review, not a petition for certiorari.
2.) Yes. There is a Valid Exercise of Management Prerogative. The Court has held that management is free to
regulate, all aspects of employment, including hiring, work assignments, working methods, time, place, and
manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
 Page 65 of 153
exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with
due regard to the rights of labor.

In present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant to a national
directive and in line with its I Operate, I Maintain, I Clean program, launched to enable the Union to
perform their duties and responsibilities more efficiently. The chairs were not removed indiscriminately.
They were carefully studied with due regard to the welfare of the members of the Union. The removal of the
chairs was compensated by: a) a reduction of the operating hours of the bottling operators from a two-
and-one-half hour rotation to a one-and-a half hour rotation period; and b) an increase of the break period
from 15 to 30 minutes between rotations.

Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage
interferences with an employers judgment in the conduct of its business. For this reason, the Court often
declines to interfere in legitimate business decisions of employers. The law must protect not only the welfare
of the employees, but also the right of the employers.

The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor et al
 Page 66 of 153
GR No. 150326, March 12, 2014

Facts:
On June 9, 1989, RA No. 6727 was enacted into law. Article 121 of the Labor Code, as amended by
Section 3 of RA 6727, empowered the NAWPC to formulate policies and guidelines on wages, incomes and
productivity improvement at the enterprise, industry and national levels; to prescribe rules and guidelines for
the determination of appropriate minimum wage and productivity measures at the regional, provincial or
industry levels; and to review regional wage levels set by the RTWPBs to determine whether the levels were
in accordance with the prescribed guidelines and national development plans, among others. On the other
hand, Art. 122(b) of the Labor Code, also amended by Section 3 of the RA No. 6727, tasked the RTPWBs to
determine and fix minimum wage rates applicable in their region, provinces or industries therein; and to
issue the corresponding wage orders, subject to the guidelines issued by the NWPC. The RTWPBs were also
mandated to receive, process and act on applications for exemption from the prescribed wage rates as may be
provided by law or any wage order.

Consequently, the RTWPB-NCR issued Wage Order on October 14, 1999 imposing an increase of
P25.50/day on the wages of all private sector workers and employees in the NCR and pegging the minimum
wage rate in the NCR at P223.50/day. Under section 2 of the Wage Order, the adjustment in this Order does
not cover the following: Workers in the following sectors which were granted corresponding wage increases
on January 1, 1999 by Wage Order: Agricultural workers, cottage/handicraft industry, private hospitals with
bed capacity of 100 or less, and retail/service establishments employing 11-15 workers or employing not
more than 10 workers; Workers in small establishments employing less than 10 workers.

In Section 9, upon application with and as determined by the Board, based on documentation and other
requirements in accordance with applicable rules and regulations issued by the Commission, the following
may be exempt from the applicability of this Order: 1) Distressed establishments as defined in the NPWC
Guidelines and 2) Exporters including indirect exporters with at least 50% export sales and with forward
contracts with their foreign buyers/principals entered into on or twelve (12) months before the date of
publication of this Order may be exempt during the lifetime of said contract but not to exceed 12 months
from the effectivity of this Order.

Feeling aggrieved by their non-coverage by the wage adjustment, the APL and TNMR appeal with the
NPWC assailing Section 2 (A) and Section 9 (2) of Wage Order. They contended that neither the NWPC nor
the RTWPB-NCR had the authority to expand the non-coverage and exemptible categories under the wage
order; hence, the assailed sections of the wage order should be voided.

Issue:
Whether or not the Wage Order No. NCR-09 is valid

Held: Yes.
Indisputably, the NWPC had the authority to prescribe the rules and guidelines for the determination
of the minimum wage and productivity measures, and the RTWPB-NCR had the power to issue wage orders.

Section 1 of Rule VIII of NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to
issue exemptions from the application of the wage orders subject to the guidelines issued by the NWPC.

The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the exemption
from compliance with the wage increases prescribed by the RWTPBs. Under the guidelines, the RTWPBs
could issue exemptions from the application of the wage orders as long as the exemptions complied with the
rules of the NWPC. In its rules, the NWPC enumerated 4 exemptible establishments, but the list was not
exclusive. The RTWPBs had the authority to include in the wage orders establishments that belonged to, or
to exclude from the four enumerated exemptible categories. If the exempted category was one of the listed
ones, the RTWPB issuing the wage order must see to it that the requisites had stated in Section 3 and 4 of the
NWPC Guidelines were complied with before granting fully or partially the application of an establishment
seeking to avail of the exemption. On the other hand, if the exemption was outside of the four exemptible
categories, the exemptible category should be: 1) in accord with the rationale for exemption; 2)
reviewed/approved by the NWPC; and 3) upon review, the RTWPB issuing the wage order must submit a
 Page 67 of 153
strong and justifiable reason or reasons for the inclusion of such category. It is the compliance with the
second requisite that is at issue here. The Congress meant the RTWPBs to be creative in resolving the annual
question of wages without Labor and Management knocking on the doors of Congress at every turn. The
RTWPBs are the thinking group of men and women guided by the statutory standards and bound by the rules
and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs investigate and study
all the pertinent facts to ascertain the conditions in their respective regions. Hence, they are logically vested
with the competence to determine the applicable minimum wages to be imposed as well as the industries and
sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order is presumed to be regularly issued in the absence of any strong showing of grave
abuse of discretion on the part of RTWPB-NCR. The presumption of validity is made stronger by the fact
that its validity was upheld by the NWPC upon review.

David/Yiels Hog Dealer vs. Macasio,

 Page 68 of 153
GR No. 195466, July 2, 2014

Facts:
Respondent filed before the LA a complaint against petitioner doing business under the name and style
Yiels Hog Dealer, for non-payment of overtime pay, holiday pay and 13th month pay. He also claimed
payment for moral and exemplary damages and attorneys fees. Respondent also claimed payment for service
incentive leave (SIL.

Respondent alleged that he had been working as a butcher for petitioner since Jan. 6, 1995. He claimed
that petitioner exercised effective control and supervision over his work, pointing out that the latter: 1) set
the work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his
work; 2) daily paid his salary of P700.00, which was increased from P600.00 in 2007; and 3) approved and
disapproved his leaves. He added that the petitioner owned the hogs delivered for chopping, as well as the
work tools and implements; the latter rented the workplace. He further claimed that the petitioner employs
about 25 butchers and delivery drivers.

In his defense, the petitioner claimed that he started his dog dealer business in 2005 and that he only
has ten employees. He alleged that he hired respondent as a butcher on pakaw or task basis who is, therefore,
not entitled to overtime pay, holiday pay and 13th month pay pursuant to the IRR of the Labor Code. The
petitioner pointed out that respondent: 1) usually starts his work at 10pm and ends at 2am of the following
day or earlier, depending on the volume of the delivered hogs; 2) received the fixed amount of P700.00 per
engagement, regardless of the actual number of hours that he spent chopping the delivered hogs; and 3) was
not engaged to report for work and, accordingly, did not receive any fee when no hogs were delivered.

The respondent disputed the petitioners allegations. He argued that, first, the petitioner did not start
his business only in 2005. He pointed to the Certificate of Employment that the petitioner issued in
respondents favor which placed the date of his employment, albeit erroneously, in January 2000. Second, he
reported for work every day which the payroll or time record could have easily proved that petitioner
submitted them in evidence.

Refuting respondents submissions, petitioner claims that respondent was not his employee as he hired
the latter on pakyaw or task basis. He also claimed that he issued the Certificate of Employment, upon
respondents request, only for overseas employment purposes.

Issue:
The issue revolves around the proper application and interpretation of the labor law provisions on holiday,
SIL and 13th month pay to a worker engaged on "pakyaw" or task basis.

Held:
The Court reject the assertion of petitioner that the respondent was not his employee since the latter
engaged on pakyaw or task basis. Very noticeably, the petitioner confuses engagement on pakyaw or task
basis with the lack of employment relationship. Impliedly, petitioners asserts that their pakyawanan or task
basis arragenement negates the existence of employment relationship.

Engagement on pakyaw or task basis does not characterize the relationship that may exist between the
parties, ie., whether one of employment or independent contractorship. Article 97 (6) of the Labor Code
defines wages as ". . . the remuneration or earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered[.]" In relation to
Article 97 (6), Article 101 of the Labor Code speaks of workers paid by results or those whose pay is
calculated in terms of the quantity or quality of their work output which includes "pakyaw" work and other
non-time work.

To determine the existence of an employer-employee relationship, four elements generally need to be

considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct. These elements or indicators
 Page 69 of 153
comprise the so-called "four-fold" test of employment relationship. Macasio's relationship with David
satisfies this test.

First, the petitioner engaged the services of respondent thus satisfying the element of selection and
engagement of the employee. Second, the petitioner paid Macasios wages. Third, the petitioner had been
setting the day and time when the respondent should report for work. And fourth, the petitioner had the right
and power to control and supervise respondents work as to the mans and methods of performing it.
Therefore, the employer-employee relationship is existing in this case.

The existence of employment relationship between the parties is determined by applying the four-
fold test; engagement on pakyaw or task basis does not determine the parties relationship as it is simply a
method of pay computation. Accordingly, respondent is petitioners employee, albeit engaged on pakyaw or
task basis.

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

Our Haus Realty Development Corp., vs. Parian et al.,

 Page 70 of 153
GR No. 204651, August 6, 2014

Facts:
Respondents were all laborers working for petitioner, a company engaged in the construction business.

Sometime in May 10, the petitioner experienced financial distress. To alleviate its condition, the
petitioner suspended some of its construction projects and asked the affected workers, including the
respondents, to vacation leaves.

Eventually, the respondents were asked to report back to work but instead of doing so, they filed with the LA
a complaint for underpayment of their daily wages. They claimed that except for respondent Bernardo, their
wages were below the minimum wages prescribed in the Wage Orders from 2007 to 2010. The respondent
also alleged that the petitioner failed to pay them their holiday, service incentive leave (SIL), 13th month and
overtime pays.

The petitioner argued that the respondents wages complied with the laws minimum requirement.
Aside from the paying the monetary amount of the respondents wages, the petitioner also sub sized their
meals (3 times a day), and gave them free lodging near the construction project they were assigned to. The
petitioner also rejected the respondents other monetary claims for lack of proof that they were entitled to it.

On the other hand, the respondents argued that the value of their meals should not be considered in
determining their wages total amount since the requirements set under Section 4 of DOLE Memorandum
Circular No. 2 were not complied with.

The respondent pointed out that the petitioner never presented any proof that they agreed in writing to
the inclusion of their meals value in their wages. Also, the petitioner failed to prove that the value of the
facilities it furnished was fair and reasonable. Finally, instead of deducting the maximum amount of 70% of
the value of the meals. The petitioner actually withheld its full value.

Issue: Whether or not the petitioner complied with the requirements for deductibility of the value of the
facilities.

Held: NO.

There is no substantial distinction between deducting and charging a facilitys value from the
employee wages; the legal requirements for credibility apply to both.

The facility must be customarily furnished by the trade. The SC concluded that one of the badges to
show that a facility is customarily furnished by the trade is the existence of a company policy or guideline
showing that provisions for facility were designated as part of the employees salary. To comply with this, the
petitioner presented with the NLRC the joint sinumpaang salaysay of four of its alleged employees. These
employees averred that they were recipients of free lodging, electricity and water, as well as subsidized
meals from petitioner.

The sinumpaang salaysay statements submitted by petitioners are self-serving. For one, the petitioner
only produced the documents when the NLRC had already earlier determined that petitioner failed to prove
that it was traditionally giving the respondents their board and lodging. The document did not state whether
these benefits had been consistently enjoyed by the rest of the employees. Moreover, the records reveal that
the board and lodging were given on a per project basis. The petitioner did not show if these benefits were
also provided in its other construction projects, thus negating its claimed customary nature.

SC held that only the value of facilities may be deducted from the employees wages but not the value
of supplements. Facilities include articles or services for the benefit of the employee or his or services
primarily for the benefit of the employer or necessary to the conduct of the employers business. The law
also prescribes that the computation of wages shall exclude whatever benefits, supplements or allowances
given to employees. Supplements are paid to employees on top of their basis pay and are free of charge.
Since it does not form part of the wage, a supplements value may not be included in the determination of
 Page 71 of 153
whether an employer complied with the prescribed minimum wage rates. In the present case, the board and
lodging provided by the petitioner cannot be categorized as facilities but as supplements.

The provision of deductible facilities must be voluntarily accepted in writing by the employee. In this
case, in the sinumpaang salay by petitioners four employees, it was not mentioned that they also executed a
kasunduan for their board and lodging benefits.

The facility must be charged at a fair and reasonable value. The petitioner admitted that it deducted the
amount of P290.00 per week from each of the respondents for their meals. But it now submits that it did not
actually withhold the entire amount as it did not figure in the computation the money it expended for the
salary of the cook, the water, and the LPG used for cooking, which amounts to P249.40 per week per person.
From these, it appears that the total meal expense per week for each person is P529.40, making petitioners
P290.00 deduction within the 70% ceiling prescribed by the rules.

However, the petitioners valuation cannot be plucked out of thin air. The valuation must be supported
by relevant documents such as receipts and company records for it to be considered as fair and reasonable. In
the present case, the petitioner never explained how it came up with the values it assigned for the benefits it
provided; it merely listed its supposed expenses without any supporting document.

Milan et al., vs. NLRC

 Page 72 of 153
GR No. 202961, February 4, 2015

Facts:
As Solid Mills employees, petitioners and their families were allowed to occupy SMI Village, a
property owned by Solid Mills (SM). According to SM, this was out of liberality and for the convenience of
its employees and on the condition that the employees would vacate the premises anytime the Company
deems fit.

In September 2003, petitioners were informed that effective October 10, 2003, SM would case its
operations due to serious business losses. NAFLU (representative of the petitioners) recognized SMs closure
due to serious business losses in the memorandum of agreement (MOA( dated Sept. 1, 2003. The MOA
provided for SMs grant of separation pay less accountabilities, accrued sick leave benefits, vacation leave
benefits, and 13th month pay to the employees.

SM filed its termination on Sept. 2, 2003. Later, SM sent to petitioners individual notices to vacate
SMI Village. Petitioners were no longer allowed to report for work by Oct. 10, 2003. They were required to
sign a MOA with release and quitclaim before their vacation and sick leave benefits, 13th month pay, and
separation pay would released. Employees who signed the MOA were considered to have agreed to vacate
SMI Village, and to the demolition of the constructed houses inside as a condition for the release of their
termination benefits and separation pay. Petitioners refused to sign the documents and demanded to be paid
their benefits and separation pay. Hence, petitioners filed complaints before the Labor Arbiter for alleged
non-payment of separation pay, accrued sick and vacation leaves, and 13th month pay. They argued that their
accrued benefits and separation pay should not be withheld because their payment is based on company
policy and practice. Moreover, the 13th month pay is based on law. Their possession of SM property is not
an accountability that is subject to clearance procedures. They had already turned over to SM their uniforms
and equipment when SM ceased operations. On the other hand, SM argue that petitioners complaint was
premature because they had not vacated its property.

Issue: 1) Whether or not the NLRC Commission has jurisdiction to determine an issue related to rights or
claims arising from an employer-employee relationship.
2) Whether or not SM is prohibited from withholding wages and elimination or diminution of benefits from
employees.

Held:
1. Yes. Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the NLRC, in its
appellate jurisdiction, may determine issues involving claims arising from employer-employee
relationship.
2. No. As a general rule, employers are prohibited from withholding wages from employees. The Labor
Code also prohibits the elimination of diminution of benefits. However, our law supports the employers
institution of clearance procedure before the release of wages. As an exception to the general rule that
wages may not be withheld and benefits may not be diminished. The Civil Code provides that the
employer is authorized to withhold wages for debts due. It may be true that not all employees enjoyed
the privilege of staying in respondent SM property. However, this alone does not imply this privilege
when enjoyed was not a result of the employer-employee relationship. Those who did avail of the
privilege were employees of SM. Petitioners possession should, therefore, be included in the term
accountability. Accountability means obligation or debt. Accountabilities of employees are personal.
They need not be uniform among all employees in order to be included in accountabilities incurred by
virtue of an employer-employee relationship. Withholding of payment by the employer does not mean
that the employer may revenge on its obligation to pay employees their wages, termination payments,
and due benefits. The employees benefits are also not being reduced. It is only subjected to the
condition that the employees return properties properly belonging to the employer. This is only
consistent with the equitable principle that no one shall be unjustly enriched or benefited at the expense
of another. For these reasons, the SC cannot hold that petitioners are entitled to interest of their
withheld separation benefits. These benefits were properly withheld by SM because of their refusal to
return its property.
Page 73 of 153
 Page 74 of 153
Wage Enforcement and Recovery

Tiger Construction and Development Corp vs. Abay et al.

GR No 1641141, February 26, 2010

Facts:

On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the
Regional Office of the Department of Labor and Employment (DOLE), an inspection was conducted by
DOLE officials at the premises of petitioner TCDC. Several labor standard violations were noted, such
as deficiencies in record keeping, non-compliance with various wage orders, non-payment of holiday
pay, and underpayment of 13th month pay. The case was then set for summary hearing.

Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the
same Code, this instant case should be referred back to the National Labor Relations Commission
(NLRC) Sub-Arbitration Branch V, Naga City, on the ground that the aggregate money claim of each
worker exceeds the jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only
(P5,000.00).

Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto.
Tomas), in an apparent reversal of Director Manalos endorsement, issued another inspection authority
on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials conducted another
investigation of petitioners premises and the same violations were discovered.

According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of
lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE
regional office after July 25, 2002 were null and void for want of jurisdiction.

ISSUE:

Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly
on the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution
stage.

Ruling:

The petition lacks merit.

Petitioner admits that it failed to appeal the January 29, 2003 Order within the period prescribed by
law. It likewise admits that the case was already in the execution process when it resorted to a belated
appeal to the DOLE Secretary. Petitioner, however, excuses itself from the effects of the finality of the
Order by arguing that it was allegedly issued without jurisdiction and may be assailed at any time.

Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the
claim was within the latters jurisdiction, did not oust or deprive her of jurisdiction over the case. She
therefore retained the jurisdiction to decide the case when it was eventually returned to her office by the
DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by law and not by the
interested parties, much less by one of them, and should be exercised precisely by the person in authority
or body in whose hands it has been placed by the law. [18]

We also cannot accept petitioners theory that Director Manalos initial endorsement of the case to
the NLRC served as a dismissal of the case, which prevented her from subsequently assuming
jurisdiction over the same. The said endorsement was evidently not meant as a final disposition of the
case; it was a mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction was
lodged with the latter. It cannot preclude the regional director from subsequently deciding the case after
 Page 75 of 153
the mistake was rectified and the case was returned to her by the DOLE Secretary, particularly since it
was a labor case where procedural lapses may be disregarded in the interest of substantial justice.

