1. ANGELINA FRANCISCO vs. NLRC, KASEI CORPORATION, et al.

G.R. No. 170087

August 31, 2006

DOCTRINE: 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.

FACTS: In 1995, petitioner Angelina Francisco was hired by Kasei Corporation (Kasei) during its
incorporation stage. She was designated as Accountant, Corporate Secretary and Liaison Officer of
the company. In 1996, Francisco was designated Acting Manager to handle recruitment of all
employees and perform management administration functions, represent the company in all dealings
with government agencies, and to administer all other matters pertaining to the operation of Kasei
Restaurant which is owned and operated by Kasei.

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

In January 2001, Francisco was replaced as Manager. She 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. The Treasurer convened a meeting of all employees and announced that Francisco was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR
matters.
Thereafter, Kasei 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. She was not paid her mid-year bonus
allegedly because the company was not earning well. In October 2001, she did not receive her salary
from the company, made repeated follow-ups with the cashier but was advised that the company was
not earning well. On October 15, 2001, she asked for her salary, but she was informed that she is no
longer connected with the company.

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

Kasei Corporation claimed that Francisco was not their employee, having been designated as
technical consultant who performed work at her own discretion without the control and supervision
of the Corporation, and that her consultancy may be terminated any time considering that her
services were only temporary in nature and dependent on the needs of the corporation.

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

ISSUES: Whether or not there was an employer-employee relationship between Francisco and Kasei
Corporation; and whether Francisco was illegally dismissed.

HELD: YES. 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, 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.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporations
Technical Consultant. She reported for work regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting and tax services to the company
and performing
functions necessary and desirable for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. When petitioner was designated General Manager, respondent corporation made
a report to the SSS signed by Irene Ballesteros. 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.

It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latters line of business.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month
from January to September 2001. This amounts to an illegal termination of employment, where the
petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust
and confidence, and under the principle of strained relations, petitioner is further entitled to
separation pay, in lieu of reinstatement.

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.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of
sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship
between employees and employers, we are mindful of the fact that the policy of the law is to apply the
Labor Code to a greater number of employees. This would enable employees to avail of the benefits
accorded to them by law, in line with the constitutional mandate giving maximum aid and protection
to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance
of social justice and national development.

2. JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 188051

June 10, 2004

DOCTRINE: A radio broadcast specialist who works under minimal supervision is an

independent contractor.
Case law has consistently held that the elements of an employer-employee relationship
are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the 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.
The right of labor to security of tenure as guaranteed in the Constitution53 arises only
if there is an employer-employee relationship under labor laws. Not every performance of
services for a fee creates an employer-employee relationship. To hold that every person who
renders services to another for a fee is an employee - to give meaning to the security of tenure
clause - will lead to absurd results.

FACTS: In May 1994, respondent ABS-CBN signed an 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.

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 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:

Dear Mr. Lopez,

We would like to call your attention to the Agreement dated May 1994 entered into by your
goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.

As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his
programs and career. We consider these acts of the station violative of the Agreement and the
station as in breach thereof. In this connection, we hereby serve notice of rescission of said
Agreement at our instance effective as of date.

Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other
benefits under said Agreement.

Thank you for your attention.

Very truly yours,

(Sgd.)
JOSE Y. SONZA
President and Gen. Manager

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.

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.

The Labor Arbiter dismissed the case for lack of jurisdiction ruling that there exist no employer-
employee relationship in the case. Sonza appealed to NLRC and the latter affirmed the decision of the
Labor Arbiter. Sonza then filed for a special civil action for certiorari before the Court of Appeals and
the same was dismissed by the latter.
ISSUE: Whether or not there was an employer-employee relationship.

HELD: NO. The existence of an employer-employee relationship is a question of fact. Appellate courts
accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when
supported by substantial evidence. Case law has consistently held that the elements of an employer-
employee relationship are: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the 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.

A. Selection and Engagement of Employee

Independent contractors often present themselves to possess unique skills, expertise or talent
to distinguish them from ordinary employees. The specific selection and hiring of
SONZA, because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not conclusive, of an independent
contractual relationship. If SONZA did not possess such unique skills, talent and celebrity
status, ABS-CBN would not have entered into the Agreement with SONZA but would have
hired him through its personnel department just like any other employee.

B. Payment of Wages

All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to
stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay" which the law
automatically incorporates into every employer-employee contract. Whatever benefits SONZA
enjoyed arose from contract and not because of an employer-employee relationship.

SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so
huge and out of the ordinary that they indicate more an independent contractual relationship
rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZAs unique skills, talent and celebrity status not
possessed by ordinary employees. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for his services. The power to
bargain talent fees way above the salary scales of ordinary employees is a circumstance
indicative, but not conclusive, of an independent contractual relationship.

C. Power of Dismissal

For violation of any provision of the Agreement, either party may terminate their relationship.
SONZA failed to show that ABS-CBN could terminate his services on grounds other than
breach of contract, such as retrenchment to prevent losses as provided under labor laws.

During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as
 "AGENT and Jay Sonza shall faithfully and completely perform each condition of this
Agreement."24 Even if it suffered severe business losses, ABS-CBN could not retrench SONZA
because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual relationship between
SONZA and ABS-CBN.

D. Power of Control

Since there is no local precedent on whether a radio and television program host is an
employee or an independent contractor, we refer to foreign case law in analyzing the present
case. The United States Court of Appeals, First Circuit, recently held in Alberty-Vlez v.
Corporacin De Puerto Rico Para La Difusin Pblica ("WIPR") that a television program
host is an independent contractor.

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. 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.

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

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. 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.

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.

WHEREFORE, the Court DENY the petition. The assailed Decision of the Court of Appeals dated 26
March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner.
3. BITOY JAVIER V. FLY ACE CORP AND FLORDELYN CASTILLO

G.R. NO. 192558

FEB. 15, 2012

Doctrine: In an illegal dismissal case, the onus probandi rests on the employer to prove that
its dismissal of an employee was for a valid cause. However, before a case for illegal
dismissal can prosper, an employer-employee relationship must first be established.

FACTS: Javier alleged that he was an employee of Fly Ace since September 2007, performing various
tasks at the respondents warehouse such as cleaning and arranging the canned items before their
delivery to certain locations, except in instances when he would be ordered to accompany the
companys delivery vehicles, as pahinante; that he reported for work from Monday to Saturday from
7:00 oclock in the morning to 5:00 oclock in the afternoon; that during his employment, he was not
issued an identification card and payslips by the company; that on May 6, 2008, he reported for
work but he was no longer allowed to enter the company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior;[5] that after several minutes of begging to the guard
to allow him to enter, he saw Ong whom he approached and asked why he was being barred from
entering the premises; that Ong replied by saying, Tanungin mo anak mo; [6] that he then went
home and discussed the matter with his family; that he discovered that Ong had been courting his
daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk
to Ong and convince him to spare her father from trouble but he refused to accede; that thereafter,
Javier was terminated from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.

ISSUE: Whether or not an Employer-Employee Relationship existed.

HELD: NO. Javier was not able to persuade the Court that the four-fold test elements exist. He
could not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly
Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at
work.

Javier simply assumed that he was an employee of Fly Ace. He performed his contracted work
outside the premises of the respondent; he was not even required to report to work at regular hours;
he was not made to register his time in and time out every time he was contracted to work; he was
not subjected to any disciplinary sanction imposed to other employees for company violations; he was
not issued a company I.D.; he was not accorded the same benefits given to other employees; he was
not registered with the Social Security System (SSS) as petitioners employee; and, he was free to
leave, accept and engage in other means of livelihood as there is no exclusivity of his contracted
services with the petitioner, his services being co-terminus with the trip only. Fly Ace claims that it
had no right to control the result, means, manner and methods by which Javier would perform his
work or by which the same is to be accomplished. Javiers function as a pahinante was not directly
related or necessary to its principal business of importation and sales of groceries. Even without
Javier, the business could operate its usual course as it did not involve the business of inland
transportation. Lastly, the acknowledgment receipts bearing Javiers signature and words
pakiao rate, referring to his earned salaries on a per trip basis, have evidentiary weight that the LA
correctly considered in arriving at the conclusion that Javier was not an employee of the company.

4. WILHELMINA S. OROZCO vs. THE FIFTH DIVISION OF THE HONORABLE COURT OF

APPEALS, PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ MAGSANOC
G.R. No. 155207
August 13, 2008

DOCTRINE: The line should be drawn between rules that merely serve as guidelines towards
the achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict
the party hired to the use of such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second, which address both the result
and the means used to achieve it.

FACTS: Philippine Daily Inquirer (PDI) engaged the services of petitioner to write a weekly column for
its Lifestyle section. She religiously submitted her articles every week, except for a six-month stint in
New York City when she, nonetheless, sent several articles through mail. She received compensation
for every column published.
On November 7, 1992, petitioners column appeared in the PDI for the last time. Petitioner
claims that her then editor told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief,
wanted to stop publishing her column as the Lifestyle section already had many columnists and that
they decided to cut down the number of columnists by keeping only those whose columns were well-
written, with regular feedback and following.
Petitioner filed a complaint for illegal dismissal before the NLRC. The Labor Arbiter rendered a
Decision in favor of petitioner and ordered respondent company to reinstate her to her former or
equivalent position opining that [R]espondent company exercised full and complete control over the
means and method by which complainants work had to be accomplished. Also, the fact that her
articles were (sic) published weekly for three (3) years show that she was respondents regular
employee.
The NLRC Second Division dismissed the appeal thereby affirming the Labor Arbiters
Decision.
The Court of Appeals set aside the NLRC Decision and dismissed petitioners Complaint
saying that it is not disputed that private respondent had no employment contract with petitioner
PDI. With regard to the control test, the public respondent NLRCs ruling that the guidelines given by
petitioner PDI for private respondent to follow, e.g. in terms of space allocation and length of article, is
not the form of control envisioned by the guidelines set by the Supreme Court. The length of the
article is obviously limited so that all the articles to be featured in the paper can be accommodated.
As to the topic of the article to be published, it is but logical that private respondent should not write
morbid topics such as death because she is contributing to the lifestyle section. Other than said
given limitations, if the same could be considered limitations, the topics of the articles submitted by
private respondent were all her choices. Thus, the petitioner PDI in deciding to publish private
respondents articles only controls the result of the work and not the means by which said articles
were written.

ISSUES: (1) Whether petitioner is an employee of PDI; (2) if the answer be in the affirmative, whether
she was illegally dismissed.

HELD: (1) NO. This Court has constantly adhered to the "four-fold test" to determine whether there
exists an employer-employee relationship between parties. 24 The four elements of an employment
relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to control the employees conduct. Of these four
elements, it is the power of control which is the most crucial 26 and most determinative factor,27 so
important, in fact, that the other elements may even be disregarded.
The line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it.
Petitioner believes that respondents acts are meant to control how she executes her work. We
do not agree. A careful examination reveals that the factors enumerated by the petitioner are
inherent conditions in running a newspaper. In other words, the so-called control as to time,
space, and discipline are dictated by the very nature of the newspaper business itself.
Aside from the constraints presented by the space allocation of her column, there were no
restraints on her creativity; petitioner was free to write her column in the manner and style she was
accustomed to and to use whatever research method she deemed suitable for her purpose. The
apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not
translate to control, but was simply a logical consequence of the fact that her column appeared in
that section and therefore had to cater to the preference of the readers of that section. Contrary to
petitioners protestations, it does not appear that there was any actual restraint or limitation on the
subject matter within the Lifestyle section that she could write about. Respondent PDI did not
dictate how she wrote or what she wrote in her column.
The newspapers power to approve or reject publication of any specific article she wrote for her
column cannot be the control contemplated in the "control test," as it is but logical that one who
commissions another to do a piece of work should have the right to accept or reject the product . The
important factor to consider in the "control test" is still the element of control over how the
work itself is done, not just the end result thereof.
Where a person who works for another performs his job more or less at his own pleasure, in
the manner he sees fit, not subject to definite hours or conditions of work, and is compensated
according to the result of his efforts and not the amount thereof, no employer-employee relationship
exists.
 Aside from the control test, this Court has also used the economic reality test. The economic
realities prevailing within the activity or between the parties are examined, taking into consideration
the totality of circumstances surrounding the true nature of the relationship between the parties.37
This is especially appropriate when, as in this case, there is no written agreement or contract on
which to base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing
possible employment relationships for purposes of applying the Labor Code ought to be the economic
dependence of the worker on his employer.
Petitioners main occupation is not as a columnist for respondent but as a womens rights
advocate working in various womens organizations. Likewise, she herself admits that she also
contributes articles to other publications. Thus, it cannot be said that petitioner was dependent on
respondent PDI for her continued employment in respondents line of business.
Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities
she needed to perform her work. Petitioner only needed her talent and skill to come up with a column
every week. As such, she had all the tools she needed to perform her work.
The inevitable conclusion is that petitioner was not respondent PDIs employee but an
independent contractor, engaged to do independent work.

(2) NO. Considering that respondent PDI was not petitioners employer, it cannot be held guilty of
illegal dismissal.

5.GREGORIO V. TONGKO, petitioner vs. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.),
INC. and RENATO A. VERGEL DE DIOS, respondents.

G.R. No. 167622

November 7, 2008

DOCTRINE: In the determination of whether an employer-employee relationship exists

between two parties, this court applies the four-fold test to determine the existence of the
elements of such relationship. Jurisprudence is firmly settled that whenever the existence of
an employment relationship is in dispute, four elements constitute the reliable yardstick: (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 employees conduct.

It is the so-called control test which constitutes the most important index of existence of
the employer-employee relationship that is, 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. Stated
otherwise, an employer-employee relationship exists where the person for whom the services
are performed reserves the right to control not only the end to be achieved but also the means
to be used in reaching such end.
FACTS: The contractual relationship between Tongko and Manulife had two basic phases.

The first phase began on July 1, 1977, under a Career Agents Agreement, which provided 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. In 1996, Tongko became a Regional Sales
Manager. Tongkos gross earnings consisted of commissions, persistency income, and management
overrides. Since the beginning, Tongko consistently declared himself self-employed in his income tax
returns. Under oath, he declared his gross business income and deducted his business expenses to
arrive at his taxable business income.

Respondent Renato Vergel de Dios, sales manager, wrote Tongko a letter dated November 6, 2001 on
concerns that were brought up during the Metro North Sales Managers Meeting, expressing
dissatisfaction of Tongkos performance in their agent recruiting business, which resulted in some
changes on how Tongko would conduct his duties, including that Tongko hire at his expense a
competent assistant to unload him of routine tasks, which he had been complaining to be too taxing
for him.

On December 18, 2001, de Dios wrote Tongko another letter which served as notice of termination of
his Agency Agreement with the company effective fifteen days from the date of the letter. Tongko
filed an illegal dismissal complaint with the National Labor Relations Commission (NLRC), alleging
that despite the clear terms of the letter terminating his Agency Agreement, that he was Manulifes
employee before he was illegally dismissed.

The labor arbiter decreed that no employer-employee relationship existed between the parties. The
NLRC reversed the labor arbiters decision on appeal; it found the existence of an employer-employee
relationship and concluded that Tongko had been illegally dismissed. The Court of Appeals found that
the NLRC gravely abused its discretion in its ruling and reverted to the labor arbiters decision that
no employer-employee relationship existed between Tongko and Manulife.

ISSUE: Is there an employer-employee relationship between Tongko and Manulife?

HELD: NO. In the determination of whether an employer-employee relationship exists between two
parties, this court applies the four-fold test to determine the existence of the elements of such
relationship. Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (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 employees conduct.

It is the so-called control test which constitutes the most important index of existence of the
employer-employee relationship that is, 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. Stated otherwise, an employer-employee
relationship exists where the person for whom the services are performed reserves the right to control
not only the end to be achieved but also the means to be used in reaching such end.
In the case at bar, the absence of evidence showing Manulifes control over Tongkos contractual
duties points to the absence of any employer-employee relationship between Tongko and Manulife. In
the context of the established evidence, Tongko remained an agent all along; although his subsequent
duties made him a lead agent with leadership role, he was nevertheless only an agent whose basic
contract yields no evidence of means-and-manner control. Claimant clearly failed to substantiate his
claim of employment relationship by the quantum of evidence the Labor Code requires. Tongkos
failure to comply with the guidelines of de Dios letter, as a ground for termination of Tongkos agency,
is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance,
agency and contracts.

6. TELEVISION AND PRODUCTION EXPONENTS, INC. AND/OR ANTONIO P. TUVIERA vs.

ROBERTO SERVAA

G.R. No. 167648

January 28, 2008

DOCTRINE: It has been in held that in a business establishment, an identification card is

usually provided not just as a security measure but to mainly identify the holder thereof as a
bona fide employee of the firm who issues it.

Jurisprudence is abound with cases that recite the factors to be considered in determining
the existence of employer-employee relationship, namely: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's
power to control the employee with respect to the means and method by which the work is to
be accomplished. The most important factor involves the control test. Under the control test,
there is an employer-employee relationship when the person for whom the services are
performed reserves the right to control not only the end achieved but also the manner and
means used to achieve that end.

FACTS: TAPE is a domestic corporation engaged in the production of television programs, such as the
long-running variety program, Eat Bulaga!. Its president is Antonio P. Tuviera
(Tuviera). Respondent Roberto C. Servaa had served as a security guard for TAPE from March 1987
until he was terminated on 3 March 2000.

Respondent filed a complaint for illegal dismissal and nonpayment of benefits against
TAPE. He alleged that he was first connected with Agro-Commercial Security Agency but was later
on absorbed by TAPE as a regular company guard. He was detailed at Broadway Centrum in Quezon
City where Eat Bulaga! regularly staged its productions. On 2 March 2000, respondent received a
memorandum informing him of his impending dismissal on account of TAPEs decision to contract
the services of a professional security agency. At the time of his termination, respondent was
receiving a monthly salary of P6,000.00. He claimed that the holiday pay, unpaid vacation and sick
leave benefits and other monetary considerations were withheld from him. He further contended that
his dismissal was undertaken without due process and violative of existing labor laws, aggravated by
nonpayment of separation pay.
The Labor Arbiter ruled that respondent is a regular employee but the NLRC ruled that he was only a
mere program employee. The Court of Appeals affirmed the decision of the Labor Arbiter that Servaa
is a regular employee.

ISSUE: Whether an employer-employee relationship exist between TAPE and respondent.

HELD: YES. Jurisprudence is abound with cases that recite the factors to be considered in
determining the existence of employer-employee relationship, namely: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee with respect to the means and method by which the work is
to be accomplished. The most important factor involves the control test. Under the control test, there
is an employer-employee relationship when the person for whom the services are performed reserves
the right to control not only the end achieved but also the manner and means used to achieve that
end.

Respondent was hired by TAPE. Respondent presented his identification card to prove that he is
indeed an employee of TAPE. It has been in held that in a business establishment, an identification
card is usually provided not just as a security measure but to mainly identify the holder thereof as a
bona fide employee of the firm who issues it.

Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to
designate such amount as talent fees. Wages, as defined in the Labor Code, are 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 service rendered or to be rendered. It is beyond dispute that
respondent received a fixed amount as monthly compensation for the services he rendered to TAPE.

The Memorandum informing respondent of the discontinuance of his service proves that TAPE had
the power to dismiss respondent.

Control is manifested in the bundy cards submitted by respondent in evidence. He was required to
report daily and observes definite work hours.

TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying
respondent as a program employee and equating him to be an independent contractor. TAPE failed to
adduce any evidence to prove that it complied with the requirements laid down in the policy
instruction. It did not even present its contract with respondent. Neither did it comply with the
contract-registration requirement.

More importantly, respondent had been continuously under the employ of TAPE from 1995 until his
termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had
been performing work that is necessary or desirable to the usual business of TAPE, respondent is still
considered a regular employee under Article 280 of the Labor Code.

As a regular employee, respondent cannot be terminated except for just cause or when authorized by
law. It is clear from the tenor of the 2 March 2000 Memorandum that respondents termination was
due to redundancy.

However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that
he acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with
TAPE. Thus, the Court of Appeals ruling on this point has to be modified.

7. GR NO.87098 November 4, 1996

ENCYCLOPAEDIA BRITANICCA VS. NLRC

FACTS:
Benjamin Limjoco was a Sales Division Manager of Encyclopaedia Britanicca.
He was in charge of selling petitioner's products through some sales representatives.
As compensation, he receives commissions from the products sold by his agents.
On June 14, 1974, Limjoco resigned from office to pursue his private business.
Then on October 30, 1975, he filed a complaint against the petitioner with the DOLE, claiming for
non-payment of separation pay and other benefits, and also illegal deduction from his sales
commissions.

LABOR ARBITER
On its decision, Limjoco was an employee of the petitioner. The company had control over Limjoco
since the latter was requires to make periodic reports of his sales activities to the company. All
transactions were subject to the final approval of the petitioner company had active control on the
sales activities.

NLRC
Petitioner appealed to NLRC
On its decision, the NLRC affirmed to Labor Arbiter's decision. There was no evidence supporting the
allegation that Limjoco was an independent contractor or dealer.

ISSUE:
WoN there exists an employer-employee relationship between Encyclopaedia Britanicca and
Benjamin Limjoco?

RULING:
The petition has been granted.
In determining the existence of an employer-employee relationship the following elements must be
present:
1. Selection and engagement of the employee;
2. Payment of wages;
3. Power of Dismissal; and
4. The power to control employee's conduct.

Under the control test, an employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only to end to be achieved, but also the
manner and means to be used in reaching that end.

Limjoco was merely an agent or an independent dealer of the petitioner. Had he been an employee of
the company. He could not be employed elsewhere and he would be required to devote full time for
petitioner.

In the case at bar, the element of control is absent, 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 in
turn is compensated affording to the result of his efforts and not the amount thereof.

8. GR NO. 169510 August 8, 2011

ATOK BIG WEDGE COMPANY, INC. VS. JESUS P. GISON

FACTS:
Jesus P. Gison was engaged as part-time consultant on retainer basis to Atok Big Wedge Company
(Atok, for brevity).
As a consultant on retainer basis, he assisted Atok retained legal counsel with matters pertaining to
the prosecution of cases against illegal surface occupants within the area covered by the company's
mineral claims.
 As payment, he receives 3,000 a month. This set-up continued for eleven years.
Since, Gison was getting old, he requested that Atok cause his registration with the SSS.
Such request has been denied. (Petitioner contends that he was only a retainer/consultant).
Gison filed a complaint with the SSS for Atok's refusal to cause his registration with the SSS.
On the same date, Mario Cera ( resident manager of Atok) issued a memorandum for Gison's
termination. (within 30 days upon receipt)

NLRC:
Gison filed a complaint with the NLRC for illegal dismissal, unfair labor practice, underpayment of
wages, non-payment of 13th month pay, vacation pay, and sick leave pay.
Decision of the Labor Arbiter: Ruling in favor of the petitioner. Finding that no employer-employee
relationship between petitioner and respondent.
Gison filed an appeal.
Decision of the 2nd Division of the NLRC: Affirming the decision of the Labor Arbiter.
Gison filed a MR but then it was denied.

CA:
Gison filed a petition for review, questioning the decision and resolution of the NLRC.
Decision of the CA: In favor of the respondent.
The CA opined that the NLRC and Labor Arbiter may have overlooked Article 280 of the Labor Code,
or the provision which distinguishes two kinds of employees (regular and casual).
In the case at bar, Gison is deemed a regular employee of Atok after the lapse of one year from his
employment. Considering also that he had been performing services for the petitioner for 11 years,
thus, respondent is entitled to the rights and privileges of a regular employee.

ISSUE:
WoN there exists an employer-employee relationship between Atok and Gison?

SC:
The petition has been GRANTED, in favor with the petitioner. The resolutions issued by the NLRC
has been reinstated.
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably
adhered to the four-fold test, to wit:
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal; and
4. the power to control the employee's conduct, or the so-called "control test".
The so-called "control test" is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed reserves the right
to control not only the end achieved , but also the manner and means to be used in reaching that
end.
Applying the aforementioned test, an employer-employee relationship is ABSENT.
Respondent was assigned tasks to perform but petitioner did not control the manner and methods
by which respondent performed those tasks.

9. Dumpit- Murillo v CA
FACTS:

On October 2, 1995, under Talent Contract No. NT95-1805, Associated Broadcasting Company (ABC)
hired petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor for Balitang-Balita, an early
evening news program.

The contract was for a period of three months. Which was later renewed. In addition, petitioners
services were engaged for the program Live on Five.

On September 30, 1999, after four years of repeated renewals, petitioners talent contract expired.
Two weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier, Vice
President for News and Public Affairs of ABC, informing the latter that she was still interested in
renewing her contract subject to a salary increase. Thereafter, petitioner stopped reporting for work.
She wrote Mr. Javier another letter saying "should I not receive any formal response from you until
Monday, November 8, 1999, I will deem it as a constructive dismissal of my services."

A month later, petitioner sent a demand letter

(a) reinstatement to her former position

(b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and full
backwages

(c) payment of 13th benefits due to a regular employee starting March 31, 1996

On December 20, 1999, petitioner filed a complaint Edward Tan, for illegal constructive dismissal,
nonpayment of salaries, overtime pay, premium pay, separation pay, holiday pay, service incentive
leave pay, vacation/sick leaves and 13th pay. She likewise demanded payment for moral, exemplary
and actual damages, as well as for attorneys fees.

Labor Arbiter dismissed the complaint.

On appeal, The National Labor Relations Commission reversed the LA. The Court of Appeals reversed
the NLRC and ruled that as per the contract between ABC and Dumpit, Dumpit is a fixed term
employee.

ISSUE: Whether or not Dumpit is a regular employee.

HELD: Yes. Dumpit was a regular employee under contemplation of law. The practice of having fixed-
term contracts in the industry does not automatically make all talent contracts valid and compliant
with labor law. The assertion that a talent contract exists does not necessarily prevent a regular
employment status.The duties of Dumpit as enumerated in her employment contract indicate that
ABC had control over the work of Dumpit. Aside from control, ABC also dictated the
work assignments and payment of petitioners wages. ABC also had power to dismiss her. All these
being present, clearly, there existed an employment relationship between Dumpit and ABC.

In addition, her work was continuous for a period of four years. This repeated engagement under
contract of hire is indicative of the necessity and desirability of the Dumpits work in ABCs business.
The primary standard for determining regular employment is the reasonable connection private
respondent to ABC, demanding: 13th month pay, vacation/sick/service incentive leaves and other
monetary against ABC.

The particular activity performed by the employee vis--vis the usual trade or business of the
employer. This connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. If the employee has been
performing the job for at least a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient evidence
of the necessity if not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity exists.

10. JOSE MEL BERNARTEvs. PBA

FACTS:

Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as
referees. During the leadership Bernardino, they were made to sign contracts on a year-to-year basis.
During the term of Commissioner Eala, however,changes were made on the terms of their
employment.

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

On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of referees
in February 2001. On March 1, 2001, he signeda contract as trainee. Beginning 2002, he signed a
yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued
amemorandum 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, on the other
hand, that complainants entered into two contracts of retainer with the PBA in the year 2003. The
first contract wasfor the period January 1, 2003 to July 15, 2003; and the second was for September
1 to December 2003. After the lapse of the latter period, PBA decided not to renew their
contracts.Complainants were not illegally dismissed because they were not employees of the PBA.

Labor Arbiter declared petitioner an employee whose dismissal by respondents was illegal.
Accordingly, the Labor Arbiter ordered the reinstatement . The NLRC affirmed the Labor Arbiter's
judgment. Respondents filed a petition for certiorari with the Court of Appeals, which overturned the
decisions of the NLRC and Labor Arbiter.

ISSUE:
Whether petitioner is an employee of respondents, which in turn determines whether petitioner was
illegally dismissed

HELD:
NO, Petitioner is not an employee of the respondents. The SC DENIED the petition and AFFIRMED
the assailed decision of the Court of Appeals. To determine the existence of an employer-employee
relationship, case law has consistently applied the four-fold test, to wit: (a) the selection
andengagement of the employee;

(b) the payment of wages;

(c) the power of dismissal; and

(d) the employers power to control the employee on themeans and methods by which the work is
accomplished.

The so-called control test is the most important indicator of the presence or absence of anemployer-
employee relationship. In this case, PBA admits repeatedly engaging petitioners services, as shown in
the retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract for petitioners violation of
its terms and conditions. However, respondents argue that the all-important element of control
is lacking in this case, making petitioner an independent contractor and not an employee
of respondents. The contractual stipulations do not pertain to, much less dictate, how and when
petitioner will blow the whistle and make calls. On the contrary, they merely serve as rules of conduct
or guidelines in order to maintain the integrity of the professional basketball league.

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 towhen and how a call or decision is to be made. The
referees are the only, absolute, and final authority on the playing court. The very nature of
petitioners job of officiating a professional basketball game undoubtedly calls for freedom of control
by respondents. Moreover, unlike regular employees who ordinarily report for work eight hours per
day for five days a week, 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 SocialSecurity System, Philhealth or
Pag-Ibig, which are the usual deductions from employees salaries. These undisputed circumstances
buttress the factthat petitioner is an independent contractor, and not an employee of respondents.

11.Jardin vs. National Labor Relations Commission

Facts:
Petitioners were drivers of private respondent, Philjama International, Inc. a domestic corporation
engaged in the operation of Goodman Taxi. Petitioners used to drive private respondents taxicabs
every other day on a 24-hour work schedule under the boundary system. Under this arrangement,
the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly,
regularly deducts from petitioners daily earnings the amount of P30.00 supposedly for the washing
of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to
protect their rights and interests.

Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their
taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners
suspected that they were singled out because they were the leaders and active members of the
proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private
respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. The labor
arbiter dismissed said complaint for lack of merit. On appeal, the NLRC reversed the decision of the
labor arbiter. Private Respondent then filed a motion for reconsideration but was denied.
Private Respondent filed another motion for reconsideration which eventually was granted dismissing
the complaint of the petitioners for lack of jurisdiction on the ground that there was no employer-
employee relationship. Petitioners sought reconsideration of the labor tribunals latest decision which
was denied.

ISSUE: Whether or not employer-employee relationship exist.

HELD: Yes. In the number of cases decided by the court, it ruled that the relationship between
operators and drivers under the boundary system is that of employer-employee and not of lessor-
lessee as argued by the NLRC. The court already explained that in the lease of chattels, the lessor
loses complete control over the chattel leased although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the damages to the lessor.

In the case of jeepney owners/operators and jeepney operators and drivers, the former exercise
supervision and control over the latter. The management of the business is in the owners hand. The
owner as holder of the certificate of public convenience must see to it that the drivers follow the route
prescribed by the franchising authority and the rules promulgated as regards its operation.

The fact that the drivers do not receive a fixed salary but get only that excess of the boundary is not
sufficient to withdraw the relationship between that of the employer- employee. This is based in the
four fold test provided to determine the relationship, to wit: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, or the so-called "control test." Of these four, the last one is the most important.
The so-called "control test" is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test an employer-
employee relationship exists if 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.

Otherwise, no such relationship exists.

Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does
not pay the drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for
the use of the vehicle. On the matter of control, the drivers, once they are out plying their trade and
are beyond the physical control of the owner/operator, they themselves determine the amount of
revenue they would want to earn in a days driving and, more significantly, aside from the fact that
they pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages
sustained by the vehicles they are driving.

As consistently held by the Supreme Court, termination of employment must be effected in

accordance with law. The just and authorized causes for termination of employment are enumerated
under articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is set-out
in Article 277 (b) of the said code. Hence, petitioners being employees of private respondent can be
dismissed only for just and authorized cause, and after affording them notice and hearing prior to
termination. In the instant case, private respondent had no valid cause to terminate the employment
of the petitioners. Neither were there two written notices sent by private respondent informing each
of the petitioners that they had been dismissed from work. This lack of valid cause and failure on the
part of private respondent to comply with the twin-notice requirement underscored the illegality
surrounding petitioners dismissal.

In the issue of the washing fee, the court held that it was a valid deduction. It is incumbent upon the
driver to restore the unit he has driven to the same clean condition when he took it out.

Private respondent is directed to reinstate petitioners to their positions held at the time of the
complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages,
to be computed for the date of the dismissal until their actual reinstatement. However, the order of
public respondent that petitioners be reimbursed the amount paid as washing charges is deleted.

12. Professional Sertvices, Inc., petitioner v The Court of Appeals and Natividad and Enrique

Agana, respondents

Facts:

Natividad Agana was admitted at the Medical City General Hospital because of difficulty of bowel
movement and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from cancer of the
sigmoid. Dr. Ampil performed an anterior resection surgery upon her, and found
that the malignancy in her sigmoid area had spread to her left ovary, necessitating the removal
of certain portions of it. Upon the consent of Atty. Enrique Agana, Natividads husband, a
hypersectomy was performed upon Natividad by Dr. Fuentes. Afterwards, Dr. Ampil took over,
completed the operation and closed the incision. In the Record of Operation, the attending nurse
entered these remarks: sponge count lacking 2; announced to surgeon searched done but to no
avail.

After a couple of days, Natividad complained of pain in her anal region and consulted both Dr. Ampil
and Dr. Fuentes. The doctors told her that the pain was the natural consequence of the surgical
operation performed upon her. Dr. Ampil recommended that she consult an oncologist to treat the
cancerous nodes which were not removed during the operation. After four months of consultations
and examinations in the US, she was told that she was free of cancer.

Two weeks after returning to the Philippines, her daughter found a piece of gauze (1.5 in) protruding
from her vagina. Dr. Ampil was immediately informed. Dr. Ampil extracted by hand the piece of gauze
and assured Natividad that the pains would soon vanish. However, the pains intensified prompting
Natividad to seek treatment at the Polymedic General Hospital, where another Dr. Gutierrez detected
the presence of a foreign object in her vagina. Natividad underwent another surgery.

Spouses Agana filed with the Regional Trial Court a complaint for damages against Professional
Services, Inc. (owner of Medical City), Dr. Ampil and Dr. Fuentes. Pending the outcome of the case,
Natividad died. The RTC found PSI, Dr. Ampil and Dr. Fuentes jointly and
severally liable. On appeal, the Court of Appeals affirmed the assailed judgment with modification
that the complaint against Dr. Fuentes was dismissed.

Issue:

Whether or not there was an employer-employee relationship between the Medical City and Dr.
Ampil?
Ruling:

Yes, there exists an employer-employee relationship between the Medical City and Dr. Ampil. The
Court, relying on Ramos v Court of Appeals, held that for the purpose of apportioning responsibility
in medical negligence cases, an employer-employee relationship in effect exists between hospitals and
their attending and visiting physicians. Hospitals exercise significant control in the hiring and firing
of consultants and in the conduct of their work within the hospital premises. Furthermore, PSIs act
of publicly displaying in the lobby of the Medical City the names and specializations of its accredited
physicians estopped it from denying the existence of an employer-employee relationship between them
under the doctrine of ostensible agency or agency by estoppel.

13. Locsin v. PLDT

October 2, 2009

Facts: On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and
the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services
Agreement (Agreement) whereby SSCP would provide armed security guards to PLDT to be assigned
to its various offices. Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin,
among other security guards, were posted at a PLDT office.

On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement
effective October 1, 2001. Despite the termination of the Agreement, however, petitioners continued
to secure the premises of their assigned office. They were allegedly directed to remain at their post by
representatives of respondent. In support of their contention, petitioners provided the Labor Arbiter
with copies of petitioner Locsins pay slips for the period of January to September 2002.

Then, on September 30, 2002, petitioners services were terminated. Thus, petitioners filed a
complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such as
overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.

The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the
Decision that petitioners were found to be employees of PLDT and not of SSCP. Such conclusion was
arrived at with the factual finding that petitioners continued to serve as guards of PLDTs offices. As
such employees, petitioners were entitled to substantive and procedural due process before
termination of employment.

Issue: Is there employer-employee relationship?

Held: Yes. From the foregoing circumstances, reason dictates that we conclude that petitioners
remained at their post under the instructions of respondent. We can further conclude that
respondent dictated upon petitioners that the latter perform their regular duties to secure the
premises during operating hours. This, to our mind and under the circumstances, is sufficient to
establish the existence of an employer-employee relationship.

To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of
the Agreement, petitioners remained at their post securing the premises of respondent while receiving
their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials
proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that,
with the behest and, presumably, directive of respondent, petitioners continued with their services.
Evidently, such are indicia of control that respondent exercised over petitioners.

Evidently, respondent having the power of control over petitioners must be considered as petitioners
employerfrom the termination of the Agreement onwardsas this was the only time that any
evidence of control was exhibited by respondent over petitioners and in light of our ruling in Abella.
Thus, as aptly declared by the NLRC, petitioners were entitled to the rights and benefits of employees
of respondent, including due process requirements in the termination of their services.