In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can
no longer be questioned (as it is final and executory), we can no longer entertain petitioners half-hearted
and unsubstantiated arguments that the said Order was allegedly based on erroneous computation and
included non-employees. Likewise, we find no more need to address petitioners contention that the CA
erred in dismissing its petition on the ground of its belated compliance with the requirement of
certification against forum-shopping
 Page 76 of 153
Peoples Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al
GR No 179652, May 8, 2009

FACTS:

Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo Radyo Phils.
(Bombo Radyo) for illegal deduction, non-payment of service incentive leave, 13th month pay,
premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and
non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE conducted a
plant level inspection. The Labor Inspector in his report wrote,

Management representative informed that (Juezan) complainant is a drama talent hired on a per
drama participation basis hence no employer-employer relationship existed between them. As proof of
this, management presented photocopies of cash vouchers, billing statement, employments of specific
undertaking, etc. The management has no control of the talent if he ventures into another contract with
other broadcasting industries.

ISSUE:

Whether or not the Secretary of Labor has the power to determine the existence of an employer-
employee relationship.

HELD:

NO. Art. 128 (b) of the Labor Code, as amended by R.A. 7730 reads:

Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue compliance orders to give effect to the
labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of inspection.

The provision is explicit that the visitorial and enforcement power of the DOLE comes into play
only in cases when the relationship of employer-employee still exists. This clause signifies that the
employer-employee relationship must have existed even before the emergence of the controversy.
Necessarily, the DOLEs power does not apply in two instances, namely: (i) where the employer-
employee relationship has ceased; and (ii) where no such relationship has ever existed.

The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of
Labor Standards Cases issued by the DOLE Secretary. It reads:

Where employer-employee relationship no longer exists by reason of the fact that it has already been
severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the
labor arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employer-employee
relationship no longer exists, the case, whether accompanied by an allegation of illegal dismissal, shall
immediately be endorsed by the Regional Director to the appropriate branch of the National Labor
Relations Commission (NLRC).

The law accords a prerogative to the NLRC over the claim when the employer-employee relationship
has terminated or such relationship has not arisen at all. The existence of an employer-employee
relationship is a matter which is not easily determinable from an ordinary inspection because the
elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and
implications of an employer-employee relationship demand that the level of scrutiny should be far above
the superficial. While documents, particularly documents found in the employers office are the primary
source materials, what may prove decisive are factors related to the history of the employers business
operations, its current state as well as accepted contemporary practices in the industry. More often than
not, the question of employer-employee relationship becomes a battle of evidence, the determination of
 Page 77 of 153
which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial
body of the NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow
has to make a determination of the existence of an employer-employee relationship. However, such
determination cannot be coextensive with the visitorial and enforcement power itself. Such is merely
preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee relationship is still primarily
lodged with the NLRC. This is the meaning of the clause in cases where the relationship of employer-
employee still exists in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Art. 128, two important questions must be
resolved: (i) Does the employer-employee relationship still exist, or alternatively, was there ever an
employer-employee relationship to speak of; and (ii) Are there violations of the Labor Code or of any
labor law?

The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on

the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale
underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor
and the NLRC. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers
absent the first requisite, his office confers jurisdiction on itself which it cannot otherwise acquire.

Nevertheless, a mere assertion of absence of employer-employee relationship does not deprive the
DOLE of jurisdiction over the claim. At least a prima facie showing of such absence of relationship, as
in this case, is needed to preclude the DOLE from the exercise of its power. Without a doubt, Bombo
Radyo, since the inception of this case had been consistent in maintaining that Juezan is not its
employee. A preliminary determination, based on the evidence offered and noted by the Labor Inspector
during the inspection as well as submitted during the proceedings before the Regional Director puts in
genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse
on the part of the DOLE should have been to refer Juezan to the NLRC for the proper dispensation of his
claims. Furthermore, even the evidence relied on by the Regional Director in his order are mere self-
serving declarations of Juezan, and hence cannot be relied upon as proof of employer-employee
relationship.

Superior Packaging Corp. vs. Balagsay et al., October 10, 2012

 Page 78 of 153

Facts: The petitioner engaged the services of Lancer to provide reliever services to its business, which
involves the manufacture and sale of commercial and industrial corrugated boxes. According to petitioner,
the respondents were engaged for four (4) months from February to June 1998 and their tasks included
loading, unloading and segregation of corrugated boxes.

Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of
salary. Upon receipt Department of Labor and Employment (DOLE) conducted an inspection of the
petitioners premises and found several violations, to wit:
(1) Non-presentation of payrolls and daily time records;
(2) Non-submission of annual report of safety organization;
(3) Medical and accident/illness reports;
(4) Non-registration of establishment under Rule 1020 of Occupational and Health Standards; and
(5) No trained first aide.

Due to the petitioners failure to appear in the summary investigations conducted by the DOLE, an Order was
issued on June 18, 2003 finding in favor of the respondents and adopting the computation of the claims
submitted. Petitioner and Luz were ordered, among others, to pay respondents their total claims in the
amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and 38/100 (P 840,463.38).

Petitioner filed a motion for reconsideration on the ground that respondents are not its employees but of
Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its
motion because petitioner failed to support its claim that the respondents are not its employees, and even
assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13 of the
Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor
to contractual employees to the extent of the work performed when the contractor fails to pay its employees
wages.

Their appeal to the Secretary of DOLE was dismissed thus, l petitioner and Luz filed a petition
for certiorari with the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in that Luz
was absolved of any personal liability under the award.
Hence, this petition for review under Rule 45 of the Rules of Court.

Issue: Whether or not DOLE has authority to determine the existence of an employer-employee
relationship? Whether Superior Packaging Corporation may be held solidarily liable with Lancer Staffing &
Services Network, Inc. (Lancer) for respondents unpaid money claims?

Held: The petition is bereft of merit.

The DOLE clearly acted within its authority when it determined the existence of an employer-employee
relationship between the petitioner and respondents as it falls within the purview of its visitorial and
enforcement power under Article 128(b) of the Labor Code. The determination of the existence of an
employer-employee relationship by the DOLE must be respected.

With regard to the contention that there is no evidence to support the finding that the respondents rendered
overtime work and that they worked on their rest day, the resolution of this argument requires a review of the
factual findings and the evidence presented, Court said that it is not a trier of facts and it applies with greater
force in labor cases. Hence, where the factual findings of the labor tribunals or agencies conform to, and are
affirmed by, the CA, the same are accorded respect and finality, and are binding to Supreme Court.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but
was engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of
respondents and liable to the latter for their unpaid money claims.
 Page 79 of 153
At the time of the respondents employment in 1998, the applicable regulation was DOLE Department Order
No. 10, Series of 1997. Under said Department Order, labor-only contracting was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly related
to the principal business or operations of the employer in which workers are habitually employed.

Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an
agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent
as if the latter were directly employed by him.

According to the CA, the totality of the facts and surrounding circumstances of this case point to such
conclusion that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that the
petitioner failed to produce any written service contract that might serve as proof of its alleged agreement
with Lancer.

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed contractor, and the
"labor only" contractor is considered as a mere agent of the principal, the real employer. The former becomes
solidarily liable for all the rightful claims of the employees.

Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily
liable for respondents unpaid money claims.

Wage Protection Provisions & Prohibitions Regarding Wages

 Page 80 of 153

SHS Perforated Materials, Inc et al vs. Diaz

GR No. 185814, October 13, 2010

FACTS:

Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing
under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone
Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in
which capacity he determines the administration and direction of the day-to-day business affairs of SHS.
Petitioner Hinrich Johann Schumacher(Schumacher), also a German national, is the treasurer and one of
the board directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of
whatever nature upon maturity. Schumacher is also the Executive Vice-President of the European
Chamber of Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities
have an arrangement where ECCP handles the payroll requirements of SHS to simplify business
operations and minimize operational expenses. Thus, the wages of SHS employees are paid out by
ECCP, through its Accounting Services Department headed by Juliet Taguiang (Taguiang).

Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on
probationary status Respondent was also instructed by Hartmannshenn to report to the SHS office and
plant at least two (2) days every work week to observe technical processes involved in the manufacturing
of perforated materials, and to learn about the products of the company, which respondent was hired to
market and sell.

During respondents employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed through
telephone or mobile phone. When he would be in the Philippines, he and the respondent held meetings.
As to respondents work, there was no close supervision by him. During meetings with the respondent,
Hartmannshenn expressed his dissatisfaction over respondents poor performance.

On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondents salary. Later
that afternoon, respondent called and inquired about his salary. The next day, on November 30, 2005,
respondent served on SHS a demand letter and a resignation letter. Hartmannshenn then accepted
respondents resignation and informed him that his salary would be released upon explanation of his
failure to report to work, and proof that he did, in fact, work for the period in question. He demanded that
respondent surrender all company property and information in his possession. Respondent agreed to
these "exit" conditions through electronic mail. Instead of complying with the said conditions, however,
respondent sent another electronic mail message to Hartmannshenn and Schumacher on December 1,
2005, appealing for the release of his salary.

To settle the issue amicably, petitioners counsel advised respondents counsel by telephone that a
check had been prepared in the amount of P50,000.00, and was ready for pick-up on December 5, 2005.
On the same date, a copy of the formal reply letter relating to the prepared payment was sent to the
respondents counsel by facsimile transmission. Despite being informed of this, respondent never picked
up the check. Respondent countered that his counsel received petitioners formal reply letter only on
December 20, 2005, stating that his salary would be released subsequent to the turn-over of all materials
owned by the company in his possession. Respondent claimed that the only thing in his possession was a
sample panels folder which he had already returned and which was duly received by Taguiang on
November 30, 2005.
 Page 81 of 153
On December 9, 2005, respondent filed a Complaint against the petitioners for illegal dismissal; non-
payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages;
exemplary damages, and attorneys fees, costs of suit, and legal interest.

ISSUE:

Whether or not the temporary withholding of respondents salary/wages by petitioners was a valid
exercise of management prerogative.

Whether or not respondent voluntarily resigned.

Whether or not respondent was constructively dismissed by petitioners.

HELD:

1. Management prerogative refers "to the right of an employer to regulate all aspects of employment, such
as the freedom to prescribe work assignments, working methods, processes to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and
recall of work." Although management prerogative refers to "the right to regulate all aspects of
employment," it cannot be understood to include the right to temporarily withhold salary/wages without
the consent of the employee. To sanction such an interpretation would be contrary to Article 116 of the
Labor Code, which provides:

ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly
or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of
his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers
consent.
Any withholding of an employees wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

As correctly pointed out by the LA, "absent a showing that the withholding of complainants wages
falls under the exceptions provided in Article 113, the withholding thereof is thus unlawful." Although it
cannot be determined with certainty whether respondent worked for the entire period from November 16
to November 30, 2005, the consistent rule is that if doubt exists between the evidence presented by the
employer and that by the employee, the scales of justice must be tilted in favor of the latter in line with
the policy mandated by Articles 2 and 3 of the Labor Code to afford protection to labor and construe
doubts in favor of labor. For petitioners failure to satisfy their burden of proof, respondent is presumed to
have worked during the period in question and is, accordingly, entitled to his salary. Therefore, the
 Page 82 of 153
withholding of respondents salary by petitioners is contrary to Article 116 of the Labor Code and, thus,
unlawful.

2. The Court agrees with the LA and the CA that respondent was forced to resign. What made it impossible,
unreasonable or unlikely for respondent to continue working for SHS was the unlawful withholding of
his salary. For said reason, he was forced to resign. It is of no moment that he served his resignation
letter on November 30, 2005, the last day of the payroll period and a non-working holiday, since his
salary was already due him on November 29, 2005, being the last working day of said period. In fact, he
was then informed that the wages of all the other SHS employees were already released, and only his
was being withheld. What is significant is that the respondent prepared and served his resignation letter
right after he was informed that his salary was being withheld. It would be absurd to require respondent
to tolerate the unlawful withholding of his salary for a longer period before his employment can be
considered as so impossible, unreasonable or unlikely as to constitute constructive dismissal. Even
granting that the withholding of respondents salary on November 30, 2005, would not constitute an
unlawful act, the continued refusal to release his salary after the payroll period was clearly unlawful. The
petitioners claim that they prepared the check ready for pick-up cannot undo the unlawful withholding.

3. The Court agrees with the LA and the CA that the unlawful withholding of respondents salary amounts
to constructive dismissal.

Respondent was constructively dismissed and, therefore, illegally dismissed. Although respondent
was a probationary employee, he was still entitled to security of tenure. Section 3 (2) Article 13 of the
Constitution guarantees the right of all workers to security of tenure. In using the expression "all
workers," the Constitution puts no distinction between a probationary and a permanent or regular
employee. This means that probationary employees cannot be dismissed except for cause or for failure to
qualify as regular employees.
 Page 83 of 153
NIA JEWELRY MANUFACTURING OF METAL ARTS, INC. (otherwise known as NIA
MANUFACTURING AND METAL ARTS, INC.) and ELISEA B. ABELLA, vs. MADELINE C.
MONTECILLO and LIZA M. TRINIDAD,
G.R. No. 188169, November 28, 2011

Facts:
On August 13, 2004, Nia Jewelry imposed a policy for goldsmiths requiring them to post cash
bonds or deposits in varying amounts but in no case exceeding 15% of the latter's salaries per week. The
deposits were intended to answer for any loss or damage which Nia Jewelry may sustain by reason of
the goldsmiths' fault or negligence in handling the gold entrusted to them. The deposits shall be returned
upon completion of the goldsmiths' work and after an accounting of the gold received.

Said respondents defied same policy and were considered constructively dismissed by the company,
who only alleged that they stopped reporting to work. Respondents then filed complaint but same was
dismissed by the Labor Arbiter, only awarding them their 13 th month pay. They then elevated their
complaint to the NLCR minus the already-won 13th month pay.

Applying Article 113 and 114 of the Labor Code, the CA ruled in favor and awarding respondents.
Hence this petition for review

Issues:
Whether or not Rule 65 Petition for Certiorari was the proper remedy.

Whether or not the CA acted with grave abuse of discretion when it ruled that there was indeed
constructive dismissal and ordering the Respondents reinstatement and back wages and other monetary
benefits without factual or legal bases.

Whether or not the requirement of posting cash bonds or have the same deducted from the workers
salaries is proper.

Held:

NO. Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In
ruling for legal correctness, we have to view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of
whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct.
In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on
appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45
review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling on the case?

In certiorari proceedings under Rule 65 of the Rules of Court, the appellate court does not assess and
weigh the sufficiency of evidence upon which the Labor Arbiter and the NLRC based their conclusion.
The query in this proceeding is limited to the determination of whether or not the NLRC acted without or
in excess of its jurisdiction or with grave abuse of discretion in rendering its decision. However, as an
exception, the appellate court may examine and measure the factual findings of the NLRC if the same
are not supported by substantial evidence.
 Page 84 of 153

YES. Constructive dismissal occurs when there is cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay
or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to
the employee.

In the case now under our consideration, the petitioners did not whimsically or arbitrarily impose the
policy to post cash bonds or make deductions from the workers' salaries. As attested to by the
respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the
reason behind the implementation of the new policy. Instead of airing their concerns, the respondents just
promptly stopped reporting for work.

Although the propriety of requiring cash bonds seems doubtful for reasons to be discussed
hereunder, we find no grounds to hold that the respondents were dismissed expressly or even
constructively by the petitioners. It was the respondents who merely stopped reporting for work. While it
is conceded that the new policy will impose an additional burden on the part of the respondents, it was
not intended to result in their demotion. Neither is a diminution in pay intended because as long as the
workers observe due diligence in the performance of their tasks, no loss or damage shall result from their
handling of the gold entrusted to them, hence, all the amounts due to the goldsmiths shall still be paid in
full. Further, the imposition of the new policy cannot be viewed as an act tantamount to discrimination,
insensibility or disdain against the respondents. For one, the policy was intended to be implemented
upon all the goldsmiths in Nia Jewelry's employ and not solely upon the respondents. Besides, as
stressed by the petitioners, the new policy was intended to merely curb the incidences of gold theft in the
work place. The new policy can hardly be said to be disdainful or insensible to the workers as to render
their continued employment unreasonable, unlikely or impossible.

NO. While employers should generally be given leeways in their exercise of management
prerogatives, we agree with the respondents and the CA that in the case at bar, the petitioners had failed
to prove that their imposition of the new policy upon the goldsmiths under Nia Jewelry's employ falls
under the exceptions specified in Articles 113 and 114 of the Labor Code.

While the petitioners are not absolutely precluded from imposing the new policy, they can only do so
upon compliance with the requirements of the law. In other words, the petitioners should first establish
that the making of deductions from the salaries is authorized by law, or regulations issued by the
Secretary of Labor. Further, the posting of cash bonds should be proven as a recognized practice in the
jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by the
Secretary of Labor through the issuance of appropriate rules and regulations that the policy the former
seeks to implement is necessary or desirable in the conduct of business. The petitioners failed in this
respect. It bears stressing that without proofs that requiring deposits and effecting deductions are
recognized practices, or without securing the Secretary of Labor's determination of the necessity or
desirability of the same, the imposition of new policies relative to deductions and deposits can be made
subject to abuse by the employers. This is not what the law intends.
 Page 85 of 153
Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013

Facts: Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food
Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In addition to his
compensation and benefit package, a car was offered to him under which one-half of the cost of the vehicle
is to be paid by the company and the other half to be deducted from petitioner's salary. The car valued at
280,000 which Locsin paid through salary deductions of 5,000 per month.

On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his
monthly salary and applied as part of his share in the car plan. Upon resignation, petitioner made personal
and written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service
vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with the
company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood at
P116,380.00 if he opts to purchase the same.

On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a
Complaint for the recovery of monetary claims consisting of unpaid salaries, commissions, sick/vacation
leave benefits, and recovery of monthly salary deductions which were earmarked for his cost-sharing in the
car plan.

Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the service
vehicle under the car plan.