Both the Labor Arbiter and NLRC found that respondent did not observe such due process
requirements. Having failed to do so, respondent is guilty of illegal dismissal.

14. Ymbong v. ABSCBN

Facts:

Petitioner Ernesto G. Ymbong started working for ABS-CBN in 1993 at its regional station in Cebu as
a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended
to radio when ABS-CBN Cebu launched its AM station in 1995.

Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as
talent, director and scriptwriter for various radio programs aired.

On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy on Employees Seeking Public
Office. The pertinent portions read:

1. Any employee who intends to run for any public office position, must file
his/her letter of resignation,
2. Any employee who intends to join a political group/party or even with no
political affiliation but who intends to openly and aggressively campaign for a
candidate or group of candidates must file a request for leave of absence
subject to managements approval.

Because of the 1998 elections and based on his immediate recollection of the policy Mr. Dante
Luzon, Assistant Station Manager issued a memorandum stating any employee/talent who
wants to run for any position in the coming election will have to file a leave of
absence the moment he/she files his/her certificate of candidacy. And added further
that The services rendered by the concerned employee/talent to this company will then be
temporarily suspended for the entire campaign/election period.

Luzon, however, admitted that upon double-checking of the exact text of the policy he saw that the
policy actually required suspension for those who intend to campaign for a political party or
candidate and resignation for those who will actually run in the elections.

After the issuance of the Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong
approached him and told him that he would leave radio for a couple of months because he will
campaign for the administration ticket. It was only after the elections that they found out that
Ymbong actually ran for public office himself at the eleventh hour. Ymbong, on the other hand,
claims that in accordance with the Memorandum, he informed Luzon through a letter that he would
take a few months leave of absence because he was running for councilor of Lapu-Lapu City.

As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor
for Naga. According to Luzon, he clarified to Patalinghug that he will be considered resigned and not
just on leave once he files a certificate of candidacy. Thus, Patalinghug wrote Luzon his resignation
letter.

Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.

Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he
informed them that they cannot work there anymore because of company policy.

ABS-CBN, however, agreed out of pure liberality to give them a chance to wind up their participation
in the radio drama since it was rating well and to avoid an abrupt ending. The agreed winding-up,
however, dragged on for so long prompting Luzon to issue to Ymbong a memorandum stating that his
involvement as narrator of the drama continues until its director wraps it up one week upon receipt
of a separate memo.

Ymbong in contrast contended that after the expiration of his leave of absence, he reported back to
work as a regular talent and in fact continued to receive his salary. On he received a memorandum
stating that his services are being terminated immediately, much to his surprise.

Thus, he filed an illegal dismissal. He argued that the ground cited by ABS-CBN for his dismissal was
not among those enumerated in the Labor Code. And even granting without admitting the existence
of the company policy supposed to have been violated, Ymbong averred that it was necessary that the
company policy meet certain requirements before willful disobedience of the policy may constitute a
just cause for termination. Ymbong further argued that the company policy violates his
constitutional right to suffrage.

Patalinghug likewise filed an illegal dismissal complaint against ABS-CBN.

ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug.

The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN and
Ymbong and Patalinghug considering the stipulations in their appointment letters/talent contracts.

In its memorandum of appeal before the National Labor Relations Commission (NLRC), ABS-CBN
contended that the Labor Arbiter has no jurisdiction over the case because there is no employer-
employee relationship between the company and Ymbong and Patalinghug.

In its Supplemental Appeal, ABS-CBN insisted that Ymbong and Patalinghug were engaged as radio
talents and their contract is one between a self-employed contractor and the hiring party which is a
standard practice in the broadcasting industry.
The NLRC dismissed ABS-CBNs Supplemental Appeal for being filed out of time.

As to the issue of whether they were illegally dismissed, the NLRC treated their cases differently. In
the case of Patalinghug, it found that he voluntarily resigned from employment when he submitted
his resignation letter. As to Ymbong, however, the NLRC ruled otherwise. It ruled that the
Memorandum merely states that an employee who seeks any elected position in the government will
only merit the temporary suspension of his services. It held that under the principle of social justice,
the Memorandum shall prevail and ABS-CBN is estopped from enforcing the other memorandum
issued to Ymbong stating that his services had been automatically terminated when he ran for an
elective position.

ABS-CBN moved to reconsider the NLRC decision, but the same was denied in a Resolution. ABS-
CBN then filed a petition for certiorari before the CA.

CA rendered the assailed decision. The CA declared Ymbong resigned from employment and not to
have been illegally dismissed.

Issues:

1) Whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed
by ABS-CBN.
2) Whether such policy is valid.

Held:

We have consistently held that so long as a companys management prerogatives are exercised in good
faith for the advancement of the employers 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 them. In the instant case, ABS-CBN validly justified the implementation of the Policy. It is
well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from
any appearance of impartiality.

We find no merit in Ymbongs argument that [his] automatic termination x x x was a blatant
[disregard] of [his] right to due process as he was never asked to explain why he did not tender his
resignation before he ran for public office as mandated by [the subject company policy]. Ymbongs
overt act of running for councilor of is tantamount to resignation on his part. He was separated from
ABS-CBN not because he was dismissed but because he resigned.

Since there was no termination to speak of, the requirement of due process in dismissal cases cannot
be applied to Ymbong.

Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his resignation before
he ran for public office as mandated by the subject company policy.
15. Chavez v. NLRC

January 17, 2005

Facts: Petitioner Pedro Chavez was hired as truck driver of Private Respondent Supreme Packaging,
Inc. Chavez requested to avail himself of the benefits that a regular employees were receiving but his
request was denied. Chavez filed before NLRC a complaint for regularization. Later on he was
dismissed by SPI. He later on filed an amended complaint for illegal dismissal.

Issue/s:
1. W/N there existed an employer-employee relationship between SPI and Chavez?
2. W/N Chavez is an independent contractor?

Held: Yes, there existed an employer-employee relationship between SPI and Chavez.
Applying four-fold test, all elements are present:

1. selection and engagement of the employee

- it was SPI who engaged the services of Chavez without intervention of third party
2. payment of wages
- that petitioner was paid on per trip basis is not significant, this is merely a method of computing
compensation and not a basis for determining the existence or absence of er-ee relationship
3. power of dismissal
- power to dismiss was inherent in the fact that they engaged the services of Chavez as driver
4. power to control employee's conduct
- an employee is subject to employer's power to control the means and method by which the work is
to be performed while an independent contractor is free from control and supervision of employer
-
* Manifestation of Power of Control of SPI to Chavez truck was owned by SPI express instruction in
the method of delivery instruction on parking of delivery truck instruction on when and where
Chavez would perform his task by issuing to him gate passes and routing slips Chavez is not and
Independent Contractor

* Proof that Chavez is not an Independent Contractor. Chavez did not own the truck SPI did not have
substantial capitalization or investment. Delivery was exclusively done for SPI for 10years.

* Er-Ee Relationship cannot be negated by expressly repudiating it in contract and providing therein
that the employee is an independent contractor. Indeed the employment status of the person is
defined and prescribed by law and not by what parties say it should be.

16. COCA-COLA BOTTLERS PHILS., INC., vs. CLIMACO

G.R. No. 146881

February 15, 2007

Facts:

Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer agreement. The
agreement states that there is no employer-employee relationship between the parties. The retainer
agreement was renewed annually. The last one expired on Dec. 31, 1993. Despite of the non-renewal
of the agreement, respondent continued to perform his functions as company doctor until he received
a letter in March 1995 concluding their retainer agreement.

Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the
petitioner company and prayed for the payment of all benefits of a regular employee. In the decision of
the Labor Arbiter, the company lacked control over the respondents performance of his duties.
Respondent appealed where it rendered that no employer-employee relationship existed between the
parties.

The CA ruled that an employer-employee relationship existed.

Issue:

Whether or not there exists an employer-employee relationship between the parties.

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.

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 Comprehensive
Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not
control the means and methods by which respondent performed his assigned tasks. In addition, the
Court finds that the schedule of work and the requirement to be on call for emergency cases do not
amount to such control, but are necessary incidents to the Retainership Agreement.

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.
17. Gabriel vs Bilon

Employee-Employer Relations

FACTS:

Complaint for illegal dismissal and illegal deductions

Gabriel owner-operator of public transport business Gabriel Jeepney with a fleet of 54
jeepneys plying the Baclaran-Divisoria-Tondo route
Gabriel had a pool of drivers, which included Bilon and other respondents, operating under
the boundary system of Php 400/day
Drivers (private respondents) drove for Gabriel November 1984 until April 1995
Driving 5 days a week with daily earnings of Php 400
Alleged illegal deductions: Php 20 for police protection + Php 20 washing + Php 10 for deposit
+ Php 5 for garage fees
April 30, 1995 Gabriel told them not to drive anymore
NOTE: Gabriel died after the Labor Arbiter gave his decision.

ISSUE: WON there is an employee-employer relationship between the Gabriel and his drivers so that
Gabriel can be made guilty of illegal dismissal?

HELD: YES

As held in Martinez vs NLRC: [T]he relationship between jeepney owners/operators and

jeepney drivers under the boundary system is that of employer-employee and not of lessor-
lessee because in the lease of chattels the lessor loses complete control over the chattel leased
although the lessee cannot be reckless in the use thereof, otherwise he would be responsible
for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers,
the former exercises supervision and control over the latter. The fact that the drivers do not
receive fixed wages but get only that in excess of the so-called "boundary" [that] they pay to
the owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee.
Drivers were also illegally dismissed because they were not accorded due process and
petitioner failed to show the cause for termination.
Reinstatement of the drivers is obtainable because it has not been shown that there is an
ensuing strained relation between petitioners and respondents.

18. ALFREDO B. FELIX, vs.DR. BRIGIDA BUENASEDA

Facts: After passing the Physician's Licensure Examinations given by the Professional Regulation
Commission in June of 1979, petitioner, Dr. Alfredo B. Felix, joined the National Center for Mental
Health (then the National Mental Hospital) on May 26, 1980 as a Resident Physician with an annual
salary of P15,264.00. 5 In August of 1983, he was promoted to the position of Senior Resident
Physician 6 a position he held until the Ministry of Health reorganized the National Center for Mental
Health (NCMH) in January of 1988, pursuant to Executive Order No. 119.

Under the reorganization, petitioner was appointed to the position of Senior Resident Physician in a
temporary capacity immediately after he and other employees of the NCMH allegedly tendered their
courtesy resignations to the Secretary of Health. 7 In August of 1988, petitioner was promoted to the
position of Medical Specialist I (Temporary Status), which position was renewed the following year. 8

In 1988, the Department of Health issued Department Order No. 347 which required board
certification as a prerequisite for renewal of specialist positions in various medical centers, hospitals
and agencies of the said department. Specifically, Department Order No. 347 provided that specialists
working in various hospitals and branches of the Department of Health be recognized as "Fellows" of
their respective specialty societies and/or "Diplomates" of their specialty boards or both. The Order
was issued for the purpose of upgrading the quality of specialties in DOH hospitals by requiring them
to pass rigorous theoretical and clinical (bedside) examinations given by recognized specialty boards,
in keeping up with international standards of medical practice.

Upon representation of the Chiefs of Hospitals of various government hospitals and medical centers,
(then) Secretary of Health Alfredo Bengzon issued Department Order No. 347 providing for an
extension of appointments of Medical Specialist positions in cases where the termination of medical
specialist who failed to meet the requirement for board certification might result in the disruption of
hospital services.

On November 25, 1991, an emergency meeting of the Chiefs of Service was held to discuss, among
other matters, the petitioner's case. In the said meeting Dr. Vismindo de Grecia, petitioner's
immediate supervisor, pointed out petitioner's poor performance, frequent tardiness and inflexibility
as among the factors responsible for the recommendation not to renew his appointment. With one
exception, other department heads present in the meeting expressed the same opinion, and the
overwhelming concensus was for non-renewal.

The Board likewise finds as baseless complainant's allegation of harassment. It should be noted that
the subsistence, quarters and laundry benefits provided to the Complainant were in connection with
his employment with the NCMH. Now that his employment ties with the said agency are severed, he
eventually loses his right to the said benefits. Hence, the Hospital Management has the right to take
steps to prevent him from the continuous enjoyment thereof, including the occupancy of the said
cottage, after his cessation form office.

ISSUE: WON petitioners dismissal is illegal and violative of the constitutional provision on security
of tenure allegedly because his removal was made pursuant to an invalid reorganization.

HELD: Responding to the instant petition, the Solicitor General contends that 1) the petitioner's
temporary appointment after the reorganization pursuant to E.O. No. 119 were valid and did not
violate his constitutional right of security of tenure; 2) petitioner is guilty of estoppel or laches, having
acquiesced to such temporary appointments from 1988 to 1991; and 3) the respondent Commission
did not act with grave abuse of discretion in affirming the petitioner's non-renewal of his appointment
at the National Center for Mental Hospital. We agree. The patent absurdity of petitioner's posture is
readily obvious. A residency or resident physician position in a medical specialty is never a
permanent one. Residency connotes training and temporary status. It is the step taken by a physician
right after post-graduate internship (and after hurdling the Medical Licensure Examinations) prior to
his recognition as a specialist or sub-specialist in a given field. Petitioner's insistence on being
reverted back to the status quo prior to the reorganizations made pursuant to Executive Order No.
119 would therefore be akin to a college student asking to be sent back to high school and staying
there. From the position of senior resident physician, which he held at the time of the government
reorganization, the next logical step in the stepladder process was obviously his promotion to the
rank of Medical Specialist I, a position which he apparently accepted not only because of the increase
in salary and rank but because of the prestige and status which the promotion conferred upon him in
the medical community.

Estoppel. We lay stress to the fact that petitioner made no attempt to oppose earlier renewals of his
temporary Specialist I contracts in 1989 and 1990, clearly demonstrating his acquiescence to if not
his unqualified acceptance of the promotion (albeit of a temporary nature) made in 1988. Whatever
objections petitioner had against the earlier change from the status of permanent senior resident
physician to temporary senior physician were neither pursued nor mentioned at or after his
designation as Medical Specialist I (Temporary). He is therefore estopped from insisting upon a right
or claim which he had plainly abandoned when he, from all indications, enthusiastically accepted the
promotion. His negligence to assert his claim within a reasonable time, coupled with his failure to
repudiate his promotion to a temporary position, warrants a presumption, in the words of this Court
in Tijam vs. Sibonghanoy, 20 that he "either abandoned (his claim) or declined to assert it."

It is crystal clear, from the facts of the case at bench, that the petitioner accepted a temporary
appointment (Medical Specialist I). As respondent Civil Service Commission has correctly pointed out
23, the appointment was for a definite and renewable period which, when it was not renewed, did not
involve a dismissal but an expiration of the petitioner's term.

19. AUTO BUS TRANSPORT SYSTEMS, INC. v. BAUTISTA

GR No. 156367; May 26, 2005

FACTS:

Respondent Antonio Bautista was employed with petitioner Auto Bus Transport System, Inc. since
May 24, 1995 as a driver-conductor of the latters bus. Bautista was paid on commission basis per
travel on a twice a month basis. On January 3, 2000, the bus driven by Bautista accidentally
bumped another bus owned by the respondent. As a result, Auto Bus did not allow Bautista to work
until he paid the cost of the repair of the damaged bus. Bautista failed to pay and after given the
opportunity to explain his side, Auto Bus sent him a letter for termination. Bautista then instituted a
Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service
incentive leave pay (SILP) against Auto Bus. Labor Arbiter Tabingan decided on the case in favor of
Auto Bus, dimissing the Complaint of Bautista. However, the LA ordered Auto Bus to pay Bautista his
13th month pay from the date of his hiring to the date of his dismissal and his SILP for all the years
he has been in service for the former. Auto Bus appealed the decision to the NLRC wherein the latter
affirmed with modification LAs decision. It held that Bautista, being an employee paid on
commission basis, was not entitled for 13th month pay in accordance with Section 3 of the Rules and
Regulations Implementing PD No. 851, leaving Bautista with a claim for his SILP. Auto Bus filed a
motion for reconsideration on the ground that Bautista was also not entitled for it. It averred that
Bautista, being a field personnel, was an exception to the rule that employees are entitled to SILP.
As a legal basis, it cited Section 1(d), Rule V, Book 3 of the Implementing Rules and Regulations of
the Labor Code which delimits the grant of the SIL, excluding among others field personnel and
other employees whose performance is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount
for performing work irrespective of the time consumed in the performance thereof. Auto Bus motion
was denied and so it elevated the case to the CA which affirmed NLRCs decision.

ISSUES:

1. Whether or not Bautista is a field personnel.

2. Whether or not Bautista is entitled for service incentive leave pay.

RULING:

1. The Court ruled in negative. 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. The term 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. 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 the case of Bautista, it was observed in the facts found by the LA that he must be at a specific
place in a specified time to be able to observe prompt departure and arrival from his point of origin to
his point of destination. In each and every depot, there is always a dispatcher whose function is to
see to it that Bautistas bus and its crew leave the premises at specific time and arrive at the
estimated proper time. Therefore, Bautista was under constant supervision while in the performance
of his work. In conclusion, he was not a field personnel but a regular employee who performs tasks
usually necessary and desirable to the usual trade of Auto Bus.
2. The Court ruled in affirmative. Being a regular employee, he has the right to claim service
incentive leave pay under Article 95 of the Labor Code.

20. Songco vs. NLRC

G.R. No. L-50999 March 23, 1990

Justice Medialdea

FACTS:

Private respondent F.E Zuellig (Zuellig) filed with the Department of Labor an application seeking
clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel
(petitioners) allegedly on the ground of retrenchment due to financial losses, which was seasonably
opposed by petitioners alleging that the company is not suffering from any losses. They alleged
further that they are being dismissed because of their membership in the union. At the last hearing
of the case, however, the parties agreed that the sole issue to be resolved is the basis of the
separation pay due to petitioners. The salesmen received monthly salaries of at least P400.00 and
commissions for every sale they made.

The CBA between Zuellig and the Union contained the following provision: Any employee, who is
separated from employment due to old age, sickness, death or permanent lay-off not due to the fault
of said employee shall receive from the company a retirement gratuity in an amount equivalent to one
(1) month's salary per year of service.

ISSUE:

Whether or not earned sales commissions allowances should be included in the monthly salary of
petitioners for the purpose of computation of their separation pay as included in the definition of
wage under Article 97(f) of the Labor Code.

HELD:

Yes. It is important to note that the SC resolved that the words wages, pay and salary have the
same meaning. In the issue of whether commission should be included in the computation of their
separation pay, it is proper to define first commission. Blacks Law Dictionary defined commission as
the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor,
broker or bailee, when the same is calculated as a percentage on the amount of his transactions or
on the profit to the principal. The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that the commission are part of petitioners
wage and salary.

We take judicial notice of the fact that some salesman do not received any basic salary but depend on
commissions and allowances or commissions alone, although an employer-employee relationship
exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do
not form part of wage or salary, then, in effect, We will be saying that this kind of salesmen do not
receive any salary and therefore, not entitled to separation pay in the event of discharge from
employment.

Additionally, in Soriano v. NLRC, et al. the SC held that: The commissions also claimed by petitioner
('override commission' plus 'net deposit incentive') are not properly includible in such base figure
since such commissions must be earned by actual market transactions attributable to petitioner.
Applying this by analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay.

Article 97(f) 'Wage' paid to any employee shall mean 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, 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. 'Fair reasonable value' shall not include any profit to the employer or to
any person affiliated with the employer.

The final consideration is, in carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. This kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all
doubts in the implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor" and Article 1702 of the Civil
Code which provides that "in case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.

21. Millares Et. Al, vs. NLRC

Facts:

Petitioners were employees of Paper Industries Corporation of the Philippines (PICOP) in Bislig,
Surigao del Sur, they occupied the position of Technical Staff, Unit Manager, Section Manager,
Department Manager, Division Manager and Vice President in the mill site of respondent. In 1992
PICOP suffered a major financial setback brought about by the joint impact of restrictive government
regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment
program and terminated the services of petitioners. Accordingly, petitioners received separation pay
computed at the rate of one (1) month basic pay for every year of service. Believing that the
allowances they allegedly regularly received on a monthly basis during their employment should have
been included in the computation thereof they lodged a complaint for separation pay differentials

The allowances in question pertained to the following

1. Staff/Manager's Allowance

Respondent PICOP provides free housing facilities to supervisory and managerial employees assigned
in Bislig. The privilege includes free water and electric consumption. Owing however to shortage of
such facilities, it was constrained to grant Staff allowance instead to those who live in rented houses
outside but near the vicinity of the mill site. But the allowance ceases whenever a vacancy occurs in
the company's housing facilities. The former grantee is then directed to fill the vacancy. For Unit,
Section and Department Managers, respondent PICOP gives an additional amount to meet the same
kind of expenses called Manager's allowance.

2. Transportation Allowance

To relieve respondent PICOP's motor pool in Bislig from a barrage of requests for company vehicles
and to stabilize company vehicle requirements it grants transportation allowance to key officers and
Managers assigned in the mill site who use their own vehicles in the performance of their duties. It is
a conditional grant such that when the conditions no longer obtain, the privilege is discontinued. The
recipients of this kind of allowance are required to liquidate it by submitting a report with a detailed
enumeration of expenses incurred.

3. Bislig Allowance

The Bislig Allowance is given to Division Managers and corporate officers assigned in Bislig on
account of the hostile environment prevailing therein. But once the recipient is transferred elsewhere
outside Bislig, the allowance ceases.

Applying Art. 97, par. (f), of the Labor Code which defines "wage," the Executive Labor Arbiter opined
that the subject allowances, being customarily furnished by respondent PICOP and regularly received
by petitioners, formed part of the latter's wages. Thus respondent PICOP was ordered on 28 April
1994 to pay petitioners Four Million Four Hundred Eighty-One Thousand Pesos P(4,481,000.00)
representing separation pay differentials plus ten per cent (10%) thereof as attorney's fees.

The National Labor Relations Commission (NLRC) did not agreed with the view of the Executive Labor
Arbiter and aside the assailed decision by decreeing that the said allowances did not form part of the
salary base used in computing separation pay.

Issue:

Whether or not the allowances regularly received by the petitioners should have been included in the
computation for their separation pay?

Held:
when an employer customarily furnishes his employee board, lodging or other facilities, the fair and
reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in
"wage."

"Customary" is founded on long-established and constant practice connoting regularity. The receipt of
an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of
salary because the nature of the grant is a factor worth considering. We agree with the observation of
the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received
by petitioners because

In the case of the housing allowance, once a vacancy occurs in the company-provided housing
accommodations, the employee concerned transfers to the company premises and his housing
allowance is discontinued . . . .

On the other hand, the transportation allowance is in the form of advances for actual transportation
expenses subject to liquidation . . . given only to employees who have personal cars.

The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao
del Norte. Once the officer is transferred outside Bislig, the allowance stops. 16

We add that in the availment of the transportation allowance, respondent PICOP set another
requirement that the personal cars be used by the employees in the performance of their duties.
When the conditions for availment ceased to exist, the allowance reached the cutoff point. The finding
of the NLRC along the same line likewise merits concurrence, i.e., petitioners' continuous enjoyment
of the disputed allowances was based on contingencies the occurrence of which wrote finis to such
enjoyment.

Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec.
5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as
including articles or services for the benefit of the employee or his family but excluding tools of the
trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the
employer's business. The Staff/Manager's allowance may fall under "lodging" but the transportation
and Bislig allowances are not embraced in "facilities" on the main consideration that they are granted
as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to
insure that petitioners render quality performance. In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose. That the assailed allowances were for the benefit
and convenience of respondent company was supported by the circumstance that they were not
subjected to withholding tax.

Petitioners' allowances do not represent such fair and reasonable value as determined by the proper
authority simply because the Staff/Manager's allowance and transportation allowance were amounts
given by respondent company in lieu of actual provisions for housing and transportation needs
whereas the Bislig allowance was given in consideration of being assigned to the hostile environment
then prevailing in Bislig.
The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of
petitioners' wages.

separation pay when awarded to an illegally dismissed employee in lieu of reinstatement or to a

retrenched employee should be computed based not only on the basic salary but also on the regular
allowances that the employee had been receiving. But in view of the previous discussion that the
disputed allowances were not regularly received by petitioners herein, there was no reason at all for
petitioners to resort to the above cases.

22. SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON vs.NATIONAL LABOR
RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA and DANILO
CAETE

G.R. No. 172161, March 2, 2011

Facts:

* Sometime in 1996, and January 1997: Roldan Lopez and Danilo Caete, and Edgardo Zuiga were
hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees, they did not report for work
regularly but came in as substitutes to the regular workers or in undertakings that needed extra
workers to expedite completion of work.

* After their training, Zuiga, Caete and Lopez were engaged as project employees by the petitioners
in their Islacom project in Bohol from 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.

* Minimum wage increased from P145 to P150 in July 1997 by the Regional Wage Board (RWB) and
in October of the same year, the latter was increased to P155.00.

* Sometime in March 1998 until late Sept. 1998: Zuiga and Caete were engaged again by Lagon as
project employees for its PLDT Antipolo, Rizal project. For this project, Zuiga and Caete received
only the wage of P145.00 daily. (Prescribed wage for Rizal at that time was P160.00)

* Sometime in late November 1998: private respondents re-applied in the Racitelcom project of Lagon
in Bulacan. Zuiga and Caete were re-employed. Lopez was also hired for the said specific project.
They received the wage of P145.00. Again, after the completion of their project in March 1999, private
respondents went home to Cebu City.

* On May 21, 1999: Private respondents worked with Lagons project in Camarin, Caloocan City with
Furukawa Corporation as the general contractor. Expiration of contract: February 28, 2000, the
period of completion of the project. From May 21, 1997-December 1999, private respondents received
the wage of P145.00. (Minimum prescribed rate for Manila was then P198.00). In January to
February 28, the three received the wage of P165.00. (The existing rate at that time was P213.00).

* The Camarin project was not completed on the scheduled date of completion due to delay of delivery
of materials. Faced with economic problems, Lagon was constrained to cut down the overtime work of
its workers. Lagon refused to allow respondents to work overtime rather told them 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.

* March 3, 2000: Private respondents filed a complaint for illegal dismissal, non-payment of wages,
holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages
and attorneys fees.

Petitioners: They admitted employment of private respondents but claimed that the latter were only
project employees and that their services were merely engaged for a specific project or undertaking
and the same were covered by contracts duly signed by private respondents. Petitioners further
alleged that the food allowance of P63.00 per day as well as private respondents allowance for lodging
house, transportation, electricity, water and snacks allowance should be added to their basic pay,
amounting to higher wage rate than that prescribed in Rizal and Manila.

Findings of Labor Arbiter Reynoso Belarmino:

1) As to status of respondents employment - private respondents were regular employees because

they were repeatedly hired by petitioners and they performed activities which were usual, necessary
and desirable in the business or trade of the employer.

2) On underpayment of wages - Private respondents were underpaid. The free board and lodging,
electricity, water, and food enjoyed by them could not be included in the computation of their wages
because these were given without their written consent.

3) On illegal dismissal Private respondents were not illegally dismissed. Their act of going home
showed an act of indifference when petitioners decided to prohibit overtime work.

March 31, 2004: NLRC affirmed the findings of the Labor Arbiter.

CA: Affirmed the findings that the private respondents were regular employees; The CA also stated
that the failure of petitioners to comply with the simple but compulsory requirement to submit a
report of termination to the nearest Public Employment Office every time private respondents
employment was terminated was proof that the latter were not project employees but regular
employees; The CA likewise found that the private respondents were underpaid. The CA added that
the private respondents were entitled to 13th month pay; The CA also agreed with the NLRC that
there was no illegal dismissal. The CA opined that it was the petitioners prerogative to grant or deny
any request for overtime work and that the private respondents act of leaving the workplace after
their request was denied was an act of abandonment. In modifying the decision of the labor tribunal,
however, the CA noted that respondent Roldan Lopez did not work in the Antipolo project and, thus,
was not entitled to wage differentials. Also, in computing the differentials for the period January and
February 2000, the CA disagreed in the award of differentials based on the minimum daily wage of
P223.00, as the prevailing minimum daily wage then was only P213.00.

Issue: Whether NLRC committed a serious error in law in awarding wage differentials to the private
complainants on the bases of mere technicalities, that is, for lack of written conformity and lack of
notice to the DOLE.

Ruling: The Court finds no merit in the petition. 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 the instant case, petitioners failed to present any evidence, such as payroll or payslips, to support
their defense of payment. Private respondents, on the other hand, are entitled to be paid the
minimum wage, whether they are regular or non-regular employees. Section 3, Rule VII of the Rules
to Implement the Labor Code specifically enumerates those who are not covered by the payment of
minimum wage and project employees are not among them.

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

SLL failed to present present any company policy or guideline showing that provisions for meals and
lodging were part of the employees salaries. It also failed to provide proof of the employees written
authorization, much less show how they arrived at their valuations.

Facilities vs. Supplements

"Supplements," constitute extra remuneration or special privileges or benefits given to or received by

the laborers over and above their ordinary earnings or wages. "Facilities," on the other hand, are
items of expense necessary for the laborer's and his family's existence and subsistence so that by
 express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer
are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for
them just the same. The Court held that the food and lodging, or the electricity and water allegedly
consumed by private respondents in this case were not facilities but supplements.

Petition is denied. 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.

23. AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, petitioner, vs. AMERICAN
WIRE AND CABLE CO., INC. and THE COURT OF APPEALS, respondents.

[G.R. No. 155059. April 29, 2005]

CHICO-NAZARIO, J.

FACTS:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables.
There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union
(Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-Rated
Union).
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment (DOLE) by the two unions for voluntary arbitration. They alleged that the private
respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits and
entitlements which they have long enjoyed. These are the following:

a. Service Award;

b. 35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy
Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;

c. Christmas Party; and

d. Promotional Increase.

A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or
 assigned new job classifications. According to petitioner, the new job classifications were in the
nature of a promotion, necessitating the grant of an increase in the salaries of the said 15 members.
On 25 September 2001, a Decision[5] was rendered by Voluntary Arbitrator Angel A. Ancheta in favor
of the private respondent.
A motion for reconsideration was filed by both unions [7] where they alleged that the Voluntary
Arbitrator manifestly erred in finding that the company did not violate Article 100 of the Labor Code,
as amended, when it unilaterally withdrew the subject benefits, and when no promotional increase
was granted to the affected employees. It was denied.
An appeal was made with the CA but it was also denied.

PETITIONERS CONTENTION: The petitioner submits that the withdrawal of the private respondent of
the 35% premium pay for selected days during the Holy Week and Christmas season, the holding of
the Christmas Party and its incidental benefits, and the giving of service awards violated Article 100
of the Labor Code. The grant of these benefits was a customary practice that can no longer be
unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The benefits
in question were given by the respondent to the petitioner consistently, deliberately, and
unconditionally since time immemorial.

RESPONDENTS CONTENTION: On respondent companys Revenues and Profitability Analysis for the
years 1996-2000, the petitioner insists that since the former was unaudited, it should not have
justified the companys sudden withdrawal of the benefits/entitlements. The normal and/or legal
method for establishing profit and loss of a company is through a financial statement audited by an
independent auditor.

ISSUE: whether or not private respondent is guilty of violating Article 100 of the Labor Code, as
amended, when the benefits/entitlements given to the members of petitioner union were withdrawn.

HELD: NO.

ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in

this Book shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
In the case of Producers Bank of the Philippines v. NLRC: A bonus is an amount granted and paid to
an employee for his industry and loyalty which contributed to the success of the employers business
and made possible the realization of profits.
Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects of the
instant case are all bonuses which were given by the private respondent out of its generosity and
munificence.
Since they are above what is strictly due to the members of petitioner-union, the granting of the same
was a management prerogative, which, whenever management sees necessary, may be withdrawn,
unless they have been made a part of the wage or salary or compensation of the employees.
For a bonus to be enforceable, it must have been promised by the employer and expressly
agreed upon by the parties,[30] or it must have had a fixed amount[31] and had been a long and
regular practice on the part of the employer
The benefits/entitlements in question were never subjects of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreement (CBA). As observed by
 the Voluntary Arbitrator, the records reveal that these benefits/entitlements have not been subjects
of any express agreement between the union and the company, and have not yet been incorporated in
the CBA.
The Christmas parties and its incidental benefits, and the giving of cash incentive together with the
service award cannot be said to have fixed amounts. What is clear from the records is that over the
years, there had been a downtrend in the amount given as service award.
The additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season cannot be held to have ripened into a company practice that the petitioner herein
have a right to demand.

24. TSPIC CORPORATION, petitioner,

vs.
TSPIC EMPLOYEES UNION

G.R. No. 163419 February 13, 2008

VELASCO, JR., J.:

FACTS:

TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to
serve the communication, automotive, data processing, and aerospace industries. Respondent TSPIC
Employees Union (FFW) (Union), on the other hand, is the registered bargaining agent of the rank-
and-file employees of TSPIC.

In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA) 8 for the years
2000 to 2004. The CBA included a provision on yearly salary increases starting January 2000 until
January 2002.

The CBA also provided that employees who acquire regular employment status within the year but
after the effectivity of a particular salary increase shall receive a proportionate part of the increase
upon attainment of their regular status.

Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National Capital
Region, issued Wage Order No. NCR-0810 (WO No. 8) which raised the daily minimum wage from PhP
223.50 to PhP 250 effective November 1, 2000.

On various dates during the last quarter of 2000, the above named 17 employees attained regular
employment11and received 25% of 10% of their salaries as granted under the provision on
regularization increase under Article X, Sec. 2 of the CBA.

In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the
nine employees (first group), who were senior to the above-listed recently regularized employees,
received less wages.
 On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective,
TSPICs Human Resources Department notified 24 employees that due to an error in the automated
payroll system, they were overpaid and the overpayment would be deducted from their salaries in a
staggered basis, starting February 2001.

TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or not
the acts of the management in making deductions from the salaries of the affected employees
constituted diminution of pay.

On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral
deduction made by TSPIC violated Art. 10013 of the Labor Code.

TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.

Aggrieved, TSPIC filed before the CA a petition for review under Rule 43 docketed as CA-G.R. SP No.
68616. The appellate court, through its October 22, 2003 Decision, dismissed the petition and
affirmed in toto the decision of the voluntary arbitrator.

ISSUE: Does the TSPICs decision to deduct the alleged overpayment from the salaries of the affected
members of the Union constitute diminution of benefits in violation of the Labor Code?

HELD: NO.

According to TSPIC, it is specifically provided in the CBA that "the salary/wage increase for the year
2001 shall be deemed inclusive of the mandated minimum wage increases under future wage orders
that may be issued after Wage Order No. 7." The Union, on the other hand, insists that the "crediting"
provision of the CBA finds no application in the present case, since at the time WO No. 8 was issued,
the probationary employees (second group) were not yet covered by the CBA, particularly by its
crediting provision.

Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement that, effective January
1, 2001, all employees on regular status and within the bargaining unit on or before said date shall
be granted a salary increase equivalent to twelve (12%) of their basic monthly salary as of December
31, 2000. The 12% salary increase is granted to all employees who (1) are regular employees and (2)
are within the bargaining unit.

Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the
increase in salary granted under WO No. 7 and the correction of the wage distortion for November
1999.

The last paragraph, on the other hand, states the specific condition that the wage/salary increases
for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases
under future wage orders, that may be issued after WO No. 7, and shall be considered as correction
of the wage distortions that may be brought about by the said future wage orders. Thus, the
 wage/salary increases in 2001 and 2002 shall be deemed as compliance to future wage orders after
WO No. 7.

Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It,
however, clashes with the last paragraph which specifically states that the salary increases for the
years 2001 and 2002 shall be deemed inclusive of wage increases subsequent to those granted under
WO No. 7. It is a familiar rule in interpretation of contracts that conflicting provisions should be
harmonized to give effect to all. 21 Likewise, when general and specific provisions are inconsistent, the
specific provision shall be paramount to and govern the general provision.22 Thus, it may be
reasonably concluded that TSPIC granted the salary increases under the condition that any wage
order that may be subsequently issued shall be credited against the previously granted increase. The
intention of the parties is clear: As long as an employee is qualified to receive the 12% increase in
salary, the employee shall be granted the increase; and as long as an employee is granted the 12%
increase, the amount shall be credited against any wage order issued after WO No. 7.

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the
employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded
on a policy or has ripened into a practice over a long period; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or application of a doubtful or
difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the
employer.

As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This
error was immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously
granted benefit may be withdrawn without violating the prohibition against non-diminution of
benefits.

Case No. 25

LEPANTO CERAMICS, INC V LEPANTO CERAMICS EMPLOYEES ASSOCIATION

Gr no. 180866

March 2, 2010

Perez, J

FACTS:

In December 1988, petitioners gave a 3,000Php bonus to its employees. In September 1999,

petitioner and respondent association entered into a Collective Bargaining agreement which provided

for the grant of a Christmas gift package/bonus to the members of the employee association. The

Christmas bonus was one enumerated existing benefit, practice of traditional rights which shall
remain in full force and effect.

In the succeeding years of 1999, 2000 and 2001 the bonus was not in cash but instead petitioner

gave each of the members Tile redemption certificates equivalent to 3,000Php. IN the year 2002, the

petitioner gave a year-end cash benefit of 600Php and offered a cash advance to interested employees

equivalent to 1 month salary payable in 1 year.

They failed to amicably settle the dispute and led them to file a notice of strike for violation of the

CBA in which the case was placed under preventive mediation and after such efforts to conciliate

failed, the

case was referred to the voluntary arbiter who ruled in favor of the Employees association. It denied

the motion for reconsideration by the company at which case they elevated the case to the Court of

Appeals who likewise affirmed the decision of the labor arbiter and as a result the case reached the

Supreme Court.

Petitioner argued (Lepanto Ceramics, Inc)

nonpayment of the 2002 Christmas bonus had no basis as it was not a demandable and

enforceable obligation
the extra compensation was based on the companys available resources meaning that the

employees are entitled to the bonus only when the company has profits
Petitioner claimed that was debt ridden having incurred losses amounting to 2.7 billion by the

time the CBA was signed

The grant of 1 month salary advance was meant to show the companys desire to help its

employees despite its financial situation

They claimed that the Christmas gift/bonus refers to alternative benefits
Even if the CBA contained an unconditional obligation to grant the bonus to the respondent

association, the economic times had already legally released it from such obligation

Respondents argued that (Lepanto Ceramics Employees Association)

That the giving of the Christmas gift/bonus has become a traditional practice of the

company

ISSUE

WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE

VOLUNTARY ARBITRATOR THAT THE PETITONER IS OBLIGED TO GIVE THE MEMBERS OF THE
RESPONDENT ASSOCIATION A CHRISTMAS BONUS IN THE AMOUN OF 3000PHP IN 2002

HELD

The Supreme Court upheld the ruling of the voluntary arbitrator and the Court of appeals. Judgment

in favor of the respondent Association.

Generally, A bonus is not a demandable and enforceable obligation. For a bonus to be

enforceable it must have been promised by the employer and expressly agreed upon by the

parties. Given that the bonus is integrated in the CBA, it partakes of the nature of a demandable

obligation. As a result the Christmas bonus has become more than just an act of generosity on the

part of the petitioner but a contractual obligation it has undertaken.

A familiar and fundamental doctrine in labor law is that the CBA is the law between the parties

and they are obliged to comply with its provisions. The provision of the CBA provides for the

giving of a Christmas gift/bonus without qualification. The records show that the petitioner failed to

show that the bonus was dependent on any condition. If the petitioner and respondent association

intended that the 3,000 bonus wound be dependent on the company earning such intention should

have been expressed in the CBA.

Petitioner cannot insist on business losses as a basis for disregarding its undertaking. It is

manifestly clear that the petitioner was very much aware of the imminence and possibility of business

losses owing to the 1997 financial crisis (amounting to 14,347,549.00Php) yet it gave a 3,000 bonus

to the members of the association. In 1999, the company have yet to favorably affect the operations

of the company (a loss of 346,925,733.00Php) but still entered into the CBA with the Association.

Even when the petitioner continued to incur losses in 2000 and 2001, they still honored the

CBA and gave 3,000 to the members of the respondent association

Business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule

is settled that any benefit and supplement being enjoyed by the employees cannot be reduced,

diminished, discontinued or eliminated by the employer (art. 100). The Principle of non-

diminution of benefits is founded on the constitutional mandate to protect the rights of workers and

to promote their welfare and to afford labor full protection

Petitioners remedy lied not in the courts invalidation of the provisions but the parties

clarification of the same in subsequent CBA negotiations under Article 253 of the Labor code.
Case No. 26

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. v. EASTERN TELECOMS EMPLOYEES

UNION

G.R. No. 185665

February 8, 2012

Mendoza, J.:

Facts: Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business of

providing telecommunications facilities, particularly leasing international date lines or circuits,

regular landlines, internet and data services, employing approximately 400 employees. Eastern

Telecoms Employees Union (ETEU) is the certified exclusive bargaining agent of the companys rank

and file employees with a strong following of 147 regular members. It has an existing collecti[ve]

bargaining agreement with the company to expire in the year 2004 with a Side Agreement signed on

September 3, 2001.

In essence, the labor dispute was a spin-off of the companys plan to defer payment of the 2003 14th,

15th and 16thmonth bonuses sometime in April 2004. The companys main ground in postponing the

payment of bonuses is due to allege continuing deterioration of companys financial position which

started in the year 2000. However, ETPI while postponing payment of bonuses sometime in April

2004, such payment would also be subject to availability of funds. Invoking the Side Agreement of the

existing Collective Bargaining Agreement for the period 2001-2004 between ETPI and ETEU which

stated as follows: 4. Employment Related Bonuses. The Company confirms that the 14th, 15th and

16th month bonuses (other than 13th month pay) are granted. The union strongly opposed the

deferment in payment of the bonuses by filing a preventive mediation complaint with the NCMB on

July 3, 2003, the purpose of which complaint is to determine the date when the bonus should be

paid. In the conference held at the NCMB, ETPI reiterated its stand that payment of the bonuses

would only be made in April 2004 to which date of payment, the union agreed. Thus, considering the

agreement forged between the parties, the said agreement was reduced to a Memorandum of

Agreement. The union requested that the President of the company should be made a signatory to the

agreement, however, the latter refused to sign. In addition to such a refusal, the company made a

sudden turnaround in its position by declaring that they will no longer pay the bonuses until the

issue is resolved through compulsory arbitration. The companys change in position was contained in

a letter dated April 14, 2004 written to the union by Mr. Sonny Javier, Vice-President for Human
Resources and Administration, stating that the deferred release of bonuses had been superseded

and voided due to the unions filing of the issue to the NCMB on July 18, 2003. He declared that

until the matter is resolved in a compulsory arbitration, the company cannot and will not pay any

bonuses to any and all union members.

Thus, on April 26, 2004, ETEU filed a Notice of Strike on the ground of unfair labor practice for

failure of ETPI to pay the bonuses in gross violation of the economic provision of the existing CBA. On

May 19, 2004, the Secretary of Labor and Employment, finding that the company is engaged in an

industry considered vital to the economy and any work disruption thereat will adversely affect not

only its operation but also that of the other business relying on its services, certified the labor

dispute for compulsory arbitration pursuant to Article 263 (q) of the Labor Code as amended. Acting

on the certified labor dispute, a hearing was called on July 16, 2004 wherein the parties have

submitted that the issues for resolution are (1) unfair labor practice and (2) the grant of 14th, 15th

and 16th month bonuses for 2003, and 14th month bonus for 2004. Thereafter, they were directed to

submit their respective position papers and evidence in support thereof after which submission, they

agreed to have the case considered submitted for decision.

On April 28, 2005, the NLRC issued its Resolution dismissing ETEUs complaint and held that ETPI

could not be forced to pay the union members the 14th, 15th and 16th month bonuses for the year

2003 and the 14th month bonus for the year 2004 inasmuch as the payment of these additional

benefits was basically a management prerogative, being an act of generosity and munificence on the

part of the company and contingent upon the realization of profits.

In its assailed June 25, 2008 Decision, the CA declared that the Side Agreements of the 1998 and

2001 CBA created a contractual obligation on ETPI to confer the subject bonuses to its employees

without qualification or condition. It also found that the grant of said bonuses has already ripened

into a company practice and their denial would amount to diminution of the employees benefits.

Issue: Whether the members of ETEU are entitled to the payment of 14th, 15th and 16th month

bonuses for the year 2003 and 14th month bonus for year 2004.

Held: From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the

recipient has no right to demand as a matter of right. The grant of a bonus is basically a

management prerogative which cannot be forced upon the employer who may not be obliged to

assume the onerous burden of granting bonuses or other benefits aside from the employees basic
salaries or wages. A bonus, however, becomes a demandable or enforceable obligation when it is

made part of the wage or salary or compensation of the employee.

In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecom

Employees Union agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month

bonuses in the 1998-2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement,

which contained no qualification for its payment. There were no conditions specified in the CBA Side

Agreements for the grant of the bonus. There was nothing in the relevant provisions of the CBA which

made the grant of the bonus dependent on the company's financial standing or contengient upon the

realization of profits. There was also no statement that if the company derives no profits, no bonus

will be given to the employees. In fine, the payment of these bonuses was not related to the

profitability of business operations. Consequently, the giving of the subject bonuses cannot be

peremptorily withdrawn by Eastern Telecommunications Phils., Inc. without violating Article 100 of

the Labor Code, which prohibits the unilateral elimination or diminuition of benefits by the employer.

The rules is settled that any benefit and supplement being enjoyed by the employees cannot be

reduced, diminished, discontinued or eliminated by the employer.

Case no. 27

GSIS v. NLRC; Banlasan et al.

Nov. 17, 2010

Facts:

Private respondents Banlasan et al. are security guards employed by DNL Security Agency (DNL

Security). By virtue of a contract entered into between DNL Security and petitioner GSIS on May 1,

1978, the respondents were assigned to petitioner GSIS Tacloban office.

On February 1993, the service contract between DNL Security and petitioner was terminated.

However, the respondents, as instructed by DNL Security, continued to report to work without pay,

up until they were eventually terminated from employment by petitioner.

Respondents filed a complaint with the NLRC against DNL Security and petitioner GSIS for illegal

dismissal, separation pay, salary differential, 13th month pay, and payment of unpaid salary. The

Labor Arbiter rendered a decision finding that there was no illegal dismissal of complainants (because

the service contract was already terminated), but ordering DNL Security to pay the separation pay

and the unpaid wages of complainants from February 1993 to April 1993 (because GSIS voluntarily

received services from respondents despite the termination of the contract). Additionally, petitioner

was considered as an indirect employer of respondents, and was made solidary liable with DNL

Security to pay the salary differential and 13th month pay. Petitioner filed a petition for certiorari

before the Court of Appeals, but the CA affirmed the Labor Arbiter's decision in toto.

Petitioner GSIS argued that they should not be held liable for payment of monetary claims because

DNL Security, and not GSIS, is the employer of the respondent security guards.
Issue:

Whether or not petitioner GSIS, who contracted the services of DNL Security Agency, is liable for the

monetary claims of the contractor's employees.

Held:

Yes. While the petitioner was not held liable for payment of separation pay, the Court ruled that

petitioner GSIS is solidary liable with DNL Security Agency to pay respondents salary differential and

13th month pay, including the unpaid wages from February 1993 until April 20, 1993. The fact that

there is no actual and direct employer-employee relationship between petitioner and respondents does

not absolve the former from liability for the latters monetary claims. When petitioner contracted DNL

Securitys services, petitioner became an indirect employer of respondents, pursuant to Article 107 of

the Labor Code.

ART. 107. Indirect employer. The provisions of the immediately preceding Article

shall likewise apply to any person, partnership, association or corporation which,

not being an employer, contracts with an independent contractor for the

performance of any work, task, job or project.

After DNL Security failed to pay respondents the correct wages and other monetary benefits,

petitioner, as principal, became jointly and severally liable, as provided in Articles 106 and 109 of the

Labor Code.

ART. 106. Contractor or subcontractor. Whenever an employer enters into a

contract with another person for the performance of the formers work, the

employees of the contractor and of the latters subcontractor, if any, shall be paid

in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly

and severally liable with his contractor or subcontractor to such employees

to the extent of the work performed under the contract, in the same manner

and extent that he is liable to employees directly employed by him. x x x.

xxxx

ART. 109. Solidary liability. The provisions of existing laws to the contrary

notwithstanding, every employer or indirect employer shall be held responsible

with his contractor or subcontractor for any violation of any provision of this

Code. For purposes of determining the extent of their civil liability under this

Chapter, they shall be considered as direct employers.

Case No. 28

Alviado et al. v. P&G and Promm-Gem, Inc.

June 6, 2011

Facts:

The Court rendered a decision on March 9, 2010 declaring: a) that Promm-Gem, Inc. (Promm-Gem) is

a legitimate independent contractor; (b) that Sales and Promotions Services (SAPS) is a labor-only

contractor and consequently its employees are considered employees of Procter & Gamble

Phils., Inc. (P&G); (c) that Promm-Gem is guilty of illegal dismissal; (d) that SAPS/P&G is likewise

guilty of illegal dismissal; (e) that petitioners are entitled to reinstatement; and (f) that the dismissed

employees of SAPS/P&G are entitled to moral damages and attorneys fees there being bad faith in

their dismissal.

P&G contended that the court should have applied the four-fold test in determining whether SAPS

is a legitimate independent contractor or a labor-only contractor, and argued that SAPS passed the

control test and therefore SAPS is the employer of the petitioners and not P&G.

Issues:

a) Whether or not the Court erred in not applying the four-fold test in determining whether SAPS is

a legitimate independent contractor or a labor-only contractor.

b) Whether or not SAPS has substantial capital to be considered as a legitimate independent

contractor.

Held:

a) No. There is no basis for P&G's claim that the Court erred in not applying the four-fold test,

particularly the control test in determining whether SAPS is a legitimate independent contractor or

a labor-only contractor. The applicable rules are Article 106 of the Labor Code and Rule VIII-A,

Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order

No. 18-02.

Article 106 defines labor-only contracting, viz:

 There is labor-only contracting where the person supplying workers to an

employer does not have substantial capital or investment in the form of

tools, equipment, machineries, work premises, among others, and the

workers recruited and placed by such person are performing activities which are

directly related to the principal business of such employer. In such cases, the

person or intermediary shall be considered merely as an agent of the employer

who shall be responsible to the workers in the same manner and extent as if the

latter were directly employed by him.

On the same vein, Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as

amended by Department Order No. 18-02, pertinently provides:

Section 5. Prohibition against labor-only contracting. Labor only contracting is

hereby declared prohibited. For this purpose, labor-only contracting shall refer

to an arrangement where the contractor or subcontractor merely recruits,

supplies or places workers to perform a job, work or service for a principal, and

ANY of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or

investment which relates to the job, work or service to be performed and the

employees recruited, supplied or placed by such contractor or subcontractor are

performing activities which are directly related to the main business of the

principal; OR

ii) [T]he contractor does not exercise the right to control over the

performance of the work of the contractual employee.

Therefore, the control test is merely one of the factors to consider. The above-provision states that

labor-only contracting exists when any of the two elements is present. In the March 9, 2010 Decision

of the Court, it was established that SAPS has no substantial capitalization and it was performing

merchandising and promotional activities which are directly related to P&G's business. Since SAPS

met one of the requirements, it was enough basis for us to hold that it is a labor-only contractor.

Consequently, its principal, P&G, is considered the employer of its employees. This is pursuant to the

ruling in Aklan v. San Miguel Corporation where the Court held that [a] finding that a contractor
is a labor-only contractor, as opposed to permissible job contracting, is equivalent to

declaring that there is an employer-employee relationship between the principal and the

employees of the supposed contractor, and the labor-only contractor is considered as a mere

agent of the principal, the real employer.

b) No. Prom-Gem has proven that it has an authorized capital stock of P1 million, a paid-in capital, or

capital available for operations, of P500,000.00 as of 1990, long term assets worth P432,895.28 and

current assets of P719,042.32, and other evidence that proves substantial investment which relates

to the work to be performed. On the other hand, the Articles of Incorporation of SAPS shows that it

has a paid-in capital of only P31,250. There is no other evidence presented to show how much its

working capital and assets are. Furthermore, there is no showing of substantial investment in

tools, equipment or other assets.

In Vinoya v. National Labor Relations Commission, the Court held that [w]ith the current

economic atmosphere in the country, the paid-in capitalization of PMCI amounting to P75,000.00

cannot be considered as substantial capital and, as such, PMCI cannot qualify as an independent

contractor. Applying the same rationale to the present case, it is clear that SAPS having a paid-in

capital of only P31,250 has no substantial capital.

Case No. 29
Mandaue Galleon Trade Inc. v. Andales et al.
G.R. No. 159668
March 7, 2008

Facts:

The petitioners are business entities engaged in rattan furniture manufacturing.

Respondent filed a complaint with the LA for illegal dismissal and non-payment of 13th
month pay and service incentive leave pay.
Allegation: Complainants
They were hired as weavers, grinders, sanders and finishers by MGTI. The
Finishing Department were transferred to a contractor, the other departments
were told that there was no work available for them. They were dismissed
without notice and just cause.
They further alleged that they are regular employees of MGTI.
Allegation: MGTI
There is no employer-employee relationship; MGTI claimed that they are workers
of independent contractors whose services are engaged temporarily and
seasonally.
Decision: LA
LA rendered a decision holding that complainants are regular piece-rate
employees of MGTI.
They independent contractors were not properly identified
There was no dismissal but only a claim for separation.
Appeal: Both parties -> NLRC
Decision: NLRC
Affirmed the LAs finding of employer-employee relationship. It held that labor-
only contracting and not job contracting was present.
However it did not agree with the LAs fins\ding that there was no dismissal. It
held that the complainants were constructively dismissed when they were
temporarily transefered to contractor to evade payment of separation pay.
MoR: Both parties
Denied
Certiorari: Petirioners -> CA
Decision: CA
Affirmed NLRC, alleged contractors are not independent contractors but labor-
only contractors.
MoR: Petitioners ->CA
Decision: CA
Amended decision, reduced separation pay
Petition for Review: Petitioners
MoR: Respondent -> CA
Assailing decision of CA

Issue:
Whether or not the petitioners contractors are independent contractors

Ruling:

The petitioners claim that their contractors are independent contractors and therefore, a
case of permissible job contracting is without basis.
The work of the respondents were directly related to MGTIs principal business
MGTI failed to prove that its contractors had substantial capital

The intention of law in prohibiting labor-only contracting is to prevent employers from

circumventing labor law intended to protect employees.
 Case No. 30
Spic N Span Services Corporation v. Paje et al.
G.R. No. 174084
August 25, 2010

Facts:

SNSs business is to supply manpower services to its client for a fee. Swift Foods Inc. and SNS
have a contract to promote Swift products.

Complainants work as Deli/Promo Girls of Swift products

Complainants filed complaints for illegal dismissal against SNS and Swift before the NLRC

The LA ordered the parties to submit their position papers

Allegations: Complainants

There were employees of Swift and SNS

Their services were terminated without cause and without due process

Allegations: Swift

Complainants were employees of SNS, not of Swift

It alleged that it entered into an independent labor contract with SNS for the promotion of its
products

Decision: LA

SNS is an agent of Swift, the LA ordered SNS and Swift to jointly and severally pay two of the
complainants their retirement pay and service incentive leave pay.

The claims of the other complainants (Paje et al) were dismissed

Appeal: Both Swift and Complainants -> NLRC

Decision: NLRC

Denied complainants appeal for lack of merit

Dismissed the complaint against Swift and ordered SNS to pay the two complainants (agreed
on a settlement, their cases were thus closed)

MoR: Complainants (Paje et al) -> NLRC

Dismissed

Certiorari: Respondents -> CA

Alleged grave abuse of discretion by NLRC

Decision: CA

Found petition meritorious.

It concluded that SNS was merely an agent of SNS; thus, the latter should not be exempt from
liability.

MoR: SNS and Swift -> CA

Denied

Petition for Review on Certiorari: SNS

Issue:

Whether or not the relationship between Swift and SNS is categorized as job contracting

Ruling:

The court affirmed the findings of the CA.

SNS is considered merely an agent of Swift which does not exempt the latter from liability.
There is, therefore, a case of illegal dismissal perpetrated by a principal and its illegal
contractor-agent, being categorized as labor-only contracting.

The test to determine a job contracting relationship is whether the independent contractor has
contracted to do the work according to his own methods and without being subject to the
principals control except only as to the results, he has substantial capital, and he has assured
the contractual employees entitlement to all labor and occupational safety and health
standards, free exercise of the right to self-organization, security of tenure, and social and
welfare benefits.

31.ART. 110

DEVELOPMENT BANK OF THE PHILIPPINES

v. NATIONAL LABOR RELATIONS COMMISSION and LEONOR A ANG
G.R. No. 108031 March 1, 1995

CASE DOCTRINE: A declaration of bankruptcy or a judicial liquidation must be present before

the workers preference may be enforced.

Art. 110 should not be treated apart from other laws but applied in conjunction with the
pertinent provisions of the Civil Code and the Insolvency Law to the extent that piece-meal
distribution of the assets of the debtor is avoided.

The right of first preference as regards unpaid wages recognized by Article 110 does not
constitute a lien on the property of the insolvent debtor in favor of workers. It is but a
preference of credit in their favor, a preference in application.
FACTS:

(Petitioner Development Bank of the Philippines (DBP) is the mortgagee of TPWII business.
Respondent NLRC is a quasi-judicial agency attached to the Department of Labor and
Employment (DOLE) that is mandated to adjudicate labor and management disputes involving
both local and overseas workers through compulsory arbitration and alternative modes of dispute
resolution; Private Respondent Leonor A. Ang is an employee terminated from TPWII)

March 21, 1977 private respondent Leonor A. Ang started employment as Executive
Secretary with Tropical Philippines Wood Industries, Inc. (TPWII), a corporation engaged in
the manufacture and sale of veneer, plywood and sawdust panel boards. In 1982 she was
promoted to the position of Personnel Officer.
September 1983 petitioner Development Bank of the Philippines, as mortgagee of TPWII,
foreclosed its plant facilities and equipment. TPWII still continued its business operations
interrupted only by brief shutdowns for the purpose of servicing its plant facilities and
equipment.
In January 1986 petitioner took possession of the foreclosed properties. From then on the
company ceased its operations. As a consequence private respondent was on 15 April 1986
verbally terminated from the service.
December 14, 1987 aggrieved by the termination of her employment, private respondent
filed with the Labor Arbiter a complaint for separation pay, 13th month pay, vacation and
sick leave pay, salaries and allowances against TPWII, its General Manager, and petitioner.

LABOR ARBITER: found TPWII primarily liable to private respondent but only for her
separation pay and vacation and sick leave pay because her claims for unpaid wages and
13th month pay were later paid after the complaint was filed.

-The General Manager was absolved of any liability. But with respect to petitioner, DBP was
held subsidiarily liable in the event the company failed to satisfy the judgment. The
Labor Arbiter rationalized that the right of an employee to be paid benefits due him from
the properties of his employer is superior to the right of the latter's mortgage, citing this
Court's resolution in PNB v. Delta Motor Workers Union.

November 16, 1992 public respondent National Labor Relations Commission affirmed the
ruling of the Labor Arbiter. 3

ISSUE: Is declaration of bankruptcy or judicial liquidation required before the workers

preference may be invoked under Art. 110 of the Labor Code?

HELD:

YES it is necessary. Art. 110 should not be treated apart from other laws but applied in
conjunction with the pertinent provisions of the Civil Code and the Insolvency Law to the
extent that piece-meal distribution of the assets of the debtor is avoided. Thus, public
respondent NLRC gravely abused its discretion in affirming the decision of the Labor Arbiter.

In the case decision of Development Bank of the Philippines v. Santos the court held that:
. . . a declaration of bankruptcy or a judicial liquidation must be present before the worker's
preference may be enforced.

Art. 110, as amended (amended by R.A. 6715 effective 21 March 1989) expanded the
concept of "worker preference" to cover not only unpaid wages but also other monetary
claims to which even claims of the Government must be deemed subordinate.

The right to preference given to workers under Art. 110 cannot exist in any effective way prior
to the time of its presentation in distribution proceedings. In the present case, there is as yet
no declaration of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to
enforce the worker's preference.

Petitioner DBP anchors its claim on a mortgage credit. A mortgage directly and immediately
subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It
creates a real right which is enforceable against the whole world. It is a lien on an identified
immovable property, which a preference is not.

A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil
Code on classification of credits. The preference given by Article 110, when not falling
within Article 2241 (6) and Article 2242 (3), of the Civil Code and not attached to any
specific property, is all ordinary preferred credit although its impact is to move it from
second priority to first priority in the order of preference established by Article 2244 of the
Civil Code.

Petition is GRANTED. The decision of NLRC is SET ASIDE.

+NOTES ON CASE:

In the Development Bank of the Philippines v. Santos case:

In the event of insolvency, a principal objective should be to effect an equitable distribution
of the insolvents property among his creditors. To accomplish this there must first be some
proceeding where notice to all of the insolvent's creditors may be given and where the
claims of preferred creditors may be bindingly adjudicated. (De Barreto v. Villanueva, No. L-
14938, December 29, 1962, 6 SCRA 928).

The rationale therefore has been expressed in the recent case of DBP v. Secretary of Labor (G.R.
No. 79351, 28 November 1989):

A preference of credit bestows upon the preferred creditor an advantage of having his credit
satisfied first ahead of other claims which may be established against the debtor. Logically,
 it becomes material only when the properties and assets of the debtors are insufficient to
pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how
can the necessity exist to determine which of his creditors shall be paid first or whether
they shall be paid out of the proceeds of the sale (of) the debtor's specific property.
Indubitably, the preferential right of credit attains significance only after the properties of
the debtor have been inventoried and liquidated, and the claims held by his various
creditors have been established (Kuenzle & Sheriff (Ltd.) v. Villanueva, 41 Phil. 611 [1916];
Barretto v. Villanueva, G.R. No. 14938, 29 December 1962, 6 SCRA 928; Philippine Savings
Bank v. Lantin, G.R. No. 33929, 2 September 1983, 124 SCRA 476).

Preference of Credit v. Lien (Development Bank of the Philippines v. NLRC)

Preference of Credit - applies only to claims which do not attach to specific properties.
Lien - creates a charge on a particular property.

**The right of first preference as regards unpaid wages recognized by Article 110 does not
constitute a lien on the property of the insolvent debtor in favor of workers. It is but a
preference of credit in their favor, a preference in application.

It is a method adopted to determine and specify the order in which credits should be paid in
the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference
in the discharge of the funds of the judgment debtor

In Republic v. Peralta:
Article 110 of the Labor Code does not purport to create a lien in favor of workers or
employees for unpaid wages either upon all of the properties or upon any particular
property owned by their employer. Claims for unpaid wages do not therefore fall at all within
the category of specially preferred claims established under Articles 2241 and 2242 of the
Civil Code, except to the extent that such claims for unpaid wages are already covered by
Article 2241, number 6: "claims for laborers: wages, on the goods manufactured or the
work done;" or by Article 2242, number 3, "claims of laborers and other workers engaged in
the construction reconstruction or repair of buildings, canals and other works, upon said
buildings, canals and other works . . . . To the extent that claims for unpaid wages fall
outside the scope of Article 2241, number 6, and 22421 number 3, they would come within
the ambit of the category of ordinary preferred credits under Article 2244.

On worker preference SC previous interpretation in Development Bank of the Philippines v.

Santos:

It (worker preference) will find application when, in proceedings such as insolvency, such
unpaid wages shall be paid in full before the "claims of the Government and other creditors"
may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be
convened, their claims ascertained and inventoried, and thereafter the preferences
determined. In the course of judicial proceedings which have for their object the subjection
of the property of the debtor to the payment of his debts or other lawful obligations.
Thereby, an orderly determination of preference of creditors' claims is assured (Philippine
Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the
 adjudication made will be binding on all parties-in-interest since those proceedings are
proceedings in rem; and the legal scheme of classification, concurrence and preference of
credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony.

32. ART. 113

SHS PERFORATED MATERIALS, INC., WINFRIED HARTMANNSHENN, and HINRICH

JOHANN SCHUMACHER
v. MANUEL F. DIAZ
G.R. No. 185814 October 13, 2010

CASE DOCTRINE: Although management prerogative refers to the right to regulate all aspects
of employment, it cannot be understood to include the right to temporarily withhold salary/
wages without the consent of the employee; Any withholding of an employees wages by an
employer may only be allowed in the form of wage deductions under the circumstances
provided in Art 113 of the Labor Code

FACTS:

(Petitioner SHS Perforated Materials, Inc. is a start-up corporation registered with the Philippine
Economic Zone Authority; Other Petitioners are both German nationals, Hartmannshenn
President ot SHS and Schumacher treasurer and one of the Board of Directors; Respondent
Manuel F. Diaz was a probationary Manager for Business Development of SHS)

Respondent Manuel F Diaz was on a probationary status from July 18, 2005-January 18,
2006, with a monthly salary of P100,000.00.
In addition to his job responsibilities, Diaz was also instructed by Pres. Hartmanshenn to
report to SHS office and plant at least 2 days every work week to observe technical
processes involved in the manufacturing of perforated materials + learn about the products
of the company which Diaz was hired to market and sell.
Due to business exigencies abroad, Hartmanshenns instructions to Diaz were often either
sent by e-mail or relayed through telephone or mobile phone. Meetings were held between
the two when Hartmanshenn is in the Philippines. Respondent Diaz work was not closely
supervised by the President

PETITIONERS VERSION
Hartmanshenn expressed dissatisfaction over respondents poor performance alleging
respondents failure to make concrete business proposal or implement measures to improve
SHS office productivity. Further contends that: Respondent Diaz acknowledged these
observations and offered to resign from the company
November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on
November 22 and 24, 2005, notified respondent of his arrival through electronic mail
messages and advised him to get in touch with him. Respondent claimed that he never
received the messages.
 November 29, 2005, Hartmannshenn instructed Taguiang not to release respondents
salary. Later that afternoon, respondent called and inquired about his salary. Taguiang
informed him that it was being withheld and that he had to immediately communicate with
Hartmannshenn. Again, respondent denied having received such directive.

After accepting respondents resignation, Hartmannshenn 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.

RESPONDENTS CONTRARY VERSION OF THE FACTS

Respondent Diaz denied sending such messages of acknowledgment of his poor

performance but admitted that he had reported to the SHS office and plant only eight (8)
times from July 18, 2005 to November 30, 2005.
Claimed that the meeting with Hartmannshenn took place in the evening of December 1,
2005, at which meeting the latter insulted him and rudely demanded that he
accept P25,000.00 instead of his accrued wage and stop working for SHS, which demands
he refused.
Later that same night, he sent Hartmannshenn and Schumacher an electronic mail
message appealing for the release of his salary.
Another demand letter for respondents accrued salary for November 16 to November 30,
2005, 13th month pay, moral and exemplary damages, and attorneys fees was sent on
December 2, 2005.

November 30, 2005, respondent served on SHS a demand letter and a resignation letter
citing that SHS has committed illegal and unfair labor practices
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.

LABOR ARBITER DECISION: June 15, 2006,

(1) Respondent was constructively dismissed

(2) Ordered respondents immediate reinstatement without loss of seniority rights and benefits
and that he be declared as a regular employee.

Respondents probationary employment was deemed regularized because petitioners failed

to conduct a prior evaluation of his performance and to give notice two days prior to his
termination as required by the Probationary Contract of Employment and Article 281 of
the Labor Code.
(3) The withholding of his salary was contrary to Article 116 of the Labor Code as it was not
one of the exceptions for allowable wage deduction by the employer under Article 113 of the
Labor Code

(4) Petitioners are jointly and severally liable to respondent for backwages including 13th
month pay as there was no showing in the salary vouchers presented that such was integrated
in the salary; for moral and exemplary damages for having in bad faith harassed respondent
into resigning; and for attorneys fees.

NLRC RULING December 29, 2006 Resolution

-Reversed the decision of the Labor Arbiter

(1) Withholding of respondents salary was a valid exercise of management prerogative. The
act was deemed justified as it was reasonable to demand an explanation for failure to report to
work and to account for his work accomplishments.

(2) Respondent could not have been regularized having voluntarily resigned prior to the
completion of the probationary period. 13th month pay was already integrated in Respondents
salary in accordance with his Probationary Contract of Employment and, therefore, no
additional amount should be due him.

January 25, 2007, Subsequent motion for reconsideration was denied

COURT OF APPEALS December 23, 2008

-The CA reversed the NLRC resolutions but ruled out actual reinstatement

(1) As a probationary employee entitled to security of tenure, respondent was illegally

dismissed. Diaz is awarded separation pay equivalent to at least one month pay, and his full
backwages, other privileges and benefits, or their monetary equivalent during the period of his
dismissal up to his supposed actual reinstatement by the Labor Arbiter on 15 June 2006.

(2) Withholding respondents salary was NOT a valid exercise of management prerogative as
there is no such thing as a management prerogative to withhold wages temporarily.

ISSUES:
(1) Was respondent constructively dismissed?
(2) Was there a valid exercise of Management Prerogative by petitioners?
(3) Should Individual petitioners be held solidarily and personally liable with petitioner
SHS for payment of monetary award to respondent?

HELD:
(1) YES. 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.

-There was evident unlawful withholding of his salary. For said reason, Diaz was forced to
resign.

- It is worthy to note that in his resignation letter, respondent cited petitioners "illegal and
unfair labor practice" as his cause for resignation. As correctly noted by the CA, respondent
lost no time in submitting his resignation letter and eventually filing a complaint for illegal
dismissal just a few days after his salary was withheld. These circumstances are inconsistent
with voluntary resignation and bolster the finding of constructive dismissal.
.
-In this case, the withholding of respondents salary does not fall under any of the
circumstances provided under Article 113. Neither was it established with certainty that
respondent did not work from November 16 to November 30, 2005.
.

(2) NO. This is not a valid exercise of management prerogative for 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 and as
correctly pointed out by the Labor Arbiter, "absent a showing that the withholding of
complainants wages falls under the exceptions provided in Article 113, the withholding thereof
is thus unlawful."

- Respondent is, thus, entitled to reinstatement and other benefits withheld from time of his
resignation. Respondent, however, is not entitled to the additional amount for 13th month pay,
as it is clearly provided in respondents Probationary Contract of Employment that such is
deemed included in his salary. Due to strain in relationship between parties, however,
reinstatement not advisable.

(3) NO. Hartmanshenn and Schumacher cannot be held personally liable.

Petitioners withheld respondents salary in the sincere belief that respondent did not work for
the period in question and was, therefore, not entitled to it. There was no dishonest purpose or
ill will involved as they believed there was a justifiable reason to withhold his salary. Thus,
although they unlawfully withheld respondents salary, it cannot be concluded that such was
made in bad faith.
WHEREFORE, the assailed December 23, 2008 Decision of the Court of Appeals in CA-G.R. SP
No. 100015 is hereby AFFIRMED with MODIFICATION. The additional amount for 13th month
pay is deleted. Petitioners Winfried Hartmannshenn and Hinrich Johann Schumacher are not
solidarily liable with petitioner SHS Perforated Materials, Inc.

+NOTES:

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.

Management Prerogative right of an employer to regulate all aspects of employment, such as

the freedom to prescribe work assignment, 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.

Constructive Dismissal (Duldulao v. CA, 517 SCRA 191 (2007))

- If an act of clear discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it would foreclose any choice by him except to
forego his continued employment.
- It exists when there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay.

Doctrine of Strained Relations The payment of separation pay is considered an acceptable

alternative to reinstatement when the latter option is no longer desirable or viable
33. ART. 124

P.I. MANUFACTURING, INCORPORATED

vs. P.I. MANUFACTURING SUPERVISORS AND FOREMAN ASSOCIATION and the
NATIONAL LABOR UNION

G.R. No. 167217; February 4, 2008

CASE DOCTRINE: To compel employers simply to add on legislative increases in salaries or

allowances without regard to what is already being paid, would be to penalize employers who
grant their workers more than the statutory prescribed minimum rates of increases. Clearly,
this would be counter-productive so far as securing the interests of labor is concerned.

FACTS:
(Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in the
manufacture and sale of household appliances. Respondent P.I. Manufacturing Supervisors and
Foremen Association (PIMASUFA) is an organization of petitioners supervisors and foremen and
joined in this case by its federation, the National Labor Union (NLU).)

On Dec. 10, 1987, RA No. 6640 (a law increasing the statutory minimum wage and salary
rates of employees and workers in the private sector) is passed
Section 2 of the Act provides:
"The statutory minimum wage rates of workers and employees in the private sector, whether
agricultural or non-agricultural, shall be increased by ten pesos (P10.00) per day, except
non-agricultural workers and employees outside Metro Manila who shall receive an increase
of eleven pesos (P11.00) per day: Provided, That those already receiving above the minimum
wage up to one hundred pesos (P100.00) shall receive an increase of ten pesos (P10.00) per
day. Excepted from the provisions of this Act are domestic helpers and persons employed in
the personal service of another."