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

Under Article 22 of the Civil Code, every person who through an act of performance by another, or
any other means, acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him." Article 2142 of the same Code likewise clarifies that there are
certain lawful, voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to the
end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of specific
terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-
contractual relation was created between them. Consequently, Mekeni may not enrich itself by charging
petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective
promotion of its business. It may not, under the claim that petitioner's payments constitute rents for the use of
the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not carry
such a condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan
arrangement benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using
the vehicle was merely incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost of
the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in lieu
of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation package. The
vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to refund
petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart contribution to
the car plan, as this would unjustly enrich him at Mekeni's expense.
 Page 86 of 153

Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under the car
plan agreement amounting only to the extent of the contribution Locsin made, totalling to the amount of
P112,500.00.
 Page 87 of 153

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014

Facts: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union
(THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and Illegal
Lockout, with moral and exemplary damages and attorneys fees, against T&H Shopfitters Corporation
(T&H Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).

1st CAUSE:
In their desire to improve their working conditions, respondents and other employees of held their
first formal meeting on November 23, 2003 to discuss the formation of a union. The following day,
seventeen (17) employees were barred from entering petitioners factory premises located in Castillejos,
Zambales, and ordered to transfer to T&H Shopfitters warehouse at Subic Bay Freeport Zone (SBFZ)
purportedly because of its expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered
to go on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work assignments, while
subcontractors were continuously hired to perform their functions. Respondents sought the assistance of the
National Conciliation and Mediation Board. Subsequently, an agreement between petitioners and THS-GQ
Union was reached. Petitioners agreed to give priority to regular employees in the distribution of work
assignments. Respondents averred, however, that petitioners never complied with its commitment but instead
hired contractual workers. Instead, Respondents claimed that the work weeks of those employees in the
SBFZ plant were drastically reduced to only three (3) days in a month.

2nd CAUSE:
On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued
to hold the certification election in both T&H Shopfitters and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers and
members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of the field
trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the forthcoming
certification election.
When the certification election was scheduled on October 11, 2004, the employees were escorted from the
field trip to the polling center in Zambales to cast their votes. The remaining employees situated at the SBFZ
plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for "no union"
prevailed.

3rd CAUSE:
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed its
employees of the expiration of the lease contract between Gin Queen and its lessor in Castillejos, Zambales
and announced the relocation of its office and workers to Cabangan, Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland.
The said union officers and members were made to work as grass cutters in Cabangan, under the supervision
of a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees assigned in
Cabangan did not report for work. The other employees who likewise failed to report in Cabangan were
meted out with suspension.

PETITIONERS DEFENSE:
 Page 88 of 153
In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that there
is no employer-employee relationship between the former and respondents. Further, Gin Queen avers that its
decision to implement an enforced rotation of work assignments for respondents was a management
prerogative permitted by law, justified due to the decrease in orders from its customers, they had to resort to
cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a rotational basis. It
explains that its failure to present concrete proof of its decreasing orders was due to the impossibility of
proving a negative assertion. It also asserts that the transfer from Castillejos to Cabangan was made in good
faith and solely because of the expiration of its lease contract in Castillejos. It was of the impression that the
employees, who opposed its economic measures, were merely motivated by spite in filing the complaint for
ULP against it.

Issues: Whether ULP acts were committed by petitioners against respondents.

Ruling: ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly
Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.It shall be unlawful for an employer to commit
any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
xxxx
(c) To contract out services or functions being performed by union members when such will interfere
with, restrain, or coerce employees in the exercise of their right to self-organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization. x x x

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees,
to the exclusion of union members, before the scheduled certification election; 2) the active campaign by the
sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3)
escorting its employees after the field trip to the polling center; 4) the continuous hiring of subcontractors
performing respondents functions; 5) assigning union members to the Cabangan site to work as grass
cutters; and 6) the enforcement of work on a rotational basis for union members, taken together, reasonably
support an inference that, indeed, such were all orchestrated to restrict respondents free exercise of their
right to self-organization.

The Court is of the considered view those petitioners undisputed actions prior and immediately
before the scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its
employees in selecting their exclusive bargaining representative.
 Page 89 of 153

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

GR No. 181806, March 12, 2014

Facts: Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly

organized and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines
Faculty and Staff Association, on the other hand, is a duly registered labor organization acting as the sole and
exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.

On August 16, 2005, petitioner, through its President, Atty. Maglaya , issued a Memorandum
providing guidelines on the implementation of vacation and sick leave credits as well as vacation leave
commutation which states that vacation and sick leave credits are not automatic as leave credits would be
earned on a month-to-month and only vacation leave is commuted or monetized to cash which is effected
after the second year of continuous service of an employee.

Respondents questioned the guidelines for being violative of existing practices and the CBA which
provide that all covered employees are entitled to 15 days sick leave and 15 days vacation leave with pay
every year and that after the second year of service, all unused vacation leave shall be converted to cash and
paid to the employee at the end of each school year, not later than August 30 of each year.

Respondent file a grievance complaint on the implementation of the vacation and sick leave policy.
Petitioner also announced its plan of implementing a one-retirement policy which was unacceptable to
respondent.

Respondent submitted affidavits to prove that there is an established practice of giving two
retirement benefits, one from the Private Education Retirement Annuity Association (PERAA) Plan and
another from the CBA Retirement Plan.

The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the
Memorandum dated August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA
Plan are one and the same. It maintains that there is no established company practice or policy of giving two
retirement benefits to its employees. Respondent belies the claims of petitioner and asserts that there are two
retirement plans as the PERAA Retirement Plan, which has been implemented for more than 30 years, is
different from the CBA Retirement Plan. Respondent further avers that it has always been a practice of
petitioner to give two retirement benefits and that this practice was established by substantial evidence as
found by both the Voluntary Arbitrator and the CA.

Issue: Whether or not the respondents are entitled to two retirement plans.

Ruling: The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers
from eliminating or reducing the benefits received by their employees. This rule, however, applies only if the
benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered a
practice, it must be consistently and deliberately made by the employer over a long period of time.
Respondent was able to present substantial evidence in the form of affidavits to support its claim that there
 Page 90 of 153
are two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early
as 1997. Petitioner, on the other hand, failed to present any evidence to refute the veracity of these affidavits.
Petitioner's assertion that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan
are one and the same is not supported by any evidence.

The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available
leave credits of an employee at the start of the school year. The Memorandum dated imposes a limitation not
agreed upon by the parties nor stated in the CBA, so it must be struck down.
 Page 91 of 153
Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014,
Citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

Facts: The respondent was employed as a sales clerk and assigned at the petitioners boutique. Her primary
tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients,
cashiering and reporting to the accounting department. The petitioner learned that some of their employees
had access to their POS system with the use of a universal password given to them by a certain Elmer Flores,
who in turn learned of the password from the respondent. The petitioner then conducted an investigation and
asked the petitioner to explain why she should not be disciplinarily dealt with. During the investigation the
respondent was placed under preventive suspension. After investigation the petitioner terminated the
respondent on the grounds of loss of trust or confidence. This respondent was given her final wage and
benefits less the inventory variance incurred by the store. This urged the respondent to file a complaint for
illegal dismissal, illegal suspension, holiday pay, rest day and separation pay. The labor arbiter ruled in her
favour awarding her backwages. The petitioner appealed the decision in the NLRC and the decision was
reversed. However, upon the respondents petition for certiorari in the court of appeals the decision was
reinstated. Hence, this petition.

Issue: Whether the negative sales variance could be validly deducted from the respondents wage?

Ruling: No, it cannot be deducted in this case.

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The
Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. Where the employer is engaged in a trade,
occupation or business where the practice of making deductions or requiring deposits is recognized
to answer for the reimbursement of loss or damage to tools, materials, or equipment supplied by the
employer to the employee, the employer may make wage deductions or require the employees to
make deposits from which deductions shall be made, subject to the following conditions:
a) That the employee concerned is clearly shown to be responsible for the loss or damage;
b) That the employee is given reasonable opportunity to show cause why deduction should not
be made;
c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss
or damage; and
d) That the deduction from the wages of the employee does not exceed 20 percent of the
employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the
negative variance it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to
show cause the deduction from her last salary should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:

[T]he petitioners should first establish that the making of deductions from the salaries is authorized
by law, or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be
proven as a recognized practice in the jewelry manufacturing business, or alternatively, the
petitioners should seek for the determination by the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy the former seeks to implement is necessary or
 Page 92 of 153
desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that
without proofs that requiring deposits and effecting deductions are recognized practices, or without
securing the Secretary of Labor's determination of the necessity or desirability of the same, the
imposition of new policies relative to deductions and deposits can be made subject to abuse by the
employers. This is not what the law intends.
 Page 93 of 153
Netlink Computer Inc. vs. Delmo,
GR No. 160827, June 18, 2014

Facts:
Petitioner hired respondent as account manager tasked to canvass and source clients and convince
them to purchase the products and services of the petitioner. Respondent worked in the field most of the
time. He and his fellow account managers were not required to accomplish time cards to record their
personal presence in the office of the petitioner. He was able to generate sales worth P35,000,000.00, more
or less, from which he earned commissions amounting to P993,558.89 and US$7,588.30. He then requested
payment of his commissions, but the petitioner refused and only gave him partial cash advances chargeable
to his commissions. Later on, the petitioner began to nitpick and fault find, like stressing his supposed
absences and tardiness. In order to force him to resign, the petitioner issued several memoranda detailing his
supposed infractions of the companys attendance policy. Despite the memoranda, the respondent continued
to generate huge sales for the petitioner.

On November 28, 1996, the respondent was shocked when he was refused entry into the company
premises by the security guard pursuant to a memorandum to that effect. His personal belongings were still
inside the company premises and he sought their return to him. This incident prompted the respondent to file
a complaint for illegal dismissal.

In its answer to respondents complaint, the petitioner countered that there were guidelines regarding
company working time and its utilization and how the employees time would be recorded. Allegedly, all
personnel were required to use the bundy clock to punch in and out in the morning, and in and out in the
afternoon. Excepted from the rules were the company officers, and the authorized personnel in the field
project assignments. The petitioner claimed that it would be losing on the business transactions closed by
respondent due to the high costs of equipment, and in fact his biggest client had not yet paid. The petitioner
pointed out that the respondent had become very lax in his obligations, with the other account managers
eventually having outperformed him. The petitioner asserted that warning, reprimand, and suspension
memoranda were given to employees who violated company rules and regulations but such actions were
considered as a necessary management tool to instill discipline.

The CA ruled in favor of the respondent. The petitioner submits that the CA committed a palpable and
reversible error of law in not holding that the applicable exchange rate for computing the US dollar
commissions of the respondent should be the rates prevailing at the time when the sales were actually
generated, not the rates prevailing at the time of the payment; and in awarding attorneys fees.

In his comment, the respondent counters that because he had earned in US dollars it was only fair that
his commissions be paid in US dollars; that the petitioner should not be allowed a flip-flop after it had paid
commissions in US dollar on the sales generated by its sales agents on US-dollar denominated transactions;
and that attorneys fees were warranted because of the unanimous finding that there was violation of
procedural due process.

In its reply, the petitioner maintains that the commissions of respondent should be based on sales
generated, actually paid by and collected from the customers; that commissions must be paid on the basis of
the conversion of the US dollar to the Philippine peso at the time of sale; and that no cogent and justifiable
reason existed for the award of attorneys fees.

Issue:
Whether or not the payment of the commissions should be in US dollars; and whether or not the award of
attorneys fees was warranted.

Held: The appeal has no merit.

As a general rule, all obligations shall be paid in Philippine currency. However, the contracting parties
may stipulate that foreign currencies may be used for settling obligations. This is pursuant to RA 8183.
 Page 94 of 153
There was no written contract between the petitioner and respondent stipulating that the latters
commissions would be paid in US dollars. The absence of the contractual stipulation notwithstanding, the
petitioner was still liable to pay respondent in US dollars because the practice of paying its sales agents in
US dollars for their US dollar-denominated sales had become a company policy. This was impliedly admitted
by petitioner when it did not refute the allegation that the commissions earned by respondent and its other
sales agents had been paid in US dollars. Instead of denying the allegation, the petitioner only sought a
declaration that the US dollar commissions be paid using the exchange rate at the time of sale. The principle
of non-diminution of benefits, which as been incorporated in Article 100 of the Labor Code, forbade the
petitioner from unilaterally reducing, diminishing, discontinuing or eliminating the practice. Verily, the
phrase supplements, or other employee benefits in Article 100 is construed to mean the compensation and
privileges received by an employee aside from regular salaries or wages.

With the payment of US dollar commissions having ripened into a company practice, there is no way
that the commissions due to respondent were to paid in US dollars or their equivalent in Philippine currency
determined at the time of the sales. To rule otherwise would be cause an unjust diminution of the
commissions due and owing to Delmo. Finally, the SC affirms the following justification of the CA in
granting attorneys fees to respondent.
 Page 95 of 153
PLDT vs.Estranero,
GR No.192518, Oct 15, 2014

Facts:
Petitioner employed the respondent as an Auto-Mechanic/Electrician Helper, Job Grade 3 with a
monthly salary of P15,000.00 at the time of his separation from the service in 2003.

In the year 1995, petitioner adopted a company-wide Manpower Reduction Program (MRP), aimed at
reducing its work force. To commence with its program, petitioner offered the affected employees an
attractive redundancy pay consisting of 100% of their basic monthly salary for every year of service, in
addition to their retirement benefits, if entitled. For those who were not qualified to the retirement benefits,
they were offered separation or redundancy package of 200% of their basic monthly salary for every year of
service.

By virtue of the MRP, the respondents position was included in those declared as redundant.

Attracted by the separation pay offered by the company, the respondent expressed his conformity to
his inclusion in the MRP. In their inter-office Memorandum dated April 21, 2003, the respondent declared
that he has no objection to being included in the redundancy program of PLDT. After having signified his
intention and after approval thereof by his superior officers, the respondents name was included in the list of
redundant employees for that period and a Notice of Separation Due to Redundancy was submitted to the
Department of Labor and Employment on April 25, 2003. He was then made to sign a deed denominated as a
Receipt, Release and Quitclaim for his severance from employment, thus availed of the offered personnel
reduction program. Thereafter, PLDT proceeded to compute the respondents redundancy/separation
benefits. Thereafter, PLDT proceeded to compute the respondents redundancy/separation benefits.

Since his length of service was 7 years, 11 months and 15 days, which was rounded to 8 years, the
respondent was not qualified for retirement pay which required an employee to have worked for at least 15
years. The respondent was nonetheless entitled to 200% of his basic monthly salary for every year of service
by way of redundancy pay or equivalent to P240,000.00. In addition, he was also entitled to other benefits he
has earned for the years prior to, and during the year of his actual separation, i.e., 2002 and 2003 sick leave
benefits, 2002 and 2003 vacation leave and vacation leave premium benefits, longevity pay, mid-year bonus,
13th month pay and Christmas bonus, all in the sum of P27,028.37. Thus, his aggregate redundancy pay plus
other earned benefits amounted to P267, 028.37.

However, the respondent had outstanding liabilities arising from various loan he obtained from
different entities. Thus, PLDT deducted the said amount fro mthe payment that the respondent was supposed
to receive as his redundancy pay.
As a result, when the respondent was made to sign the Receipt, Release and Quitclaim, it showed that his
take home pay was in the amount of zero pesos. This prompted the respondent to retract his availment of
the separation pay package offered to him through a letter addressed to the company dated May 8, 2003.
Despite said retraction, howver, the respondent was no longer allowed to report for work.

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

Held: No.

It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The
Omnibus Rules Implementing the Labor Code, meanwhile, provides that deductions from the wages of the
employees may be made by the employer wen such deductions are authorized by law, or when the
deductions are with the written authorization of the employees payment to a third person. Thus, any
withholding of an employees wages by an employer may only be allowed in the form of wage deductions
under the circumstances provided in Article 113of the Labor Code, as well as the Omnibus Rules
 Page 96 of 153
implementing it. Further, Article 116 of the Labor Code clearly provides that it is unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker without the workers consent.

In this case, the deductions made to the respondents redundancy pay do not fall under any of the
circumstances provided under Article 113, nor was it established with certainty that the respondent has
consented to the said deductions or that the petitioners had authority to make such deductions.

As aptly stated by the CA, the matter would have been different if the deductions refer to the
respondent's contributions for his being a member of SSS, HDMF, or withholding taxes on income, because
if such was the case, the contributions are deductions already sanctioned by existing laws. Here, it is
evidently emphasized that the subject deductions pertain to the respondent's outstanding loans from various
entities. aDSIHc
Furthermore, the petitioners may not offset the outstanding loans of the respondent against the latter's
monetary benefits. The records expressly revealed that the respondent has obtained various loans from
different entities and not with PLDT. Accordingly, set-off or legal compensation cannot take place between
PLDT and the respondent because they are not mutually creditor and debtor of each other. Thus, there can be
no valid set-off because the respondent's creditor is not PLDT.

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

In fine, the Court rules that PLDT has no legal right to withhold the respondent's redundancy pay
and other benefits to recompense for his outstanding loan obligations to different entities. The respondent's
entitlement to his redundancy pay is mandated by law which the petitioners cannot unjustly deny.
 Page 97 of 153
Milan et al., vs. NLRC
GR No. 202961, February 4, 2015

Facts:
As Solid Mills employees, petitioners and their families were allowed to occupy SMI Village, a
property owned by Solid Mills (SM). According to SM, this was out of liberality and for the convenience of
its employees and on the condition that the employees would vacate the premises anytime the Company
deems fit.

In September 2003, petitioners were informed that effective October 10, 2003, SM would case its
operations due to serious business losses. NAFLU (representative of the petitioners) recognized SMs closure
due to serious business losses in the memorandum of agreement (MOA( dated Sept. 1, 2003. The MOA
provided for SMs grant of separation pay less accountabilities, accrued sick leave benefits, vacation leave
benefits, and 13th month pay to the employees.

SM filed its termination on Sept. 2, 2003. Later, SM sent to petitioners individual notices to vacate
SMI Village. Petitioners were no longer allowed to report for work by Oct. 10, 2003. They were required to
sign a MOA with release and quitclaim before their vacation and sick leave benefits, 13th month pay, and
separation pay would released. Employees who signed the MOA were considered to have agreed to vacate
SMI Village, and to the demolition of the constructed houses inside as a condition for the release of their
termination benefits and separation pay. Petitioners refused to sign the documents and demanded to be paid
their benefits and separation pay. Hence, petitioners filed complaints before the Labor Arbiter for alleged
non-payment of separation pay, accrued sick and vacation leaves, and 13th month pay. They argued that their
accrued benefits and separation pay should not be withheld because their payment is based on company
policy and practice. Moreover, the 13th month pay is based on law. Their possession of SM property is not
an accountability that is subject to clearance procedures. They had already turned over to SM their uniforms
and equipment when SM ceased operations. On the other hand, SM argue that petitioners complaint was
premature because they had not vacated its property.