Eight days after the passage of the law, P.I. Manufacturing and PIMASUFA entered into a
new Collective Bargaining Agreement (1987 CBA) whereby the supervisors were granted an
increase of P625.00 per month and the foremen, P475.00 per month. The increases were
made retroactive to May 12, 1987, or prior to the passage of R.A. No. 6640, and every year
thereafter until July 26, 1989.
On January 26, 1987, respondents PIMASUFA and NLU filed a complaint with the
Arbitration Branch of the National Labor Relations Commission (NLRC) charging petitioner
with violation of R.A. No. 6640. They alleged that there is a wage distortion resulting from
the implementation of R.A. No. 6640.

The Labor Arbiter decided in favor of PIMASUFA and NLU. It held that:
a. Petitioner is ordered to give the PIMASUFA wage increases equivalent to 13.5% of their
basic pay
b. Employees cannot waive future benefits, much less those mandated by law. That is
against public policy as it would render meaningless the law. Thus, the waiver in the CBA
 does not bar the union from claiming adjustments in pay as a result of distortion of wages
brought about by the implementation of R.A. 6640.
c. The percentage in increase given those who received benefits under R.A. 6640 should be
the same percentage given to the supervisors and foremen.
On appeal, NLRC affirmed the decision of the Labor Arbiter
The Court of Appeals upheld the decisions of Labor Arbiter and NLRC with modification on
the wage increase from 13.5% increased to 18.5%

Petitioners contend: Filed motion for certiorari

The wage distortion issue is already barred by Sec. 2 Article IV of the Contract since it
absolves, quit claims and releases the COMPANY for any monetary claim they have, if any
there might be or there might have been previous to the signing of the CBA. Petitioner
interprets this as absolving it from any wage distortion brought about by the
implementation of the new minimum wage law. Since the contract was signed on December
17, 1987, or after the effectivity of Republic Act No. 6640, petitioner claims that private
respondent is deemed to have waived any benefit it may have under the new law.

ISSUES:

I.Whether the implementation of R.A. No. 6640 resulted in a wage distortion

II. If it does, whether such distortion was cured or remedied by the 1987 CBA.
III. Whether or not the CA erred in holding the petitioner liable for 18.5% increase in the
employees' wage.

HELD:

I. IT DOES. R.A. No. 6640 resulted in wage distortion or the elimination of the intentional
quantitative differences in the wage rates of the employees.

II. YES. CBA is more than a substantial compliance with R.A. No. 6640. The 1987 CBA
increased the monthly salaries of the supervisors by P625.00 and the foremen, by P475.00,
effective May 12, 1987. These increases re-established and broadened the gap, not only
between the supervisors and the foremen, but also between them and the rank-and-file
employees. Significantly, the 1987 CBA wage increases almost doubled that of the P10.00
increase under R.A. No. 6640. The P625.00/month means P24.03 increase per day for the
supervisors, while the P475.00/month means P18.26 increase per day for the foremen. The
provisions of the CBA should be read in harmony with the wage orders, whose benefits should
be given only to those employees covered thereby.

III. YES. Requiring petitioner to pay all the members of PIMASUFA a wage increase of 18.5%,
over and above the negotiated wage increases provided under the 1987 CBA, is highly unfair
and oppressive to the former. Obviously, it was not the intention of R.A. No. 6640 to grant an
across-the-board increase in pay to all the employees of petitioner. Section 2 of R.A. No. 6640
mandates only the following increases in the private sector: (1) P10.00 per day for the
employees in the private sector, whether agricultural or non-agricultural, who are receiving the
statutory minimum wage rates; (2) P11.00 per day for non-agricultural workers and employees
outside Metro Manila; and (3) P10.00 per day for those already receiving the minimum wage up
to P100.00. To be sure, only those receiving wages P100.00 and below are entitled to the
P10.00 wage increase. The apparent intention of the law is only to upgrade the salaries or
wages of the employees specified therein. As the numerical illustration shows, almost all of the
members of respondent PIMASUFA have been receiving wage rates above P100.00 and,
therefore, not entitled to the P10.00 increase. Only three (3) of them are receiving wage rates
below P100.00, thus, entitled to such increase. Now, to direct petitioner to grant an across-the-
board increase to all of them, regardless of the amount of wages they are already receiving,
would be harsh and unfair to the former.
To compel employers simply to add on legislative increases in salaries or allowances without
regard to what is already being paid, would be to penalize employers who grant their workers
more than the statutory prescribed minimum rates of increases. Clearly, this would be counter-
productive so far as securing the interests of labor is concerned.

+NOTES+

WAGE DISTORTION
-situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of differentiation.
(R.A. No. 6727, otherwise known as the Wage Rationalization Act)
-means the disappearance or virtual disappearance of pay differentials between lower and
higher positions in an enterprise because of compliance with a wage order.

RESOLUTION OF LABOR CASES:

-The Court has always been guided by the State policy enshrined in the Constitution that the
rights of workers and the promotion of their welfare shall be protected. However, consistent
with such policy, the Court cannot favor one party, be it labor or management, in arriving at a
just solution to a controversy if the party concerned has no valid support to its claim.

34. BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS

v. NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC.
G.R. No. 140689. February 17, 2004

CASE DOCTRINE: Article 124 of the Labor Code should be construed and correlated in
relation to minimum wage fixing, the intention of the law being that in the event of an increase
in minimum wage, the distinctions embodied in the wage structure based on skills, length of
service, or other logical bases of differentiation will be preserved.

FACTS:
 Employer Bankard classifies its employees by levels, to wit: Level I, Level II, Level III, Level
IV, & Level V.
On May 28, 1993, it adopted an upgraded salary scale that increased the hiring rates of
new employees without increasing the salary rates of old employees
Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly certified
exclusive bargaining agent of the regular rank and file employees of Bankard, to press for
the increase in the salary of its old, regular employees.
Request of petitioner for increase in the wages and salaries of Bankards regular employees
remained unheeded
Petitioner filed a Notice of Strike on August 26, 1993 on the ground of discrimination and
other acts of Unfair Labor Practice (ULP).

Petitioners contend: that there was wage distortion which seems to be uncured by
adjustments of wages. They maintained that for purposes of wage distortion, the
classification is not one based on levels or ranks but on two groups of employees, the
newly hired and the old, in each and every level, and not between and among the different
levels or ranks in the salary structure.
NLRC found no wage distortion, dismissed the case for lack of merit. Motion for
reconsideration was denied.
On appeal, CA affirmed NLRCs decision.

ISSUE:

Whether the unilateral adoption by an employer of an upgraded salary scale that increased the
hiring rates of new employees without increasing the salary rates of old employees resulted in
wage distortion within the contemplation of Article 124 of the Labor Code.

HELD:

NO. Apart from the findings of fact of the NLRC and the Court of Appeals that some of the
elements of wage distortion are absent, petitioner cannot legally obligate Bankard to correct the
alleged wage distortion as the increase in the wages and salaries of the newly-hired was not
due to a prescribed law or wage order.

The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds
of wage adjustments, then the language of the law should have been broad.

To determine the existence of wage distortion, the historical classification of the employees
prior to the wage increase must be established. Likewise, it must be shown that as between the
different classification of employees, there exists a historical gap or difference. The employees
of private respondent have been historically classified into levels, i.e. I to V, and not on the
basis of their length of service. Put differently, the entry of new employees to the company ipso
facto place[s] them under any of the levels mentioned in the new salary scale which private
respondent adopted retroactive [to] April 1, 1993. Petitioner cannot make a contrary
classification of private respondents employees without encroaching upon recognized
management prerogative of formulating a wage structure, in this case, one based on level.

In fine, absent any indication that the voluntary increase of salary rates by an employer was
done arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any
legitimate purpose other than to discriminate against the regular employees, this Court will not
step in to interfere with this management prerogative. Employees are of course not precluded
from negotiating with its employer and lobby for wage increases through appropriate channels,
such as through a CBA.

+NOTES:

FOUR ELEMENTS OF WAGE DISTORTION:

(1.) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase
in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country. (Prubankers Association v.
Prudential Bank and Trust Company)
(In the above mentioned case, the first element is lacking)

DEALING WITH WAGE DISTORTION:

-Normally, a company has a wage structure or method of determining the wages of its
employees. In a problem dealing with wage distortion, the basic assumption is that there
exists a grouping or classification of employees that establishes distinctions among them on
some relevant or legitimate bases.

13TH MONTH PAY

PD 851

Coverage: All employers are required to pay their rank and file employees 13th month pay,
regardless of the nature of their employment and irrespective of the methods by which
their wages are paid, provided they worked for at least a month during a calendar year.

The 13th month pay should be given to the employees not later than Dec. 24 of every year. An
employer, however, may give to his/her employees of the 13th month pay before the opening
of the regular school year and the remaining half on or before Dec. 24. Frequency of payment of
this benefit may be the subject of an agreement bet. the employer and the recognized/collective
bargaining agent of the employees.
35. CENTRAL AZUCARERA DE TARLAC
v. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU
G.R. No. 188949 July 26, 2010

CASE DOCTRINE: Basic Salary of an employee for the purpose of computing the 13th month
pay was interpreted to include all remuneration or earnings paid by the employer for services
rendered, but does not include allowances and monetary benefits which are not integrated as
part of the regular or basic salary.

FACTS:

(Petitioner Central Azucarera de Tarlac is a domestic corporation engaged in the business of

sugar manufacturing; Respondent Union is a legitimate labor organization serving as the
exclusive bargaining representative of petitioners rank-and-file employees)

Petitioner Central Azucarera de Tarlac granted its employees the mandatory 13th month pay
using the formula of Total Basic Annual Salary (basic monthly salary+ first 8 hours
overtime pay on Sunday & legal/special holiday+ night premium pay + vacation & sick
leaves for each year) divided by 12 from 1976 to 2006
Respondent Union staged a strike in November 2004
Petitioner declared a temporary cessation of operations during the pendency of the strike
All the striking members were allowed to return to work in December 2005 however,
petitioner declared another temporary cessation of operations for the months of April and
May 2006
The suspension of operation was lifted on June 2006, but the rank-and-file employees were
allowed to report for work on a 15 day-per-month rotation basis until September 2006
In December 2006, petitioner gave the employees their 13th month pay based on the
employees total earnings during the year divided by 12
Respondent objected to this computation stating that petitioner didnt adhere to the usual
computation of the 13th month pay where the divisor should have been eight instead of 12
since the employees worked for only 8 months in 2006
Petitioner and respondent tried to thresh out their differences where the representative of
petitioner explained that the change in the computation of the 13th month pay was intended
to rectify an error in the computation, particularly the concept of basic pay which should
have included only the basic monthly pay of the employees
Both parties failed to arrive at a settlement which led to respondents application for
preventive mediation before the National Conciliation and Mediation Board; However,
parties still failed to settle the dispute
Respondent filed a complaint for money claims based on the alleged diminution of
benefits/erroneous computation of 13th month pay before the Regional Arbitration Branch
of NLRC on March 2007

Labor Arbiter: complain was dismissed ratiocinating that petitioner had the right to rectify
the error in computation of 13th month pay of its employees
NLRC: reversed the decision of Labor Arbiter; petitioner is ordered to adhere to its
established practice of granting 13th month pay on the basis of gross annual basic salary
 Court of Appeals: dismissed the petition and affirmed the decision of NLRC
Petitioners contentions:
- there was an error in the computation of the 13th month pay of its employees as a
result of its mistake in implementing PD 851 which was discovered only by the
management when a question concerning the computation of employees 13th month
pay for 2006 was raised; an error that was repeatedly committed for almost 30 yrs
- insists that the length of time during which an employer has performed a certain act
beneficial to the employees, does not prove that such an act was not done in error
- maintains that for the claim of mistake to be negated, there must be a clear showing
that the employer had freely, voluntarily, and continuously performed the act,
knowing that he is under no obligation to do so voluntariness was absent in this case

ISSUE: Interpretation of the term BASIC PAY, essential in the computation of the 13th month
pay.

HELD:

The petition is DENIED for lack of merit; AFFIRMED the decision of CA.

13th month pay represents an additional income based on wage but not part of the wage
and is equivalent to 1/12 of the total basic salary earned by an employee within a calendar
year;
All rank-and-file employees, regardless of their designation or employment status and
irrespective of the method by which their wages are paid, are entitled to this benefit,
provided that they have worked for at least a month during the calendar year
Supplementary Rules and Regulations implementing PD 851, issued on January 16, 1976,
clarifies that overtime pay, earnings, and other remuneration that arent part of the basic
salary shall NOT be included in the computation of the 13th month pay
Revised Guidelines on the implementation of 13th month pay law, issued on November 16,
1987, specifically states that the 13th month pay required by law shall NOT be less than
1/12 of the total basic salary earned by an employee within a calendar year
Basic Salary: all remuneration or earnings paid by the employer for services rendered, but
doesnt include allowances and monetary benefits which arent integrated as part of the
regular or basic salary; However, salary-related benefits should be included as part of the
basic salary in the computation of 13th month pay if, by individual or collective agreement,
company practice or policy, the same are treated as part of the basic salary of the
employment
The practice of petitioner in giving 13th month pay based on the employees gross annual
earnings which included the basic monthly salary, premium pay for work on rest days and
special holidays, night shift differential pay and holiday pay continued for almost 30 years
and has ripened into a company policy or practice which cannot be unilaterally withdrawn
Article 100 of Labor Code: benefits given to employees cannot be taken back or reduced
unilaterally by the employer because the benefit has become part of the employment
contract, written or unwritten; Nevertheless, rule will not apply if the practice is due to
 error in construction or application of a doubtful or difficult question of law (though it
should be corrected immediately after discovery of the error)
The guidelines set by the law arent difficult to decipher; the voluntariness of the grant of
the benefit was manifested by the number of years the employer had paid the benefit to its
employees
The act of petitioner in changing the formula after almost 30 years cannot be sanctioned, as
it indicates a badge of bad faith

+NOTES ON 13TH MONTH PAY:

Managerial employee- one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign, or
discipline employees, or to effectively recommend such managerial actions.

*All employees not falling within the definition of managerial employee are considered rank-
and-file employees*

Minimum Amount: shall not be less than one-twelfth (1/12) of the total basic salary earned
by an employee in a calendar year

Basic Salary: shall include all remunerations or earnings paid by his or her employer for
services rendered and does not include allowances and monetary benefits (cash equivalent
of unused vacation/sick leave credits, overtime, premium, night shift differential and holiday,
cost of living allowance and which arent considered or integrated as part of the regular or
basic salary

* But if those benefits listed above are treated as part of the basic salary of the employees thru
individual or collective agreement/ company practice or policy, they should be included in the
computation of the 13th month pay*

The following employers are NOT covered by PD 851:

Govt and any of its political subdivision, including GOCCs, except those corporations
operating essentially as private subsidiaries of the govt;
Employers who are already paying their employees 13th month pay or more in a calendar
year or its equivalent (Christmas bonus/midyear bonus/ cash bonuses/ other payment
amounting to not less than 1/12 of basic salary)1 at the time of the issuance of PD 851;
Employers of househelpers and persons in the personal service of another in relation to
such workers; and
Employers of those who are paid on purely commission, boundary or task basis, and
those who are paid a fixed amount for performing specific work, irrespective of the time

1 Shall not include cash and stock dividends, cost of living allowance (COLA) and all other
allowances regularly enjoyed by employee as well as nonmonetary benefits
 consumed in the performance thereof (except those workers who are paid on piece-rate
basis, in which case their employer shall grant them 13th month pay)

Workers paid on PIECE-RATE basis shall refer to those who are paid a standard amount
for every piece or unit of work produced that is more or less regularly replicated, w/o regard
to the time spent in producing the same.

13th month pay for certain types of employees:

Employees who are paid on piecework basis are entitled to 13th month pay
Employees who are paid a fixed or guaranteed wage + commission are also entitled to
13th month pay, based on their earnings during the calendar year
Employees with multiple employers2

13th month pay of RESIGNED or SEPARATED employee: entitled to 13th month pay in
proportion to the length of time he or she has worked during the year, reckoned from the
time he or she has started working during the calendar year up to the time of his or her
resignation or termination form the service

*So if he worked only from Jan-Sept, his proportionate 13th month pay should be equal to
1/12 of his total basic salary EARNED during that period*

The mandated 13th month pay need not be credited as part of the regular wage of employees
for purposes of determining overtime and premium payments, fringe benefits, as well as
contributions to the State Insurance Fund, SSS, Natl Health Insurance Program, and
private retirement plans.

36, ART. 128

PEOPLES BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.),

v.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL
DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN

FACTS:

2 Govt employees working part-time in a private enterprise, including private educational

institutions, as well as employees working in two or more private firms, whether on full-time or
part-time basis are entitled to the 13th month pay from all their private employers, regardless of
their total earnings from each of their employers
Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department
of Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction,
nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day
and illegal diminution of benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG
and Philhealth. After the conduct of summary investigations, and after the parties submitted
their position papers, the DOLE Regional Director found that private respondent was an
employee of petitioner, and was entitled to his money claims. Petitioner sought reconsideration
of the Directors Order, but failed. The Acting DOLE Secretary dismissed petitioners appeal on
the ground that petitioner submitted a Deed of Assignment of Bank Deposit instead of posting
a cash or surety bond. When the matter was brought before the CA, where petitioner claimed
that it had been denied due process, it was held that petitioner was accorded due process as it
had been given the opportunity to be heard, and that the DOLE Secretary had jurisdiction over
the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code on the
power of the DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act
No. (RA) 7730.
The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE be not
considered as co-extensive with the power to determine the existence of an employer-employee
relationship.] In its Comment, the DOLE sought clarification as well, as to the extent of its
visitorial and enforcement power under the Labor Code, as amended.

ISSUE: May the DOLE make a determination of whether or not an employer-employee

relationship exists, and if so, to what extent?

HELD:
In the Decision of this Court, the CA Decision was reversed and set aside, and the
complaint against petitioner was dismissed.

The Court found that there was no employer-employee relationship between petitioner and
private respondent. It was held that while the DOLE may make a determination of the
existence of an employer-employee relationship, this function could not be co-extensive with the
visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by
RA 7730. The National Labor Relations Commission (NLRC) was held to be the primary
agency in determining the existence of an employer-employee relationship. This was the
interpretation of the Court of the clause in cases where the relationship of employer-employee
still exists in Art. 128(b).

Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing
officers to hear and decide any matter involving the recovery of wages and other monetary
claims and benefits was qualified by the proviso that the complaint not include a claim for
reinstatement, or that the aggregate money claims not exceed PhP 5,000. RA 7730, or an Act
Further Strengthening the Visitorial and Enforcement Powers of the Secretary of Labor, did
away with the PhP 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial and
enforcement power for claims beyond PhP 5,000. The only qualification to this expanded power
of the DOLE was only that there still be an existing employer-employee relationship.
It is conceded that if there is no employer-employee relationship, whether it has been
terminated or it has not existed from the start, the DOLE has no jurisdiction. The Court held
that the determination of the existence of an employer-employee relationship is still primarily
within the power of the NLRC, that any finding by the DOLE is merely preliminary. This
conclusion must be revisited.

The elements to determine the existence of an employment relationship are:

(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal;
(4) the employers power to control the employees conduct.

The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her
representatives, can utilize the same test, even in the course of inspection, making use of the
same evidence that would have been presented before the NLRC.

If a complaint is brought before the DOLE to give effect to the labor standards provisions of the
Labor Code or other labor legislation, and there is a finding by the DOLE that there is an
existing employer-employee relationship, the DOLE exercises jurisdiction to the
exclusion of the NLRC. If the DOLE finds that there is no employer-employee
relationship, the jurisdiction is properly with the NLRC.

If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the
jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which
provides that the Labor Arbiter has original and exclusive jurisdiction over those cases
involving wages, rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is
still an existing employer-employee relationship, the jurisdiction is properly with the
DOLE. The findings of the DOLE, however, may still be questioned through a petition for
certiorari under Rule 65 of the Rules of Court.

In the present case, the finding of the DOLE Regional Director that there was an employer-
employee relationship has been subjected to review by this Court, with the finding being that
there was no employer-employee relationship between petitioner and private respondent, based
on the evidence presented. Private respondent presented self-serving allegations as well as
self-defeating evidence. The findings of the Regional Director were not based on substantial
evidence, and private respondent failed to prove the existence of an employer-employee
relationship. The DOLE had no jurisdiction over the case, as there was no employer-employee
relationship present. Thus, the dismissal of the complaint against petitioner is proper.

37. Yanson vs Secretary of Labor

G.R. No. 159026

Facts:
On March 27, 1998, Mardy Cabigo and 40 other workers (private respondents) filed
with DOLE Bacolod, a request for payroll inspection of Hacienda Valentin Balabag
owned by Alberta Yanson.
 DOLE Bacolod conducted an inspection on May 27, 1998, and issued a Notice of
Inspection Report, finding petitioner liable for the following violations of labor
standard laws:
1.Underpayment of salaries and wages (workers being paid a daily rate of
P90.00 since 1997 and P75.00 prior to such year);
2.Non-payment of 13th month pay for 2 years;
3.Non-payment of Social Amelioration Bonus (SAB) for 2 years;
4.Non-payment of employers 1/3 carabao share.
DOLE directed Yanson to:
1,)Affect restitution and/or correction of the foregoing at the company or plant
level within 10 calendar days from notice hereof.
2.) Any question of the findings should be submitted to this Office within 5
working days from notice otherwise order of compliance shall be issued.
3.) Notice shall be posted conspicuously in the premises of the workplace,
removal of which shall subject the establishment to a fine and/ or contempt
proceedings.
4.) When there is a certified union, a copy of the notice shall be furnished said
union.
DOLE Bacolod also scheduled a summary investigation and issued, by registered mail,
notices of hearing as well as a subpoena duces tecum to the parties which Yanson
never appeared to.
In a Compliance Order dated August 12, 1998, DOLE Bacolod directed petitioner to
pay, within 5 days, P9, 084.00 to each of the 41 respondents or a total of P372,
444.00, and to submit proof of payment. It also required Yanson to correct existing
violations of occupational safety and health standards.
Thereafter, DOLE Bacolod issued on December 17, 1998 a Writ of Execution of its
August 12, 1998 Compliance Order.
On February 17, 1999, Yanson filed with DOLE Bacolod a Double Verified Special
Appearance to Oppose Writ of Execution For Being a Blatant and Dangerous
Violation of Due Process.
She claims that she did not receive any form of communication, or participate in
any proceeding relative to the subject matter of the writ of execution. She also
impugned the validity of the August 12, 1998 Compliance Order subject of the writ
of execution on the ground of lack of employment relationship between her and
private respondents.
DOLE Bacolod denied said motion.
Petitioner filed with public respondent a Verified Appeal3and Supplement to the
Verified Appeal, posting therewith an appeal bond of P1,000.00 in money order and
attaching thereto a Motion to be Allowed to Post Minimal Bond with Motion for
Reduction of Bond.
Public respondent dismissed her appeal..
Petitioner filed a Petition for Certiorari which was denied due course and dismissed by
the CA.

3
 Petitioners motion for reconsideration was also denied.

Issue: Whether or not the CA and Secretary erred in dismissing the appeal

Ruling
The appeal ultimately questioned the August 12, 1998 Compliance Order in which
DOLE Bacolod, in the exercise of its visitorial and enforcement power, awarded
private respondents P9,084.00 each in labor standard benefits or the aggregate sum of
P377,444.00.4.
For its perfection, the appeal was therefore subject to the requirements prescribed
under Article 128 of the Labor Code, as amended by Republic Act No. 7730,

Art. 128. Visitorial and Enforcement Power. - x x x (b)

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 Secretary or his duly authorized representatives 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.

An order issued by the duly authorized representative of the

Secretary of Labor and Employment under this article may be appealed
to the latter. In case said order involves a monetary award, an appeal
by the employer may be perfected only upon the POSTING OF A CASH
OR SURETY BOND ISSUED by a reputable bonding company duly
accredited by the Secretary of Labor and Employment in the amount
EQUIVALENT TO THE MONETARY AWARD in the order appealed
from. (Emphasis ours)

When petitioner filed her Verified Appeal and Supplement to the Verified Appeal, she
posted a mere P1,000.00-appeal bond and attached a Motion to be Allowed to Post
Minimal Bond with Motion for Reduction of Bond. It was rejected for insufficiency of
the appeal bond.
There is no analogous application in the Office of the Secretary of the practice in the
NLRC of reducing the appeal bond; the law applicable to the Office of the Secretary of
Labor and Employment does not allow this practice. In other words, the respondents
request for the reduction of the required bond cannot be allowed for lack of legal

4
 basis. Hence, for lack of the required bond, the respondents appeal was never duly
perfected and must therefore be dismissed.
The rationale behind the stringency of such requirement is that the employer-appellant
may choose between a cash bond and a surety bond. Hence, limitations in his liquidity
should pose no obstacle to his perfecting an appeal by posting a mere surety bond.
Moreover, Article 128(b) deliberately employed the word only in reference to the
requirements for perfection of an appeal in labor standards cases. It commands a
restrictive application, giving no room for modification of said requirements.
It should be borne in mind that reduction of bond in the NLRC is expressly authorized
under the Rules implementing Article 223,
It is of record that she received the August 12, 1998 Compliance Order. Petitioner does
not question this, except to point out that the registry return card does not indicate the
date she received the order. That is of no consequence, for the fact remains that
petitioner was put on actual notice not only its existence but also of the summary
investigation of her establishment. It behooves her to file a timely appeal to public
respondent or object to the conduct of the investigation. Petitioner did neither, opting
instead to sit idle and wait until the following year to question the investigation
and resultant order, in the guise of opposing the writ of execution through a motion
dubbed Double Verified Special Appearance to Oppose 'Writ of Execution' For
Being a Blatant and Dangerous Violation of Due Process. Such appeal already went
beyond the ten-day period allowed under Section 8(b) of Rule X-B of the Implementing
Rules.
CA was correct in holding that public respondent did not commit grave abuse of
discretion in rejecting the appeal of petitioner due to the insufficiency of her appeal
bond.
Also, in the Collective Bargaining Agreement dated January 29, 1998, petitioner
acknowledged under oath that she is the employer of private respondents Mardy
Cabigo, et al., who are members of the union known as Commercial and Agro-Industrial
Labor Organization.

38. NESTOR J. BALLADARES, ET. AL. v. PEAK VENTURES CORPORATION AND YANGCO
MARKET OWNERS ASSOCIATION
G.R. No. 161794
June 16, 2009

FACTS:
Balladares and co-petitioners were hired as security guards by Peak Ventures and were assigned at
the premises of Yangco Market. They filed a complaint for underpayment of wages against Peak
Ventures with the DOLE. The Regional Director of DOLE rendered judgment in favor of petitioners and ruled
that Peak Ventures and Yangco Market are solidarily liable to petitioners. Said decision was upheld by the
Secretary of Labor. On certiorari, the Court of Appeals ruled that the Regional Director has no jurisdiction over
the case because the claims of each petitioners exceeded P5,000. Therefore, power to adjudicate such claims
belong to the Labor Arbiter.
ISSUE:
WON the Regional Director correctly assumed jurisdiction over the case.

HELD:
YES. The Regional Director correctly assumed jurisdiction over the case. The complaint involved underpayment
of wages. In order to verify the allegations in the complaint, DOLE conducted an inspection which yielded proof
of violations of labor standards. By nature of the complaint and from the result of the inspection, the authority
of the DOLE under Art. 128 of the Labor Code came into play regardless of monetary value of claims involved.
The Secretary of Labor or his duly authorized representatives is now empowered to hear and decide, in
summary proceeding, any matter involving the recovery of amount of wages and other monetary claims arising
out of employer-employee relationship at the time of inspections, even if the amount of money claims exceed
P5,000.
Said jurisdiction was in accordance with Art. 128(b) of the Labor Code, and the case does not fall under the
exception clause. We must take note that the doctrine in the Servando case is no longer controlling upon the
amendment of Art. 128 by RA 7730. In this case, Peak Ventures did not contest the findings of the Regional
Director. It even admitted before the Court of Appeals that petitioners were not paid correct wages
and as a defense, tried to pass the buck to Yangco Market. Therefore the case does not fall
under the exceptions provided in Art. 128(b) of the Labor Code which would have divested the Regional
Director of jurisdiction over the case.

39. ALLIED INVESTIGATION BUREAU, INC. vs. HON. SECRETARY OF LABOR &
EMPLOYMENT

G.R. No. 122006

November 24, 1999

Facts:

Petitioner Allied Investigation Bureau, Inc. is a security agency. On January 11, 1994, it
entered into a security contract with Novelty Philippines, Inc. (NPI) whereby it obligated itself to
provide security services to the latter.

On January 17, 1995, private respondents Melvin T. Pelayo and Samuel Sucanel, two of the
security guards assigned by petitioner to NPI, filed a complaint with the Office of respondent
Regional Director Romeo A. Young charging petitioner with non-compliance with Wage Order
No. NCR-03, which increased the minimum daily pay of workers by P17.00, or from P118.00 to
P135.00 effective December 16, 1993; and further, by P10.00, or from P135.00 to P145.00 daily
beginning April 1, 1994. Private respondents, likewise, sought the recovery of wage
differentials.
On February 9 and 14, 1995, the Office of Regional Director Young conducted inspection visits
at petitioners establishment. Senior Labor Enforcement Officer Eduvigis A. Acero issued a
Notice of Inspection Results, which reads:

1) Non-implementation under W.O. # NCR-03 from Dec. 16, 1993 to Dec. 15, 1994 to security
guards assigned at Novelty Phils., Inc.

2) Excessive deduction or Bayanihan System (P20.00) every pay day instead of P5.00 only.

Thereafter, in order to facilitate amicable settlement between the parties, a series of conferences
and hearings were scheduled by the Office of the Regional Director. However, despite due
notice, petitioner failed to appear in any of said hearings.

On May 9, 1995, respondent Regional Director issued an Order, ordering ALLIED

INVESTIGATION BUREAU, INC ordered to pay to the ninety-two employees the total amount of
EIGHT HUNDRED SEVEN THOUSAND FIVE HUNDRED SEVENTY PESOS AND THIRTY-SIX
CENTAVOS (P807.570.36) to be distributed to the individual employees in accordance with the
schedule mentioned above, within ten (10) days from receipt hereof. Otherwise, Writ of
execution shall issue to enforce this Order.

Petitioner appealed the above Order to respondent Secretary of Labor and Employment,
without however, posting a cash or surety bond equivalent to the monetary award in the said
Order appealed from.

On September 19, 1995, the Secretary of Labor, thru Undersecretary Cresenciano B. Trajano
issued an Order dismissing petitioners appeal for failure to perfect said appeal.

Petitioner argues that the power to adjudicate money claims belongs to the Labor Arbiter who
has exclusive jurisdiction over employees claims where the aggregate amount of the claims of
each employee exceeds P5,000.00.

Petitioner further contends that since the Order appealed from is void and without legal effect,
said Order never assumed finality and, therefore, it was improper for the respondent Secretary
of Labor to outrightly dismiss the appeal on the ground that petitioner failed to post a
cash/surety bond.
Hence, the instant petition for certiorari.

Issues:

a. Whether or not respondent Regional Director acted without jurisdiction in adjudicating the
private respondents money claims where the aggregate money claim of each of them exceeds
P5,000.00.

b. Whether or not respondent Secretary of Labor & Employment, acting through

Undersecretary Cresenciano B. Trajano, acted with grave abuse of discretion in dismissing
herein petitioners appeal attacking the jurisdiction of respondent Regional Director in
adjudicating subject money claims of private respondents.

Held:

Petitioners arguments are untenable.

While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has
jurisdiction to hear and decide cases where the aggregate money claims of each employee
exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized representatives.

In the case at bar, the Office of respondent Regional Director conducted inspection visits at
petitioners establishment on February 9 and 14, 1995 in accordance with the above-
mentioned provision of law. In the course of said inspection, several violations of the labor
standard provisions of the Labor Code were discovered and reported by Senior Labor
Enforcement Officer Eduvigis A. Acero in his Notice of Inspection Results. It was on the bases
of the aforesaid findings (which petitioner did not contest), that respondent Regional Director
issued the assailed Order for petitioner to pay private respondents the respective wage
differentials due them.

Clearly, as the duly authorized representative of respondent Secretary of Labor, and in the
lawful exercise of the Secretarys visitorial and enforcement powers under Article 128 of the
Labor Code, respondent Regional Director had jurisdiction to issue his impugned Order.

Anent the issue of whether or not the respondent Secretary of Labor acted with grave abuse of
discretion in dismissing petitioners appeal on the ground that petitioner failed to post the
required cash or surety bond, we rule in the negative.

Article 128 of the Labor Code likewise explicitly provides that in case an order issued by the
duly authorized representative of the Secretary of Labor and Employment involves a monetary
award, an appeal by the employer may be perfected only upon posting of a cash or surety bond
in an amount equivalent to the monetary award in the order appealed from.

It is undisputed that petitioner herein did not post a cash or surety bond when it filed its
appeal with the Office of respondent Secretary of Labor. Consequently, petitioner failed to
perfect its appeal on time and the Order of respondent Regional Director became final and
executory.

Thus, the Secretary of Labor and Employment thru Undersecretary Cresenciano B. Trajano
correctly dismissed petitioners appeal.

40. Urbanes vs. Sec. of Labor

G.R. No. 122791, Feb. 19, 2003

Facts:

Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina
Security Agency, entered into an agreement to provide security services to respondent SSS.

During the effectivity of the agreement, Urbanes requested SSS for the upward adjustment
of their contract rate pursuant to a wage order, however, such request remained unheeded even
after several attempts so he pulled out his agencys services from the premises of the SSS and
another security agency, Jaguar, took over. Urbanes then filed a complaint with the DOLE-NCR
against the SSS seeking the implementation of the wage order. DOLE granted the petitioners
request, however the order was set aside because when SSS appealed to the Sec. of Labor, the
latter remanded the records of the case for recomputation of the wage differentials to the RTC.

Issue: Whether or not the Sec. of Labor has jurisdiction to review appeals from decisions of the
Regional Directors.

Held:

Petitioner asserts the implementation of Art. 129 and contends that as the appeal of
SSS was filed with the wrong forum, it should have been dismissed. The SSS, on the other
hand, contends that Article 128, not Article 129, is applicable to the case.

Neither the petitioners contention nor the SSSs is impressed with merit. It is well settled
in law and jurisprudence that where no employer-employee relationship exists between the
parties and no issue is involved which may be resolved by reference to the Labor Code, other
labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has
jurisdiction. In this case, even if petitioner filed the complaint on his and also on behalf of the
security guards, the relief sought has to do with the enforcement of the contract between him
and the SSS which was deemed amended by virtue of Wage Order No. NCR-03. The controversy
subject of the case is thus a civil dispute, the proper forum for the resolution of which is the
civil courts.

41. Zialcita, et al. v. PAL, RO4-3-3398-76, 20 February 1977

Facts: Complainant Zialcita, an international flight stewardess of PAL, was discharged from
the service on account of her marriage. In separating Zialcita, PAL invoked its policy which
stated that flight attendants must be single, and shall be automatically separated from
employment in the event they subsequently get married. They claimed that this policy was in
accordance with Article 132 of the Labor Code. On the other hand, Zialcita questioned her
termination on account of her marriage, invoking Article 136 of the same law.

Issue:

Whether or no Zialcita was validly terminated on account of her marriage?

Held:

NO. When Presidential Decree No. 148, otherwise known as the Women and Child Labor Law,
was promulgated in 13 March 1973, PALs policy had met its doom. However, since no one
challenged its validity, the said policy was able to obtain a momentary reprieve. Section 8 of
PD148 is exactly the same provision reproduced verbatim in Article 136 of the Labor Code,
which was promulgated on 1 May 1974 and took effect six months later.

Although Article 132 enjoins the Secretary of Labor to establish standards that will ensure the
safety and health of women employees and in appropriate cases shall by regulation require
employers to determine appropriate minimum standards for termination in special
occupations, such as those of flight attendants, it is logical to presume that, in the absence of
said standards or regulations which are yet to be established, the policy of PAL against
marriage is patently illegal.

Article 136 is not intended to apply only to women employed in ordinary occupations, or
 it should have categorically expressed so. The sweeping intendment of the law, be it on
special or ordinary occupations, is reflected in the whole text and supported by Article
135 that speaks of non-discrimination on the employment of women.