Issue: 1) Whether or not the NLRC Commission has jurisdiction to determine an issue related to rights or
claims arising from an employer-employee relationship.
2) Whether or not SM is prohibited from withholding wages and elimination or diminution of benefits from
employees.

Held:
3. Yes. Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the NLRC, in its
appellate jurisdiction, may determine issues involving claims arising from employer-employee
relationship.
4. No. As a general rule, employers are prohibited from withholding wages from employees. The Labor
Code also prohibits the elimination of diminution of benefits. However, our law supports the employers
institution of clearance procedure before the release of wages. As an exception to the general rule that
wages may not be withheld and benefits may not be diminished. The Civil Code provides that the
employer is authorized to withhold wages for debts due. It may be true that not all employees enjoyed
the privilege of staying in respondent SM property. However, this alone does not imply this privilege
when enjoyed was not a result of the employer-employee relationship. Those who did avail of the
privilege were employees of SM. Petitioners possession should, therefore, be included in the term
accountability. Accountability means obligation or debt. Accountabilities of employees are personal.
They need not be uniform among all employees in order to be included in accountabilities incurred by
virtue of an employer-employee relationship. Withholding of payment by the employer does not mean
that the employer may revenge on its obligation to pay employees their wages, termination payments,
and due benefits. The employees benefits are also not being reduced. It is only subjected to the
condition that the employees return properties properly belonging to the employer. This is only
consistent with the equitable principle that no one shall be unjustly enriched or benefited at the expense
of another. For these reasons, the SC cannot hold that petitioners are entitled to interest of their
withheld separation benefits. These benefits were properly withheld by SM because of their refusal to
return its property.
 Page 98 of 153
Payment of Wages

Congson vs. NLRC

243 SCRA 260 (1995)

Facts:
Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on
various dates by petition'er as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per
tuna weighing thirty (30) to eighty (80) kilos per movement, that is, from the fishing boats down to
petitioner's storage plant at a load/unload cycle of work until the tuna catch reached its final
shipment/destination. They did the work of unloading tuna from fishing boats to truck haulers; unloading
them again at petitioner's cold storage plant for filing, storing, cleaning, and maintenance; and finally
loading the processed tuna for shipment. They worked seven (7) days a week. During the first week of
June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna movement due to
the scarcity of tuna. Private respondents resisted petitioner's proposed rate reduction. When they reported
for work the next day, they were informed that they had been replaced by a new set of workers, When
they requested for a dialogue with the management, they were instructed to wait for further notice. They
waited for the notice of dialogue for a full week but in vain.
Issue:
Whether or not the tuna liver and intestines respondents were entitled to retrieve should be considered as
forming a substantial part of respondents total wages.

Held:

Negative

The Labor Code expressly provides:

Article 102. Forms of Payment.. No. employer shall pay the wages of an employee by means of,
promissory notes, vouchers, coupons, tokens tickets, chits, or any object other than legal tender, even
when expressly requested by the employee.Payment of wages by check or money order shall be allowed
when such manner of payment is customary on the date of effectivity of this Code, or is necessary as
specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective
bargaining agreement.
Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of
legal tender combined with tuna liver and intestines runs counter to the above cited provision of the
Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both
parties in the employment agreement but even expressly requested by private respondents, does not
shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal
tender. The only instance when an employer is permitted to pay wages informs other than legal tender,
that is, by checks or money order, is when the circumstances prescribed in the second paragraph of
Article 102 are present.
 Page 99 of 153
North Davao Mining vs. NLRC
254 SCRA 721 (1996)

Facts:

Petitioner was incorporated in 1974 as a 100% privately-owned company. Later, the Philippine
National Bank (PNB) became part owner thereof as a result of a conversion into equity of a portion of
loans obtained by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to and
equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50
dated December 8, 1986, later turned them over to petitioner Asset Privatization Trust (APT). As of
December 31, 1990 the national government hold 81.8% of the common stock and 100% of the preferred
stock of said company.

Respondent Wilfredo Guillema is one among several employees of North Davao who were separated
by reason of the company's closure on May 31, 1992, and who were the complainants in the cases before
the respondent labor arbiter.

On May 31, 1992, petitioner completely ceased operations due to serious business reverses. From
1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos
(P3,000,000,000.00) per year, for each of the five years prior to its closure. All told, as of December 31,
1991, or five months prior to its closure, its total liabilities had exceeded its assets by 20,392 billion
pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased
operations, its remaining employees were separated and given the equivalent of 12.5 days' pay for every
year of service, computed on their basic monthly pay, in addition to the commutation to cash of their
unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation,
from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay
equivalent to thirty (30) days' pay for every year of service. Moreover, inasmuch as the region where
North Davao operated was plagued by insurgency and other peace and order problems, the employees
had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 1/2 hours' travel time by public transportation; this arrangement lasted from 1981
up to 1990.

Subsequently, a complaint was filed with respondent Labor Arbiter by respondent Wilfredo Guillema
and 271 other separated employees for: (1) additional separation pay of 17.5 days for every year of
service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5)
housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical
allowance, all of which amounted to P58,022,878.31 as computed by private respondent.

Issue:

Whether or not an employer whose business operations ceased due to serious business losses
reverses is obliged to pay separation pay to its employees separated by reason of such closure.

Whether or not time spent in collecting wages in a place other than the place of employment is
compensable notwithstanding that the same is done during official time.

Whether or not private respondents are entitled to transportation expenses in the absence of evidence
that these expenses were incurred.

Held:

I. Negative

Art. 283 of the Labor Code, which reads as follows:

Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
 Page 100 of 153
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year.

The underscored portion of Art. 283 governs the grant of separation benefits "in case of closures or
cessation of operation" of business establishments "NOT due to serious business losses or financial
reverses. Where, however, the closure was due to business losses, as in the instant case, in which the
aggregate losses amounted to over P20 billion, the Labor Code does not impose any obligation upon the
employer to pay separation benefits, for obvious reasons. There is no need to belabor this point.

The company's practice of giving one month's pay for every year of service could no longer be
continued precisely because the company could not afford it anymore. It was forced to close down on
account of accumulated losses of over P20 billion. It gave 30-days' separation pay to its employees when
it was still a going concern even if it was already losing heavily. As a going concern, its cash flow could
still have sustained the payment of such separation benefits. But when a business enterprise completely
ceases operations, i.e., upon its death as a going business concern, its vital lifeblood, its cashflow,
literally dries up. Therefore, the fact that less separation benefits ware granted when the company finally
met its business death cannot be characterized as discrimination. Such action was dictated not by a
discriminatory management option but by its complete inability to continue its business life due to
accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land.

As already stated, Art. 283 of the Labor Code does not obligate an employer to pay separation
benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional
separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is
proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of
the present case, the grant of a lesser amount of separation pay to private respondent was done, not by
reason of discrimination, but rather, out of sheer financial bankruptcy, a fact that is not controlled by
management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses
was a supervening fact that prevented the company from continuing to grant the more generous amount
of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any
separation benefits at all, although not required by law, and 12.5-days worth at that, should have elicited
admiration instead of condemnation. But to require it to continue being generous when it is no longer in
a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience.
The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the
employer.

The Solicitor General stresses that North Davao was among the assets transferred by PNB to the
national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was
constituted trustee of this government asset. He then concludes that "it would, therefore, be incongruous
to declare that the National Government, which should always be presumed to be solvent, could not pay
now private respondents' money claims." Such argumentation is completely misplaced. Even if the
national government owned or controlled 81.8% of the common stock and 100% of the preferred stock
of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing
jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the
indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of
the national government, hence, whether the latter be solvent or not is not material to the instant case.
The respondents have not shown that this case constitutes one of the instances where the corporate veil
may be pierced. From another angle, the national government is not the employer of private respondent
and his co-complainants, so there is no reason to expect any kind of bailout by the national government
under existing law and jurisprudence.
 Page 101 of 153
I. Affirmative

It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC
maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the
workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not
official.

Records also show that on February 12, 1992, when an inspection was conducted by the Department
of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it
was found out that petitioners had violated labor standards law, one of which is the place of payment of
wages.

Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:

Sec. 4. Place of payment. (a) As a general rule, the place of payment shall be at or near the place of
undertaking. Payment in a place other than the workplace shall be permissible only under the following
circumstances:

(1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace
and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or
other calamity rendering payment thereat impossible;

(2) When the employer provides free transportation to the employees back and forth; and

(3) Under any analogous circumstances; provided that the time spent by the employees in collecting their
wages shall be considered as compensable hours worked.

Thus, the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall
be considered compensable hours worked. Considering further the distance between Amacan, Maco to
Tagum which is 2 1/2 hours by travel and the risks in commuting all the time in collecting complainants'
salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for.

II. Affirmative

On the contrary, it will be petitioners' burden or duty to present evidence of compliance of the law on
labor standards, rather than for private respondents to prove that they were not paid/provided by
petitioners of their backwages and transportation expenses.

Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for
the transportation expenses incurred by complainants at P40.00 round trip fare during pay days.
 Page 102 of 153

Heirs of Sara Lee vs. Rey

GR No. 149013, August 31, 2006

Facts:
Petitioner Sara Lee is engaged in the direct selling of a variety of product lines for men and and
women. Petitioner engages with dealers to sell their merchandises, called as Independent Business
Managers, depending on whether they sell individually or through their own groups. Respondent held the
position of Credit Administration Supervisor. These dealers must remit to the petitioner the proceeds of
their sales within 38 days or 52 days. Sometime, it was alleged that she allegedly instructed the Accounts
Receivable Clerk to change the credit term of one of several IBMs from 52-day limit to a term of 60
days. As a consequence of the alleged anomalous practice, respondent was dismissed for breach of trust
and confidence.

Issue:
Whether or not the respondent was dismissed for a just cause.

Held:
Yes. The law has recognized the right of employers to dismiss the employees by reason of loss of
trust and confidence. The treatment of managerial employees for rank-and-file personnel in the
application of the doctrine of loss of trust and confidence however must be distinguished. With respect to
rank-and-file personnel, loss of trust and confidence as a ground for valid dismissal requires proof of
involvement in the alleged events and accusations. But as to managerial employees, the mere existence
of a basis for believing that such employee has breached the trust of his employer would suffice for his
dismissal. Hence, proof beyond reasonable doubt is not required. In the instant case, respondent is not
just an ordinary rank-and-file employee. Her position involves a high degree of responsibility requiring
trust and confidence. Hence, her continuance in the sensitive position would be inimical to the interests
of the petitioner.
 Page 103 of 153
Conditions of Employment

San Juan De Dios Hospital vs. NLRC

282 SCRA 316, 1997

Facts:
Petitioners requested respondent through a 4-page letter requesting for the implementation and
payment by respondent of 40 HOURS/5-DAY WORKWEEK with compensable 2 days off provided for
by the RA 5901 and clarified by the Secretary of Labors Policy Instructions. Because of the hospitals
failure to give a favorable response, petitioner filed a complaint.

Issue:
Whether or not the Policy Instructions No. 54 issued by then Labor Secretary Drilon is valid or not.

Held:
No. The Policy Instruction No. 54 relies on RA 5901. Such however is misplaced for the said statute
has been repealed by the passage of the Labor Code. Accordingly, only Article 83 of the Labor Code may
support the Policy Instructions on which such may be gauged.

A cursory reading of the Article 83 of the Labor Code betrays the position that hospital employees
are entitled to a full weekly salary with paid two days off if they have completed the 40-hour/5-day
workweek. What Article 83 provides are: regular office hours of eight hours a day, five days per week
for health personnel and on the 6 th day, such shall be entitled to an additional compensation of at least
30%. There is nothing in the law which supports the Secretarys assertion that when they have completed
the 40-hour/5-day workweek. Hence the Secretary exceeded his authority by including a two days off
with pay in contravention of the clear mandate of the statute.
 Page 104 of 153
Simerdarby vs. NLRC
289 SCRA 86, 1998

Facts:
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and
other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is
an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule effective 14 September 1992.

Since private respondent felt affected adversely by the change in the work schedule and
discontinuance of the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint
with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability.

However, the Labor Arbiter dismissed the complaint. Private respondent appealed to respondent
National Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the
appeal. 4 However, upon motion for reconsideration by private respondent, the NLRC, this time with two
(2) new commissioners replacing those who earlier retired, reversed its earlier decision of 20 April 1994
as well as the decision of the Labor Arbiter.

Issue:

Whether or not the act of management in revising the work schedule of its employees and discarding
their paid lunch break constitutive of unfair labor practice.

Held:
No. The right to fix the work schedules of the employees rests principally on their employer. In the
instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its
business operations and its improved production. It rationalizes that while the old work schedule
included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period
as they were "on call." Even if denominated as lunch break, this period could very well be considered as
working time because the factory employees were required to work if necessary and were paid
accordingly for working. With the new work schedule, the employees are now given a one-hour lunch
break without any interruption from their employer. For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this hour not only for eating but also for their rest and comfort
which are conducive to more efficiency and better performance in their work. Since the employees are
no longer required to work during this one-hour lunch break, there is no more need for them to be
compensated for this period. We agree with the Labor Arbiter that the new work schedule fully complies
with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new
schedule applies to all employees in the factory similarly situated whether they are union members or
not.

The change effected by management with regard to working time is made to apply to all factory
employees engaged in the same line of work whether or not they are members of private respondent
union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of
private respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the process, it may devise means to
attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives. Thus, management is free to
regulate, according to its own discretion and judgment, all aspects of employment, including hiring,
 Page 105 of 153
work assignments, working methods, time, place and manner of work, processes to be followed,
supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers
and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever
exigencies of the service so require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise.

While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every dispute will be automatically decided in favor of labor.
Management also has rights which, as such, are entitled to respect and enforcement in the interest of
simple fair play. Although this Court has inclined more often than not toward the worker and has upheld
his cause in his conflicts with the employer, such favoritism has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.
 Page 106 of 153

Philippines Airlines vs. NLRC

302 SCRA 582, 1999

Facts:

Private respondent was employed as flight surgeon at petitioner company. He was assigned at the
PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight.

On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner
at his residence, which was about five-minute drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a
heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him
of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately
rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief
Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private
respondent to explain why no disciplinary sanction should be taken against him.

In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that
he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he
arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the
hospital without waiting for him.

Finding private respondents explanation unacceptable, the management charged private respondent
with abandonment of post while on duty. He was given ten days to submit a written answer to the
administrative charge.

In his answer, private respondent reiterated the assertions in his previous explanation. He further
denied that he abandoned his post on February 17, 1994. He said that he only left the clinic to have his
dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the
emergency.

After evaluating the charge as well as the answer of private respondent, petitioner company decided
to suspend private respondent for three months effective December 16, 1994.

Private respondent filed a complaint for illegal suspension against petitioner.

Issue:

Whether or not the petitioner is correct in arguing that being a full-time employee, private
respondent is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may
not leave the company premises during such time, even to take his meals

Held:

The petitioner corporation is not correct.Supreme Court said:

Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work of any employee shall not exceed
eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or
in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the
 Page 107 of 153
exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in
which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this Article, health personnel shall include:
resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
(emphasis supplied)

Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for
their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:

Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not
less than twenty (20) minutes may be given by the employer provided that such shorter meal period is
credited as compensable hours worked of the employee;

(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;

(b) Where the establishment regularly operates not less than sixteen hours a day;

(c) In cases of actual or impending emergencies or there is urgent work to be performed on

machineries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and

(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private
respondents act, therefore, of going home to take his dinner does not constitute abandonment
 Page 108 of 153
Linton Commercial Co Inc, vs. Hellera et al
GR No 163147, October 10, 2007

Facts:
Linton is a domestic corporation engaged in the business of importation, wholesale, retail and
fabrication of steel and its by-products. Petitioner Desiree Ong is Lintons vice president. On 17
December 1997, Linton issued a memorandum addressed to its employees informing them of the
companys decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the
currency crisis that affected its business operations. Linton submitted an establishment termination report
to the Department of Labor and Employment (DOLE) regarding the temporary closure of the
establishment covering the said period. The companys operation was to resume on 6 January 1998.

On 7 January 1997, Linton issued another memorandum informing them that effective 12 January
1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other
words, each worker would be working on a rotation basis for three working days only instead for six
days a week. On the same day, Linton submitted an establishment termination report concerning the
rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for
its approval by DOLE.

Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays
with the Arbitration Branch of the NLRC on 17 July 1998.
Respondent: Linton implemented the reduction of work hours without observing Article 283 of the
Labor Code, which required submission of notice thereof to DOLE one month prior to the
implementation of reduction of personnel, since Linton filed only the establishment termination report
enacting the compressed workweek on the very date of its implementation.

Issue:
Whether or not had committed illegal reduction of work when it imposed a reduction of work hours
thereby affecting its employees.

Held:Affirmative

For the reduction of working hours to be valid, the following must be taken into consideration: the
arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel, there
was notice and consultations with the workers and supervisors, a consensus were reached on how to deal
with deteriorating economic conditions and it was sufficiently proven that the company was suffering
from losses.
A reduction of the number of regular working days is valid where the arrangement is resorted to by
the employer to prevent serious losses due to causes beyond his control, such as when there is a
substantial slump in the demand for his goods or services or when there is lack of raw materials.
A close examination of petitioners financial reports for 1997-1998 shows that, while the company
suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating
income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to
sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in
the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the
welfare of the employees, which in this case was done through a reduced workweek that resulted in an
unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at
the slightest indication of losses would be contrary to the States policy to afford protection to labor and
provide full employment.
 Page 109 of 153

Certainly, management has the prerogative to come up with measures to ensure profitability or loss
minimization. However, such privilege is not absolute. Management prerogative must be exercised in
good faith and with due regard to the rights of labor.
As previously stated, financial losses must be shown before a company can validly opt to reduce the
work hours of its employees. However, to date, no definite guidelines have yet been set to determine
whether the alleged losses are sufficient to justify the reduction of work hours. If the standards set in
determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e.,
suspension of work) of the Labor Code were to be considered, petitioners would end up failing to meet
the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the
employers operation of a business or undertaking for a period not exceeding six (6) months. Records
show that Linton continued its business operations during the effectivity of the compressed workweek,
which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any
claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred
are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment
is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the alleged
losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by
sufficient and convincing evidence. Linton failed to comply with these standards.
 Page 110 of 153

Bisig Manggagawa sa Tryco vs. NLRC

GR No. 151309, October 15, 2008

Facts:

Respondent Tryco Pharma Corp. received a letter dated March 26, 1997 from the Bureau of Animal
Industry of the Department of Agriculture reminding it that its production should be conducted in San
Rafael, Bulacan, not in Caloocan City.