42. Star Paper Corp. vs. Simbol

G.R. No. 164774, April 12, 2006

Facts:

Petitioner Star Paper Corp. 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. Respondents Simbol, Comia and Estrella were
all regular employees of the company. All three of them met their spouses while working for the
company because they were co-workers and consequently, all three were forced to resign
because of a company policy which states:

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.

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.

Issue: Whether the policy of the employer banning spouses from working in the same company
violates the rights of the employee under the Constitution and the Labor Code is a valid
exercise of management prerogative.

Held:

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.

It is true that the policy of petitioners prohibiting close relatives from working in the
same company takes the nature of an anti-nepotism employment policy. Companies adopt
these policies to prevent the hiring of unqualified persons based on their status as a relative,
rather than upon their ability. These policies focus upon the potential employment problems
arising from the perception of favoritism exhibited towards relatives.

Petitioners sole contention that "the company did not just want to have two (2) or more
of its employees related between the third degree by affinity and/or consanguinity" is lame.
That the second paragraph was meant to give teeth to the first paragraph of the questioned
rule is evidently not the valid reasonable business necessity required by the law. It is
significant to note that respondents were hired after they were found fit for the job, but were
asked to resign when they married a co-employee. 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.

Petitioners contend that their policy will apply only when one employee marries a co-
employee, but they are free to marry persons other than co-employees. The questioned policy
may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect
and under the disparate impact theory, the only way it could pass judicial scrutiny is a
showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The
failure of petitioners to prove a legitimate business concern in imposing the questioned policy
cannot prejudice the employees right to be free from arbitrary discrimination based upon
stereotypes of married persons working together in one company.

Lastly, the absence of a statute expressly prohibiting marital discrimination in our

jurisdiction cannot benefit the petitioners. The protection given to labor in our jurisdiction is
vast and extensive that we cannot prudently draw inferences from the legislatures
silence41 that married persons are not protected under our Constitution and declare valid a
policy based on a prejudice or stereotype. Thus, for failure of petitioners to present undisputed
proof of a reasonable business necessity, we rule that the questioned policy is an invalid
exercise of management prerogative.

43. Domingo v. Rayala

Facts:
Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an
employees spirit and her capacity for advancement. It affects her sense of judgment; it changes
her life.
On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at
the NLRC, filed a Complaint for sexual harassment against Rayala before Secretary Bienvenido
Laguesma of the Department of Labor and Employment (DOLE). To support the Complaint,
Domingo executed an Affidavit narrating the incidences of sexual harassment complained of
After the last incident narrated, Domingo filed for leave of absence and asked to be immediately
transferred. Thereafter, she filed the Complaint for sexual harassment on the basis of
Administrative Order No. 250, the Rules and Regulations Implementing RA 7877 in the
Department of Labor and Employment. The committee constituted found Rayala guilty of the
offense charged. Secretary Laguesma submitted a copy of the Committee Report and
Recommendation to the OP, but with the Recommendation that the penalty should be
suspension for six (6) months and one (1) day, in accordance with AO 250.On May 8, 2000, the
OP issued AO 119, disagreeing with the recommendation that respondent be meted only the
penalty of suspension for six (6) months and one (1) day considering the circumstances of the
case because of the nature of the position of Reyala as occupying the highest position in the
NLRC, being its Chairman. Long digest by Ernani Tadili. It was ordered that Rayala be
dismissed from service for being found guilty of grave offense of disgraceful and immoral
conduct. Rayala filed Motions for Reconsideration until the case was finally referred to the
Court of Appeals for appropriate action. The CA found Reyala guilty and imposed the penalty of
suspension of service for the maximum period of one (1) year. Domingo filed a Petition for
Review before the SC. Rayala likewise filed a Petition for Review with this Court essentially
arguing that he is not guilty of any act of sexual harassment. The Republic then filed its own
Petition for Review. On June 28, 2004, the Court directed the consolidation of the three (3)
petitions

Issue:
Did Reyala commit Sexual harassment?

Ruling:
He insists, however, that these acts do not constitute sexual harassment, because Domingo did
not allege in her complaint that there was a demand, request, or requirement of a sexual favor
as a condition for her continued employment or for her promotion to a higher position. Rayala
urges us to apply to his case our ruling in Aquino v. Acosta. We find respondents insistence
unconvincing. Basic in the law of public officers is the three-fold liability rule, which states
that the wrongful acts or omissions of a public officer may give rise to civil, criminal and
administrative liability. An action for each can proceed independently of the others. This rule
applies with full force to sexual harassment. The law penalizing sexual harassment in our
jurisdiction is RA 7877. Section 3 thereof defines work-related sexual harassment in this wise:

Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work, education or

training-related sexual harassment is committed by an employer, manager, supervisor, agent of
the employer, teacher, instructor, professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for submission is accepted by the
object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment
or continued employment of said individual, or in granting said individual favorable
compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual
favor results in limiting, segregating or classifying the employee which in a way would
discriminate, deprive or diminish employment opportunities or otherwise adversely affect said
employee;
(2) The above acts would impair the employees rights or privileges under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for the
employee.

The CA, thus, correctly ruled that Rayalas culpability is not to be determined solely on the
basis of Section 3, RA 7877, because he is charged with the administrative offense, not the
criminal infraction, of sexual harassment. It should be enough that the CA, along with the
Investigating Committee and the Office of the President, found substantial evidence to support
the administrative charge.
Yet, even if we were to test Rayalas acts strictly by the standards set in Section 3, RA 7877, he
would still be administratively liable. It is true that this provision calls for a "demand, request
or requirement of a sexual favor." But it is not necessary that the demand, request or
requirement of a sexual favor be articulated in a categorical oral or written statement. It may be
discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingos
shoulders, running his fingers across her neck and tickling her ear, having inappropriate
conversations with her, giving her money allegedly for school expenses with a promise of future
privileges, and making statements with unmistakable sexual overtones all these acts of
Rayala resound with deafening clarity the unspoken request for a sexual favor. Rayalas
invocation of Aquino v. Acosta4 is misplaced, because the factual setting in that case is
different from that in the case at bench. To repeat, this factual milieu in Aquino does not
obtain in the case at bench. While in Aquino, the Court interpreted the acts (of Judge Acosta)
as casual gestures of friendship and camaraderie, done during festive or special occasions and
with other people present, in the instant case, Rayalas acts of holding and squeezing
Domingos shoulders, running his fingers across her neck and tickling her ear, and the
inappropriate comments, were all made in the confines of Rayalas office when no other
members of his staff were around. More importantly, and a circumstance absent in Aquino,
Rayalas acts, as already adverted to above, produced a hostile work environment for Domingo,
as shown by her having reported the matter to an officemate and, after the last incident, filing
for a leave of absence and requesting transfer to another unit.

44. Bernardo v. NLRC

Facts:
The 43 petitions are deaf-mutes who were hired on various periods from 188 to 1993 by
respondent Far East Bank and Trust Co. as Money Sorters and Counters through uniformly
wondered agreement called Employment Contract for Handicapped Workers. The said
agreement provides for the manner of how they are hired and rehired, the amount of their
wages (P118.00 per day), period of employment (5 days a week, 8 hours a day, training for 1
month, 6 months period) and the manner and method of their works are to be done ( sort out
bills according to colors; Count each denomination per hundred, either manually or with the
aid of a counting machine; Wrap and label bills per hundred; put the wrapped bills into
bundles; and Submit bundled bills to bank teller for verification.) Many of their employments
were renewed every six months. Claiming that they should be considered as regular employees
they filed complaint for illegal dismissal and recovery of various benefits.

Labor arbiters decision: complaint is dismissed for lack of merit (the terms of the contract shall
be law between the parties.). Affirmed by the NLRC (Art. 280 controlling herein but Art. 80)
(the Magna Carta for Disabled Persons was not applicable, considering the prevailing
circumstances of the case.) and denied motion for consideration.

Issue:
Are petitioners considered as regular employees?

Ruling:
Yes. The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employment was illegal. The stipulations in the employment contracts indubitably conform
with article 80, however the application of Article 280 of the Labor Code is justified because of
the advent of RA No. 7277 ( the Magna Carta for Disabled Persons) which mandates that a
qualified employee should be given the same terms and conditions of employment as a qualified
able-bodied person ( compensation, privileges, benefits, incentives or allowances) 27 of the
petitioners are considered regular employees by provision of law regardless of any agreement
between the parties as embodied in the article 280 in relation to article 281 of the Labor Code.
The test is whether the former is usually necessary or desirable in the usual business or trade
of the employer. Hence, the employment is considered regular, but only with respect to such
activity, and while such activity exist. Without doubt, the task of counting and sorting bills is
necessary and desirable to the business of respondent bank. When the bank renewed the
contract after the lapse of the six-month probationary period, the employees thereby became
regular employees. No employer is allowed to determine indefinitely the fitness of its employees.
Those who have worked for only 6 months and employments were not renewed are not
considered regular employees.

45. Hon. Patricia Sto. Tomas, et. al. v. Rey Salac, et. al.

Facts:
These are consolidated cases which assails the constitutionality of some of the provisions of R.
A. No. 8042, otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995." In
G.R. 152642 and G.R. 152710, respondents Rey Salac, et. al. filed before the RTC of Quezon
City a petition for certiorari, prohibition and mandamus against petitioners DOLE Secretary,
POEA administrator and TESDA Secretary General and enjoin them from complying with the
policy of deregulation mandated under Sections 29 and 30 of R.A. No. 8042. However, Sec. 29
and 30 of R.A. No. 8042 has been repealed by R.A 9422 which makes the issues raised by
Salac, et. al. moot and academic. In G.R. 167590, respondent Philippine Association of Service
Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition with prayer for
issuance of TRO and writ of preliminary injunction before the RTC of Manila, seeking to annul
Sections 6, 7, and 9 of R.A. 8042 for being unconstitutional. Sec. 6 defines the crime of "illegal
recruitment" and enumerates the acts constituting the same. Sec. 7 provides for the penalties
for prohibited acts. Sec. 9 allowed the filing of criminal actions arising from illegal
recruitment before the RTC of the province or city where the offense was committed or where
the offended party actually resides at the time of the commission of the offense. The RTC of
Manila declared Section 6 unconstitutional after hearing on the ground that its definition of
illegal recruitment is vague as it fails to distinguish between licensed and non-licensed
recruiters and for that reason gives undue advantage to the non-licensed recruiters in violation
of the right to equal protection of those that operate with government licenses or authorities.
The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping
application of the penalties failed to make any distinction as to the seriousness of the act
committed for the application of the penalty imposed on such violation. The Manila RTC also
invalidated Section 9 of R.A. 8042 on the ground that allowing the offended parties to file the
criminal case in their place of residence would negate the general rule on venue of criminal
cases which is the place where the crime or any of its essential elements were committed.
Venue, said the RTC, is jurisdictional in penal laws and, allowing the filing of criminal actions
at the place of residence of the offended parties violates their right to due process. In G.R. No.
167590, G.R. 182978-79 and G.R. 184298-99, Respondent spouses Simplicio and Mila
Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and damages against
petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services,
Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while working as staff
nurse in Riyadh, Saudi Arabia. The Labor Arbiter (LA) dismissed the claim on the ground that
the Cuaresmas had already received insurance benefits arising from their daughters death
from the Overseas Workers Welfare Administration (OWWA) but the NLRC found Becmen and
White Falcon jointly and severally liable for Jasmin's death. On appeal, CA also found them
liable. Petitioners now assail the constitutionality of the 2nd paragraph of Sec. 10 of R.A. 8042
which holds the corporate directors, officers, and partners of recruitment and placement
agencies jointly and solidarily liable for money claims and damages that may be adjudged
against the latter agencies.

Issue:
Whether or not Sec. 6, 7, 9 and 10(par.2) of Republic Act No 8042 are constitutional

Ruling:
The Court held that Sec. 6, 7, 9, and 10(par.2) of R.A. No. 8042 valid and constitutional.

Section 6
Illegal recruitment as defined in Section 6 is clear and unambiguous and, contrary to the
RTCs finding, actually makes a distinction between licensed and non-licensed recruiters. By
its terms, persons who engage in canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers without the appropriate government license or authority are
guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that
section. On the other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs,
although with the appropriate government license or authority, are guilty of illegal recruitment
only if they commit any of the wrongful acts enumerated in Section 6.

Section 7
In fixing uniform penalties for each of the enumerated acts under Section 6, Congress was
within its prerogative to determine what individual acts are equally reprehensible, consistent
with the State policy of according full protection to labor, and deserving of the same penalties.
It is not within the power of the Court to question the wisdom of this kind of choice. Notably,
this legislative policy has been further stressed in July 2010 with the enactment of R.A.
1002212 which increased even more the duration of the penalties of imprisonment and the
amounts of fine for the commission of the acts listed under Section 7. In fixing such tough
penalties, the law considered the unsettling fact that OFWs must work outside the countrys
borders and beyond its immediate protection. The law must, therefore, make an effort to
somehow protect them from conscienceless individuals within its jurisdiction who, fueled by
greed, are willing to ship them out without clear assurance that their contracted principals
would treat such OFWs fairly and humanely.

Section 9
There is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for
violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on
Criminal Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows exceptions
provided by laws. Section 9 of R.A. 8042, as an exception to the rule on venue of criminal
actions is, consistent with that laws declared policy15 of providing a criminal justice system
that protects and serves the best interests of the victims of illegal recruitment.

Section 10
The Court has already held, pending adjudication of this case, that the liability of corporate
directors and officers is not automatic. To make them jointly and solidarily liable with their
company, there must be a finding that they were remiss in directing the affairs of that
company, such as sponsoring or tolerating the conduct of illegal activities.19 In the case of
Becmen and White Falcon,20 while there is evidence that these companies were at fault in not
investigating the cause of Jasmins death, there is no mention of any evidence in the case
against them that intervenors Gumabay, et al., Becmens corporate officers and directors, were
personally involved in their companys particular actions or omissions in Jasmins case.

46. Century Canning Corp. v. CA

Facts:
On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as
fish cleaner atpetitioners tuna and sardines factory. Palad signed on 17 July 1997 an
apprenticeship agreement with petitioner.Palad received an apprentice allowance of P138.75
daily. On 25 July 1997, petitioner submitted its apprenticeshipprogram for approval to the
Technical Education and Skills Development Authority (TESDA) of the Department of Labor
and Employment (DOLE). On 26 September 1997, the TESDA approved petitioners
apprenticeship program. According to petitioner, a performance evaluation was conducted on
15 November 1997, where petitioner gavePalad a rating ofN.I. or needs improvement since she
scored only27.75% based on a 100% performance indicator.Furthermore, according to the
performance evaluation, Palad incurred numerous tardiness and absences. As aconsequence,
petitioner issued a termination notice dated 22 November 1997 to Palad, informing her of
hertermination effective at the close of business hours of 28 November 1997. Palad then filed a
complaint for illegaldismissal, underpayment of wages, and non-payment of pro-rated 13th
month pay for the year 1997.

Issue:
1. Whether or not the apprenticeship agreement was valid and binding between the parties
2. Whether or not Palad was illegally dismissed by petitioner
Ruling:
1) The Court held that the apprenticeship agreement which Palad signed was not valid and
binding because it was executed more than two months before the TESDA approved petitioners
apprenticeship program. The Court cited Nitto Enterprises v. National Labor Relations
Commission, where it was held that an apprenticeship program should first be approved by the
DOLE before an apprentice may be hired, otherwise the person hired will be considered a
regular employee. It is mandated that apprenticeship agreements entered into by the employer
and apprentice shall be entered only in accordance with the apprenticeship program duly
approved by the Minister of Labor and Employment. Prior approval by the Department of Labor
and Employment of the proposed apprenticeship program is, therefore, a condition sine qua
non before an apprenticeship agreement can be validly entered into. The Labor Code defines an
apprentice as a worker who is covered by a written apprenticeship agreement with an employer.
Since Palad is not considered an apprentice because the apprenticeship agreement was
enforced before the TESDAs approval of petitioners apprenticeship program, Palad is deemed a
regular employee performing the job of a fish cleaner. Clearly, the job of a fish cleaner is
necessary in petitioners business as a tuna and sardines factory. Under Article 280 of the
Labor Code, an employment is deemed 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.

2) Under Article 279 of the Labor Code, an employer may terminate the services of an employee
for just causes or for authorized causes. Under Article 277(b) of the Labor Code, the employer
must send the employee who is about to be terminated, a written notice stating the causes for
termination and must give the employee the opportunity to be heard and to defend himself.
Thus, to constitute valid dismissal from employment, two requisites must concur: (1) the
dismissal must be for a just or authorized cause; and (2) the employee must be afforded an
opportunity to be heard and to defend himself. Palad was not accorded due process. Even if
petitioner did conduct a performance evaluation on Palad, petitioner failed to warn Palad of her
alleged poor performance. In fact, Palad denies any knowledge of the performance evaluation
conducted and of the result thereof. Petitioner likewise admits that Palad did not receive the
notice of termination because Palad allegedly stopped reporting for work. The records are bereft
of evidence to show that petitioner ever gave Palad the opportunity to explain and defend
herself. Clearly, the two requisites for a valid dismissal are lacking in this case.

47. Phil Aeolus v. NLRC

Facts:
Private respondent was a company nurse for the Philippine Aeolus United Corporation. A
memorandum was issued by the personnel manager petitioner corporation to respondent
Cortez asking her to explain why no action should be taken against her for (1) throwing a
stapler at plant manager William Chua; (2) for losing the amount of P1488 entrusted to her, (3)
for asking a co-employee to punch in her time card one morning when she was not there. She
was then placed on preventive suspension. Another memorandum was sent asking her to
explain why she failed to process the ATM applications of her co-employees. She submitted a
written explanation as to the loss of the P1488 and the punching in of her time card. A third
memorandum was sent to her informing her of her termination from service for gross and
habitual neglect of duties, serious misconduct, and fraud or willful breach of trust.
Issue:
W/N petitioner was illegally dismissed.
If such dismissal was illegal, W/N petitioner should be entitled to damages.

Held:
Yes. The grounds by which an employer may validly terminate the services of an employee must
be strictly construed. As to the first charge, respondent claims that plant manager William
Chua had been making sexual advances on her since her first year of employment and that
when she would not accede to his requests, he threatened that he would cause her termination
from service. As to the second charge, the money entrusted to her was not lost, but given to the
personnel-in charge for proper transmittal as evidenced by a receipt signed by the latter. As to
the third charge, , she explains that she asked someone to punch in her card as she was doing
an errand for one of the companys officer and with the permission of William Chua. As to the
fourth charge, she asserts that she had no knowledge thereof. To constitute serious
misconduct to justify dismissal, the act should be unfit to continue working for her employer.
The acts complained did not pertain to her duties as a nurse nor did they constitute serious
misconduct. However due to the strained relations, in lieu of reinstatement, she is to be
awarded separation pay of one month for every year of service until finality of this judgment.

Yes. Private respondent admittedly allowed four years to pass before coming out with her
employers sexual impositions; but the time to do such varies depending upon the needs,
circumstances and emotional threshold of the employee. It is clear that the respondent has
suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of
the act complained of. Thus, she should be entitled to moral and exemplary damages for the
oppressive manner with which petitioners effected her dismissal and to serve as a warning to
officers who take advantage of their ascendancy over their employees
 1 GSIS vs CA

G.R. No. 124208

(These two consolidated cases are petitions for review on certiorari of the Decision of the Court
of Appeals (CA) promulgated on March 13, 1996, which reversed and set aside the Decision of
the Employees Compensation Commission (ECC) dated September 7, 1995 denying private
respondents claim for compensation benefits of the late Abraham Cate under Presidential
Decree (P.D.) No. 626, as amended.)

FACTS:
On March 6, 1974, Abraham Cate (Abraham) joined the military service as a Rifleman of the
Philippine Navy. In 1975, he was designated as Action Clerk. On February 22, 1986, he was
transferred to the now defunct Philippine Constabulary with the rank of Technical Sergeant
and was later promoted to Master Sergeant. On January 2, 1991, he was absorbed in the
Philippine
National Police (PNP) with the rank of Senior Police Officer IV (SPO4).

In 1993, Abraham complained of a mass on his left cheek which gradually increased in size. A
biopsy was done at the Philippine General Hospital (PGH). The histopath report revealed that
he was suffering from Osteoblastic Osteosarcoma. He was admitted at the PGH payward, and
on October 28, 1993, he underwent Total Maxillectomy with Orbital Exenteration, which
operation removed the mass on his left cheek. In April 1994, another biopsy revealed the
recurrence of the ailment. On June 9, 1994, Abraham underwent debulking of the recurrent
tumor at the PGH. Post-operative course was uneventful and he underwent radiotherapy.

On December 1, 1994, Abraham was compulsorily retired from the PNP.

On December 20, 1994, Abraham filed a claim for income benefits with the Government
Service Insurance System (GSIS) under P.D. No. 626, as amended.

In a letter dated December 27, 1994, GSIS denied the claim on the ground that Osteosarcoma
is not considered an occupational disease under P.D. No. 626, and there is no showing that his
duties as SPO4 in the Armed Forces of the Philippines had increased the risk of contracting
said ailment.

GSIS denied Abrahams request for reconsideration of the decision in a letter dated March 22,
1995. On May 2, 1995, Abraham died at the age of 45. He was survived by his wife, Dorothy
Cate, and two children. The heirs of Abraham appealed the decision of GSIS to the ECC.

In a Decision dated September 7, 1995, ECC affirmed the decision of GSIS and dismissed the
case for lack of merit. The heirs of Abraham filed a petition for review of the decision of ECC
with the CA.

Supreme Court concur with the ruling of the Court of Appeals:

"In all due respect and with the least of intention of committing contempt and discourtesy but
rather solely moved by the time-honored principle that the Employees Compensation Act is
basically a social legislation designed to afford relief to our working men (Santos v. ECC, 221
SCRA 182 [1993] and that labor, social welfare legislations should be liberally construed in
favor of the applicant (Tira v. ECC, 208 SCRA 834 [1992]), We have to rule in favor of herein
petitioners.

The plight of any cancer patient deserves some serious considerations. We were not to be told
that no one is a willing victim of cancer. Inflicted with this dreadful malady, the patient suffers
from the trauma of an impending death not to mention the high cost of medical attendance
required, only to prolong ones agony and the hopelessness of any definite cure simply because
the origin and cause of cancer are farfetched unresolved.

The present case at bench is no different. Petitioners failure to present positive evidence of a
causal relation of the illness and his working conditions is due to the pure and simple lack of
available proof to be offered in evidence. Verily, to deny compensation to osteosarcoma victims
who will definitely be unable to produce a single piece of proof to that effect, is unrealistic,
illogical and unfair. At the very least, on a very exceptional circumstance, the rule on
compensability should be relaxed and be allowed to apply to such situations. To disallow the
benefit will even more add up to the sufferings, this time, for the ignorance of the inability of
mankind to discover the real truth about cancer.
It is not the intention of this decision to challenge the wisdom of the Raro case. What is being
hoped for is to have a second look on the issue of compensability of those inflicted with
osteosarcoma or like disease, where the origin or cause is still virtually not ascertained. The
protection of the stability and integrity of the State Insurance Fund against non-compensable
claims is much to be desired. Nonetheless, to allow the presumption of compensability to
Osteosarcoma victims, will not adversely prejudice such state policy. In fact, it will give more
meaning to the very purpose and essence of the State Insurance Fund. Upon the other hand,
to deny the claim will not only defeat the very reason for its creation but will likewise turn down
benefits to the intended rightful beneficiary thereof. As employees compensation is based on
social security principles. We believe that in the meantime that osteosarcomas cause and
origin are not yet unearthed, the benefit of the doubt should be resolved in favor of the claim.

In main, We subscribe to the more compassionate and humane considerations contained in the
dissenting opinions of Justices Sarmiento and Paras in the same Raro case and We quote:
It must be likewise be noted that the petitioner is suffering from cancer (brain tumor), whose
cause medical science is yet to unravel. It would then be asking too much to make her prove
that her illness was cause by work or aggravated by it, when experts themselves are ignorant
as to what brings it about. I do not believe, finally, that the question is a matter of legislation.
Compassion, it is my view, is reason enough. (J. Sarmiento)
While brain tumor is not expressly or specifically referred to as an occupational disease, and
while admittedly it precise causes are still unknown, We may say that the disease is akin to
cancer of the brain and should therefore be regarded as either compensable or borderline
case. At any rate, the precise work of the petitioner at the Bureau of Mines and Geo-Sciences
consisted of the following: As Mining Recorded II, to record and file mining instruments and
documents in the Mining Recorders Section and to type correspondence and other documents
pertaining to the same action. It will readily be seen that her work required at times mental
concentration. Whether this is specifically causative of brain tumor is of course still unknown
but doubts must generally be resolved in favor whenever compensation for disease is
concerned. It would certainly be absurd to throw upon petitioner the burden of showing that
her work either caused or aggravated the disease, particularly when both the GSIS and ECC
profess ignorance themselves of the causes of the disease. (Justice Paras)."

Stated otherwise, before the amendment, the law simply did not allow compensation for the
ailment of respondent. It is under this set-up that the Raro case was decided. However, as the
ECC decision noted, the law was amended and now the present law on compensation allows
certain diseases to be compensable if it is sufficiently proven that the risk of contracting is
increased by the working conditions. It, therefore, now allows compensation subject to
requirement of proving by sufficient evidence that the risk of contracting the ailment is
increased by the working conditions.

As earlier noted, however, in the specific case of respondent, the requirement is impossible to
comply with, given the present state of scientific knowledge. The obligation to present such as
an impossible evidence must, therefore, be deemed void. Respondent, therefore, is entitled to
compensation, consistent with the social legislations intended beneficial purpose.

2 Dominga A. Salmone vs. Employees Compensation Commission (ECC)

GR No. 142392 26 September 2000

Facts:

In 1982, Salmone (petitioner) was employed as a sewer in Paul Geneve Entertainment

Corporation (PGEC)
PGEC is engaged in the business of sewing costumes, gowns and casual and formal
dresses.
Petitioner was later promoted as the officer-in-charge and the over-all custodian in the
Sewing Department
In 1996, petitioner started to felt chest pains hence he consulted Dr. Claudio Saratan
for medical examination
Per results, she was found suffering from atherosclerotic heart disease, atrial
fibrillation, cardiac arrhythmia
Upon recommendation of her doctor, she resigned from her work hoping that with
much-needed complete rest, she will be cured.
SSS
Petitioner filed a disability claim, but SSS denied such claim
She filed a Motion for Reconsideration but the same was denied
ECC
Petitioner appealed to ECC
ECC denied the appeal
CA
Petitioner appealed to CA
CA dismissed the appeal
Decision: Petitioners illness was not compensable because petitioner failed to adduce
substantial evidence proving any of the conditions of compensability

The Court of Appeals ruled that "atherosclerotic heart disease, atrial fibrillation,
 cardiac arrhythmia" from which petitioner suffered falls under the classification
"cardiovascular diseases" and under Resolution No. 432, dated July 20, 1977 of the
ECC, cardiovascular disease is listed as compensable occupational disease provided
that substantial evidence is adduced to prove any of the following conditions:

a If the heart disease was known to have been present during employment
there must be proof that an acute exacerbation clearly precipitated by the
unusual strain by reason of the nature of his work.

b The strain of work that brings about an acute attack must be of sufficient
severity and must be followed within twenty four (24) hours by the clinical
signs of a cardiac insult to constitute causal relationship.

c If a person who was apparently asymptomatic before subjecting himself to

strain of work showed signs and symptoms of cardiac injury during the
performance of his work and such symptoms and signs persisted, it is
reasonable to claim a causal relationship.

ISSUE
Whether or not petitioners illness is compensable, as work-related, and whether there
was sufficient evidence of compensability
SC
The court held that petitioners illness is compensable
Under the Labor Code, as amended, the law applicable to the case at bar, in order for
the employee to be entitled to sickness or death benefits, the sickness or death resulting
therefrom must be or must have resulted from either (a) any illness definitely
accepted as an occupational disease listed by the Commission, or (b) any illness
caused by employment, subject to proof that the risk of contracting the same is
increased by working conditions
In other words, "for a sickness and the resulting disability or death to be compensable,
the said sickness must be an occupational disease listed under Annex "A" of said
Rules, otherwise, the claimant or employee concerned must prove that the risk of
contracting the disease is increased by the working condition
The degree of proof required under P. D. No. 626, is merely substantial evidence,
which means, "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion."
The claimant must show, at least, by substantial evidence that the development of the
disease is brought largely by the conditions present in the nature of the job. What the
law requires is a reasonable work-connection and not a direct causal relation. It
is enough that the hypothesis on which the workmen's claim is based is probable.
Medical opinion to the contrary can be disregarded especially where there is some basis
in the facts for inferring a work-connection. Probability, not certainty, is the touchtone.
3 LEGAL HEIRS OF THE LATE EDWIN B. DEAUNA, represented by his wife, MRS.
ARLINA DEAUNA v. FIL-STAR MARITIME CORPORATION, GREGORIO ORTEGA,
CAPT. VICTOR S. MILLALOS and GRANDSLAM ENTERPRISES CORPORATION

Facts:
o Respondent Fil-Star Maritime Corporation (Fil-Star) is a local manning agency, with
respondent Captain Victor S. Millalos (Capt. Millalos) as its general manager.
Respondent Grandslam Enterprise Corporation (Grandslam) is among Fil-Star's foreign
principals. Grandslam owns and manages the vessel M/V Sanko Stream (Sanko) which
Edwin boarded on August 1, 2004 for a nine-month engagement as Chief Engineer. As
such, he was responsible for the operations and maintenance of the entire vessel's
engineering equipment. He also determined the requirements for fuel, lube oil and
other consumables necessary for a voyage, conducted inventory of spare parts, prepared
the engine room for inspection by marine and safety authorities, and took charge of the
engine room during maneuvering and emergency situations.
o Prior to Edwin's deployment, he underwent the customary Pre-employment Medical
Examination (PEME) and was found as fit to work as was repeatedly the case in the
past 30 years since his first deployment by Fil-Star in 1975.
o Sometime in October 2004, Edwin experienced abdominal pains while on-board Sanko.
He was promptly referred to a doctor in Paranagua, Brazil. An ultrasound examination
revealed that he had kidney stones for which he was administered oral medications.
Thereafter, he resumed his work on-board Sanko.
o On April 3, 2005 or more or less 8 months from deployment, Edwin was repatriated.
There were, however, conflicting claims regarding the cause of his repatriation. The
respondents claimed that Edwin requested for an early termination of his contract in
order to attend his daughter's graduation ceremony. On the other hand, the petitioners
averred that Edwin was repatriated due to the latter's body weakness and head
heaviness.[5] The petitioners likewise claimed that on April 4, 2005, they called Capt.
Millalos to inform the latter that upon arrival at the airport, Edwin was very sick, weak,
disoriented, and merely wanted to immediately go home to Daet, Camarines Norte.
Edwin can neither physically report in Fil-Star's office nor board his next vessel of
assignment.
o On 2005, he was diagnosed that he contracted Glioblastoma (GBM) Brain Cancer.
Respondent extended allowance and disability benefits, even though not obligated
because one who suffers GBM can only be considered as work-related if a person who
suffers therefrom had exposures to radiation or vinyl products, or had worked in the
vicinity of power lines.[11] The respondents claimed that Edwin did not have such
exposure while under their employ.
o Edwin died. Petitioners seek death benefits.
o Labor Arbiter through Voluntary Arbitrator ruled in favor of petitioners. (ailment was
work related)
o Court of Appeals ruled in favor of respondents (ailment was not work related)
o PETITIONERS CONTENTION: The petitioners emphasize that under the
IBF/AMOSUP/IMMAJ CBA, a seafarer's death is compensable regardless of its cause
and its non work-relatedness as long as it occurs during the term of the latter's
 employment. The only exception to compensability is when death is due to willful acts.
In Edwin's case, he had been under the respondents' employment for the past 30 years.
Prior to boarding Sanko, he passed the PEME but was thereafter medically-repatriated
as stated in Dr. Cruz's report. He died of GBM, the origin of which is unknown. Hence,
it can be presumed that GBM had been contracted during his employment with the
respondents.
o RESPONDENTS CONTENTION: the respondents counter that Edwin's illness was not
work-related and his death occurred not during the term of his employment. Thus, the
petitioners are not entitled to the payment of any benefits. The mere circumstance that
the manifestations of an illness appeared while the seafarer is on-board does not
necessarily render it as work-related. In the POEA SEC, the words during the term of
contract refer to the time when death occurs while work-related refers to the cause of
death. In the absence of substantial evidence, working conditions cannot be presumed
to have increased the risk of contracting the disease.

ISSUE: 1. WON Petitioners are entitled to death compensation

2. WON Petitioners entitled to Moral damages and Attys fees

HELD:

1. YES. Under the IBF/AMOSUP/IMMAJ CBA provisions, Edwin's death a little more than a
year from his repatriation can still be considered as one occurring while he was still under the
respondents' employ. We note that body weakness, head heaviness, drowsiness and
disorientedness are among the symptoms associated with GBM. Dr. Cruz indicated that these
symptoms were exhibited by Edwin since October 2004 while he was still on board Sanko and
were notable even when the latter was repatriated on April 3, 2005. Hence, since Edwin's death
is reasonably connected to the cause of his repatriation, within the purview of the
IBF/AMOSUP/IMMAJ CBA, he indubitably died while under the respondents' employ, thus,
entitling the petitioners to death benefits as provided for in Appendix 3 of the said CBA.

2. NO. The petitioners are, however, not entitled to moral and exemplary damages and
attorney's fees.

We find that the acts of the respondents hardly indicate an intent on their part to evade
the payment of their obligations so as to justify the award of moral and exemplary damages and
attorney's fees to the petitioners. The respondents extended medical assistance and allowances
to Edwin while he went through his treatment. Further, the respondents offered an amount of
US$60,000.00 as disability benefits even when the petitioners' claims had not been
conclusively established yet.

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is PARTIALLY

GRANTED.

4. D.DEBAUDIN, Petitioner,
vs.
SOCIAL SECURITY SYSTEM (SSS) and EMPLOYEES COMPENSATION COMMISSION
(ECC), Respondents.

G.R. No. 148308 September 21, 2007

FACTS:
Petitioner is a seaman by profession. He joined the United Philippine Lines (UPL) on
April 13, 1975 and was separated from his employment on May 21, 1993 at the age
of 62
During his eighteen (18) years of service with UPL, he boarded various foreign ocean-
going vessels4 while performing his duties and responsibilities that included cleaning
chemical-spill-oil on deck, slat dislodging, and spraying naphtha chemical and washing
dirt and rusts inside the tank.

Petitioners medical record shows that his illness started in May 1993 when he
experienced episodes of bilateral blurring of vision.
While in Singapore then, he consulted Dr. Richard F.T. Fan, an ophthalmic surgeon,
and he was diagnosed to be suffering from advanced glaucoma
His condition recurred even after his separation from service, prompting him to seek
further eye consultations and treatments in the Philippines. 6 His eye disease was
finally diagnosed as chronic open angle glaucoma

petitioner filed before the SSS a claim for compensation benefits under P.D. No. 626,
as amended. The application, however, was denied on the ground that there is no
causal relationship between the illness and his job as a seaman

When his motion for reconsideration was also denied, petitioner elevated the case to
the ECC which later on affirmed the assailed decision.

An appeal from the adverse decision was filed before the CA. 10 On August 17, 1999,
however, the petition was denied due course and the CA accordingly dismissed the
case on the ground that petitioner failed to adduce substantial evidence supporting
the conclusion that the working conditions as a seaman increased the risk of
contracting his chronic open angle glaucoma

In fine, petitioner stresses that, as a social legislation, P.D. No. 626, as amended,
should be interpreted to give meaning and substance to the liberal and compassionate
spirit of the 1987 Constitution and the Labor Code.

ISSUE: whether the work of petitioner as a seaman contributed even in a small degree in or
had increased the risk of contracting his chronic open angle glaucoma and is entitled to
employees compensation program, which is embodied in P.D. 626

HELD:
The petition lacks merit.

Under the Labor Code, as amended, an employee is entitled to compensation benefits

if the sickness is a result of an occupational disease listed under Annex "A" of the
Rules on Employees' Compensation; or in case of any other illness, if it is caused by
employment, subject to proof that the risk of contracting the same is increased by
the working conditions
This is as it should be because for an illness to be compensable, it must be (1)
directly caused by such employment; (2) aggravated by the employment; or (3) the
result of the nature of such employment
15
Jurisprudence provides that to establish compensability of a non-occupational
disease, reasonable proof of work-connection and not direct causal relation is
required
Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings18 since in carrying out and interpreting the provisions of the Labor Code
and its implementing rules and regulations the primordial and paramount
consideration is the employees' welfare.

In the present case, petitioners chronic open angle glaucoma is not listed as an
occupational disease; hence, he has the burden of proving by substantial evidence, or
such relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion, that the nature of his employment or working conditions increased the risk
of contracting the ailment or that its progression or aggravation was brought about
thereby.

Perusal of the records, however, regrettably reveals petitioners failure to

adduce any proof of a reasonable connection between his work as a seaman and
the.
Other than positing the foregoing, petitioner presented no competent medical history,
records or physicians report to objectively substantiate the claim that there is a
reasonable nexus between his work and his ailment. Without saying more, his bare
allegations do not ipso facto make his illness compensable. Awards of compensation
cannot rest on speculations or presumptions. The claimant must present concrete
evidence to prove a positive proposition
The necessity of establishing the supposed work connection is all the more crucial in
the face of the fact that the readily-available medical literature would appear to
consistently indicate that open angle glaucoma is brought about by several factors
other than the purported "physical and emotional strains," such as aging, race,
family history, nearsightedness or farsightedness, prolonged corticosteroid use,
nutritional deficiencies, brain chemical abnormalities, injuries, infection or
abnormalities in the eye, and medical conditions such as diabetes, high blood
pressure or heart disease
DENIED.
 5 PABLO A. AUSTRIA, petitioner, vs. COURT OF APPEALS AND EMPLOYEES
COMPENSATION COMMISSION (SOCIAL SECURITY SYSTEM), (CENTRAL
AZUCARERA DE TARLAC), respondents.

PUNO, J.:

Facts: Petitioner Pablo A. Austria was employed as bag piler at Central Azucarera de Tarlac
from June 1, 1977 to July 20, 1997. In 1994, petitioner began to feel severe back pain. The x-
ray photographs taken on May 23, 1997, September 3, 1998, and September 28, 1998 revealed
osteoarthritis of the lumbar spine. On account of his osteoarthritis, petitioner filed with the
SSS a claim for compensation benefits under PD 626 as amended. The claim was granted and
petitioner was awarded permanent partial disability benefits for eight (8) months starting
September 1, 1995, a second release for seven (7) months starting May 10, 1996, and a third
release for fifteen (15) months starting April 1, 1997. Petitioner thereafter requested the SSS for
conversion of his permanent partial disability benefit to permanent total disability benefit. The
SSS denied the request. On appeal, the ECC affirmed the decision of the SSS. The ECC held
that considering the degree of his disability at the time he was separated from the service,
petitioner has already availed of the maximum benefits to which he is entitled on account of his
osteoarthritis. Petitioner elevated the case to the Court of Appeals via petition for certiorari. The
appellate court dismissed the petition, ruling that the law does not allow the conversion of
permanent partial disability to permanent total disability. Petitioner filed a petition before this
Court to review the decision of the CA.

Issue: Whether or not the CA erred in denying the claim for additional benefits in favor of the
petitioner and not allowing the conversion of his permanent partial disability to permanent
total disability.

Held: PD 626 as amended provides three types of disability benefits to qualified employees: (1)
temporary total disability, (2) permanent total disability, and (3) permanent partial disability. In
the case at bar, petitioner was granted by the SSS, as affirmed by the ECC, permanent partial
disability benefit, but he seeks to avail of permanent total disability benefit. Under Section 2
Rule VII of the Amended Rules on Employees Compensation, a disability is total and
permanent if as a result of the injury or sickness, the employee is unable to perform any
gainful occupation for a continuous period exceeding 120 days; and a disability is partial and
permanent if as a result of the injury or sickness, the employee suffers a permanent partial
loss of the use of any part of his body. We held in Vicente vs. Employees Compensation
Commission that:
x x x the test of whether or not an employee suffers from permanent total disability is a
showing of the capacity of the employee to continue performing his work notwithstanding the
disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee
is unable to perform his customary job for more than 120 days and he does not come within
the coverage of Rule X of the Amended Rules on Employees Compensability (which, in more
detailed manner, describes what constitutes temporary total disability), then the said employee
undoubtedly suffers from permanent total disability regardless of whether or not he loses the
use of any part of his body.

Contrary to the assertion of the Court of Appeals, there is nothing in the law that prohibits the
conversion of permanent partial disability benefit to permanent total disability benefit if it is
shown that the employees ailment qualifies as such. Furthermore, the grant of permanent
total disability benefit to an employee who was initially compensated for permanent partial
disability but is found to be suffering from permanent total disability would not be prejudicial
to the government to give it reason to deny the claim. The Court has in fact allowed in the past
the conversion of permanent partial disability benefit to permanent total disability benefit.
These rulings are consistent with the primary purpose of PD 626, that is, to provide
meaningful protection to the working class against the hazards of disability, illness and other
contingencies resulting in the loss of income, as well as the Constitutional mandate to afford
full protection to labor.

6. ALEXANDER B. GATUS V. SOCIAL SECURITY SYSTEM, G.R. NO. 174725, January 26,
2011

FACTS:

Gatus worked at the Central Azucarera de Tarlac beginning on January 1, 1972. He was a
covered member of the SSS. He optionally retired from Central Azucarera de Tarlac upon
reaching 30 years of service on January 31, 2002, at the age of 62 years. By the time of his
retirement, he held the position of Tender assigned at the Distillery Cooling Tower. In the
course of his employment in Central Azucarera de Tarlac, he was certified fit to work on
October 21, 1975 and was accordingly promoted to a year-round regular employment. He
suffered chest pains and was confined at the Central Luzon Doctors Hospital in Tarlac City on
August 12, 1995. Upon discharge on August 17, 1995, he was diagnosed to be suffering from
Coronary Artery Disease (CAD): Triple Vessel and Unstable Angina. His medical records
showed him to be hypertensive for 10 years and a smoker.

On account of his CAD, he was given by the SSS the following EC/SSS Permanent Partial
Disability (PPD) benefits: (a) 8 monthly pensions effective September 1, 1994 and (b) 4 monthly
pensions effective January 3, 1997. He became an SSS retirement pensioner on February 1,
2002.

Sometime in 2003, an SSS audit revealed the need to recover the EC benefits already paid to
him on the ground that his CAD, being attributed to his chronic smoking, was not work-
related. He was notified thereof through a letter dated July 31, 2003.
Convinced that he was entitled to the benefits, he assailed the decision but the SSS
maintained its position. The SSS also denied his motion for reconsideration.

He elevated the matter to the ECC, which denied his appeal on December 10, 2004, essentially
ruling that although his CAD was a cardiovascular disease listed as an occupational disease
under Annex A of the Implementing Rules on Employees Compensation, nothing on record
established the presence of the qualifying circumstances for responsibility; that it was
incumbent upon him to prove that the nature of his previous employment and the conditions
prevailing therein had increased the risk of contracting his CAD; and that he had failed to
prove this requisite.

Hence, this recourse, wherein he contends that he had contracted the disease due to the
presence of harmful fuel smoke emission of methane gas from a nearby biological waste
digester and a railway terminal where diesel-fed locomotive engines had spew(ed) black
smoke; and that he had been exposed for 30 years to various smoke emissions that had
contained carbon monoxide, carbon dioxide, sulfur, oxide of nitrogen and unburned carbon.

The Court of Appeals held that petitioner is not entitled to compensation benefits under
Presidential Decree No. 626, as amended, affirming the Decision of the Employees
Compensation Commission (ECC), which was likewise a confirmation of the audit conducted by
the Social Security System (SSS).

Petitioner claims that he was in good health when he first entered the Central Azucarera de
Tarlac as a factory worker at the Alcohol Distillery Plant in 1972.[8] He alleges that in the
course of his employment he suffered essential hypertension starting 1995, when he
experienced chest pains and was confined at the Central Luzon Doctors Hospital in Tarlac
City; that he was diagnosed as having Coronary Artery Disease (CAD) [Triple] Vessel and
Angina Pectoris and hypertension; that he was initially granted disability benefits by the SSS
but his request for additional benefits was denied; and that the ECC denied his appeal due to
allegations of smoking. He asserts that he has cited technical, scientific and medical
authorities to bolster his claim including the exposure he experienced for thirty (30) years
from the alcohol distillery to hydrocarbons and [locomotives], carbon monoxide, carbon
dioxide, sulfur, phosphorous, nitrogen oxides and soot (particulate matter).

Petitioner insists that the allegation of cigarette smoking was not proven and that the ECC did
not present a document signed by competent medical authority to back such claim. Petitioner
claims that there is no showing that the ECC records were elevated to the Court of Appeals,
and that the latter had completely ignored his evidence.

In its Comment dated December 11, 2006, respondent SSS alleges that the Decision of the
Court of Appeals affirming the Decision of the ECC was in accordance with law and existing
jurisprudence. Respondent SSS further alleges that as viewed from the records of the case,
the petitioner failed to show proof by mere substantial evidence that the development of his
disease was work-related;[13] that petitioners heart ailment had no causal relation with his
employment; and that [as] viewed from by his lifestyle, he was a chain smoker, a habit [which
had] contributed to the development of his heart ailment.[14]

ISSUE: The sole issue to be determined is whether the Court of Appeals committed grave abuse
of discretion in affirming the finding of the ECC that petitioners ailment is not compensable
under Presidential Decree No. 626, as amended.

HELD: The grounds for compensability are set forth in Section 1, Rule III of the Amended Rules
on Employees Compensation

RULE III

Compensability

Sec. 1. Grounds x x x

(b) For the sickness and the resulting disability or death to be compensable, the sickness must
be the result of an occupational disease listed under Annex A of these Rules with the
conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the
disease is increased by the working conditions.

Further, under Annex A of the Amended Rules,

For an occupational disease and the resulting disability or death to be compensable, all of the
following conditions must be satisfied:

1. The employee's work must involve the risks described herein;

2. The disease was contracted as a result of the employee's exposure to the described risks;

3. The disease was contracted within a period of exposure and under such other factors
necessary to contract it;

4. There was no notorious negligence on the part of the employee.

Cardiovascular diseases are considered as occupational when contracted under any of the
following conditions:

(a) If the heart disease was known to have been present during employment there must be
proof that an acute exacerbation clearly precipitated by the unusual strain by reason of the
nature of his work.

(b) The strain of work that brings about an acute attack must be of sufficient severity and
must be followed within twenty-four (24) hours by the clinical signs of a cardiac insult to
constitute causal relationship.
(c) If a person who was apparently asymptomatic before subjecting himself to strain at work
showed signs and symptoms of cardiac injury during the performance of his work and such
symptoms and signs persisted, it is reasonable to claim a causal relationship.[16]

The burden of proof is thus on petitioner to show that any of the above conditions have been
met in his case.

The requisite quantum of proof in cases filed before administrative or quasi-judicial bodies is
neither proof beyond reasonable doubt nor preponderance of evidence. In this type of cases, a
fact may be deemed established if it is supported by substantial evidence, or that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

As found by the Court of Appeals, petitioner failed to submit substantial evidence that might
have shown that he was entitled to the benefits he had applied for. We thus affirm in toto the
findings and conclusions of the Court of Appeals in the questioned Decision and quote with
approval the following pronouncements of the appellate court:

The degree of proof required under P.D. 626 is merely substantial evidence, which means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
Accordingly, the claimant must show, at least by substantial evidence, that the development of
the disease was brought about largely by the conditions present in the nature of the job. What
the law requires is a reasonable work connection, not a direct causal relation.

Gatus was diagnosed to have suffered from CAD; Triple Vessel and Unstable Angina, diseases
or conditions falling under the category of Cardiovascular Diseases which are not considered
occupational diseases under the Amended Rules on Employees Compensation. His disease not
being listed as an occupational disease, he was expected to show that the illness or the fatal
disease was caused by his employment and the risk of contracting the disease was increased or
aggravated by the working conditions. His proof would constitute a reasonable basis for
arriving at a conclusion that the conditions of his employment had caused the disease or that
such working conditions had aggravated the risk of contracting the illness or the fatal disease.

Gatus did not discharge the burden of proof imposed under the Labor Code to show that his
ailment was work-related. While he might have been exposed to various smoke emissions at
work for 30 years, he did not submit satisfactory evidence proving that the exposure had
contributed to the development of his disease or had increased the risk of contracting the
illness. Neither did he show that the disease had progressed due to conditions in his job as a
factory worker. In fact, he did not present any physicians report in order to substantiate his
allegation that the working conditions had increased the risk of acquiring the cardiovascular
disease.

Gatus was not qualified for the disability benefits under the employees compensation law.
The Decision of the Employees Compensation Commission is AFFIRMED.

Petitioner filed a Motion for Reconsideration but this was denied by the Court of Appeals in its
Resolution.

This Court cannot be tasked to go over the proofs presented by the petitioners in the lower
courts and analyze, assess and weigh them to ascertain if the court a quo and the appellate
court were correct in their appreciation of the evidence.

There is no doubt that petitioner deserves sympathy because even the benefits already given to
him were questioned after the SSS found that he was a chronic cigarette smoker. For
humanitarian reasons, as he pursued his claim all the way to the Court as an indigent litigant,
and due to his advancing age, we would like to clarify that what had already been given him
should no longer be taken away from him. But he is not entitled to further compensation for
his condition.

The petition is hereby DENIED.

7. Republic vs. Mariano

March 28, 2003

G.R. No. 139455

Facts:

For an eleven-year period starting January 1983, respondent Pedro Mariano was an employee
of LGP Printing Press. During his employment, Mariano worked in various capacities, including
that of a machine operator, paper cutter, monotype composer, film developer, and supervisor of
the printing press.[3]

Sometime in February 1994, Marianos service abruptly ended when he could no longer
perform any work due to a heart ailment. An electrocardiograph test revealed that he was
suffering from Incomplete Right Bundle Branch Block.[4]

Mariano filed a claim for employees compensation benefit with the SSS. In its medical
evaluation dated April 15, 1997, SSS denied his claim on the ground that there was no causal
connection between his ailment and his job as film developer.[5]

On July 1, 1997, the SSS forwarded the record of respondents case to the ECC. In a letter
dated September 12, 1997, the ECC remanded respondents case to the SSS for reception of
additional documentary evidence.

On February 9, 1998, the SSS directed respondent to submit the following: (1) complete clinical
abstract if he was confined; and (2) records of consultation due to hypertension.[6]

Meanwhile, respondent had consulted Dr. Rogelio Mariano, whose diagnosis showed he was
suffering from Parkinsons disease and hypertension, as per the medical certificate dated April
20, 1998.[7]

The SSS once again submitted respondents case records to the ECC for review.

On October 23, 1998, the ECC, through Executive Director Teofilo E. Hebron, dismissed
respondents claim. Hebron ruled that the respondent had failed to establish a causal
connection between Parkinsons Disease and the working conditions at the printing press.[8]
On respondents claim for compensation for Essential Hypertension, the ECC found that
respondent had failed to adduce sufficient evidence to establish that his ailment had caused
impairment of any of his body organs, which in turn could permanently prevent him from
engaging in a gainful occupation.

Aggrieved, respondent elevated the matter to the Court of Appeals in CA-G.R. SP No. UDK-
2898.

On July 26, 1999, the appellate court rendered a judgment reversing the decision of the ECC,
decreeing as follows:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Accordingly,
respondents Employees Compensation Commission (ECC) and Social Security System (SSS)
are ordered to pay petitioners claim for compensation benefits under P.D. 626.[9]

In holding for the respondent, the Court of Appeals found that the nature of petitioners work
at LGP resulted in his exposure to various toxic chemicals, which is a possible cause of
Parkinsons Disease. As to his hypertension, the appellate court ruled that the respondents
duties as machine operator and paper cutter involved physical pressure and restlessness, since
he was required to meet urgent deadlines for rush print orders. This in turn caused respondent
to suffer from stress

and anxiety. In sum, the appellate court held that respondent had substantially established the
connection between the cause of his ailments and the nature of his work.

Issue:

Did the Court of Appeals err in reversing the ECC decision and in ordering petitioner to pay
respondent his claim for compensation benefits?

Held:
NO.

Workmens Compensation cases are governed by the law in force at the time the claimant
contracted his illness.[12] In the instant case, the applicable rule is Section 1 (b),[13] Rule III,
of the Rules Implementing P.D. No. 626. Under said Rule, for the sickness to be compensable,
the same must be an occupational disease included in the list provided, with the conditions
set therein satisfied; otherwise, the claimant must show proof that the risk of contracting it is
increased by the working conditions.[14] What kind and quantum of evidence would constitute
an adequate basis for a reasonable man (not necessarily a medical scientist) to reach one or the
other conclusion, can obviously be determined only on a case-to-case basis.[15]For reasons
herein elaborated, we agree with the appellate court that respondent Pedro Mariano has
substantially proved his claim to compensability.

In upholding respondent Marianos claim, the Court of Appeals found that among the various
jobs the respondent performed were those of a machine operator, paper cutter, monotype
composer,[24] and later as supervisor, most of which are physical and stressful in character. In
established cases of Essential Hypertension, the blood pressure fluctuates widely in response
to emotional stress and physical activity.[25] Given the nature of his assigned job and the
printing business, with its tight deadlines entailing large amounts of rush work, indeed the
emotional and physical stress of respondents work at the printing press caused, and then
exacerbated, his hypertension. On this score, we hold that the Court of Appeals did not err in
liberally construing the rules implementing P.D. No. 626. In matters of labor and social
legislation, it is well established that doubts in the interpretation and application of the law are
resolved liberally in favor of the worker and strictly against the employer.

8. MAGSAYSAY MARITIME CORP. v LOBUSTA

G.R. No. 177578 January 25, 2012

Magsaysay Maritime Corp. is a domestic corporation and the local manning agent of the vessel
MV Fossanger, petitioner v Oberto Lobusta is a seaman who has worked for petitioner since
1994. respondent

Case Doctrine: Disability should not be understood more on its medical significance but on the
loss of earning capacity. Permanent total disability means disablement of an employee to earn
wages in the same kind of work, or work of similar nature that [he] was trained for or
accustomed to perform, or any kind of work which a person of [his] mentality and attainment
could do. It does not mean absolute helplessness. It likewise cited Bejerano v. ECC, that in a
disability compensation, it is not the injury which is compensated, but rather it is the
incapacity to work resulting in the impairment of ones earning capacity.

Facts:
* Respondent Lobusta is a seaman who has worked for the respondent since 1994; He was
hired again as Able Seaman by the petitioner with a basic salary of US$515 and an overtime
pay of US$206 per month;

* The employment contract also provides that the standard terms and conditions governing the
employment of Filipino seafarers on board ocean-going vessels, approved per Department Order
No. 33 of the Department of Labor and Employment and Memorandum Circular No. 55 of the
POEA (POEA Standard Employment Contract), both series of 1996, shall be strictly and
faithfully observed;

* On March 16, 1998, Lobusta boarded MV Fossanger; Shortly after two months, he
complained of breathing difficulty and back pain which resulted to his admission at Gleneagles
Maritime Medical Center in Singapore; Diagnosis: Severe Acute Bronchial Asthma with
secondary infection and lumbosacral muscle strain

* Upon repatriation on May 21, 1998, Lobusta was referred to Metropolitan Hospital for further
treatment; He went through a surgery called decompression laminectomy and was on his way
to recovery;

* On February 19, 1999, he was diagnosed to have a moderate obstructive pulmonary disease
which tends to be a chronic problem and will be on medications indefinitely ;He was declared
disabled after the Pulmonologist opined that Lobustas obstructive airway disease needs to be
monitored regularly ;

* On December 16, 1999, Lobustas clinical summary states that he is not physically fit to
resume his normal work as a seaman

* Lobusta filed a complaint before the NLRC for disability/medical benefits against petitioner
due to failure to reach a settlement as to the amount to which Lobusta is entitled

* Sometime in October 2000, Magsaysay Maritime Corporation suggested that Lobusta be

examined by another company-designated doctor for an independent medical examination; The
parties agreed on an independent medical examination by Dr. Annette M. David, who suggested
that Mr. Lobusta ought not to be considered fit to return to work; Still, no settlement was
reached by the parties;

Labor Arbiter: ordered petitioners to pay Lobusta because he suffered illness during the term of
his contract; Provisions of the labor code, as amended, on permanent total disability, do not
apply to overseas seafarers;

NLRC: dismissed his appeal and affirmed Labor Arbiters decision; his condition may only be
considered permanent partial disability since the degree of impairment is only mild; also
denied Lobustas motion for reconsideration
CA: declared that Lobusta is suffering from permanent total disability and increased the award
of disability benefits in his favor to US$60,000, to wit;

* The CA ruled that Lobusta's disability brought about by his bronchial asthma is permanent
and total as he had been unable to work since May 14, 1998 up to the present or for more than
120 days, and because Dr. David found him not fit to return to work as an able seaman

Issue: W/N the provisions of the Labor Code should be applied in determining Lobustas
disability instead of the POEA contract

Ruling: Yes, petitioners are mistaken that it is only the POEA Standard Employment Contract
that must be considered in determining Lobusta's disability;

* It was already established in the case of Palisoc v Easways Marine that the Labor Codes
provision on permanent total disability applies to seafarers;

* Disability should not be understood more on its medical significance but on the loss of
earning capacity. Permanent total disability means disablement of an employee to earn wages
in the same kind of work, or work of similar nature that [he] was trained for or accustomed to
perform, or any kind of work which a person of [his] mentality and attainment could do. It does
not mean absolute helplessness. It likewise cited Bejerano v. ECC, that in a disability
compensation, it is not the injury which is compensated, but rather it is the incapacity to work
resulting in the impairment of ones earning capacity.

* Labor Code also provides for the concept of permanent total disability, as stated in Art. 192(c)
(1) which states that: Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the
degree of permanent disability has been assessed by the company-designated physician, but in
no case shall this period exceed one hundred twenty (120) days.

* He was unable to work since 1998 up until 2006 when CA decided the case and it was
clarified in the Vergara case that temporary total disability period may only be extended up to
a maximum of 240 days. From then on, it is deemed to be a permanent disability.

9. Quitoriano vs Jebsen Maritime

Facts:
Respondent Jebsens Maritime, Inc. (represented by Ma. Theresa Gutay), on behalf of its
foreign principal co-respondent Atle Jebsens Management A/S, hired[2] on January 13, 2001
Rizaldy M. Quitoriano (petitioner) as 2nd Officer aboard the vessel M/V Trimnes for a period of
six months with a basic monthly salary of US$936.[3]
On May 23, 2001, petitioner, who was assigned as navigating officer from 12:00 midnight to
4:00 a.m. and port watcher from 12:00 midnight to 6:00 a.m., complained of dizziness with
severe headache, general body weakness, chest pains, easy fatigability, weak grip strength,
and numbness on the left side of his body and was observed to be dragging his left foot, his
mouth slightly down to one side, and his speech slurred.[4]

When the vessel berthed on May 26, 2001 at Port Huelva, Spain, petitioner was brought to a
hospital where he was diagnosed as suffering from hypertension arterial or mild stroke.[5]
Since his health condition did not improve, petitioner was repatriated to the Philippines on May
30, 2001 to undergo further medical examination and treatment.

Upon arrival in Manila, petitioner underwent several tests at the Medical Center Manila under
the care of Dr. Nicomedes G. Cruz (Dr. Cruz), the company-designated physician. On June 6,
2001, Dr. Cruz, noting that petitioner still complain[ed] of chest pain and easy fatigability. On
November 16, 2001 or 169 days after petitioners repatriation Dr. Cruz issued a medical report
declaring the petitioner fit to work. He then went to other physicians to ask for a second and
third opinion.

He then asked form the respondents full permanent disability compensation but he was
unsuccessful.

Issue: whether or not petitioner should be compensated?

Held:

The notion of disability is intimately related to the workers capacity to earn, what is
compensated being not his injury or illness but his inability to work resulting in the
impairment of his earning capacity; hence, disability should be understood less on its medical
significance but more on the loss of earning capacity

There are three kinds of disability benefits under the Labor Code, as amended by P.D. No. 626:
(1) temporary total disability, (2) permanent total disability, and (3) permanent partial disability.
Section 2, Rule VII of the Implementing Rules of Book V of the Labor Code differentiates the
disabilities as follows:

Sec. 2. Disability. (a) A total disability is temporary if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a continuous period not exceeding
120 days, except as otherwise provided for in Rule X of these Rules.

(b) A disability is total and permanent if as a result of the injury or sickness the employee is
unable to perform any gainful occupation for a continuous period exceeding 120 days, except
as otherwise provided for in Rule X of these Rules.
(c) A disability is partial and permanent if as a result of the injury or sickness the employee
suffers a permanent partial loss of the use of any part of his body.

Permanent disability is inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body. x x x.

Total disability, on the otherhand, means the disablement of an employee to earn wages in the
same kind of work of similar nature that he was trained for, or accustomed to perform, or any
kind of work which a person of his mentality and attainments could do. It does not mean
absolute helplessness. In disability compensation, it is not the injury which is compensated,
but rather it is the incapacity to work resulting in the impairment of ones earning capacity

Applying the standards reflected in the immediately quoted ruling of the Court vis--vis the fact
that it was only on November 16, 2001 that the fit to work certification was issued by Dr.
Cruz or more than five months from the time petitioner was medically repatriated on May 30,
2001, petitioners disability is considered permanent and total.

Petitioners disability being then permanent and total, he is entitled to 100% compensation,
i.e., US$80,000 for officers, as stipulated in par. 20.1.7 of the parties CBA.

SET 2
4 GSIS vs CA

G.R. No. 124208

(These two consolidated cases are petitions for review on certiorari of the Decision of the Court
of Appeals (CA) promulgated on March 13, 1996, which reversed and set aside the Decision of
the Employees Compensation Commission (ECC) dated September 7, 1995 denying private
respondents claim for compensation benefits of the late Abraham Cate under Presidential
Decree (P.D.) No. 626, as amended.)

FACTS:
On March 6, 1974, Abraham Cate (Abraham) joined the military service as a Rifleman of the
Philippine Navy. In 1975, he was designated as Action Clerk. On February 22, 1986, he was
transferred to the now defunct Philippine Constabulary with the rank of Technical Sergeant
and was later promoted to Master Sergeant. On January 2, 1991, he was absorbed in the
Philippine
National Police (PNP) with the rank of Senior Police Officer IV (SPO4).

In 1993, Abraham complained of a mass on his left cheek which gradually increased in size. A
biopsy was done at the Philippine General Hospital (PGH). The histopath report revealed that
he was suffering from Osteoblastic Osteosarcoma. He was admitted at the PGH payward, and
on October 28, 1993, he underwent Total Maxillectomy with Orbital Exenteration, which
operation removed the mass on his left cheek. In April 1994, another biopsy revealed the
recurrence of the ailment. On June 9, 1994, Abraham underwent debulking of the recurrent
tumor at the PGH. Post-operative course was uneventful and he underwent radiotherapy.

On December 1, 1994, Abraham was compulsorily retired from the PNP.

On December 20, 1994, Abraham filed a claim for income benefits with the Government
Service Insurance System (GSIS) under P.D. No. 626, as amended.

In a letter dated December 27, 1994, GSIS denied the claim on the ground that Osteosarcoma
is not considered an occupational disease under P.D. No. 626, and there is no showing that his
duties as SPO4 in the Armed Forces of the Philippines had increased the risk of contracting
said ailment.

GSIS denied Abrahams request for reconsideration of the decision in a letter dated March 22,
1995. On May 2, 1995, Abraham died at the age of 45. He was survived by his wife, Dorothy
Cate, and two children. The heirs of Abraham appealed the decision of GSIS to the ECC.

In a Decision dated September 7, 1995, ECC affirmed the decision of GSIS and dismissed the
case for lack of merit. The heirs of Abraham filed a petition for review of the decision of ECC
with the CA.

Supreme Court concur with the ruling of the Court of Appeals:

"In all due respect and with the least of intention of committing contempt and discourtesy but
rather solely moved by the time-honored principle that the Employees Compensation Act is
basically a social legislation designed to afford relief to our working men (Santos v. ECC, 221
SCRA 182 [1993] and that labor, social welfare legislations should be liberally construed in
favor of the applicant (Tira v. ECC, 208 SCRA 834 [1992]), We have to rule in favor of herein
petitioners.

The plight of any cancer patient deserves some serious considerations. We were not to be told
that no one is a willing victim of cancer. Inflicted with this dreadful malady, the patient suffers
from the trauma of an impending death not to mention the high cost of medical attendance
required, only to prolong ones agony and the hopelessness of any definite cure simply because
the origin and cause of cancer are farfetched unresolved.

The present case at bench is no different. Petitioners failure to present positive evidence of a
causal relation of the illness and his working conditions is due to the pure and simple lack of
available proof to be offered in evidence. Verily, to deny compensation to osteosarcoma victims
who will definitely be unable to produce a single piece of proof to that effect, is unrealistic,
illogical and unfair. At the very least, on a very exceptional circumstance, the rule on
compensability should be relaxed and be allowed to apply to such situations. To disallow the
benefit will even more add up to the sufferings, this time, for the ignorance of the inability of
mankind to discover the real truth about cancer.
It is not the intention of this decision to challenge the wisdom of the Raro case. What is being
hoped for is to have a second look on the issue of compensability of those inflicted with
osteosarcoma or like disease, where the origin or cause is still virtually not ascertained. The
protection of the stability and integrity of the State Insurance Fund against non-compensable
claims is much to be desired. Nonetheless, to allow the presumption of compensability to
Osteosarcoma victims, will not adversely prejudice such state policy. In fact, it will give more
meaning to the very purpose and essence of the State Insurance Fund. Upon the other hand,
to deny the claim will not only defeat the very reason for its creation but will likewise turn down
benefits to the intended rightful beneficiary thereof. As employees compensation is based on
social security principles. We believe that in the meantime that osteosarcomas cause and
origin are not yet unearthed, the benefit of the doubt should be resolved in favor of the claim.

In main, We subscribe to the more compassionate and humane considerations contained in the
dissenting opinions of Justices Sarmiento and Paras in the same Raro case and We quote:
It must be likewise be noted that the petitioner is suffering from cancer (brain tumor), whose
cause medical science is yet to unravel. It would then be asking too much to make her prove
that her illness was cause by work or aggravated by it, when experts themselves are ignorant
as to what brings it about. I do not believe, finally, that the question is a matter of legislation.
Compassion, it is my view, is reason enough. (J. Sarmiento)
While brain tumor is not expressly or specifically referred to as an occupational disease, and
while admittedly it precise causes are still unknown, We may say that the disease is akin to
cancer of the brain and should therefore be regarded as either compensable or borderline
case. At any rate, the precise work of the petitioner at the Bureau of Mines and Geo-Sciences
consisted of the following: As Mining Recorded II, to record and file mining instruments and
documents in the Mining Recorders Section and to type correspondence and other documents
pertaining to the same action. It will readily be seen that her work required at times mental
concentration. Whether this is specifically causative of brain tumor is of course still unknown
but doubts must generally be resolved in favor whenever compensation for disease is
concerned. It would certainly be absurd to throw upon petitioner the burden of showing that
her work either caused or aggravated the disease, particularly when both the GSIS and ECC
profess ignorance themselves of the causes of the disease. (Justice Paras)."

Stated otherwise, before the amendment, the law simply did not allow compensation for the
ailment of respondent. It is under this set-up that the Raro case was decided. However, as the
ECC decision noted, the law was amended and now the present law on compensation allows
certain diseases to be compensable if it is sufficiently proven that the risk of contracting is
increased by the working conditions. It, therefore, now allows compensation subject to
requirement of proving by sufficient evidence that the risk of contracting the ailment is
increased by the working conditions.

As earlier noted, however, in the specific case of respondent, the requirement is impossible to
comply with, given the present state of scientific knowledge. The obligation to present such as
an impossible evidence must, therefore, be deemed void. Respondent, therefore, is entitled to
compensation, consistent with the social legislations intended beneficial purpose.

5 Dominga A. Salmone vs. Employees Compensation Commission (ECC)

GR No. 142392 26 September 2000

Facts:
 In 1982, Salmone (petitioner) was employed as a sewer in Paul Geneve Entertainment
Corporation (PGEC)
PGEC is engaged in the business of sewing costumes, gowns and casual and formal
dresses.
Petitioner was later promoted as the officer-in-charge and the over-all custodian in the
Sewing Department
In 1996, petitioner started to felt chest pains hence he consulted Dr. Claudio Saratan
for medical examination
Per results, she was found suffering from atherosclerotic heart disease, atrial
fibrillation, cardiac arrhythmia
Upon recommendation of her doctor, she resigned from her work hoping that with
much-needed complete rest, she will be cured.
SSS
Petitioner filed a disability claim, but SSS denied such claim
She filed a Motion for Reconsideration but the same was denied
ECC
Petitioner appealed to ECC
ECC denied the appeal
CA
Petitioner appealed to CA
CA dismissed the appeal
Decision: Petitioners illness was not compensable because petitioner failed to adduce
substantial evidence proving any of the conditions of compensability

The Court of Appeals ruled that "atherosclerotic heart disease, atrial fibrillation,
cardiac arrhythmia" from which petitioner suffered falls under the classification
"cardiovascular diseases" and under Resolution No. 432, dated July 20, 1977 of the
ECC, cardiovascular disease is listed as compensable occupational disease provided
that substantial evidence is adduced to prove any of the following conditions:

d If the heart disease was known to have been present during employment
there must be proof that an acute exacerbation clearly precipitated by the
unusual strain by reason of the nature of his work.

e The strain of work that brings about an acute attack must be of sufficient
severity and must be followed within twenty four (24) hours by the clinical
signs of a cardiac insult to constitute causal relationship.

f If a person who was apparently asymptomatic before subjecting himself to

strain of work showed signs and symptoms of cardiac injury during the
performance of his work and such symptoms and signs persisted, it is
reasonable to claim a causal relationship.
ISSUE
Whether or not petitioners illness is compensable, as work-related, and whether there
was sufficient evidence of compensability
SC
The court held that petitioners illness is compensable
Under the Labor Code, as amended, the law applicable to the case at bar, in order for
the employee to be entitled to sickness or death benefits, the sickness or death resulting
therefrom must be or must have resulted from either (a) any illness definitely
accepted as an occupational disease listed by the Commission, or (b) any illness
caused by employment, subject to proof that the risk of contracting the same is
increased by working conditions
In other words, "for a sickness and the resulting disability or death to be compensable,
the said sickness must be an occupational disease listed under Annex "A" of said
Rules, otherwise, the claimant or employee concerned must prove that the risk of
contracting the disease is increased by the working condition
The degree of proof required under P. D. No. 626, is merely substantial evidence,
which means, "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion."
The claimant must show, at least, by substantial evidence that the development of the
disease is brought largely by the conditions present in the nature of the job. What the
law requires is a reasonable work-connection and not a direct causal relation. It
is enough that the hypothesis on which the workmen's claim is based is probable.
Medical opinion to the contrary can be disregarded especially where there is some basis
in the facts for inferring a work-connection. Probability, not certainty, is the touchtone.