Accordingly, respondent issued memoranda directing petitioners to report to the companys plant site in
Bulacan.

Petitioners opposed the transfer and filed a case for illegal dismissal with money claims against
respondent claiming that the transfer was tantamount to constructive dismissal. Is there merit to the
claim?

Issue:

Whether or not the dismissal was constructive

Held:

Furthermore, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless
of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of
its inherent right to control and manage its enterprise effectively. While the law is solicitous of the
welfare of employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to achieve its
purpose cannot be denied.

Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of
salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection
solely on the ground that it would cause them great inconvenience since they are all residents of Metro
Manila and they would incur additional expenses to travel daily from Manila to Bulacan.

The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a
claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal
inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid
reason to disobey an order of transfer.
 Page 111 of 153
Minimum Labor Standard Benefits
San Miguel Corp vs. CA
GR No. 146775, January 30, 2002

Facts:

On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office,
conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena,
Iligan City. In the course of the inspection, it was discovered that there was underpayment by SMC of
regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it
was received by and explained to its personnel officer. SMC contested the findings and DOLE
conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Still,
SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. Hence,
Director IV of DOLE Iligan District Office issued a compliance order, dated 17 December 1993,
directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-
Muslim employees holiday pay within thirty (30) days from the receipt of the order.

Issue:

Whether or not petitioner is liable to pay regular Muslim holiday pay to non-Muslim its employees.

Whether or not the Regional Director has jurisdiction.

Held:

Affirmative

Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No.
1083, otherwise known as the Code of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays:

(a) Amun Jadd (New Year), which falls on the first day of the first lunar month of Muharram;

(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third
lunar month of Rabi-ul-Awwal;

(c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the Prophet Muhammad), which
falls on the twenty-seventh day of the seventh lunar month of Rajab;

(d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and

(e) d-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhl-
Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially
observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato,
Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may
hereafter be created;

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially
observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides:
 Page 112 of 153
Art. 94. Right to holiday pay. -

(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall be paid
a compensation equivalent to twice his regular rate; x x x.

Petitioners arguments are untenable. We must remind the petitioner that wages and other
emoluments granted by law to the working man are determined on the basis of the criteria laid down
by laws and certainly not on the basis of the workers faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that nothing herein shall be
construed to operate to the prejudice of a non-Muslim.

In addition, the 1999 Handbook on Workers Statutory Benefits, approved by then DOLE Secretary
Bienvenido E. Laguesma on 14 December 1999 categorically stated:

Considering that all private corporations, offices, agencies, and entities or establishments operating
within the designated Muslim provinces and cities are required to observe Muslim holidays, both
Muslim and Christians working within the Muslim areas may not report for work on the days designated
by law as Muslim holidays.

II.

Affirmative

Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides:

Article 128. Visitorial and enforcement power. -

(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue compliance orders to give effect to the
labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of the
inspection. The Secretary or his duly authorized representative shall issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where the employer contests the
findings of the labor employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection.

In the case before us, Regional Director Macaraya acted as the duly authorized representative of the
Secretary of Labor and Employment and it was within his power to issue the compliance order to SMC.
In addition the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim
employees. Indeed, petitioner merely contends that its non-Muslim employees are not entitled to
Muslim holiday pay. Hence, the issue could be resolved even without documentary proofs. In any case,
there was no indication that Regional Director Macaraya failed to consider any documentary proof
presented by SMC in the course of the inspection.
 Page 113 of 153

Tan vs. Lagrama

GR No 151228, August 15, 2002

Facts:

On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi
na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When
Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-
drawing ka pa. Guikan karon, wala nay drawing.Gawas." ("Don't say anything further. I don't want you
to draw anymore. From now on, no more drawing. Get out.") Lagrama denied the charge against him. He
claimed that he was not the only one who entered the drawing area and that, even if the charge was true,
it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas"
("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with
the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally
dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary
differential, and damages.

Issue:

WON the respondent was illegally dismissed and thus entitled to payment of benefits provided by
law.

Held:

The respondent was illegally dismissed and entitled to benefits.

The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a
just or authorized cause provided by law and after due process. This provision has two aspects: (1) the
legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the
Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal
constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without
due process. In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of
his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed.
Urinating in a work place other than the one designated for the purpose by the employer constitutes
violation of reasonable regulations intended to promote a healthy environment under Art. 282(1) of the
Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here
there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his
work. Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter
found that the relationship between the employer and employee has been so strained that the latter's
reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the
grant of separation pay in lieu of reinstatement is appropriate. This is of course in addition to the
payment of backwages which, in accordance with the ruling in Bustamante v. NLRC should be
computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any
deduction or qualification.

The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1)
those whose time and performance is supervised by the employer, and (2) those whose time and
performance is unsupervised by the employer.
 Page 114 of 153

Lambo vs. NLRC

317 SCRA 420

Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents
J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They
worked from 8am to 7pm daily, including Sundays and holidays. As in the case of the other 100
employees of private respondents, petitioners were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal
and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service
incentive leave pay, separation pay, 13th month pay, and attorneys fees.

After hearing, Labor Arbiter found private respondents guilty of illegal dismissal.

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. The NLRC
held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for
13th month pay.

The decision of the NLRC is SET ASIDE and another one is rendered ordering private respondents
to pay petitioners the total amount of P181,102.40.

TWO CATEGORIES OF EMPLOYEES PAID BY RESULTS. There are 2 categories of

employees paid by results:
1. Those whose time and performance are supervised by the employer. (Here, there is an element of
control and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs in this category especially if he performs his work in the company premises.); and
2. Those whose time and performance are unsupervised. (Here, the employers control is over the
result of the work. Workers on pakyao and takay basis belong to this group.)

Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in
garment factories where work is done in the company premises, while payment on pakyao and takay
basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is
performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e.,
supervised employees.

The mere fact that petitioners were paid in a piece-rate basis does not negate their status as regular
employees of private respondents. In this case, private respondents exercised control over the work of
petitioners. As tailors, petitioners worked in the companys premises from 8am to 7pam daily, including
Sundays and holidays. The mere fact that petitioners were paid in a piece-rate basis does not negate their
status as regular employees of private respondents. The term WAGE is broadly defined in Article 97 of
the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether
fixed or ascertained on a time, task, piece or commission basis. Payment by the price is just a method of
compensation and does not define the essence of the relations. Nor does the fact that petitioners are not
covered by the SSS affect the employer-employee relationship.
 Page 115 of 153

Factors that show that petitioners although piece-rate workers, were regular employees of private
respondents.
(1) Within the contemplation of Article 280 of the Labor Code, their work as tailors was necessary or
desirable in the usual business of private respondents, which is engaged in the tailoring business;
(2) Petitioners worked for private respondents throughout the year, their employment not being
dependent on a specific project or season; and,
(3) Petitioners worked for private respondents for more than 1 year.
Not all quitclaims are per se invalid or against public policy; exceptions. To be sure, not all
quitclaims are per se invalid or against public policy. But those

(1) Where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person or
(2) Where the terms of settlement are unconscionable on their face are invalid.

In these cases, the law will step in to annul the questionable transaction. However, considering that
the Labor Arbiter had given the petitioner Lambo a total award of P94,719.20, the amount of P10,000 to
cover any and all monetary claims is clearly unconscionable. As we have held in another case, the
subordinate position of the individual employee vis--vis management renders him especially vulnerable
to its blandishments, importunings, and even intimidations, and results in his improvidently waiving
benefits too which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with
disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the
workers legal rights. An employee who is merely constrained to accept the wages paid to him is not
precluded from recovering the difference between the amount he actually received and that amount
which he should have received.
 Page 116 of 153

Asian Transmission vs. CA

425 SCRA 478, 2004

Facts:

The Department of Labor and Employment (DOLE), through Undersecretary, issued an Explanatory
Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200% of their
basic wage on April 9, 1993, whether unworked, which, apart from being Good Friday [and, therefore, a
legal holiday], is also Araw ng Kagitingan [which is also a legal holiday]. The bulletin reads:

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday
and Araw ng Kagitingan.

Despite the explanatory bulletin, petitioner opted to pay its daily paid employees only 100% of their
basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.

In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA)
existing between petitioner and BATLU, the controversy was submitted for voluntary arbitration.

On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decision directing petitioner to
pay its covered employees "200% and not just 100% of their regular daily wages for the unworked April
9, 1998 which covers two regular holidays, namely, Araw ng Kagitignan and Maundy Thursday."

Issue:

Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on
the same day.

Held:

Affirmative

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall
afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the
workers on account of work interruptions. In other words, although the worker is forced to take a rest, he
earns what he should earn, that is, his holiday pay." It is also intended to enable the worker to participate
in the national celebrations held during the days identified as with great historical and cultural
significance.

Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of
August), Bonifacio Day (November 30) and Rizal Day (December 30) were declared national holidays
to afford Filipinos with a recurring opportunity to commemorate the heroism of the Filipino people,
promote national identity, and deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally
reserved to celebrate the contributions of the working class to the development of the nation, while the
religious holidays designated in Executive Order No. 203 allow the worker to celebrate his faith with his
family.

ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good Friday, the
ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth and thirtieth of December and the day designated by law for holding a general election,
 Page 117 of 153
which was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays
are now:

1. New Years Day January 1

2. Maundy Thursday Movable Date

3. Good Friday Movable Date

4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)

5. Labor Day May 1

6. Independence Day June 12

7. National Heroes Day Last Sunday of August

8. Bonifacio Day November 30

9. Christmas Day December 25

10. Rizal Day December 30

As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten
paid regular holidays. The provision is mandatory, regardless of whether an employee is paid on a
monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory
benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular
holidays, the fact that two holidays fall on the same date should not operate to reduce to nine the ten
holiday pay benefits a worker is entitled to receive.

In the case at bar, there is nothing in the law which provides or indicates that the entitlement to ten
days of holiday pay shall be reduced to nine when two holidays fall on the same day.

In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation
of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For
the working mans welfare should be the primordial and paramount consideration.

Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides
that "Nothing in the law or the rules shall justify an employer in withdrawing or reducing any benefits,
supplements or payments for unworked regular holidays as provided in existing individual or collective
agreement or employer practice or policy.

Furthermore, from the pertinent provisions of the CBA entered into by the parties, petitioner had
obligated itself to pay for the legal holidays as required by law.
 Page 118 of 153

Autobus Transport System vs Bautista

GR No 156364, May 16, 2005

Facts:
Since 24 May 1995, Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.
(Autobus), as driver-conductor. While respondent was driving Autobus No. 114 along Sta. Fe, Nueva
Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter
vehicle suddenly stopped at a sharp curve without giving any warning.

Respondent averred that the accident happened because he was compelled by the management to go
back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just
arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until
he fully paid the amount of Php 75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondents pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of termination.

Issue:
Whether or not respondent is entitled to service incentive leave.

Held:
Petitioners contention that respondent is not entitled to the grant of service incentive leave just
because he was paid on purely commission basis is misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is
a field personnel.

According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office
of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty.

It is necessary to stress that the definition of a field personnel is not merely concerned with the
location where the employee regularly performs his duties but also with the fact that the employees
performance is unsupervised by the employer. As discussed above, field personnel are those who
regularly perform their duties away from the principal place of business of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to
conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employees time and performance are constantly supervised by the
employer.
 Page 119 of 153

San Miguel Corp vs. Del Rosario

GR No. 168194, December 13, 2005

Facts:
On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9,
2001, petitioner informed respondent that her probationary employment will be severed at the close of
the business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioners
premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and
underpayment/non-payment of monetary benefits.

Issue:
Whether or not respondent is a regular employee of petitioner.

Held:
Affirmative:

In termination cases, like the present controversy, the burden of proving the circumstances that
would justify the employees dismissal rests with the employer. The best proof that petitioner should
have presented to prove the probationary status of respondent is her employment contract. None, having
been presented, the continuous employment of respondent as an account specialist for almost 11 months,
from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary
reliever or a probationary employee.

And while it is true that by way of exception, the period of probationary employment may exceed six
months when the parties so agree, such as when the same is established by company policy, or when it is
required by the nature of the work, none of these exceptional circumstance were proven in the present
case. Hence, respondent whose employment exceeded six months is undoubtedly a regular employee of
petitioner.

Moreover, even assuming that the employment of respondent from April 7, 2000 to September 3,
2000, is only temporary, and that the reckoning period of her probationary employment is September 4,
2000, she should still be declared a regular employee because by the time she was dismissed on March
12, 2001, her alleged probationary employment already exceeded six months, i.e., six months and eight
days to be precise. A worker was found to be a regular employee notwithstanding the presentation by
the employer of a Payroll Authority indicating that said employee was hired on probation, since it was
shown that he was terminated four days after the 6 th month of his purported probationary employment.

Neither will petitioners belated claim that respondent became a probationary employee starting
October 1, 2000 work against respondent. As earlier stated, the payroll authorities indicating that
respondents probationary status became effective as of such date are of scant evidentiary value since it
does not show the conformity of respondent. At any rate, in the interpretation of employment contracts,
whether oral or written, all doubts must be resolved in favor of labor.
Hence, the contract of employment in the instant case, which appears to be an oral agreement since
no written form was presented by petitioner, should be construed as one vesting respondent with a
regular status and security of tenure.
Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code, exists where
the services of an employee are in excess of what is reasonably demanded by the actual requirements of
 Page 120 of 153
the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a
position or positions may be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise.

The determination that the employees services are no longer necessary or sustainable and, therefore,
properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of
this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is
no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other
words, it is not enough for a company to merely declare that it has become overmanned. It must produce
adequate proof of such redundancy to justify the dismissal of the affected employees.

The following evidence may be proffered to substantiate redundancy: the new staffing pattern,
feasibility studies/proposal, on the viability of the newly created positions, job description and the
approval by the management of the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and a memorandum of the
company both to the effect that there is a need to redeploy its regular employees and terminate the
employment of temporary employees, in view of an excess in manpower. These documents, however, do
not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to
support a conclusion.

Moreover, the lingering doubt as to the existence of redundancy or of petitioners so called

restructuring, realignment or reorganization which resulted in the dismissal of not only probationary
employees but also of regular employees, is highlighted by the non-presentation by petitioner of the
required notice to the DOLE and to the separated employees. If there was indeed a valid redundancy
effected by petitioner, these notices and the proof of payment of separation pay to the dismissed regular
employees should have been offered to establish that there was excess manpower in petitioners GMA-
KAG caused by a decline in the sales volume.

In balancing the interest between labor and capital, the prudent recourse in termination cases is to
safeguard the prized security of tenure of employees and to require employers to present the best
evidence obtainable, especially so because in most cases, the documents or proof needed to resolve the
validity of the termination, are in the possession of employers. A contrary ruling would encourage
employers to prevent the regularization of an employee by simply invoking a feigned or unsubstantiated
redundancy program.

Granting that petitioner was able to substantiate the validity of its reorganization or restructuring, it
nevertheless, failed to effect a fair and reasonable criterion in dismissing respondent. The criteria in
implementing a redundancy are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and
(c) seniority.

It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its sales
unit was the employment status of the employee. However, in the implementation thereof, petitioner
erroneously classified respondent as a probationary employee, resulting in the dismissal of the
latter. Verily, the absence of criteria and the erroneous implementation of the criterion selected, both
render invalid the redundancy because both have the ultimate effect of illegally dismissing an
employee.II. Affirmative. Considering that respondent was illegally dismissed, she is entitled not only
to reinstatement but also to payment of full backwages, computed from the time her compensation was
actually withheld from her on March 13, 2001, up to her actual reinstatement. As a regular employee of
petitioner from the date of her employment on April 17, 2000, she is likewise entitled to other benefits,
 Page 121 of 153
th
i.e., service incentive leave pay and 13 month pay computed from such date also up to her actual
reinstatement.

Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly
paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the
Labor Code, employees who are uniformly paid by the month, irrespective of the number of working
days therein, shall be presumed to be paid for all the days in the month whether worked or not.

Anent attorneys fees, in actions for recovery of wages or where an employee was forced to litigate
and thus incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary
award by way of attorneys fees is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII,
Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of
attorneys fees is proper and there need not be any showing that the employer acted maliciously or in bad
faith when it withheld the wages. There need only be a showing that the lawful wages were not paid
accordingly, as in the instant controversy.
 Page 122 of 153

Penaranda vs. Baganga Plywood Corp

GR No. 159577, May 3, 2006

Facts:
Sometime in June 1999, petitioner Charlito Penaranda was hired as an employee of Baganga
Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler.
In May 2001, Penaranda filed a complaint for illegal dismissal with money claims against BPC and its
general manager, Hudson Chua, before the NLRC.

Petitioner alleged that he was employed y respondent on March 15, 1999 with a monthly salary of
5,000 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated; also that he was not paid
is overtime time pay, premium pay, night shift differentials and finally claims for payment of damages
and attorneys fees having been forced to litigate the present complaint.

Upon the other hand respondent allege that petitioners separation was done pursuant to Art. 283 of
the Labor Code. The respondent was on temporary closure due to repair and general maintenance and it
applied for clearance with DOLE to shut down and dismiss employees. And that the petitioner was paid
his separation benefits. Consequently, when respondent reopened in January 2001, petitioner failed to
reapply. Hence he was not terminated illegally. He opted to severe employment when he insisted
payment of his separation benefits. Furthermore, being a managerial employee he is not entitled to
overtime pay and if ever he rendered services beyond the normal hours of work, there was no office
order or authorization for him to do so.

The labor arbiter found that Penaranda is a regular, common employee entitled to monetary benefits
under art. 82, LC. NLRC reversed the ruling and the CA affirmed.

Held:
Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards.
Labor standards provide the working condition of the employees, including entitlement of the overtime
pay and premium pay. Under this provision managerial employees are those whose primary duty consists
of the management of the establishment in which they are employed or of a
department or subdivision.