6 LEGAL HEIRS OF THE LATE EDWIN B. DEAUNA, represented by his wife, MRS.
ARLINA DEAUNA v. FIL-STAR MARITIME CORPORATION, GREGORIO ORTEGA,
CAPT. VICTOR S. MILLALOS and GRANDSLAM ENTERPRISES CORPORATION

Facts:
o Respondent Fil-Star Maritime Corporation (Fil-Star) is a local manning agency, with
respondent Captain Victor S. Millalos (Capt. Millalos) as its general manager.
Respondent Grandslam Enterprise Corporation (Grandslam) is among Fil-Star's foreign
principals. Grandslam owns and manages the vessel M/V Sanko Stream (Sanko) which
Edwin boarded on August 1, 2004 for a nine-month engagement as Chief Engineer. As
such, he was responsible for the operations and maintenance of the entire vessel's
engineering equipment. He also determined the requirements for fuel, lube oil and
other consumables necessary for a voyage, conducted inventory of spare parts, prepared
the engine room for inspection by marine and safety authorities, and took charge of the
engine room during maneuvering and emergency situations.
o Prior to Edwin's deployment, he underwent the customary Pre-employment Medical
Examination (PEME) and was found as fit to work as was repeatedly the case in the
 past 30 years since his first deployment by Fil-Star in 1975.
o Sometime in October 2004, Edwin experienced abdominal pains while on-board Sanko.
He was promptly referred to a doctor in Paranagua, Brazil. An ultrasound examination
revealed that he had kidney stones for which he was administered oral medications.
Thereafter, he resumed his work on-board Sanko.
o On April 3, 2005 or more or less 8 months from deployment, Edwin was repatriated.
There were, however, conflicting claims regarding the cause of his repatriation. The
respondents claimed that Edwin requested for an early termination of his contract in
order to attend his daughter's graduation ceremony. On the other hand, the petitioners
averred that Edwin was repatriated due to the latter's body weakness and head
heaviness.[5] The petitioners likewise claimed that on April 4, 2005, they called Capt.
Millalos to inform the latter that upon arrival at the airport, Edwin was very sick, weak,
disoriented, and merely wanted to immediately go home to Daet, Camarines Norte.
Edwin can neither physically report in Fil-Star's office nor board his next vessel of
assignment.
o On 2005, he was diagnosed that he contracted Glioblastoma (GBM) Brain Cancer.
Respondent extended allowance and disability benefits, even though not obligated
because one who suffers GBM can only be considered as work-related if a person who
suffers therefrom had exposures to radiation or vinyl products, or had worked in the
vicinity of power lines.[11] The respondents claimed that Edwin did not have such
exposure while under their employ.
o Edwin died. Petitioners seek death benefits.
o Labor Arbiter through Voluntary Arbitrator ruled in favor of petitioners. (ailment was
work related)
o Court of Appeals ruled in favor of respondents (ailment was not work related)
o PETITIONERS CONTENTION: The petitioners emphasize that under the
IBF/AMOSUP/IMMAJ CBA, a seafarer's death is compensable regardless of its cause
and its non work-relatedness as long as it occurs during the term of the latter's
employment. The only exception to compensability is when death is due to willful acts.
In Edwin's case, he had been under the respondents' employment for the past 30 years.
Prior to boarding Sanko, he passed the PEME but was thereafter medically-repatriated
as stated in Dr. Cruz's report. He died of GBM, the origin of which is unknown. Hence,
it can be presumed that GBM had been contracted during his employment with the
respondents.
o RESPONDENTS CONTENTION: the respondents counter that Edwin's illness was not
work-related and his death occurred not during the term of his employment. Thus, the
petitioners are not entitled to the payment of any benefits. The mere circumstance that
the manifestations of an illness appeared while the seafarer is on-board does not
necessarily render it as work-related. In the POEA SEC, the words during the term of
contract refer to the time when death occurs while work-related refers to the cause of
death. In the absence of substantial evidence, working conditions cannot be presumed
to have increased the risk of contracting the disease.

ISSUE: 1. WON Petitioners are entitled to death compensation

2. WON Petitioners entitled to Moral damages and Attys fees

HELD:
1. YES. Under the IBF/AMOSUP/IMMAJ CBA provisions, Edwin's death a little more than a
year from his repatriation can still be considered as one occurring while he was still under the
respondents' employ. We note that body weakness, head heaviness, drowsiness and
disorientedness are among the symptoms associated with GBM. Dr. Cruz indicated that these
symptoms were exhibited by Edwin since October 2004 while he was still on board Sanko and
were notable even when the latter was repatriated on April 3, 2005. Hence, since Edwin's death
is reasonably connected to the cause of his repatriation, within the purview of the
IBF/AMOSUP/IMMAJ CBA, he indubitably died while under the respondents' employ, thus,
entitling the petitioners to death benefits as provided for in Appendix 3 of the said CBA.

2. NO. The petitioners are, however, not entitled to moral and exemplary damages and
attorney's fees.

We find that the acts of the respondents hardly indicate an intent on their part to evade
the payment of their obligations so as to justify the award of moral and exemplary damages and
attorney's fees to the petitioners. The respondents extended medical assistance and allowances
to Edwin while he went through his treatment. Further, the respondents offered an amount of
US$60,000.00 as disability benefits even when the petitioners' claims had not been
conclusively established yet.

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is PARTIALLY

GRANTED.

4. D.DEBAUDIN, Petitioner,
vs.
SOCIAL SECURITY SYSTEM (SSS) and EMPLOYEES COMPENSATION COMMISSION
(ECC), Respondents.

G.R. No. 148308 September 21, 2007

FACTS:
Petitioner is a seaman by profession. He joined the United Philippine Lines (UPL) on
April 13, 1975 and was separated from his employment on May 21, 1993 at the age
of 62
During his eighteen (18) years of service with UPL, he boarded various foreign ocean-
going vessels4 while performing his duties and responsibilities that included cleaning
chemical-spill-oil on deck, slat dislodging, and spraying naphtha chemical and washing
dirt and rusts inside the tank.

Petitioners medical record shows that his illness started in May 1993 when he
experienced episodes of bilateral blurring of vision.
While in Singapore then, he consulted Dr. Richard F.T. Fan, an ophthalmic surgeon,
 and he was diagnosed to be suffering from advanced glaucoma
His condition recurred even after his separation from service, prompting him to seek
further eye consultations and treatments in the Philippines. 6 His eye disease was
finally diagnosed as chronic open angle glaucoma

petitioner filed before the SSS a claim for compensation benefits under P.D. No. 626,
as amended. The application, however, was denied on the ground that there is no
causal relationship between the illness and his job as a seaman

When his motion for reconsideration was also denied, petitioner elevated the case to
the ECC which later on affirmed the assailed decision.

An appeal from the adverse decision was filed before the CA. 10 On August 17, 1999,
however, the petition was denied due course and the CA accordingly dismissed the
case on the ground that petitioner failed to adduce substantial evidence supporting
the conclusion that the working conditions as a seaman increased the risk of
contracting his chronic open angle glaucoma

In fine, petitioner stresses that, as a social legislation, P.D. No. 626, as amended,
should be interpreted to give meaning and substance to the liberal and compassionate
spirit of the 1987 Constitution and the Labor Code.

ISSUE: whether the work of petitioner as a seaman contributed even in a small degree in or
had increased the risk of contracting his chronic open angle glaucoma and is entitled to
employees compensation program, which is embodied in P.D. 626

HELD:
The petition lacks merit.

Under the Labor Code, as amended, an employee is entitled to compensation benefits

if the sickness is a result of an occupational disease listed under Annex "A" of the
Rules on Employees' Compensation; or in case of any other illness, if it is caused by
employment, subject to proof that the risk of contracting the same is increased by
the working conditions
This is as it should be because for an illness to be compensable, it must be (1)
directly caused by such employment; (2) aggravated by the employment; or (3) the
result of the nature of such employment
15
Jurisprudence provides that to establish compensability of a non-occupational
disease, reasonable proof of work-connection and not direct causal relation is
required
Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings18 since in carrying out and interpreting the provisions of the Labor Code
and its implementing rules and regulations the primordial and paramount
consideration is the employees' welfare.
 In the present case, petitioners chronic open angle glaucoma is not listed as an
occupational disease; hence, he has the burden of proving by substantial evidence, or
such relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion, that the nature of his employment or working conditions increased the risk
of contracting the ailment or that its progression or aggravation was brought about
thereby.

Perusal of the records, however, regrettably reveals petitioners failure to

adduce any proof of a reasonable connection between his work as a seaman and
the.
Other than positing the foregoing, petitioner presented no competent medical history,
records or physicians report to objectively substantiate the claim that there is a
reasonable nexus between his work and his ailment. Without saying more, his bare
allegations do not ipso facto make his illness compensable. Awards of compensation
cannot rest on speculations or presumptions. The claimant must present concrete
evidence to prove a positive proposition
The necessity of establishing the supposed work connection is all the more crucial in
the face of the fact that the readily-available medical literature would appear to
consistently indicate that open angle glaucoma is brought about by several factors
other than the purported "physical and emotional strains," such as aging, race,
family history, nearsightedness or farsightedness, prolonged corticosteroid use,
nutritional deficiencies, brain chemical abnormalities, injuries, infection or
abnormalities in the eye, and medical conditions such as diabetes, high blood
pressure or heart disease
DENIED.

6 PABLO A. AUSTRIA, petitioner, vs. COURT OF APPEALS AND EMPLOYEES

COMPENSATION COMMISSION (SOCIAL SECURITY SYSTEM), (CENTRAL
AZUCARERA DE TARLAC), respondents.

PUNO, J.:

Facts: Petitioner Pablo A. Austria was employed as bag piler at Central Azucarera de Tarlac
from June 1, 1977 to July 20, 1997. In 1994, petitioner began to feel severe back pain. The x-
ray photographs taken on May 23, 1997, September 3, 1998, and September 28, 1998 revealed
osteoarthritis of the lumbar spine. On account of his osteoarthritis, petitioner filed with the
SSS a claim for compensation benefits under PD 626 as amended. The claim was granted and
petitioner was awarded permanent partial disability benefits for eight (8) months starting
September 1, 1995, a second release for seven (7) months starting May 10, 1996, and a third
release for fifteen (15) months starting April 1, 1997. Petitioner thereafter requested the SSS for
conversion of his permanent partial disability benefit to permanent total disability benefit. The
SSS denied the request. On appeal, the ECC affirmed the decision of the SSS. The ECC held
that considering the degree of his disability at the time he was separated from the service,
petitioner has already availed of the maximum benefits to which he is entitled on account of his
osteoarthritis. Petitioner elevated the case to the Court of Appeals via petition for certiorari. The
appellate court dismissed the petition, ruling that the law does not allow the conversion of
permanent partial disability to permanent total disability. Petitioner filed a petition before this
Court to review the decision of the CA.

Issue: Whether or not the CA erred in denying the claim for additional benefits in favor of the
petitioner and not allowing the conversion of his permanent partial disability to permanent
total disability.

Held: PD 626 as amended provides three types of disability benefits to qualified employees: (1)
temporary total disability, (2) permanent total disability, and (3) permanent partial disability. In
the case at bar, petitioner was granted by the SSS, as affirmed by the ECC, permanent partial
disability benefit, but he seeks to avail of permanent total disability benefit. Under Section 2
Rule VII of the Amended Rules on Employees Compensation, a disability is total and
permanent if as a result of the injury or sickness, the employee is unable to perform any
gainful occupation for a continuous period exceeding 120 days; and a disability is partial and
permanent if as a result of the injury or sickness, the employee suffers a permanent partial
loss of the use of any part of his body. We held in Vicente vs. Employees Compensation
Commission that:
x x x the test of whether or not an employee suffers from permanent total disability is a
showing of the capacity of the employee to continue performing his work notwithstanding the
disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee
is unable to perform his customary job for more than 120 days and he does not come within
the coverage of Rule X of the Amended Rules on Employees Compensability (which, in more
detailed manner, describes what constitutes temporary total disability), then the said employee
undoubtedly suffers from permanent total disability regardless of whether or not he loses the
use of any part of his body.

Contrary to the assertion of the Court of Appeals, there is nothing in the law that prohibits the
conversion of permanent partial disability benefit to permanent total disability benefit if it is
shown that the employees ailment qualifies as such. Furthermore, the grant of permanent
total disability benefit to an employee who was initially compensated for permanent partial
disability but is found to be suffering from permanent total disability would not be prejudicial
to the government to give it reason to deny the claim. The Court has in fact allowed in the past
the conversion of permanent partial disability benefit to permanent total disability benefit.
These rulings are consistent with the primary purpose of PD 626, that is, to provide
meaningful protection to the working class against the hazards of disability, illness and other
contingencies resulting in the loss of income, as well as the Constitutional mandate to afford
full protection to labor.

6. ALEXANDER B. GATUS V. SOCIAL SECURITY SYSTEM, G.R. NO. 174725, January 26,
2011

FACTS:

Gatus worked at the Central Azucarera de Tarlac beginning on January 1, 1972. He was a
covered member of the SSS. He optionally retired from Central Azucarera de Tarlac upon
reaching 30 years of service on January 31, 2002, at the age of 62 years. By the time of his
retirement, he held the position of Tender assigned at the Distillery Cooling Tower. In the
course of his employment in Central Azucarera de Tarlac, he was certified fit to work on
October 21, 1975 and was accordingly promoted to a year-round regular employment. He
suffered chest pains and was confined at the Central Luzon Doctors Hospital in Tarlac City on
August 12, 1995. Upon discharge on August 17, 1995, he was diagnosed to be suffering from
Coronary Artery Disease (CAD): Triple Vessel and Unstable Angina. His medical records
showed him to be hypertensive for 10 years and a smoker.

On account of his CAD, he was given by the SSS the following EC/SSS Permanent Partial
Disability (PPD) benefits: (a) 8 monthly pensions effective September 1, 1994 and (b) 4 monthly
pensions effective January 3, 1997. He became an SSS retirement pensioner on February 1,
2002.

Sometime in 2003, an SSS audit revealed the need to recover the EC benefits already paid to
him on the ground that his CAD, being attributed to his chronic smoking, was not work-
related. He was notified thereof through a letter dated July 31, 2003.

Convinced that he was entitled to the benefits, he assailed the decision but the SSS
maintained its position. The SSS also denied his motion for reconsideration.

He elevated the matter to the ECC, which denied his appeal on December 10, 2004, essentially
ruling that although his CAD was a cardiovascular disease listed as an occupational disease
under Annex A of the Implementing Rules on Employees Compensation, nothing on record
established the presence of the qualifying circumstances for responsibility; that it was
incumbent upon him to prove that the nature of his previous employment and the conditions
prevailing therein had increased the risk of contracting his CAD; and that he had failed to
prove this requisite.

Hence, this recourse, wherein he contends that he had contracted the disease due to the
presence of harmful fuel smoke emission of methane gas from a nearby biological waste
digester and a railway terminal where diesel-fed locomotive engines had spew(ed) black
smoke; and that he had been exposed for 30 years to various smoke emissions that had
contained carbon monoxide, carbon dioxide, sulfur, oxide of nitrogen and unburned carbon.

The Court of Appeals held that petitioner is not entitled to compensation benefits under
Presidential Decree No. 626, as amended, affirming the Decision of the Employees
Compensation Commission (ECC), which was likewise a confirmation of the audit conducted by
the Social Security System (SSS).

Petitioner claims that he was in good health when he first entered the Central Azucarera de
Tarlac as a factory worker at the Alcohol Distillery Plant in 1972.[8] He alleges that in the
course of his employment he suffered essential hypertension starting 1995, when he
experienced chest pains and was confined at the Central Luzon Doctors Hospital in Tarlac
City; that he was diagnosed as having Coronary Artery Disease (CAD) [Triple] Vessel and
Angina Pectoris and hypertension; that he was initially granted disability benefits by the SSS
but his request for additional benefits was denied; and that the ECC denied his appeal due to
allegations of smoking. He asserts that he has cited technical, scientific and medical
authorities to bolster his claim including the exposure he experienced for thirty (30) years
from the alcohol distillery to hydrocarbons and [locomotives], carbon monoxide, carbon
dioxide, sulfur, phosphorous, nitrogen oxides and soot (particulate matter).

Petitioner insists that the allegation of cigarette smoking was not proven and that the ECC did
not present a document signed by competent medical authority to back such claim. Petitioner
claims that there is no showing that the ECC records were elevated to the Court of Appeals,
and that the latter had completely ignored his evidence.

In its Comment dated December 11, 2006, respondent SSS alleges that the Decision of the
Court of Appeals affirming the Decision of the ECC was in accordance with law and existing
jurisprudence. Respondent SSS further alleges that as viewed from the records of the case,
the petitioner failed to show proof by mere substantial evidence that the development of his
disease was work-related;[13] that petitioners heart ailment had no causal relation with his
employment; and that [as] viewed from by his lifestyle, he was a chain smoker, a habit [which
had] contributed to the development of his heart ailment.[14]

ISSUE: The sole issue to be determined is whether the Court of Appeals committed grave abuse
of discretion in affirming the finding of the ECC that petitioners ailment is not compensable
under Presidential Decree No. 626, as amended.

HELD: The grounds for compensability are set forth in Section 1, Rule III of the Amended Rules
on Employees Compensation

RULE III

Compensability

Sec. 1. Grounds x x x

(b) For the sickness and the resulting disability or death to be compensable, the sickness must
be the result of an occupational disease listed under Annex A of these Rules with the
conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the
disease is increased by the working conditions.

Further, under Annex A of the Amended Rules,

For an occupational disease and the resulting disability or death to be compensable, all of the
following conditions must be satisfied:

1. The employee's work must involve the risks described herein;

2. The disease was contracted as a result of the employee's exposure to the described risks;

3. The disease was contracted within a period of exposure and under such other factors
necessary to contract it;

4. There was no notorious negligence on the part of the employee.

Cardiovascular diseases are considered as occupational when contracted under any of the
following conditions:

(a) If the heart disease was known to have been present during employment there must be
proof that an acute exacerbation clearly precipitated by the unusual strain by reason of the
nature of his work.

(b) The strain of work that brings about an acute attack must be of sufficient severity and
must be followed within twenty-four (24) hours by the clinical signs of a cardiac insult to
constitute causal relationship.

(c) If a person who was apparently asymptomatic before subjecting himself to strain at work
showed signs and symptoms of cardiac injury during the performance of his work and such
symptoms and signs persisted, it is reasonable to claim a causal relationship.[16]

The burden of proof is thus on petitioner to show that any of the above conditions have been
met in his case.

The requisite quantum of proof in cases filed before administrative or quasi-judicial bodies is
neither proof beyond reasonable doubt nor preponderance of evidence. In this type of cases, a
fact may be deemed established if it is supported by substantial evidence, or that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

As found by the Court of Appeals, petitioner failed to submit substantial evidence that might
have shown that he was entitled to the benefits he had applied for. We thus affirm in toto the
findings and conclusions of the Court of Appeals in the questioned Decision and quote with
approval the following pronouncements of the appellate court:

The degree of proof required under P.D. 626 is merely substantial evidence, which means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
Accordingly, the claimant must show, at least by substantial evidence, that the development of
the disease was brought about largely by the conditions present in the nature of the job. What
the law requires is a reasonable work connection, not a direct causal relation.

Gatus was diagnosed to have suffered from CAD; Triple Vessel and Unstable Angina, diseases
or conditions falling under the category of Cardiovascular Diseases which are not considered
occupational diseases under the Amended Rules on Employees Compensation. His disease not
being listed as an occupational disease, he was expected to show that the illness or the fatal
disease was caused by his employment and the risk of contracting the disease was increased or
aggravated by the working conditions. His proof would constitute a reasonable basis for
arriving at a conclusion that the conditions of his employment had caused the disease or that
such working conditions had aggravated the risk of contracting the illness or the fatal disease.

Gatus did not discharge the burden of proof imposed under the Labor Code to show that his
ailment was work-related. While he might have been exposed to various smoke emissions at
work for 30 years, he did not submit satisfactory evidence proving that the exposure had
contributed to the development of his disease or had increased the risk of contracting the
illness. Neither did he show that the disease had progressed due to conditions in his job as a
factory worker. In fact, he did not present any physicians report in order to substantiate his
allegation that the working conditions had increased the risk of acquiring the cardiovascular
disease.

Gatus was not qualified for the disability benefits under the employees compensation law.

The Decision of the Employees Compensation Commission is AFFIRMED.

Petitioner filed a Motion for Reconsideration but this was denied by the Court of Appeals in its
Resolution.

This Court cannot be tasked to go over the proofs presented by the petitioners in the lower
courts and analyze, assess and weigh them to ascertain if the court a quo and the appellate
court were correct in their appreciation of the evidence.

There is no doubt that petitioner deserves sympathy because even the benefits already given to
him were questioned after the SSS found that he was a chronic cigarette smoker. For
humanitarian reasons, as he pursued his claim all the way to the Court as an indigent litigant,
and due to his advancing age, we would like to clarify that what had already been given him
should no longer be taken away from him. But he is not entitled to further compensation for
his condition.

The petition is hereby DENIED.

7. Republic vs. Mariano

March 28, 2003

G.R. No. 139455

Facts:

For an eleven-year period starting January 1983, respondent Pedro Mariano was an employee
of LGP Printing Press. During his employment, Mariano worked in various capacities, including
that of a machine operator, paper cutter, monotype composer, film developer, and supervisor of
the printing press.[3]

Sometime in February 1994, Marianos service abruptly ended when he could no longer
perform any work due to a heart ailment. An electrocardiograph test revealed that he was
suffering from Incomplete Right Bundle Branch Block.[4]

Mariano filed a claim for employees compensation benefit with the SSS. In its medical
evaluation dated April 15, 1997, SSS denied his claim on the ground that there was no causal
connection between his ailment and his job as film developer.[5]

On July 1, 1997, the SSS forwarded the record of respondents case to the ECC. In a letter
dated September 12, 1997, the ECC remanded respondents case to the SSS for reception of
additional documentary evidence.

On February 9, 1998, the SSS directed respondent to submit the following: (1) complete clinical
abstract if he was confined; and (2) records of consultation due to hypertension.[6]

Meanwhile, respondent had consulted Dr. Rogelio Mariano, whose diagnosis showed he was
suffering from Parkinsons disease and hypertension, as per the medical certificate dated April
20, 1998.[7]

The SSS once again submitted respondents case records to the ECC for review.

On October 23, 1998, the ECC, through Executive Director Teofilo E. Hebron, dismissed
respondents claim. Hebron ruled that the respondent had failed to establish a causal
connection between Parkinsons Disease and the working conditions at the printing press.[8]
On respondents claim for compensation for Essential Hypertension, the ECC found that
respondent had failed to adduce sufficient evidence to establish that his ailment had caused
impairment of any of his body organs, which in turn could permanently prevent him from
engaging in a gainful occupation.

Aggrieved, respondent elevated the matter to the Court of Appeals in CA-G.R. SP No. UDK-
2898.
On July 26, 1999, the appellate court rendered a judgment reversing the decision of the ECC,
decreeing as follows:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Accordingly,
respondents Employees Compensation Commission (ECC) and Social Security System (SSS)
are ordered to pay petitioners claim for compensation benefits under P.D. 626.[9]

In holding for the respondent, the Court of Appeals found that the nature of petitioners work
at LGP resulted in his exposure to various toxic chemicals, which is a possible cause of
Parkinsons Disease. As to his hypertension, the appellate court ruled that the respondents
duties as machine operator and paper cutter involved physical pressure and restlessness, since
he was required to meet urgent deadlines for rush print orders. This in turn caused respondent
to suffer from stress

and anxiety. In sum, the appellate court held that respondent had substantially established the
connection between the cause of his ailments and the nature of his work.

Issue:

Did the Court of Appeals err in reversing the ECC decision and in ordering petitioner to pay
respondent his claim for compensation benefits?

Held:

NO.

Workmens Compensation cases are governed by the law in force at the time the claimant
contracted his illness.[12] In the instant case, the applicable rule is Section 1 (b),[13] Rule III,
of the Rules Implementing P.D. No. 626. Under said Rule, for the sickness to be compensable,
the same must be an occupational disease included in the list provided, with the conditions
set therein satisfied; otherwise, the claimant must show proof that the risk of contracting it is
increased by the working conditions.[14] What kind and quantum of evidence would constitute
an adequate basis for a reasonable man (not necessarily a medical scientist) to reach one or the
other conclusion, can obviously be determined only on a case-to-case basis.[15]For reasons
herein elaborated, we agree with the appellate court that respondent Pedro Mariano has
substantially proved his claim to compensability.

In upholding respondent Marianos claim, the Court of Appeals found that among the various
jobs the respondent performed were those of a machine operator, paper cutter, monotype
composer,[24] and later as supervisor, most of which are physical and stressful in character. In
established cases of Essential Hypertension, the blood pressure fluctuates widely in response
to emotional stress and physical activity.[25] Given the nature of his assigned job and the
printing business, with its tight deadlines entailing large amounts of rush work, indeed the
emotional and physical stress of respondents work at the printing press caused, and then
exacerbated, his hypertension. On this score, we hold that the Court of Appeals did not err in
liberally construing the rules implementing P.D. No. 626. In matters of labor and social
legislation, it is well established that doubts in the interpretation and application of the law are
resolved liberally in favor of the worker and strictly against the employer.

8. MAGSAYSAY MARITIME CORP. v LOBUSTA

G.R. No. 177578 January 25, 2012

Magsaysay Maritime Corp. is a domestic corporation and the local manning agent of the vessel
MV Fossanger, petitioner v Oberto Lobusta is a seaman who has worked for petitioner since
1994. respondent

Case Doctrine: Disability should not be understood more on its medical significance but on the
loss of earning capacity. Permanent total disability means disablement of an employee to earn
wages in the same kind of work, or work of similar nature that [he] was trained for or
accustomed to perform, or any kind of work which a person of [his] mentality and attainment
could do. It does not mean absolute helplessness. It likewise cited Bejerano v. ECC, that in a
disability compensation, it is not the injury which is compensated, but rather it is the
incapacity to work resulting in the impairment of ones earning capacity.

Facts:

* Respondent Lobusta is a seaman who has worked for the respondent since 1994; He was
hired again as Able Seaman by the petitioner with a basic salary of US$515 and an overtime
pay of US$206 per month;

* The employment contract also provides that the standard terms and conditions governing the
employment of Filipino seafarers on board ocean-going vessels, approved per Department Order
No. 33 of the Department of Labor and Employment and Memorandum Circular No. 55 of the
POEA (POEA Standard Employment Contract), both series of 1996, shall be strictly and
faithfully observed;

* On March 16, 1998, Lobusta boarded MV Fossanger; Shortly after two months, he
complained of breathing difficulty and back pain which resulted to his admission at Gleneagles
Maritime Medical Center in Singapore; Diagnosis: Severe Acute Bronchial Asthma with
secondary infection and lumbosacral muscle strain

* Upon repatriation on May 21, 1998, Lobusta was referred to Metropolitan Hospital for further
treatment; He went through a surgery called decompression laminectomy and was on his way
to recovery;
* On February 19, 1999, he was diagnosed to have a moderate obstructive pulmonary disease
which tends to be a chronic problem and will be on medications indefinitely ;He was declared
disabled after the Pulmonologist opined that Lobustas obstructive airway disease needs to be
monitored regularly ;

* On December 16, 1999, Lobustas clinical summary states that he is not physically fit to
resume his normal work as a seaman

* Lobusta filed a complaint before the NLRC for disability/medical benefits against petitioner
due to failure to reach a settlement as to the amount to which Lobusta is entitled

* Sometime in October 2000, Magsaysay Maritime Corporation suggested that Lobusta be

examined by another company-designated doctor for an independent medical examination; The
parties agreed on an independent medical examination by Dr. Annette M. David, who suggested
that Mr. Lobusta ought not to be considered fit to return to work; Still, no settlement was
reached by the parties;

Labor Arbiter: ordered petitioners to pay Lobusta because he suffered illness during the term of
his contract; Provisions of the labor code, as amended, on permanent total disability, do not
apply to overseas seafarers;

NLRC: dismissed his appeal and affirmed Labor Arbiters decision; his condition may only be
considered permanent partial disability since the degree of impairment is only mild; also
denied Lobustas motion for reconsideration

CA: declared that Lobusta is suffering from permanent total disability and increased the award
of disability benefits in his favor to US$60,000, to wit;

* The CA ruled that Lobusta's disability brought about by his bronchial asthma is permanent
and total as he had been unable to work since May 14, 1998 up to the present or for more than
120 days, and because Dr. David found him not fit to return to work as an able seaman

Issue: W/N the provisions of the Labor Code should be applied in determining Lobustas
disability instead of the POEA contract

Ruling: Yes, petitioners are mistaken that it is only the POEA Standard Employment Contract
that must be considered in determining Lobusta's disability;

* It was already established in the case of Palisoc v Easways Marine that the Labor Codes
provision on permanent total disability applies to seafarers;

* Disability should not be understood more on its medical significance but on the loss of
earning capacity. Permanent total disability means disablement of an employee to earn wages
in the same kind of work, or work of similar nature that [he] was trained for or accustomed to
perform, or any kind of work which a person of [his] mentality and attainment could do. It does
not mean absolute helplessness. It likewise cited Bejerano v. ECC, that in a disability
compensation, it is not the injury which is compensated, but rather it is the incapacity to work
resulting in the impairment of ones earning capacity.

* Labor Code also provides for the concept of permanent total disability, as stated in Art. 192(c)
(1) which states that: Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the
degree of permanent disability has been assessed by the company-designated physician, but in
no case shall this period exceed one hundred twenty (120) days.

* He was unable to work since 1998 up until 2006 when CA decided the case and it was
clarified in the Vergara case that temporary total disability period may only be extended up to
a maximum of 240 days. From then on, it is deemed to be a permanent disability.

9. Quitoriano vs Jebsen Maritime

Facts:
Respondent Jebsens Maritime, Inc. (represented by Ma. Theresa Gutay), on behalf of its
foreign principal co-respondent Atle Jebsens Management A/S, hired[2] on January 13, 2001
Rizaldy M. Quitoriano (petitioner) as 2nd Officer aboard the vessel M/V Trimnes for a period of
six months with a basic monthly salary of US$936.[3]

On May 23, 2001, petitioner, who was assigned as navigating officer from 12:00 midnight to
4:00 a.m. and port watcher from 12:00 midnight to 6:00 a.m., complained of dizziness with
severe headache, general body weakness, chest pains, easy fatigability, weak grip strength,
and numbness on the left side of his body and was observed to be dragging his left foot, his
mouth slightly down to one side, and his speech slurred.[4]

When the vessel berthed on May 26, 2001 at Port Huelva, Spain, petitioner was brought to a
hospital where he was diagnosed as suffering from hypertension arterial or mild stroke.[5]
Since his health condition did not improve, petitioner was repatriated to the Philippines on May
30, 2001 to undergo further medical examination and treatment.

Upon arrival in Manila, petitioner underwent several tests at the Medical Center Manila under
the care of Dr. Nicomedes G. Cruz (Dr. Cruz), the company-designated physician. On June 6,
2001, Dr. Cruz, noting that petitioner still complain[ed] of chest pain and easy fatigability. On
November 16, 2001 or 169 days after petitioners repatriation Dr. Cruz issued a medical report
declaring the petitioner fit to work. He then went to other physicians to ask for a second and
third opinion.

He then asked form the respondents full permanent disability compensation but he was
unsuccessful.

Issue: whether or not petitioner should be compensated?

Held:

The notion of disability is intimately related to the workers capacity to earn, what is
compensated being not his injury or illness but his inability to work resulting in the
impairment of his earning capacity; hence, disability should be understood less on its medical
significance but more on the loss of earning capacity

There are three kinds of disability benefits under the Labor Code, as amended by P.D. No. 626:
(1) temporary total disability, (2) permanent total disability, and (3) permanent partial disability.
Section 2, Rule VII of the Implementing Rules of Book V of the Labor Code differentiates the
disabilities as follows:

Sec. 2. Disability. (a) A total disability is temporary if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a continuous period not exceeding
120 days, except as otherwise provided for in Rule X of these Rules.

(b) A disability is total and permanent if as a result of the injury or sickness the employee is
unable to perform any gainful occupation for a continuous period exceeding 120 days, except
as otherwise provided for in Rule X of these Rules.

(c) A disability is partial and permanent if as a result of the injury or sickness the employee
suffers a permanent partial loss of the use of any part of his body.

Permanent disability is inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body. x x x.

Total disability, on the otherhand, means the disablement of an employee to earn wages in the
same kind of work of similar nature that he was trained for, or accustomed to perform, or any
kind of work which a person of his mentality and attainments could do. It does not mean
absolute helplessness. In disability compensation, it is not the injury which is compensated,
but rather it is the incapacity to work resulting in the impairment of ones earning capacity

Applying the standards reflected in the immediately quoted ruling of the Court vis--vis the fact
that it was only on November 16, 2001 that the fit to work certification was issued by Dr.
Cruz or more than five months from the time petitioner was medically repatriated on May 30,
2001, petitioners disability is considered permanent and total.
 Petitioners disability being then permanent and total, he is entitled to 100% compensation,
i.e., US$80,000 for officers, as stipulated in par. 20.1.7 of the parties CBA.

SET 3

1 G.R. No. 184058. March 10, 2010

PEOPLE OF THE PHILIPPINES, appellee vs. MELISSA CHUA, appellant

DOCTRINE:
(a) An employee of a company engaged in illegal recruitment may be held liable as principal
together with his employer if it is shown that he, as in the case of appellant, actively and
consciously participated therein.
(b) Illegal Recruitment in Large Scale penalized under Republic Act No. 8042, or "The Migrant
Workers and Overseas Filipinos Act of 1995," is a special law, a violation of which is malum
prohibitum, not malum in se. Intent is thus immaterial.
FACTS: An Information alleged that MELISSA CHUA violated Article 38 (a) PD 1413,
amending certain provisions of Book I, PD 442 (Labor Code) in relation to Art. 13 (b) and (c ) of
said Code, as further amended by PD Nos. 1693, 1920 and 2019 and as further amended by
Sec. 6 (a), (1) and (m) of RA 8042 committed in large scale as follows:
willfully, unlawfully and knowingly for a fee, recruit and promise employment/job placement
abroad to ERIK DE GUIA TAN, MARILYN O. MACARANAS, NAPOLEON H. YU, JR., HARRY JAMES
P. KING and ROBERTO C. ANGELES for overseas employment abroad without first having
secured the required license from the Department of Labor and Employment as required by
law, and charge or accept directly payment; that amounts are in excess of or greater than that
specified in the schedule of allowable fees as prescribed by the POEA, and failed to actually
deploy them and failed to reimburse expenses incurred in connection with their documentation
and processing for purposes of their deployment.
Tan and King testified that they later on found out that Golden Gates (recruitment
agency) license had already expired.
Appellant claimed having worked as a temporary cashier at the office of Golden Gate,
owned by one Marilyn Calueng and maintained that Golden Gate was a licensed recruitment
agency.
The RTC convicted appellant for Illegal Recruitment (Large Scale) and three (3) counts of
Estafa.
The CA affirmed the RTCs decision holding that appellants defense that, as temporary
cashier of Golden Gate, she received the money which was ultimately remitted to Marilyn
Calueng is immaterial, she having failed to prove the existence of an employment relationship
between her and Marilyn, as well as the legitimacy of the operations of Golden Gate and the
extent of her involvement therein. Citing People v. Sagayaga the appellate court ruled that an
employee of a company engaged in illegal recruitment may be held liable as principal together
with his employer if it is shown that he, as in the case of appellant, actively and consciously
participated therein.
Respecting the cases for Estafa, the appellate court, noting that a person convicted of
illegal recruitment may, in addition, be convicted of Estafa as penalized under Article 315,
paragraph 2(a) of the Revised Penal Code

ISSUE: Whether the Court of Appeals was correct in affirming the RTCs decision of convicting
appellant for Illegal Recruitment (Large Scale) and three (3) counts of Estafa.

HELD: YES. In the present case, Golden Gate, of which appellant admitted being a was initially
authorized to recruit workers for deployment abroad. Per the certification from the POEA,
Golden Gates license expired and it was delisted from the roster of licensed agencies.
Appellant was positively pointed to as one of the persons who enticed the complainants
to part with their money upon the fraudulent representation that they would be able to secure
for them employment abroad. Even if appellant were a mere temporary cashier of Golden Gate,
that did not make her any less an employee to be held liable for illegal recruitment as principal
by direct participation, together with the employer, as it was shown that she actively and
consciously participated in the recruitment process.
Assuming arguendo that appellant was unaware of the illegal nature of the
recruitment business of Golden Gate that does not free her of liability either. Illegal
Recruitment in Large Scale penalized under Republic Act No. 8042, or "The Migrant
Workers and Overseas Filipinos Act of 1995," is a special law, a violation of which
is malum prohibitum, not malum in se. Intent is thus immaterial. And that explains why
appellant was, aside from Estafa, convicted of such offense.

2. G.R. No. 187730 June 29, 2010

PEOPLE OF THE PHILIPPINES versus RODOLFO GALLO y GADOT, FIDES PACARDO y
JUNGCO and PILAR MANTA y DUNGO

DOCTRINE:
To commit syndicated illegal recruitment, three elements must be established: (1) the
offender undertakes either any activity within the meaning of recruitment and
placement defined under Article 13(b), or any of the prohibited practices enumerated
under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law
to enable one to lawfully engage in recruitment and placement of workers; and (3) the
illegal recruitment is committed by a group of three (3) or more persons conspiring or
confederating with one another.

Even with a license, however, illegal recruitment could still be committed under Section
6 of Republic Act No. 8042 (R.A. 8042), otherwise known as the Migrants and
Overseas Filipinos Act of 1995.