However, the Court disagrees with the findings of the NLRCs that petitioner was a managerial
employee. Even if petitioner was a member of the managerial staff, which also takes him out of coverage
of labor standards. Like managerial employees, officers and members of the managerial staff are not
entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code define
members of the managerial staff as those with the following duties and responsibilities:

a. The primary duty consists of the performance of work directly related to management
policies of the employer.
b. Customarily and regularly exercise discretion and independent judgment.
c. Regularly and directly assists a proprietor or managerial employee whose primary duty
consist of management of the establishment in which he is employed or subdivision thereof; or
execute under general supervision work along specialized or technical lines requiring special
training, experience or knowledge; or execute under general supervision special assignments and
task; and
 Page 123 of 153
d. Who do not devote 20 percent of their hours worked in a work week to activities which are
not directly and closely related to the performance of the works described in paragraphs 1,2, and 3
above.

Shift engineer petitioners duties and responsibilities are as follows 1) to supply the required and
continuous steam to all consuming units at minimum cost, 2) to supervise, check, and monitor manpower
workmanship as well as operation of boiler and accessories, 3) to evaluate performance of machinery
and manpower, 4) to follow-up supply of waste and other materials for fuel, 5) to train new employees
for effective and safety while working, 6) recommend parts and supplies purchases, 7) to recommend
personnel actions such as promotion or a disciplinary action, 8) to check water from the boiler,
feedwater, and softener, regenerate softener if beyond hardness limit, 9) implement chemical dosing and
10) perform other task as required by the superior from time to time.

The foregoing enumerations particularly items 1, 2, 3, 5, and 7 illustrates that petitioner was a
managerial staff. His duties and responsibilities conform to the definition of a member of a managerial
staff under the implementing rules.

Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing
the operation of the machines and the performance of the workers in the engineering section. These
works necessarily requires the use of discretion and independent judgment to ensure the proper
functioning of the steam plant boiler. As supervisor petitioner is deemed a member of the managerial
staff.

On the basis of the foregoing, the Court finds no jurisdiction to award overtime pay and premium
pay for rest days to petitioner.
Petition DENIED.
 Page 124 of 153

Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU

GR No 1577745

Facts

On April 6, 1998, petitioner and respondent entered into a Collective Bargaining Agreement (CBA)
covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On
June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to
petitioner demanding holiday pay for all employees, as provided for in the CBA. On June 20, 2000,
petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining that after perusing all
available pay slips, it found that it had paid all employees all the holiday pays enumerated in the CBA.

After exhausting the procedures of the grievance machinery, the parties agreed to submit the issues
of the interpretation and implementation of Section 2, Article VIII of the CBA on the payment of holiday
pay, for arbitration of the National Conciliation and Mediation Board (NCMB), Regional Office No. VIII
in Tacloban City. The parties were required to submit their respective position papers, after which the
dispute was submitted for decision.

On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision in favor of
respondent, holding petitioner liable for payment of unpaid holidays from 1998 to 2000 in the sum of
P1,054,393.07. On April 11, 2001, petitioner filed a Motion for Reconsideration but it was denied by the
Voluntary Arbitrator in a Resolution dated June 17, 2002. Petitioner received said Resolution on June
27, 2002.

Thirty days later, or on July 27, 2002, petitioner filed a Petition for Certiorari in the CA. In a
Resolution dated September 4, 2002, the CA dismissed outright petitioner's Petition for Certiorari for
adopting a wrong mode of appeal.

Petitioner filed a Motion for Reconsideration but it was denied by the CA in a Resolution dated
February 28, 2003.

Issue

Whether or not a petition for certiorari under Rule 65 of the Rules of Court instead of Rule 43 is proper.

Whether or not the Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips.

Held:

I. Negative

A voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial
agency; hence, his decisions and awards are appealable to the CA. This is so because the awards of
voluntary arbitrators become final and executory upon the lapse of the period to appeal; and since their
awards determine the rights of parties, their decisions have the same effect as judgments of a court.
Therefore, the proper remedy from an award of a voluntary arbitrator is a petition for review to the CA,
following Revised Administrative Circular No. 1-95, which provided for a uniform procedure for
appellate review of all adjudications of quasi-judicial entities

This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities not
expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute.
Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly
by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary
arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.
 Page 125 of 153
Thus, the general rule is that the proper remedy from decisions of voluntary arbitrators is a petition
for review under Rule 43 of the Rules of Court.

Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper
remedy for one who complains that the tribunal, board or officer exercising judicial or quasi-judicial
functions acted in total disregard of evidence material to or decisive of the controversy.

In addition, while the settled rule is that an independent action for certiorari may be availed of only
when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law and
certiorari is not a substitute for the lapsed remedy of appeal, there are a few significant exceptions when
the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal, namely:
(a) when public welfare and the advancement of public policy dictate; (b) when the broader interests of
justice so require; (c) when the writs issued are null; and (d) when the questioned order amounts to an
oppressive exercise of judicial authority.

In this case, while the petition was filed on July 27, 2002, 15 days after July 12, 2002, the expiration
of the 15-day reglementary period for filing an appeal under Rule 43, the broader interests of justice
warrant relaxation of the rules on procedure. Besides, petitioner alleges that the Voluntary Arbitrators
conclusions have no basis in fact and in law; hence, the petition should not be dismissed on procedural
grounds.

II. Affirmative

Such literal interpretation ignores the admission of respondent in its Position Paper that the
employees were paid all the days of the month even if not worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation of employees salaries gains significance.

The divisor assumes an important role in determining whether or not holiday pay is already included
in the monthly paid employees salary and in the computation of his daily rate.

In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above
the minimum, indubitably, petitioner's employees are being given their holiday pay.

Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In
granting respondent's claim of non-payment of holiday pay, a double burden was imposed upon
petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof
had already been included in the computation of their monthly salaries. Moreover, it is absurd to grant
respondent's claim of non-payment when they in fact admitted that they were being paid all of the days
of the month even if not worked. By granting respondent's claim, the Voluntary Arbitrator sanctioned
unjust enrichment in favor of the respondent and caused unjust financial burden to the petitioner.
Obviously, the Court cannot allow this.

While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute would automatically be decided in favor of
labor. Management also has it own rights which, as such, are entitled to respect and enforcement in the
interest of simple fair play. Out of concern for those with less privileges in life, this Court has inclined
more often than not toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and the applicable law and doctrine.
Page 126 of 153
 Page 127 of 153

Bahia Shipping Services vs. Chua

GR No. 162195, April 8, 2008

Facts:

Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping
Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a
Philippine Overseas Employment Administration (POEA) approved employment contract dated October
9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996,
the private respondent left Manila for Heathrow, England to board the said sea vessel where he will be
assigned to work.

On February 15, 1997, the private respondent reported for his working station one and one-half (1)
hours late. On February 17, 1997, the master of the vessel served to the private respondent an official
warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship
captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on
March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and
undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the
said dismissal notice.

On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary
claims.

Issue:

Whether or not the CA acted properly in altering the LA and NLRCs decision when it was not
questioned by respondent.

Whether or not in the computation of the award, respondennts guaranteed overtime pay should be
included as part of his salary.

Held:

1. Affirmative

It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled to
payment of his salary for the unexpired portion of his contract, as provided under Republic Act (R.A.)
No. 8042, considering that his employment was pre-terminated on March 9, 1997 or four months prior to
the expiration of his employment contract on July 17, 1997.

However, the LA limited the award to an amount equivalent to respondent's salary for three months.
The NLRC affirmed said award but deducted therefrom his salary for one day as penalty for the
tardiness incurred. The CA affirmed the one-day salary deduction imposed by the NLRC but removed
the three months - salary cap imposed by the LA. In effect, as this particular monetary award now
stands, it is to be computed based on the salary of respondent covering the period March 9, 1997 to July
17, 1997, less his salary for one day.

Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and can
no longer obtain from the appellate court any affirmative relief other that what was already granted under
said judgment..However, when strict adherence to such technical rule will impair a substantive right,
such as that of an illegally dismissed employee to monetary compensation as provided by law, then
equity dictates that the Court set aside the rule to pave the way for a full and just adjudication of the case.

Thee Court of Appeals is imbued with sufficient authority and discretion to review matters, not
otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a
 Page 128 of 153
complete and just resolution of the case or to serve the interests of justice or to avoid dispensing
piecemeal justice.

Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to his
salaries for the unexpired portion of the employment contract or for three (3) months for every year of
the unexpired term, whichever is less.

The second option which imposes a three months salary cap applies only when the term of the
overseas contract is fixed at one year or longer; otherwise, the first option applies in that the overseas
worker shall be entitled payment of all his salaries for the entire unexpired period of his contract.

In Skippers Pacific, Inc. v. Mira, wherein the overseas contract involved was only for six months, the
Court held that it is the first option provided under Section 10 of R.A. No. 8042 which is applicable in
that the overseas worker who was illegally dismissed is entitled to payment of all his salaries covering
the entire unexpired period of his contract. The CA committed no error in adhering to the prevailing
interpretation of Section 10 of R.A. No. 8042.

2. Negative

Although an overseas employment contract may guarantee the right to overtime pay, entitlement to
such benefit must first be established, otherwise the same cannot be allowed.

Hence, it being improbable that respondent rendered overtime work during the unexpired term of his
contract, the inclusion of his guaranteed overtime pay into his monthly salary as basis in the
computation of his salaries for the entire unexpired period of his contract has no factual or legal basis
and the same should have been disallowed.
 Page 129 of 153

PNCC Skyway Traffic Management and Security Division Works Organization

GR No 171231, February 17, 2010

Facts:

Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor
and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly
organized and operating under and by virtue of the laws of the Philippines. They entered
into CBA. pertinent provisions are as follows:

ARTICLE VIII

VACATION LEAVE AND SICK LEAVE

Section 1. Vacation Leave.

[b] T he company shall schedule the vacation leave of employees during

the year taking into consideration the request of preference of the

employees.

PNCC then created a schedule of leaves for their employees. Petitioner objected to the implementation of
the said memorandum. It insisted that the individual members of the union have the right to schedule
their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was done
to avoid the monetization of their vacation leave in December 2004.

Issue:

WON the PNCC has the sole discretion to schedule the vacation leaves of its employees.

Held:

YES. Petitioner insisted that their union members have the preference in scheduling their vacation
leave. On the other hand, respondent argued that Article VIII, Section 1 (b) gives the management the
final say regarding the vacation leave schedule of its employees. Respondent may take into consideration
the employees' preferred schedule,but the same is not controlling.

The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be gathered
from that language, and from that language alone. Stated differently, where the language of a written
contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports
to mean, unless some good reason can be assigned to show that the words used should be understood in a
different sense.

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section
1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of
the employer.

Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the

contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must
 Page 130 of 153
be strictly adhered to and respected if its ends have to be achieved, being the law between the parties. In
Faculty Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, this Court held that
the CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its
terms and conditions constitute the law between the parties. The parties cannot be allowed to change the
terms they agreed upon on the ground that the same are not favorable to them. The purpose of a vacation
leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and
acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him
additional salary and bounty. Accordingly, the vacation leave privilege was not intended to serve as
additional salary,but as a non- monetary benefit. To give the employees the option not to consume it with
the aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave.

Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the option
of the employees, as the public using the skyway system should be assured of its safety, security and
convenience. Petitioner's contention that labor contracts should be construed in favor of the laborer is
without basis and, therefore, inapplicable to the present case. This rule of construction does not benefit
petitioners because, as stated, there is here no room for interpretation. Since the CBA is clear and
unambiguous, its terms should be implemented as they are written.
 Page 131 of 153

Radio Mindanao Network, Inc. And Eric S. Canoy, vs. Domingo Z. Ybarola, Jr.
And Alfonso E. Rivera, Jr., [G.R. No. 198662. September 12, 2012.

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by Radio Mindanao Network (RMN). They eventually became account managers,
soliciting advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims,
including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for Ybarola and
P40,000.00 for Rivera.

Issue: Whether the amounts the respondents received represented a fair and reasonable settlement of their
claims

Held: The petitioners insist that the respondents' commissions were not part of their salaries, because they
failed to present proof that they earned the commission due to actual market transactions attributable to them.
They submit that the commissions are profit-sharing payments which do not form part of their salaries. We
are not convinced. If these commissions had been really profit-sharing bonuses to the respondents, they
should have received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received
P372,173.11 and P586,998.50 commissions, respectively, in 2002. The variance in amounts the respondents
received as commissions supports the CA's finding that the salary structure of the respondents was such that
they only received a minimal amount as guaranteed wage; a greater part of their income was derived from
the commissions they get from soliciting advertisements; these advertisements are the "products" they sell.
As the CA aptly noted, this kind of salary structure does not detract from the character of the commissions
being part of the salary or wage paid to the employees for services rendered to the company, as the Court
held in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding
the "proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and
Ybarola and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years of service with
the company; he was not shortchanged and no essential unfairness took place. In this case, as the CA noted,
the separation pay the respondents each received was deficient by at least P400,000.00; thus, they were given
only half of the amount they were legally entitled to. To be sure, a settlement under these terms is not and
cannot be a reasonable one, given especially the respondents' length of service 25 years for Ybarola and
19 years for Rivera. The CA was correct when it opined that the respondents were in dire straits when they
executed the release/quitclaim affidavits. Without jobs and with families to support, they dallied in executing
the quitclaim instrument, but were eventually forced to sign given their circumstances.
 Page 132 of 153

Robina Farm Cebu/Universal Robina Corporation, petitioner, vs. Elizabeth Villa, respondent.

Facts:

Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension, illegal
dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay in the Regional
Arbitration Branch No. VII of the NLRC in Cebu City

Villa averred that she had been employed by petitioner Robina Farms as sales clerk since August
1981; that in the later part of 2001, the petitioner had enticed her to avail herself of the company's special
retirement program; that on March 2, 2002, she had received a memorandum from Lily Ngochua requiring
her to explain her failure to issue invoices for unhatched eggs in the months of January to February 2002;
that she had explained that the invoices were not delivered on time because the delivery receipts were
delayed and overlooked; that despite her explanation, she had been suspended for 10 days from March 8,
2012 until March 19, 2002; that upon reporting back to work, she had been advised to cease working because
her application for retirement had already been approved; that she had been subsequently informed that her
application had been disapproved, and had then been advised to tender her resignation with a request for
financial assistance

The petitioner admitted that Villa had been its sales clerk at Robina Farms. It stated that on
December 12, 2001, she had applied for retirement under the special privilege program offered to its
employees in Bulacan and Antipolo who had served for at least 10 years; that in February 2002, her attention
had been called by Anita Gabatan of the accounting department to explain her failure to issue invoices for the
unhatched eggs for the month of February; that she had explained that she had been busy; that Gabatan had
referred the matter to Florabeth Zanoria who had in turn relayed the matter to Ngochua; and that the latter
had then given Villa the chance to explain, which she did.

The petitioner added that after the administrative hearing Villa was found to have violated the
company rule on the timely issuance of the invoices; that after serving the suspension, she had returned to
work and had followed up her application for retirement with Lucina de Guzman, who had then informed her
that the management did not approve the benefit equivalent to 86% of her salary rate applied for, but only 1/2
month for every year of service; and that disappointed with the outcome, she had then brought her complaint
against the petitioners

ISSUE:

WHETHER OR NOT VILLA WAS ILLEGALLY DISMISSED AFTER HER APPLICATION FOR
RETIREMENT PLAN

RULING:

Neither did Villa's application for early retirement manifest her intention to sever the employer-
employee relationship. Although she applied for early retirement, she did so upon the belief that she would
receive a higher benefit t based on the petitioner's offer. As such, her consent to be retired could not be fairly
deemed to have been knowingly and freely given. Retirement is the result of a bilateral act of both the
employer and the employee based on their voluntary agreement that upon reaching a certain age, the
employee agrees to sever his employment.

In case of early retirement programs, the offer of benefits must be certain while acceptance to be
retired should be absolute.

The petitioner posits that the CA erroneously affirmed the giving of overtime pay and service
incentive leave pay to Villa; that she did not adduce proof of her having rendered actual overtime work; that
she had not been authorized to render overtime work; and that her availment of vacation and sick leaves that
had been paid precluded her claiming the service incentive leave pay.
 Page 133 of 153
This Court rules entitlement to overtime pay must first be established by proof that the overtime
work was actually performed before the employee may properly claim the benefit. The burden of proving
entitlement to overtime pay rests on the employee because the benefit is not incurred in the normal course of
business. Failure to prove such actual performance transgresses the principles of fair play and equity.

And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa had stayed
in the company's premises beyond eight hours was misplaced.
As to the grant of service incentive leave pay, although the grant of vacation or sick leave with pay of at least
five days could be credited as compliance with the duty to pay service incentive leave, the employer is still
obliged to prove that it fully paid the accrued service incentive leave pay to the employee.
 Page 134 of 153

OTHER SPECIAL BENEFITS

ROGELIO REYES, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, Fifth Division,

and UNIVERSAL ROBINA CORPORATION GROCERY DIVISION, Respondents.

Facts:

Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on
August 12, 1977. He was eventually appointed as unit manager of Sales Department-South Mindanao
District, a position he held until his retirement on November 30, 1997. 3 Thereafter, he received a letter
regarding the computation of his separation pay, paying him 200, 322.21 pesos. The computation is pursuant
to Company policy and practice.

Insisting that his retirement benefits and 13th month pay must be based on the average monthly
salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly
commission, petitioner refused to accept the check 5 issued by private respondent in the amount
of P200,322.21.6Instead, he filed a complaint before the arbitration branch of the NLRC for retirement
benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial assistance, service incentive
leave pay, damages and attorney's fees.7

On March 15, 1999, Labor Arbiter Miriam A. Libron-Barroso rendered a decision holding that sales
commission is part of the basic salary of a unit manager.

On appeal, the NLRC modified the decision of the Labor Arbiter by excluding the overriding
commission in the computation of the retirement benefits and 13th month pay and deleted the award of
attorney's fees.

ISSUE:

WHETHER OR NOT THE AVERAGE MONTHLY SALES COMMISSION OF THIRTY ONE

THOUSAND EIGHT HUNDRED FORTY SIX AND 97/100 (Php 31,846.97) SHOULD BE INCLUDED IN
THE COMPUTATION OF HIS RETIREMENT BENEFITS AND 13th MONTH PAY.10

Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine
Duplicators, Inc. v. National Labor Relations Commission, 11 wherein the Court held that commissions earned
by salesmen form part of their basic salary.12

Private respondent counters that petitioner knew that the overriding commission is not included in
the basic salary because it had not been considered as such for a long time in the computation of the 13th
month pay, leave commissions, absences and tardiness. Petitioner himself stated in the complaint that his
basic salary is P10,919.22, thus, he is estopped from claiming otherwise. Moreover, in Boie-Takeda
Chemicals, Inc. v. De la Serna, 13 the Supreme Court held that the fixed or guaranteed wage is patently "the
basic salary" for this is what the employee receives for a standard work period, and that commissions are
given for extra efforts exerted in consummating sales or other transactions. Also, in Soriano v. National
Labor Relations Commission,14 the Court clarified that overriding commission is not properly includible in
the basic salary as it must be earned by actual market transactions attributable to the claimant. Thus, as a unit
manager who supervised the salesmen under his control and did not enter into actual sale transactions,
petitioner's overriding commissions must not be considered in the computation of the retirement benefits and
13th month pay.
 Page 135 of 153
RULING:

The petition lacks merit.

Any seeming inconsistencies between Philippine Duplicators and Boie-Takeda had been clarified by
the Court in the Resolution dated February 15, 1995 in the Philippine Duplicators case. 16

The Court thus clarified that in Philippine Duplicators, the salesmen's commissions, comprising a
pre-determined percentage of the selling price of the goods sold by each salesman, were properly included in
the term basic salary for purposes of computing the 13th month pay. The salesmen's commission are not
overtime payments, nor profit-sharing payments nor any other fringe benefit, 17 but a portion of the salary
structure which represents an automatic increment to the monetary value initially assigned to each unit of
work rendered by a salesman.18

Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives

of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded
from the term basic salary because these were paid to the medical representatives and rank-and-file
employees as productivity bonuses, which are generally tied to the productivity, or capacity for revenue
production, of a corporation and such bonuses closely resemble profit-sharing payments and have no clear
direct or necessary relation to the amount of work actually done by each individual employee. 19Further,
commissions paid by the Boie-Takeda Company to its medical representatives could not have been sales
commissions in the same sense that Philippine Duplicators paid the salesmen their sales commissions.
Medical representatives are not salesmen; they do not effect any sale of any article at all. 20

Nevertheless, should petitioner's commissions be considered in the computation of his retirement

benefits and 13th month pay? We rule in the negative.

Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New
Retirement Law,22 provides:

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.

And, Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides:

RULE II
Retirement Benefits

x x x

Section 5. Retirement Benefits.

5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the
Act 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.
 Page 136 of 153
5.2 Components of One-half (1/2) Month Salary. - For the purpose of determining the minimum retirement
pay due an employee under this Rule, the term "one-half-month salary" shall include all the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term "salary"
includes all remunerations paid by an employer to his employees for services rendered during normal
working days and hours, whether such payments are fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same, and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of food, lodging, or other facilities customarily
furnished by the employer to his employees. The term does not include cost of living allowance, profit-
sharing payments and other monetary benefits which are not considered as part of or integrated into the
regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave.

(c) One-twelfth of the 13 month pay due the employee.

(d) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employee's retirement pay. (Emphasis supplied)cralawlibrary

The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes
place at age 65, while the second is primarily determined by the collective bargaining agreement or other
employment contract or employer's retirement plan. In the absence of any provision on optional retirement in
a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee
may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has
served at least five years in the establishment concerned.

For the purpose of computing retirement pay, "one-half month salary" shall include all of the
following:

1) 15 days salary based on the latest salary rate;

2) cash equivalent of 5 days of service incentive leave (or vacation leave);

3) 1/12 of the 13th month pay;

4) other benefits as may be agreed upon by employer and employee for inclusion.

But, it shall not include the following:

1) cost of living allowance;

2) profit-sharing payments; andcralawlibrary

3) other monetary benefits which are not considered as part of or integrated into the regular salary of the
employees

Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing
his retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form
of profit-sharing payments specifically excluded by the foregoing rules.

As aptly observed by the Court of Appeals:

In fine, Boie-Takeda and Philippine Duplicator particularize the types of earnings and remuneration
that should or should not properly be included or integrated in the basic salary and which questions are to be
resolved or determined on a case-to-case basis, in the light of the specific and detailed facts of each case. In
 Page 137 of 153
other words, when these earnings and remuneration are closely akin to fringe benefits, overtime pay or
profit-sharing statements, they are properly excluded in computing retirement pay. However, sales
commissions which are effectively an integral portion of the basic salary structure of an employee, shall be
included in determining the retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the
"overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions' in
the same sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not
salesmen; they do not effect any sale of article at all. Therefore, any commission which they receive is
certainly not the basic salary which measures the standard or amount of work of complainant as Unit
Manager. Accordingly, the additional payments made to petitioner were not in fact sales commissions but
rather partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-
Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions are
additional pay that does not form part of the basic salary, applies to the present case. 23

Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but
merely supervised the salesmen under his control, the disputed commissions were not regularly received by
him. Only when the salesmen were able to collect from the sale transactions can petitioner receive the
commissions. Conversely, if no collections were made by the salesmen, then petitioner would receive no
commissions at all.24 In fine, the commissions which petitioner received were not part of his salary structure
but were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he
actually performed. The collection made by the salesmen from the sale transactions was the profit of private
respondent from which petitioner had a share in the form of a commission.

It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale
transactions; however, it is not the criterion which would entitle him to a commission, but the actual sale
transactions brought about by the individual efforts of the salesmen.

Insofar as what constitutes "basic salary," the foregoing discussions equally apply to the computation
of petitioner's 13th month pay. As held in San Miguel Corporation v. Inciong: 25

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as
the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed
not part of the basic pay is excluded as basis in the computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:

a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174;

b) Profit sharing payments;

c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic
salary of the employee at the time of the promulgation of the Decree on December 16, 1975. (Emphasis
supplied)
 Page 138 of 153

Arco Metal vs. Samahan ng Manggagawa sa Arco

Facts:

Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the
labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13th
month pay, bonus, and leave encashment of three union members in amounts proportional to the service they
actually rendered in a year, which is less than a full 12 months. Respondent protested the prorated scheme,
claiming that on several occasions petitioner did not prorate the payment of the same benefits to 7
employees who had not served for the full 12 months. The payments were made in 1992, 1993, 1994, 1996,
1999, 2003, and 2004. According to respondent, the prorated payment violates the rule against diminution of
benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the NCMB. The parties
submitted the case for voluntary arbitration.

The voluntary arbitrator, Mangabat, ruled in favor of petitioner and found that the giving of the
contested benefits in full, irrespective of the actual service rendered within one year has not ripened into a
practice. He noted the affidavit of Baingan, manufacturing group head of petitioner, which states that the
giving in full of the benefit was a mere error. He also interpreted the phrase for each year of service found
in the pertinent CBA provisions to mean that an employee must have rendered one year of service in order
to be entitled to the full benefits provided in the CBA.

The CA ruled that the CBA did not intend to foreclose the application of prorated payments of leave
benefits to covered employees. The appellate court found that petitioner, however, had an existing voluntary
practice of paying the aforesaid benefits in full to its employees, thereby rejecting the claim that petitioner
erred in paying full benefits to its seven employees. The appellate court noted that aside from the
affidavit of petitioners officer, it has not presented any evidence in support of its position that it has no
voluntary practice of granting the contested benefits in full and without regard to the service actually
rendered within the year. It also questioned why it took petitioner 11 years before it was able to discover the
alleged error.

Issue: WON the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service
rendered constitutes voluntary employer practice and, consequently, the prorated payment of the said benefits
does not constitute diminution of benefits under Article 100 of the Labor Code.

Held:

Petitioner claims that its full payment of benefits regardless of the length of service to the company
does not constitute voluntary employer practice. It points out that the payments had been erroneously made
and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. According to
petitioner, it was only in 2003 that the accounting department discovered the error when there were already
3 employees involved with prolonged absences and the error was corrected by implementing the pro-rata
payment of benefits pursuant to law and their existing CBA. It adds that the seven earlier cases of full
payment of benefits went unnoticed considering the proportion of one employee concerned (per year) vis
vis the 170 employees of the company. Petitioner describes the situation as a clear oversight which
should not be taken against it. To further bolster its case, petitioner argues that for a grant of a benefit to be
considered a practice, it should have been practiced over a long period of time and must be shown to be
consistent, deliberate and intentional, which is not what happened in this case. Petitioner tries to make a case
 Page 139 of 153
out of the fact that the CBA has not been modified to incorporate the giving of full benefits regardless of the
length of service, proof that the grant has not ripened into company practice.

Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the
Constitutional mandate to protect the rights of workers and promote their welfare, and to afford labor full
protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in
the implementation and interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to
benefits which were voluntarily given by the employer and which ripened into company practice. Thus in
Davao Fruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously
included in the computation of the 13th month pay those items that were expressly excluded by the law, we
held that the act which was favorable to the employees though not conforming to law had thus ripened into a
practice and could not be withdrawn, reduced, diminished, discontinued or eliminated.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to its employees regardless of the length of service
rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an
established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of
years within which a company practice must be exercised in order to constitute voluntary company practice.
Thus, it can be 6 years, 3 years, or even as short as 2 years. Petitioner cannot shirk away from its
responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its
manufacturing group head.

In cases involving money claims of employees, the employer has the burden of proving that the
employees did receive the wages and benefits and that the same were paid in accordance with law.

UNIVERSAL ROBINA SUGAR MILLING CORP. vs CABALLEDA

 Page 140 of 153

Facts:

Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic corporation

engaged in the sugar milling business and petitioner Renato Cabati [4] is URSUMCO's manager.

Respondent Agripino Caballeda (Agripino) worked as welder for URSUMCO from March 1989
until June 23, 1997 with a salary of P124.00 per day, while respondent Alejandro Cadalin (Alejandro) worked
for URSUMCO as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a

Memorandum[5] establishing the company policy on Compulsory Retirement (Memorandum) of its
employees. The memorandum provides:

All employees corporate-wide who attain 60 years of age on or before April 30,
1991 shall be considered retired on May 31, 1991.

Henceforth, any employee shall be considered retired 30 days after he attains age 60.

Subsequently, on December 9, 1992, Republic Act (RA) No. 7641[6] was enacted into law, and it took
effect on January 7, 1993,[7] amending Article 287 of the Labor Code, to read:

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 case of retirement, the employee shall be entitled to receive such retirement

benefits as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, That an employee's retirement benefits under any
collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of

employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at 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.

On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate labor organization
and the recognized sole and exclusive bargaining representative of all the monthly and daily paid employees
of URSUMCO, of which Alejandro was a member, entered into a Collective Bargaining Agreement (CBA).
[8]
Article XV of the said CBA particularly provided that the retirement benefits of the members of the
collective bargaining unit shall be in accordance with law.[9]

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced to retire
by URSUMCO. Agripino averred that URSUMCO illegally dismissed him from employment on June 24,
1997 when he was forced to retire upon reaching the age of sixty (60) years old. Upon the termination of his
employment, he accepted his separation pay and applied for retirement benefits with the Social Security
 Page 141 of 153
System (SSS). Earlier, on April 15, 1997, Alejandro turned 60 years old. On May 28, 1997, he filed his
application for retirement with URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997,
he accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.

ISSUES:
1. Whether R.A.7641 can be given retroactive effect;
2. Whether Agripino is a seasonal or project employee; and
3. Whether respondents were illegally terminated on account of compulsory retirement or the same
voluntarily retired.

RULING:

The Petition lacks merit.

First. The issue of the retroactive effect of R.A. 7641 on prior existing employment contracts has
long been settled. In Enriquez Security Services, Inc. v. Cabotaje,[24] we held:

There should be little doubt about the fact that 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.

This doctrine has been repeatedly upheld and clarified in several cases. [25] Pursuant thereto, this Court
imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant
for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the
claimant had complied with the requirements for eligibility for such retirement benefits under the statute.

It is evident from the records that when respondents were compulsorily retired from the service, R.A.
7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply
with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned
requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.

Second. It is a well-established rule that a petition for review on certiorari under Rule 45 of the
Rules of Court should raise only questions of law, subject to certain exceptions. [26] Whether or not Agripino
was a seasonal/project employee or a regular employee is a question of fact. [27] As such, this Court is not at
liberty to review the said factual issue because our jurisdiction is generally limited to reviewing errors of law
that the CA may have committed. Time and again, we have held that this Court is not a trier of facts, and it is
not for us to re-examine and re-evaluate the probative value of evidence presented before the LA, the NLRC
and the CA, which formed the basis of the assailed decision. Indeed, when their findings are in absolute
agreement, the same are accorded not only respect but even finality as long as they are amply supported by
substantial evidence.[28]

In this case, it is noteworthy that the LA, the NLRC and the CA are one in ruling that Agripino was
not a casual employee much less a seasonal or project employee. In their findings, Agripino was considered a
regular employee of URSUMCO. Consequently, such uniform finding of the LA, the NLRC, and the CA
binds this Court. We find no cogent reason to depart from this ruling.

Third. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her
employment with the former.[29] The age of retirement is primarily determined by the existing agreement
 Page 142 of 153
between the employer and the employees. However, in the absence of such agreement, the retirement age
shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for
compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. [30]

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory
retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement
benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor
Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at
age 65, while the second is primarily determined by the collective bargaining agreement or other
employment contract or employer's retirement plan.

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy.
Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his application for
retirement, submitted all the documentary requirements, accepted the retirement benefits and executed a
quitclaim in favor of URSUMCO. Respondents claim otherwise, contending that they were merely forced to
comply as they were no longer given any work assignment and considering that the severance of their
employment with URSUMCO is a condition precedent for them to receive their retirement benefits.

We rule in favor of respondents.

Generally, the law looks with disfavor on quitclaims and releases by employees who have been
inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities and frustrate just claims of employees. [32] They are frowned upon as contrary to public policy.
A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of
benefits therefrom does not amount to estoppel. [33]

The reason is laid down in Lopez Sugar Corporation v. Federation of Free Workers:[34]

Employer and employee, obviously, do not stand on the same footing. The employer drove
the employee to the wall. The latter must have to get hold of money. Because, out of the job,
he had to face harsh necessities of life. He thus found himself in no position to resist money
proferred.

In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the
employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily;
(2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is
credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a right recognized by law. [35] In this case, petitioners failed
to establish all the foregoing requisites.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is
clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the
differential on his retirement benefits. On the other hand, Agripino was actually and totally deprived of his
retirement benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that the quitclaim was voluntarily
entered into.
 Page 143 of 153
LOURDES A. CERCADO, Petitioner, v. UNIPROM, INC., Respondent.

Facts:

Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc.
(UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta Carnival,AranetaCenter,Quezon
City. Later on, she was promoted as cashier and then as clerk typist.

UNIPROM instituted anEmployees Non-Contributory Retirement Plan which provides that any
participant with twenty (20) years of service, regardless of age, may be retired at his option or at the option
of the company.

UNIPROM amended the retirement plan in compliance with Republic Act (R.A.) No. 7641. Under
the revised retirement plan, UNIPROM reserved the option to retire employees who were qualified to retire
under the program. Sometime in December 2000, UNIPROM implemented a company-wide early retirement
program for its 41 employees, including herein petitioner, who, at that time, was 47 years old, with 22 years
of continuous service to the company. She was offered an early retirement package amounting
toP171,982.90, but she rejected the same.

UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective at
the end of business hours on February 15, 2001. A check of even date in the amount ofP100,811.70,
representing her retirement benefits under the regular retirement package, was issued to her. Cercado refused
to accept the check.

UNIPROM nonetheless pursued its decision and Cercado was no longer given any work assignment
after February 15, 2001. This prompted Cercado to file a complaint for illegal dismissal before the Labor
Arbiter (LA), alleging, among others, that UNIPROM did not have a bona fide retirement plan, and that even
if there was, she did not consent thereto.

ISSUES:

[1] Whether UNIPROM has a bona fide retirement plan; and,

[2] Whether petitioner was validly retired pursuant thereto.

HELD:

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with
the former.

Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for compulsory
retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An employer is,
however, free to impose a retirement age earlier than the foregoing mandates. This has been upheld in
numerous cases as a valid exercise of management prerogative.

In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company
for 22 years, pursuant to UNIPROMsEmployees Non-Contributory Retirement Plan, which provides that
employees who have rendered at least 20 years of service may be retired at the option of the company. At
first blush, respondents retirement plan can be expediently stamped with validity and justified under the all
encompassing phrase management prerogative, which is what the CA did. But the attendant circumstances in
this case, vis-vis the factual milieu of the string of jurisprudence on this matter, impel us to take a deeper
look.
 Page 144 of 153

InPantranco North Express, Inc. v. NLRC,the Court upheld the retirement of private respondent pursuant to a
Collective Bargaining Agreement (CBA) allowing Pantranco to compulsorily retire employees upon
completing 25 years of service to the company. Interpreting Article 287, the Court ruled that the Labor Code
permits employers and employees to fix the applicable retirement age lower than 60 years of age. The Court
also held that there was no illegal dismissal involved, since it was the CBA itself that incorporated the
agreement between the employer and the bargaining agent with respect to the terms and conditions of
employment. Hence, when the private respondent ratified the CBA, he concurrently agreed to conform to
and abide by its provisions. Thus, the Court stressed, "providing in a CBA for compulsory retirement of
employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be
governed by such CBA."

Similarly, in Philippine Airlines, Inc. (PAL) v. Airline Pilots Association of the Philippines(APAP),
the retirement plan contained in the CBA between PAL and APAP was declared valid. The Court explained
that by their acceptance of the CBA, APAP and its members are obliged to abide by the commitments and
limitations they had agreed to cede to management.

It is axiomatic that a retirement plan giving the employer the option to retire its employees below the
ages provided by law must be assented to and accepted by the latter, otherwise, its adhesive imposition will
amount to a deprivation of property without due process of law.

In the above-discussed cases, the retirement plans in issue were the result of negotiations and
eventual agreement between the employer and the employees. The plan was either embodied in a CBA, or
established after consultations and negotiations with the employees bargaining representative. The consent of
the employees to be retired even before the statutory retirement age of 65 years was thus clear and
unequivocal.

Unfortunately, no similar situation obtains in the present case. In fact, not even an iota of voluntary
acquiescence to UNIPROMs early retirement age option is attributable to petitioner.

The assailed retirement plan of UNIPROM is not embodied in a CBA or in any employment contract
or agreement assented to by petitioner and her co-employees. On the contrary, UNIPROMsEmployeesNon-
Contributory Retirement Planwas unilaterally and compulsorily imposed on them. This is evident in the
provisions of the 1980 retirement plan and its amended version in 2000:

ARTICLE III

ELIGIBILITY FOR PARTICIPATION

Section 1. Any regular employee, as of the Effective Date,shall automatically become a Participant in
the Plan, provided the Employee was hired below age 60.

Verily, petitioner was forced to participate in the plan, and the only way she could have rejected the
same was to resign or lose her job. The assailed CA Decision did not really make a finding that petitioner
actually accepted and consented to the plan. The CA simply declared that petitioner was deemed aware of the
retirement plan on account of the length of her employment with respondent. Implied knowledge, regardless
of duration, cannot equate to the voluntary acceptance required by law in granting an early retirement age
option to an employer. The law demands more than a passive acquiescence on the part of employees,
considering that an employers early retirement age option involves a concession of the formers constitutional
right to security of tenure.

We reiterate the well-established meaning of retirement in this jurisdiction:Retirement is the result of

a bilateral act of the parties,a voluntary agreementbetween the employer and the employee whereby the
 Page 145 of 153
latter, after reaching a certain age, agrees to sever his or her employment with the former.

Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and
uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible
ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early
retirement plan. In other words, only the implementation and execution of the option may be unilateral, but
not the adoption and institution of the retirement plan containing such option. For the option to be valid, the
retirement plan containing it must be voluntarily assented to by the employees or at least by a majority of
them through a bargaining representative.

We disagree with the CAs conclusion that the retirement plan is part of petitioners employment
contract with respondent. It must be underscored that petitioner was hired in 1978 or 2 years before the
institution of UNIPROMs retirement plan in 1980. Logically, her employment contract did not include the
retirement plan, much less the early retirement age option contained therein.

We also cannot subscribe to respondents submission that petitioners consent to the retirement plan
may be inferred from her signature in the personnel action forms containing the phrase:Employee hereby
expressly acknowledges receipt of and undertakes to abide by the provisions of his/her Job Description,
Company Code of Conduct and such other policies, guidelines, rules and regulations the company may
prescribe.

It should be noted that the personnel action forms relate to the increase in petitioners salary at
various periodic intervals. To conclude that her acceptance of the salary increases was also, simultaneously, a
concurrence to the retirement plan would be tantamount to compelling her to agree to the latter. Moreover,
voluntary and equivocal acceptance by an employee of an early retirement age option in a retirement plan
necessarily connotes that her consent specifically refers to the plan or that she has at least read the same
when she affixed her conformity thereto.

Hence, consistent with the Courts ruling in Jaculbe, having terminated petitioner merely on the basis
of a provision in the retirement plan which was not freely assented to by her, UNIPROM is guilty of illegal
dismissal. Petitioner is thus entitled to reinstatement without loss of seniority rights and to full backwages
computed from the time of her illegal dismissal in February 16, 2001 until the actual date of her
reinstatement. If reinstatement is no longer possible because the position that petitioner held no longer exists,
UNIPROM shall pay backwages as computed above, plus, in lieu of reinstatement, separation pay equivalent
to one-month pay for every year of service. This is consistent with the preponderance of jurisprudence
relative to the award of separation pay in case reinstatement is no longer feasible.
 Page 146 of 153

Radio Mindanao Network, Inc. And Eric S. Canoy, vs. Domingo Z.

Ybarola, Jr. And Alfonso E. Rivera, Jr., [G.R. No. 198662. September 12, 2012.

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by Radio Mindanao Network (RMN). They eventually became account managers,
soliciting advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims,
including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for Ybarola and
P40,000.00 for Rivera.

Issue: Whether the amounts the respondents received represented a fair and reasonable settlement of their
claims

Held: The petitioners insist that the respondents' commissions were not part of their salaries, because they
failed to present proof that they earned the commission due to actual market transactions attributable to them.
They submit that the commissions are profit-sharing payments which do not form part of their salaries. We
are not convinced. If these commissions had been really profit-sharing bonuses to the respondents, they
should have received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received
P372,173.11 and P586,998.50 commissions, respectively, in 2002. The variance in amounts the respondents
received as commissions supports the CA's finding that the salary structure of the respondents was such that
they only received a minimal amount as guaranteed wage; a greater part of their income was derived from
the commissions they get from soliciting advertisements; these advertisements are the "products" they sell.
As the CA aptly noted, this kind of salary structure does not detract from the character of the commissions
being part of the salary or wage paid to the employees for services rendered to the company, as the Court
held in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding
the "proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and
Ybarola and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years of service with
the company; he was not shortchanged and no essential unfairness took place. In this case, as the CA noted,
the separation pay the respondents each received was deficient by at least P400,000.00; thus, they were given
only half of the amount they were legally entitled to. To be sure, a settlement under these terms is not and
cannot be a reasonable one, given especially the respondents' length of service 25 years for Ybarola and
19 years for Rivera. The CA was correct when it opined that the respondents were in dire straits when they
executed the release/quitclaim affidavits. Without jobs and with families to support, they dallied in executing
the quitclaim instrument, but were eventually forced to sign given their circumstances.
 Page 147 of 153

ELEAZAR S. PADILLO, Petitioner, v. RURAL BANK OF NABUNTURAN, INC., and MARK S.

OROPEZA, Respondents.

FACTS:

Petitioner, the late Eleazar Padillo (Padillo), was an employee of respondent Rural Bank of
Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems in 2003, the Bank took out
retirement/insurance plans with Philippine American Life and General Insurance Company (Philam Life) for
all its employees in anticipation of its possible closure and the concomitant severance of its personnel.
Respondent Mark Oropeza is the president and major stockholder of the bank.

Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to
effectively pursue his work. He wrote a letter addressed to Oropeza expressing his intention to avail of an
early retirement package. Despite several follow-ups, his request remained unheeded. Not having received
his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid
retirement benefits.

The Labor Arbiter dismissed Padillos complaint on the ground that the latter did not qualify to
receive any benefits under Article 300 of the Labor Code as he was only fifty-five (55) years old when he
resigned, while the law specifically provides for an optional retirement age of sixty (60) and compulsory
retirement age of sixty-five (65).

Padillo elevated the matter to the NLRC. The NLRC reversed the Labor Arbiters ruling. Aggrieved,
Oropeza and the Bank filed a petition for certiorari with the CA. The CA reversed the NLRCs ruling but
with modification. It directed the respondents to pay Padillo the amount of P50,000.00 as financial assistance
exclusive of the P100,000.00 Philam Life Plan benefit.

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to his death) filed the
instant petition before the Supreme Court.

ISSUE:
Whether or not Padillo is entitled to claim for separation and retirement benefits under the Labor
Code?

HELD:

The petition is partly meritorious. Disease as ground for termination; retirement benefits

At the outset, it must be maintained that the Labor Code provision on termination on the ground of
disease under Article 297 does not apply in this case, considering that it was Padillo and not the Bank who
severed the employment relations. A plain reading of the Article 297 of the Labor Code clearly presupposes
that it is the employer who terminates the services of the employee found to be suffering from any disease
and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health
of his co-employees. It does not contemplate a situation where it is the employee who severs his or her
employment ties.

What remains applicable, however, is the Labor Code provision on retirement. In the absence of any
applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at
least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary
for every year of service, with a fraction of at least six (6) months being considered as one whole year.
Notably, these age and tenure requirements are cumulative and non- compliance with one negates the
 Page 148 of 153
employees entitlement to the retirement benefits under Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or
any other equivalent contract between the parties which set out the terms and condition for the retirement of
employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the
Bank.

Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he
served for twenty-nine (29) years he, however, fell short with respect to the sixty (60) year age requirement
given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds
due under the Philam Life Plan, petitioners claim for retirement benefits must be denied.

Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an
increased amount. With a veritable understanding that the award of financial assistance is usually the final
refuge of the laborer, considering as well the supervening length of time which had sadly overtaken the point
of Padillos death an employee who had devoted twenty-nine (29) years of dedicated service to the Bank
the Court, in light of the dictates of social justice, holds that the CAs financial assistance award should be
increased from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit receivable by the
petitioners under the Philam Life Plan which remains undisputed.
 Page 149 of 153

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN, Petitioner,
v.
FILIPINAS A. LAVANDERA, Respondent.

FACTS:

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher
since June1977, with a monthly salary of 18,662.00 as of May 31, 2001.

On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment
of service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorneys fees against
GCHS and/or its principal, Dr. James Tan. She alleged that on May 11, 2001, she was informed that her
services were to be terminated effective May 31, 2001, pursuant to GCHS retirement plan which gives the
school the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a
retirement pay of one-half () month for every year of service. At that time, Filipinas was only 58 years old
and still physically fit to work. She pleaded with GCHS to allow her to continue teaching but her services
were terminated, contrary to the provisions of Republic Act No. (RA) 7641, otherwise known as the
Retirement Pay Law.

LA dismissed the illegal dismissal case but found the retirement benefits payable under GCHS plan
to be deficient. NLRC reversed LAs award and held that retirement pay should be computed based on her
monthly salary at the time of her retirement. CA modified NLRCs decision and ruled that the computation
of one-half month salary by equating it to22.5 days.

ISSUE:

Whether or not the multiplier 22.5 days is to be used in computing the retirement pay
differentials of Filipinas.

HELD:

YES. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code,
providing for the rules on retirement pay to qualified private sector employees in the absence of any
retirement plan in the establishment. The said law states that an employees retirement benefits under any
collective bargaining agreement (CBA)]and other agreements shall not be less than those provided under
the same that is, at least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year and that unless the parties provide for broader inclusions,
the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5) days of service incentive leaves.

Applicability of the 1/2 month salary provision

1. There is no CBA or other applicable agreement providing for retirement benefits to employees, or

2. There is a CBA or other applicable agreement providing for retirement benefits but it is below the
requirement set by law.
 Page 150 of 153
Verily, the determining factor in choosing which retirement scheme to apply is still superiority in
terms of benefits provided.

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which
gives it the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a
retirement pay of one-half (1/2) month for every year of service. Considering, however, that GCHS
computed Filipinas retirement pay without including one-twelfth (1/12) of her 13th month pay and the
cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas
retirement benefits should be computed in accordance with Article 287 of the Labor Code, as amended by
RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit
differentials due to divergent interpretations of the term one-half (1/2) month salary as used under the law.

Elegir v. Philippine Airlines, Inc.: one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days
representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for SIL.

The Court sees no reason to depart from this interpretation. GCHS argument therefore that the 5
days SIL should be likewise pro-rated to their 1/12 equivalent must fail.

Moreover, the Court held that the award of legal interest at the rate of 6% per annum on the
amount of P68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from
the rendition of the LAs Decision on March 26, 2002 and not from the filing of the illegal dismissal
complaint.
 Page 151 of 153

BANCO DE ORO UNIBANK, INC., Petitioner, v. GUILLERMO C. SAGAYSAY, Respondent.

Facts:

On May 16, 2006, respondent Guillermo Sagaysay (Sagaysay) was hired by petitioner Banco De Oro
Unibank, Inc., (BDO) as Senior Accounting Assistant 5 in its San Jose, Nueva Ecija, branch as a result of a
merger with United Overseas Bank (UOB), with BDO as the surviving bank. Sagaysay was previously
employed in UOB from 2004 to 2006 or for two (2) years. Prior thereto, he worked for Metropolitan Bank
and Trust Co. (Metrobank) from 1976 to 2004 for a period of twenty-eight (28) years.

In a letter,6 dated January 8, 2010, BDO informed Sagaysay that, pursuant to the retirement policy of
the bank which mandated its retirement age to be sixty (60), he would be formally retired effective
September 1, 2010, a few days after his 60 th birthday. The normal or compulsory retirement age of the bank
was based on its retirement plan7 which was implemented on July 1, 1994, Section 1, Article V of which
reads:

In an e-mail,9 dated July 27, 2010, Sagaysay wrote that, although the time had come that the BDO
Retirement Program would be implemented to those reaching the age of sixty (60), he requested that his
services be extended because he had an outstanding loan and his children were still in college. He assured
BDO that he was healthy and could still perform his duties in the branch. BDO denied Sagaysay's request.

In another e-mail,10 dated August 19, 2010, Sagaysay appealed to BDO to extend his service for 8.5
months or up to May 16, 2011 so that he could render at least five (5) years of employment which would
entitle him to 50% of his basic pay for every year of service upon his retirement. BDO denied Sagaysay's
appeal and retired him on September 1, 2010. As of his last day of work, he was earning a monthly salary of
P28,048.00.

Sagaysay then signed Release, Waiver and Quitclaim11 (quitclaim), dated October 22, 2010, for and
in consideration of P98,376.14. The quitclaim stated, among others, that in consideration of the foregoing
payment, Sagaysay released and discharged the bank, its affiliates and its subsidiaries from any action, suit,
claim or demand in connection with his employment.

On January 10, 2011, Sagaysay filed a complaint 12 for illegal dismissal with prayer for reinstatement
and payment of backwages, moral damages, exemplary damages, and attorney's fee against BDO before the
Labor Arbiter (LA). He claimed that despite his appeal, BDO compulsory retired him on September 1, 2010.
As a result, he and his family suffered damages in the amount of P2,225,403.00 which he would have
received if he was made to retire at the age of sixty-five (65).

For its part, BDO countered that after the bank denied Sagaysay's request for extension of services,
he was paid the amount of P98,376.14 representing the full and final settlement of his compensation,
allowances, benefits and other emoluments. BDO stressed that he was not dismissed but was retired from the
service.

ISSUE:
 Page 152 of 153
WHETHER THE RETIREMENT PLAN IS VALID AND EFFECTIVE AND, CONSEQUENTLY,
THE MANDATORY RETIREMENT AGE OF 60 YEARS OLD IS ALSO BINDING.

RULING:

The Court finds the petition meritorious.

The petition essentially centers on whether the June 1, 1994 retirement plan is valid and effective
against Sagaysay. To resolve this issue, a review of the relevant laws and jurisprudence regarding the
compulsory retirement age is warranted.

Laws and jurisprudence on early age of retirement

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with
the former.24 Article 287 of the Labor Code is the primary provision which governs the age of retirement and
states: Art. 287. Retirement. xxx

In the absence of a retirement plan or agreement providing for retirement benefits of

employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least
five (5) years in 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.
Doubtless, under this provision, the retirement age is primarily determined by the existing agreement or
employment contract. Only in the absence of such an agreement shall the retirement age be fixed by law,
which provides for a compulsory retirement age at 65 years, while the minimum age for optional retirement
is set at 60 years. 25cralawred

Retirement plans allowing employers to retire employees who have not yet reached the compulsory
retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its
express language, the Labor Code permits employers and employees to fix the applicable retirement age at
60 years or below, provided that the employees' retirement benefits under any CBA and other agreements
shall not be less than those provided therein.

Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and
uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible
ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early
retirement plan. In other words, only the implementation and execution of the option may be unilateral, but
not the adoption and institution of the retirement plan containing such option. For the option to be valid, the
retirement plan containing it must be voluntarily assented to by the employees or at least by a majority of
them through a bargaining representative.31

A scrutiny of the above-discussed cases reveals that the retirement plan was adopted after the
employees were hired by their employer. This is in stark contrast with the case at bench wherein the adoption
of the retirement plan came before the hiring of Sagaysay. Thus, the present petition portrays a unique
predicament on whether a retirement plan adopted before the employment of an employee is deemed binding
on the latter.

Sagaysay was sufficiently informed of the retirement plan

The case of Cercado is not applicable

The case of Cercado is not applicable in the present case as it has a different factual milieu. First,
inCercado, the petitioner was employed on December 15, 1978, which was almost two (2) years before the
adoption of the employer's retirement plan on April 1, 1980. The Court explained that, logically, her
employment contract did not include the retirement plan, much less the early retirement age option contained
 Page 153 of 153
therein.

In the case at bench, Sagaysay was employed on May 16, 2006, which was almost twelve (12)
yearsafter the adoption of retirement plan on July 1, 1994. Accordingly, from the moment that Sagaysay
accepted his employment, he was deemed to have consented to all existing company rules and regulations,
including the policy on the early age retirement.

Second, in Cercado, the retirement plan was implemented when the petitioner therein was already
employed. The Court held that because of the automatic application of the retirement plan to the current
employees without their voluntary conformity, "[p]etitioner was forced to participate in the plan, and the
only way she could have rejected the same was to resign or lose her job." Necessarily, it undermined the
petitioner's security of tenure.

The ruling in Cercado cannot be applied to this case as Sagaysay was not yet employed when the
retirement plan was adopted. When he was offered employment by the bank in 2006, the established
retirement plan was not forced upon him. Sagaysay had the free will whether to undertake the employment
and accept the bank's corresponding policies or look for a job elsewhere. Corollarily, no security of tenure
had yet attached at that specific moment.

In other words, the evil sought to be prevented in Cercardo does not exist in the present case as
Sagaysay was given the opportunity to accept or reject the lower retirement age policy.

Third, the petitioner in Cercado refused the early retirement package in the amount of P171,982.90
from her employer. From the very beginning, she was adamant that she did not consent to the retirement plan
of her employer.

The opposite cam be observed in the present case. It has been uncontroverted that Sagaysay earlier
acknowledged the retirement program of BDO and even requested for an extension of service. Moreover, he
signed a quitclaim for and in consideration of P98,376.14 which discharged the bank, its affiliates and its
subsidiaries from any action, suit, claim or demand in connection with his employment.

Generally, a quitclaim is frowned upon. As an exception, a quitclaim, with clear and unambiguous
contents and executed for a valid consideration received in full by the employee who signed the same, cannot
be later invalidated because its signatory claims that he was pressured into signing it on account of his dire
financial need. When it is shown that the person executing the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim was credible and reasonable, the
transaction must be recognized as a valid and binding undertaking. 40

Here, the Court is of the view that the quitclaim was validly executed. For the consideration of the
quitclaim, Sagaysay received the amount of P98,376.14. As admitted by him, the amount was based on a
liquidation data sheet which showed the computation of benefits and emoluments of a rank and file
employee.41 Understandably, the amount given would not reflect the retirement benefits he demanded
because he did not qualify under the retirement plan of BDO for he had not completed five (5) years of
service upon his compulsory retirement. Thus, the consideration provided in the quitclaim was justified and
reasonable.

Further, it has been duly proven that Sagaysay was a seasoned banker, spending thirty-four (34)
years of his career in different banking establishments. He was learned in his profession and even
experienced separation from his previous employments. Consequently, it cannot be said that he was naive in
dealing with his employer and that he failed to exercise his free and voluntary will when faced with the
documents relating to his retirement. Not an iota of evidence showed that BDO exerted undue influence
against him to acquire his consent. In fine, absent any doubt to the contrary, his quitclaim must stand.