FACTS:
Originally, accused-appellant Gallo and accused Pacardo and Manta, together with Mardeolyn
and nine (9) others, were charged with syndicated illegal recruitment and eighteen (18) counts
of estafa committed against eighteen complainants, including Dela Caza, Guantero and Sare.
The cases were respectively docketed as Criminal Case Nos. 02-2062936 to 02-206311.
However, records reveal that only Criminal Case No. 02-206293, which was filed against
accused-appellant Gallo, Pacardo and Manta for syndicated illegal recruitment, and Criminal
Case Nos. 02-206297, 02-206300 and 02-206308, which were filed against accused-appellant
Gallo, Pacardo and Manta for estafa, proceeded to trial due to the fact that the rest of the
accused remained at large. Further, the other cases, Criminal Case Nos. 02 206294 to 02-
206296, 02-206298 to 02-206299, 02-206301 to 02-206307 and 02-206309 to 02-206311
were likewise provisionally dismissed upon motion of Pacardo, Manta and accused-appellant
for failure of the respective complainants in said cases to appear and testify during trial.
It should also be noted that after trial, Pacardo and Manta were acquitted in Criminal Case
Nos. 02-206293, 02-206297, 02-206300 and 02-206308 for insufficiency of evidence. Likewise,
accused-appellant Gallo was similarly acquitted in Criminal Case Nos. 02-206300, the case
filed by Guantero, and 02-206308, the case filed by Sare. However, accused-appellant was
found guilty beyond reasonable doubt in Criminal Case Nos. 02-206293 and 02-206297, both
filed by Dela Caza, for syndicated illegal recruitment and estafa, respectively. Thus, the present
appeal concerns solely accused-appellants conviction for syndicated illegal recruitment in
Criminal Case No. 02-206293 and for estafa in Criminal Case No. 02-206297.

Version of the Prosecution (for purposes of recitation)

On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant
Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national
at the office of MPM Agency located in Malate, Manila. Dela Caza was told that Mardeolyn was
the President of MPM Agency, while Nelmar Martir was one of the incorporators. Also, that
Marcelino Martir, Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board
members. Lulu Mendanes acted as the cashier and accountant, while Pacardo acted as the
agencys employee who was in charge of the records of the applicants. Manta, on the other
hand, was also an employee who was tasked to deliver documents to the Korean embassy.
Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela
Caza that the agency was able to send many workers abroad. Together with Pacardo and
Manta, he also told Dela Caza about the placement fee of One Hundred Fifty Thousand Pesos
(PhP 150,000) with a down payment of Forty-Five Thousand Pesos (PhP 45,000) and the
balance to be paid through salary deduction. Dela Caza, together with the other applicants,
were briefed by Mardeolyn about the processing of their application papers for job placement
in Korea as a factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing
about the business and what to expect from the company and the salary. With accused-
appellants assurance that many workers have been sent abroad, as well as the presence of
the two (2) Korean nationals and upon being shown the visas procured for the deployed
workers, Dela Caza was convinced to part with his money. Thus, on May 29, 2001, he paid
Forty-Five Thousand Pesos (PhP 45,000) to MPM Agency through accused-appellant Gallo who,
while in the presence of Pacardo, Manta and Mardeolyn, issued and signed Official Receipt No.
401. Two (2) weeks after paying MPM Agency, Dela Caza went back to the agencys office in
Malate, Manila only to discover that the office had moved to a new location at Batangas Street,
Brgy. San Isidro, Makati. He proceeded to the new address and found out that the agency was
renamed to New Filipino Manpower Development & Services, Inc. (New Filipino). At the new
office, he talked to Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo.
He was informed that the transfer was done for easy accessibility to clients and for the purpose
of changing the name of the agency. Dela Caza decided to withdraw his application and recover
the amount he paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes talked him out from
pursuing his decision. On the other hand, accused-appellant Gallo even denied any
knowledge about the money. After two (2) more months of waiting in vain to be deployed, Dela
Caza and the other applicants decided to take action. The first attempt was unsuccessful
because the agency again moved to another place. However, with the help of the Office of
Ambassador Seeres and the Western Police District, they were able to locate the new address
at 500 Prudential Building, Carriedo,Manila. The agency explained that it had to move in order
to separate those who are applying as entertainers from those applying as factory workers.
Accused-appellant Gallo, together with Pacardo and Manta, were then arrested.

Version of the Defense (for purposes of recitation)

For his defense, accused-appellant denied having any part in the recruitment of Dela
Caza. In fact, he testified that he also applied with MPM Agency for deployment to Korea as a
factory worker. According to him, he gave his application directly with Mardeolyn because she
was his town mate and he was allowed to pay only Ten Thousand Pesos (PhP 10,000) as
processing fee. Further, in order to facilitate the processing of his papers, he agreed to perform
some tasks for the agency, such as taking photographs of the visa and passport of applicants,
running errands and performing such other tasks assigned to him, without salary except for
some allowance. He said that he only saw Dela Caza one or twice at the agencys office when he
applied for work abroad. Lastly, that he was also promised deployment abroad but it never
materialized.

RTC rendered its Decision convicting the accused of syndicated illegal recruitment and estafa.
CA affirmed with modification to the sentence in the the estafa case.

ISSUE:
WON CA gravely erred in finding appellant guilty of illegal recruitment and estafa.

HELD:
NO. Accused-appellant avers that he cannot be held criminally liable for illegal recruitment
because he was neither an officer nor an employee of the recruitment agency. He alleges that
the trial court erred in adopting the asseveration of the private complainant that he was indeed
an employee because such was not duly supported by competent evidence. According to him,
even assuming that he was an employee, such cannot warrant his outright conviction sans
evidence that he acted in conspiracy with the officers of the agency.

The Court disagree.

To commit syndicated illegal recruitment, three elements must be established: (1) the
offender undertakes either any activity within the meaning of recruitment and placement
defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the
Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully
engage in recruitment and placement of workers; and (3) the illegal recruitment is committed
by a group of three (3) or more persons conspiring or confederating with one another.

When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed

against three (3) or more persons individually or as a group, it is considered an offense
involving economic sabotage. Under Art. 13(b) of the Labor Code, recruitment and
placement refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not.

After a thorough review of the records, we believe that the prosecution was able to establish the
elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never
licensed by the POEA to recruit workers for overseas employment.

Even with a license, however, illegal recruitment could still be committed under Section
6 of Republic Act No. 8042 (R.A. 8042), otherwise known as the Migrants and Overseas
Filipinos Act of 1995.

Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers
and includes referring, contract services, promising or advertising for employment
abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of
authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the Philippines: Provided, That any such non-
licensee or non-holder who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. It shall, likewise, include
the following act, whether committed by any person, whether a non-licensee, non-
holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified in
the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or
to make a worker pay any amount greater than that actually received by him as a loan
or advance;

xxxx

(l) Failure to actually deploy without valid reason as determined by the Department of
Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment and processing for purposes
of deployment, in cases where the deployment does not actually take place without the
workers fault. Illegal recruitment when committed by a syndicate or in large scale shall
be considered an offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with one another. It is deemed committed in large
scale if committed against three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or direction
of their business shall be liable.

In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042.
Testimonial evidence presented by the prosecution clearly shows that, in consideration of a
promise of foreign employment, accused-appellant received the amount of Php 45,000.00 from
Dela Caza. When accused-appellant made misrepresentations concerning the agencys
purported power and authority to recruit for overseas employment, and in the process,
collected money in the guise of placement fees, the former clearly committed acts constitutive
of illegal recruitment.

Essentially, Dela Caza appeared very firm and consistent in positively identifying accused-
appellant as one of those who induced him and the other applicants to part with their money.
His testimony showed that accused-appellant made false misrepresentations and promises in
assuring them that after they paid the placement fee, jobs in Korea as factory workers were
waiting for them and that they would be deployed soon. In fact, Dela Caza personally talked to
accused-appellant and gave him the money and saw him sign and issue an official receipt as
proof of his payment. Without a doubt, accused-appellants actions constituted illegal
recruitment.

Additionally, accused-appellant cannot argue that the trial court erred in finding that he was
indeed an employee of the recruitment agency. On the contrary, his active participation in the
illegal recruitment is unmistakable. The fact that he was the one who issued and signed the
official receipt belies his profession of innocence.

This Court likewise finds the existence of a conspiracy between the accused-appellant and the
other persons in the agency who are currently at large, resulting in the commission of the
crime of syndicated illegal recruitment.

In this case, it cannot be denied that the accused-appellent together with Mardeolyn and the
rest of the officers and employees of MPM Agency participated in a network of deception. Verily,
the active involvement of each in the recruitment scam was directed at one single purpose to
divest complainants with their money on the pretext of guaranteed employment abroad. The
prosecution evidence shows that complainants were briefed by Mardeolyn about the processing
of their papers for a possible job opportunity in Korea, as well as their possible salary.
Likewise, Yeo Sin Ung, a Korean national, gave a briefing about the business and what to
expect from the company. Then, here comes accused-appellant who introduced himself as
Mardeolyns relative and specifically told Dela Caza of the fact that the agency was able to send
many workers abroad. Dela Caza was even showed several workers visas who were already
allegedly deployed abroad. Later on, accused-appellant signed and issued an official receipt
acknowledging the down payment of Dela Caza. Without a doubt, the nature and extent of the
actions of accused-appellant, as well as with the other persons in MPM Agency clearly show
unity of action towards a common undertaking. Hence, conspiracy is evidently present.

ESTAFA

The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of
confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary
estimation is caused to the offended party or third person.[15] Deceit is the false
representation of a matter of fact, whether by words or conduct, by false or misleading
allegations, or by concealment of that which should have been disclosed; and which deceives or
is intended to deceive another so that he shall act upon it, to his legal injury.

All these elements are present in the instant case: the accused-appellant, together with the
other accused at large, deceived the complainants into believing that the agency had the power
and capability to send them abroad for employment; that there were available jobs for them in
Korea as factory workers; that by reason or on the strength of such assurance, the
complainants parted with their money in payment of the placement fees; that after receiving
the money, accused-appellant and his co-accused went into hiding by changing their office
locations without informing complainants; and that complainants were never deployed abroad.
As all these representations of the accused-appellant proved false, paragraph 2(a), Article 315
of the Revised Penal Code is thus applicable.
3. GR NO. 179532
CLAUDIO S. YAP VS. THENAMARIS SHIP'S MANAGEMENT (TSM) and INTERMARE
MARITIME AGENCIES, INC. (IMAI)

FACTS:

Yap was employed as electrician of the vessel M/T SEASCOUT by IMAI in behalf of its
principal, Venture Shipping Ltd.
Contract of employment was for 12 months
After 3 months, the vessel was sold
Yap received different kinds of bonuses but he did not accept the payment of one-month
basic wage.
The petitioner insisted that he was entitled to the payment of the unexpired portion of
his contract since he was illegally dismissed from the employment.
The respondent alleged that Yap's employment contract was validly terminated due to
the sale of the vessel and no arrangement as made for Yap's transfer to TSM vessels.

LABOR ARBITER (LA):

The petitioner filed a complaint for Illegal Dismissal before the LA

The petitioner claimed that he was entitled to the Salaries corresponding to the
unexpired portion of his contract
Decision: In favor of the petitioner. The respondent acted in bad faith when they
assured the petitioner of the re-embarkation and required him to produce an electrician
certificate during the period of his contract, but actually he was not able to board one
despite of the respondents numerous vessels.
The petitioner made several follow-ups for his re-embarkation but respondent failed to
heed his plea; thus, petitioner was forced to litigate in order to vindicate his rights.
The LA opined that since the unexpired portion of the petitioners contract was less
than one year, petitioner was entitled to his salaries for the unexpired portion of his
contract for a period of nine months.

NLRC:
The respondents filed a petition to the NLRC
The NLRC affirmed the LAs decision
With modification : Instead of nine months, the NLRC ruled that it should be for 3
months, pursuant to Section 10 of Republic Act (RA) 8042.
The respondents filed a Motion for Partial Reconsideration (MPR)
The petitioners also filed a MPR to reinstate the decision of the LA that it should be nine
months.
Decision: The MPR of the respondents has been DENIED. The MPR of the petitioners
has been GRANTED.
The respondents filed a Motion for Reconsideration (MR), but the same was DENIED.
COURT OF APPEALS (CA)
The respondents filed a petition for certiorari before the CA
Decision: The CA affirmed the decision of NLRC and LAs findings and rulings.
With modification: 3 months only
Both the petitioners and respondents filed a MR.
Decision: DENIED

ISSUE:
WON Section 10 of RA 8042 to the extent that it affords an illegally dismissed migrant
worker the lesser benefit of --- salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less is
constitutional.

RULING:
The Court held that Section 10 of RA 8092 is unconstitutional, as what is provided
under the case of Serrano.

Verily, we have already declared in Serrano that the clause or for three months for every
year of the unexpired term, whichever is less provided in the 5thparagraph of Section
10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas
Filipino Workers (OFWs) to equal protection of the laws. In an exhaustive discussion of
the intricacies and ramifications of the said clause, this Court, in Serrano, pertinently
held:

The Court concludes that the subject clause contains a suspect

classification in that, in the computation of the monetary
benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired
portion of one year or more in their contracts, but none on the
claims of other OFWs or local workers with fixed-term
employment. The subject clause singles out one classification
of OFWs and burdens it with a peculiar disadvantage.

Following Serrano, the court held that the case should not be included in the
aforementioned exception. After all, it was not the fault of petitioner that he lost his job
due to an act of illegal dismissal committed by respondents. To rule otherwise would be
iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an OFWs security
of tenure which an employment contract embodies and actually profit from such
violation based on an unconstitutional provision of law.

As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes

no duties; it affords no protection; it creates no office; it is inoperative as if it has not
been passed at all. The general rule is supported by Article 7 of the Civil Code, which
 provides:

Art. 7. Laws are repealed only by subsequent ones, and their

violation or non-observance shall not be excused by disuse or
custom or practice to the contrary.

4. GR NO. 167614

ANTONIO M. SERRANO vs. GALLANT MARITIME SERVICES, INC. and MARLOW

NAVIGATION CO. INC.

FACTS:
Petitioner was hired by Gallant Maritime and Marlow Navigation under POEA-
approved Contract of Employment with the following terms and conditions:
Duration of Contract : 12 months
Position: Chief Officer
Basic Monthly Salary: US$ 1,400.00
Hours of Work: 48 hours per week
Overtime: US$ 700 per month
Vacation leave with pay: 7 days per month
On the date of his departure, the Petitioner was constrained to accept a downgraded
employment contract for the position of 2nd Officer with a monthly salary of US$
1,000.00
The Respondent did not deliver on their promise to make Petitioner Chief Officer
Petitioner refused to stay on as 2nd Officer and was repatriated.
Petitioner served only two (2) moths and seven (7) days of his contract. UNEXPIRED
PORTION: nine (9) months and 23 days

LABOR ARBITER (LA):

Petitioner filed a complaint against the Respondent for constructive dismissal and for
payment of money claims as well as moral and exemplary damages.
Decision: The LA ruled that the dismissal of the Petitioner is illegal and awarding him
monetary benefits.
With Modification: Computation of Money Claims is based on the three (3) months of
the unexpired portion of the aforesaid contract of employment
With regards to moral and exemplary damages were dismissed.

NLRC:
Respondent appealed to question the finding of the LA that Petitioner was illegally
dismissed
Decision: Modified - The NLRC corrected the LA's computation of the lump-sum salary
awarded to Petitioner by reducing the applicable salary rate from US$ 2,590 to US$
1,400 because Republic Act (RA) No. 8042 "does not provide for the award of overtime
pay, which should be proven to have been actually performed, and for vacation leave
with pay".
Petitioner filed a Motion for Partial Reconsideration questioning the constitutionality of
the subject clause
Decision: DENIED

COURT OF APPEALS (CA):

Petitioner filed Petition for Certiorari reiterating the constitution challenge against the
subject clause
The CA affirmed the NLRC ruling on the reduction of the applicable salary rate

ISSUE:
WoN the subject clause (Section 10, RA 8042) violates Section 10 of Article III of the
Constitution.
WoN the subject clause violates Section 1 of Article III, Section 18 of Article II and
Section 3 of Article XIII.

Subject Clause: "salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less"

RULING:

1. No. The subject clause may not be declared unconstitutional on the grounds that it
impinges on the impairment clause, for the law was enacted in the exercise of the police
power of the State to regulate a business, profession or calling, particularly there
recruitment and deployment of Overseas and Filipino Workers (OFWs), with the noble
end in view of ensuring respect for the dignity and well-being of OFWs wherever they
may be employed.

Section 10 of Article III

~No law impairing the obligation of contracts shall be passed.~

2. Yes. The subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.

Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3 of Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing, there are
some which the Court has declared not judicially enforceable, Article XIII being one,
particularly Section 3.

Therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive

enforceable right to stave off the dismissal of an employee for just cause owing to the
 failure to serve proper notice or hearing. As manifested by several framers of the 1987
Constitution, the provisions on social justice require legislative enactments for their
enforceability.

Thus, Section 3 of Article XIII cannot be treated as a principal source of direct

enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every
worker or union over every conceivable violation of so broad a concept as social justice
for labor.

Along the same line of reasoning, the Court further holds that the subject clause
violates petitioner's right to substantive due process, for it deprives him of property,
consisting of monetary benefits, without any existing valid governmental purpose.

The subject clause does not state or imply any definitive governmental purpose; and it
is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1 of Article III of
the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

Section 18 of Article II
~The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.~

Section 1 of Article III

~No person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws.~

Section 3 of Article XIII

~The Congress shall give highest priority to the enactment of measures that protect and
enhance the right of all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall regulate the acquisition, ownership, use, and disposition of
property and its increments.~

5. People of the Philippines vs. Domingo Panis

GR No. L5867477, July 11, 1990

FACTS: On January 9, 1981, four information were filed in the in the Court of First Instance
(CFI) of Zambales and Olongapo City alleging that herein private respondent Serapio Abug,
"without first securing a license from the Ministry of Labor as a holder of authority to operate a
fee-charging employment agency, did then and there wilfully, unlawfully and criminally operate
a private fee charging employment agency by charging fees and expenses (from) and promising
employment in Saudi Arabia" to four separate individuals. Abug filed a motion to quash
contending that he cannot be charged for illegal recruitment because according to him, Article
13(b) of the Labor Code says there would be illegal recruitment only "whenever two or more
persons are in any manner promised or offered any employment for a fee.

Denied at first, the motion to quash was reconsidered and granted by the Trial Court in its
Orders dated June 24, 1981, and September 17, 1981. In the instant case, the view of the
private respondents is that to constitute recruitment and placement, all the acts mentioned in
this article should involve dealings with two or more persons as an indispensable requirement.
On the other hand, the petitioner argues that the requirement of two or more persons is
imposed only where the recruitment and placement consists of an offer or promise of
employment to such persons and always in consideration of a fee.

ISSUE: Whether or not Article 13(b) of the Labor Code provides for the innocence or guilt of the
private respondent of the crime of illegal recruitment

HELD: The Supreme Court reversed the CFIs Orders and reinstated all four information filed
against private respondent.

The Article 13(b) of the Labor Code was merely intended to create a presumption, and not to
impose a condition on the basic rule nor to provide an exception thereto.

Where a fee is collected in consideration of a promise or offer of employment to two or more

prospective workers, the individual or entity dealing with them shall be deemed to be engaged
in the act of recruitment and placement. The words "shall be deemed" create the said
presumption.
6. Transaction Overseas Corporation vs DOLE Secretary

September 5, 1997

Facts: From July 24 to September 9, 1987, Trans Action Overseas Corporation scoured Iloilo
City for possible recruits for alleged job vacancies in Hongkong. Private respondents sought
employment domestic helpers and paid placement fees to the petitioner ranging from 1K to 14K
but petitioner failed to deploy them. Private respondents demanded refund but their demands
were ignored so they instituted complaints against the petitioner.

On April 5, 1991, Labor Usec Confesor ordered that the petitioner refund the payments of the
33 private respondents. The petitioner was also held liable for 28 counts of violation of Article
32 of the Labor Code and 5 counts of Articles 34 with corresponding suspension in aggregate
period of 66 months. Since the petitioners suspension exceeded 12 months, the penalty of
cancellation of license was also ordered.

Petitioner filed for Motion for Temporary Lifting of Order of Cancellation alleging that such
would jeopardize its operations and affect the interests of the workers about to leave for their
respective assignments. It manifested its willingness to post a bond to insure payment to the 33
private respondents. Cancellation was lifted on May 1991 but cancellation was reinstated in
April 1992. Thus, the petitioner filed this case. Petitioner contends that the Secretary Confesor
acted with grave abuse of discretion because it believed that the POEA has the exclusive and
original jurisdiction to hear and decide illegal recruitment cases, including authority to cancel
recruitment licenses.

ISSUE: WON the Secretary of Labor has the authority to cancel recruitment license?

HELD:

YES
The power to suspend or cancel any license or authority to recruit employees for
overseas employment is vested upon the Secretary of DOLE under Article 35 of the
Labor Code.
In Eastern Assurance and Surety Corp vs Secretary of Labor, the Court held that the
 Secretary of Labor has the power under Section 35 to apply the penalties of suspension
and cancellation of license.
In People Diaz, the Court held that: A non-licensee or non-holder of authority means
any person, corporation or entity which has not been issued a valid license or authority
to engage in recruitment and placement by the Secretary of Labor, or whose license or
authority has been suspended, revoked or cancelled by the POEA or the Secretary.
The power to suspend or cancel any license or authority to recruit employees for
overseas employment is concurrently vested with the POEA and the Secretary of Labor.

7. REPUBLIC OF THE PHILIPPINES, represented by the ADMINISTRATOR OF THE

PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), vs PRINCIPALIA
MANAGEMENT AND PERSONNEL CONSULTANTS, INCORPORATED G.R.
No. 167639 April 19, 2006

This case stemmed from two separate complaints filed before the Philippine Overseas
Employment Administration (POEA) against Principalia Management and Personnel
Consultants, Incorporated (Principalia) for violation of the 2002 POEA Rules and Regulations.

The first complaint dated July 16, 2003 filed by Ruth Yasmin Concha (Concha) The
second complaint dated October 14, 2003 filed by Rafael E. Baldoza (Baldoza)

Concha alleged that in August 2002, she applied with Principalia for placement and
employment as caregiver or physical therapist in the USA or Canada. Despite paying
P20,000.00 out of the P150,000.00 fee required by Principalia which was not properly
receipted, Principalia failed to deploy Concha for employment abroad. the Adjudication
Office of the POEA found Principalia liable for violations of the 2002 POEA Rules and
Regulations, particularly for collecting a fee from the applicant before employment was
obtained; for non-issuance of official receipt; and for misrepresenting that it was able to
secure employment for Concha. Principalias license was ordered suspended for 12
months or in lieu thereof, Pricipalia is ordered to pay a fine of P120,000.00 and to
refund Conchas placement fee of P20,000.00.

Baldoza alleged that Principalia assured him of employment in Doha, Qatar as a

machine operator with a monthly salary of $450.00. After paying P20,000.00 as
placement fee, he departed for Doha, Qatar but when he arrived at the jobsite, he was
made to work as welder, a job which he had no skills. He insisted that he was hired as
machine operator but the alternative position offered to him was that of helper, which he
refused. Thus, he was repatriated on July 5, 2003. On November 12, 2003, Baldoza and
Principalia entered into a compromise agreement with quitclaim and release whereby
the latter agreed to redeploy Baldoza for employment abroad. Principalia, however,
failed to deploy Baldoza as agreed hence, in an Order dated April 29, 2004, the POEA
 suspended Principalias documentary processing. Principalia moved for reconsideration
which the POEA granted on June 25, 2004. The latter lifted its order suspending the
documentary processing by Principalia after noting that it exerted efforts to obtain
overseas employment for Baldoza within the period stipulated in the settlement agreement
but due to Baldozas lack of qualification, his application was declined by its foreign
principal

Meanwhile, on June 14, 2004, or before the promulgation of POEAs order lifting the
suspension, Principalia filed a Complaint8 (Complaint) against Rosalinda D. Baldoz in her
capacity as Administrator of POEA and Atty. Jovencio R. Abara in his capacity as POEA
Conciliator, before the Regional Trial Court (RTC) of Mandaluyong City for "Annulment of Order
for Suspension of Documentation Processing with Damages and Application for Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction, and a Writ of Preliminary
Mandatory Injunction." Principalia claimed that the suspension of its documentary processing
would ruin its reputation and goodwill and would cause the loss of its applicants, employers
and principals. Thus, a writ of preliminary injunction and a writ of mandatory injunction must
be issued to prevent serious and irreparable damage to it.

The Trial Court grant the prayer for a Temporary Restraining Order enjoining the defendant[s]
Rosalinda D. Baldoz and Atty. Jovencio R. Abara, from implementing the Orders of Suspension.

After the hearing on the preliminary injunction, the trial court held that the issue on the
application for preliminary mandatory injunction has become moot because POEA had already
released the renewal of license of Principalia. It however issue the Writ of Preliminary
Prohibitory Injunction prayed for by the plaintiff, upon posting of a bond in the amount of FIVE
HUNDRED THOUSAND PESOS (Php 500,000.00), stressing that the Order of Suspension dated
March 15, 2004 is still pending appeal before the Office of the Secretary of Labor and
Employment, and that the said Order dated March 15, 2004 does not categorically state that
the suspension of Plaintiffs License is immediately executory contrary to the contention of the
defendants.

Counsel for POEA argued that the basis for the immediate implementation thereof is Section 5,
Rule V, Part VI of the 2002 POEA Rules and Regulation, which is quoted hereunder, as follows:
"Section 5. Stay of Execution. The decision of the Administration shall be stayed during the
pendency of the appeal; Provided that where the penalty imposed carried the maximum penalty
of twelve (12) months suspension o[r] cancellation of license, the decision shall be immediately
executory despite pendency of the appeal."

The Order dated March 15, 2004 decreed Plaintiff as having violated Section 2 (a) (d) and (e) of
Rule I, Part VI of the POEA Rules and Regulations and the Plaintiffs was imposed the penalty
of twelve (12) months suspension of license (or in lieu, to pay fine of P120,000, it being it[s] first
offense).

Violation of Section 2 (a) (d) and (e) Rule I, Part VI of POEA Rules and Regulations imposes a
penalty of two (2) months to six (6) months suspension of license for the FIRST offender (sic).
And in the absence of mitigating or aggravating circumstance, the medium range of the
imposable penalty which is four (4) months shall be meted out. Being a first offender, the
plaintiff was imposed suspension of license for four (4) months for each violation or an
aggregate period of suspension for twelve (12) months for the three (3) violations.

POEA avers that the trial court gravely abused its discretion in granting the writ of preliminary
prohibitory injunction when the requirements to issue the same have not been met. It asserts
that Principalia had no clear and convincing right to the relief demanded as it had no proof of
irreparable damage as required under the Rules of Court.

Issue: Whether or not the trial court erred in issuing the writ of preliminary injunction?

Held: No. The trial court did not decree that the POEA, as the granting authority of
Principalias license to recruit, is not allowed to determine Principalias compliance with the
conditions for the grant, as POEA would have us believe. For all intents and purposes, POEA
can determine whether the licensee has complied with the requirements. In this instance, the
trial court observed that the Order of Suspension dated March 15, 2004 was pending
appeal with the Secretary of the Department of Labor and Employment (DOLE). Thus,
until such time that the appeal is resolved with finality by the DOLE, Principalia has a
clear and convincing right to operate as a recruitment agency.
Furthermore, irreparable damage was duly proven by Principalia. Suspension of its license is
not easily quantifiable nor is it susceptible to simple mathematical computation, as alleged by
POEA.
If the injunctive writ was not granted, Principalia would have been labeled as an
untrustworthy recruitment agency before there could be any final adjudication of its
case by the DOLE. It would have lost both its employer-clients and its prospective Filipino-
applicants. Loss of the former due to a tarnished reputation is not quantifiable.

Moreover, POEA would have no authority to exercise its regulatory functions over Principalia
because the matter had already been brought to the jurisdiction of the DOLE. Principalia has
been granted the license to recruit and process documents for Filipinos interested to work
abroad. Thus, POEAs action of suspending Principalias license before final adjudication
by the DOLE would be premature and would amount to a violation of the latters right to
recruit and deploy workers.

8. G.R. No. 156029 November 14, 2008

 SANTOSA B. DATUMAN vs. FIRST COSMOPOLITAN MANPOWER AND PROMOTION
SERVICES, INC.

Facts:
Sometime in 1989, respondent First Cosmopolitan Manpower & Promotion Services,
Inc. recruited petitioner Santosa B. Datuman to work in Bahrain as a saleslady with
basic monthly salary of US$370.00. The duration of the contract of employment was for
one year and the foreign employer is identified as Mohammed Sharif Abbas Ghulam
Hussain.
On April 17, 1989, petitioner was deployed to Bahrain after paying the required
placement fee. However, her employer Mohammed Hussain took her passport when she
arrived there; and instead of working as a saleslady, she was forced to work as a
domestic helper with a salary of Forty Bahrain Dinar (BD40.00), equivalent only to One
Hundred US Dollars (US$100.00), contrary to the agreed salary of US$370.00 indicated
in her Contract of Employment signed in the Philippines and approved by the Philippine
Overseas Employment Administration (POEA).
On September 1, 1989, her employer compelled her to sign another contract,
transferring her to another employer as housemaid with a salary of BD40.00 for the
duration of two (2) years. She pleaded with him to give her a release paper and to return
her passport but her pleas were unheeded. Left with no choice, she continued working
against her will. Worse, she even worked without compensation from September 1991 to
April 1993 because of her employer's continued failure and refusal to pay her salary
despite demand.
In May 1993, she was able to finally return to the Philippines through the help of the
Bahrain Passport and Immigration Department
May 1995: Petitioner filed a complaint before the POEA Adjudication Office against
respondent for underpayment and nonpayment of salary, vacation leave pay and refund
of her plane fare; while the case was pending, Datuman filed the instant case before the
NLRC for underpayment of salary for a period of one year and six months, nonpayment
of vacation pay and reimbursement of return airfare.
The parties failed to arrive at an amicable settlement before the Labor Arbiter

Respondent: Contends the following

1) Petitioner actually agreed to work in Bahrain as a housemaid for one (1) year because it was
the only position available then. However, since such position was not yet allowed by the POEA
at that time, they mutually agreed to submit the contract to the POEA indicating petitioner's
position as saleslady;
2) It was actually petitioner herself who violated the terms of their contract when she allegedly
transferred to another employer without respondent's knowledge and approval;
3) Respondent raised the defense of prescription of cause of action since the claim was filed
beyond the three (3)-year period from the time the right accrued, reckoned from either 1990 or
1991.
Labor Arbiter decision: (April 29, 1998) Labor Arbiter Jovencio Mayor, Jr. rendered a Decision
finding respondent liable for violating the terms of the Employment Contract and ordering it to
pay petitioner:
(a) the amount of US$4,050.00, or its equivalent rate prevailing at the time of payment,
representing her salary differentials for fifteen (15) months since the record is bereft of any
evidence to show that complainant Datuman is either not entitled to her wage differentials or
have already received the same from respondent

(From January 1992 April 1993 (15 months)

US$370.00 - agreed salary; US$100.00 - actual paid salary; US$270.00 - balance
US$270.00 x 15 months = US$4050.00);
(b) the amount of BD 180.00 or its equivalent rate prevailing at the time of payment,
representing the refund of plane ticket.

The Labor Arbiter noted that respondent admitted that it had entered into an illegal contract
with complainant by proposing the position of a housemaid which said position was then not
allowed by the POEA, by making it appear in the Employment Contract that the position being
applied for is the position of a saleslady. It is indubitably clear that the foreign employer had
taken advantage to the herein hopeless complainant and because of this ordeal, the same
obviously rendered complainant's continuous employment unreasonable if not downright
impossible.

However, claim for vacation leave pay and overtime pay cannot granted for failure on the part of
complainant to prove with particularity the months that she was not granted vacation leave
and the day wherein she did render overtime work.

Award of damages and attorney's fees are also denied for lack of factual and legal basis.
NLRC Decision: The NLRC affirmed with modification the Decision of Labor Arbiter Mayor, Jr.,
by reducing the award of salary differentials from US$4,050.00 to US$2,970.00.

(Basis: The claims for salary differentials accruing earlier than April of 1993 had already
prescribed. This is so as complainant had filed her complaint on May 31, 1995 when she arrived
from the jobsite in April 1993. Since the cause of action for salary differential accrues at the time
when it falls due, it is clear that only the claims for the months of May 1993 to April 1994 have
not yet prescribed.)

CA Decision: The CA agreed with the respondent Commission in declaring that claims of
private respondent "for salary differentials accruing earlier than April of 1993 had indeed
prescribed." The CA noted that petitioner company is privy only to the first contract. Granting
arguendo that its liability extends to the acts of its foreign principal, the Towering Recruiting
Services, which appears to have a hand in the execution of the second contract, the same
would, at the most, extend only up to the expiration of the second contract or until 01
September 1991. Clearly, the money claims subject of the complaint filed in 1995 had
prescribed.

However, this Court declares respondent Commission as not only having abused its discretion,
but as being without jurisdiction at all, in declaring private respondent entitled to salary
differentials. After decreeing the money claims accruing before April 1993 as having prescribed,
it has no more jurisdiction to hold petitioner company for salary differentials after that period.
The provisions in number 2, Section 10 (a), Rule V, Book I of the Omnibus Rules Implementing
the Labor Code Section 1 (f), Rule II, Book II of the 1991 POEA Rules and Regulations were not
made to make the local agency a perpetual insurer against all untoward acts that may be done
by the foreign principal or the direct employer abroad. It is only as regards the principal
contract to which it is privy shall its liability extend.

Issue: Whether the CA erred in not holding respondent liable for petitioner's money claims
pursuant to their Contract of Employment.

Ruling:
On whether respondent is solidarily liable for petitioner's monetary claims -
Section 1 of Rule II of the POEA Rules and Regulations states that the private employment
agency shall assume joint and solidary liability with the employer. Private employment agencies
are held jointly and severally liable with the foreign-based employer for any violation of the
recruitment agreement or contract of employment. The SC disagrees with the view of the CA
that the solidary liability of respondent extends only to the first contract (i.e. the original,
POEA-approved contract which had a term of until April 1990). The signing of the "substitute"
contracts with the foreign employer/principal before the expiration of the POEA-approved
contract and any continuation of petitioner's employment beyond the original one-year term,
against the will of petitioner, are continuing breaches of the original POEA-approved contract.
Republic Act No. 8042 explicitly prohibits the substitution or alteration to the prejudice
of the worker of employment contracts already approved and verified by the Department of
Labor and Employment (DOLE) from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of the DOLE. The
diminution in the salary of petitioner from US$370.00 to US$100 (BD 40.00) per month is void
for violating the POEA-approved contract which set the minimum standards, terms, and
conditions of her employment. Consequently, the solidary liability of respondent with
petitioner's foreign employer for petitioner's money claims continues although she was forced to
sign another contract in Bahrain. It is the terms of the original POEA-approved employment
contract that shall govern the relationship of petitioner with the respondent recruitment
agency and the foreign employer. Respondent's evident bad faith and admitted circumvention of
the laws and regulations on migrant workers belie its protestations of innocence and put
petitioner in a position where she could be exploited and taken advantage of overseas, as what
indeed happened to her in this case.

On whether petitioner's claims for underpaid salaries have prescribed -

The SC agreed with the NLRC ruling that the right to claim unpaid salaries (or in this case,
unpaid salary differentials) accrue as they fall due. Thus, petitioner's cause of action to claim
salary differential for October 1989 only accrued after she had rendered service for that month
(or at the end of October 1989). Her right to claim salary differential for November 1989 only
accrued at the end of November 1989, and so on and so forth.
To determine for which months petitioner's right to claim salary differentials has not
prescribed, we must count three years prior to the filing of the complaint on May 31, 1995.
Thus, only claims accruing prior to May 31, 1992 have prescribed when the complaint was filed
on May 31, 1995. Petitioner is entitled to her claims for salary differentials for the period May
31, 1992 to April 1993, or approximately eleven (11) months.
The NLRC correctly computed the salary differential due to petitioner at US$2,970.00.
However, it should be for the period May 31, 1992 to April 1993 and not May 1993 to April
1994 as erroneously stated in the NLRC's Decision.

9. Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Mgt. v. Sulpecio
Medequillo, Jr.

January 18, 2012

FACTS:

On March 6, 1995, respondent Sulpecio Medequillo filed a complaint before the Adjudication
Office of the POEA against petitioners for illegal dismissal under a first contract and failure to
deploy under a second contract.

In his complaint-affidavit, respondent Medequillo alleged the ff.:

1. Respondent was hired by Stolt-Nielsen Transportation Group, Inc. on behalf of the principal
Chung Gai Ship Management as Third Assistant on board the vessel Stolt Aspiration for a
period of 9 months for $1,212.00 per month;

2. He then joined the vessel MV Stolt Aspiration, but only after 3 months, he was told by the
ship's master to disembark the vessel. He was repatriated back to Manila for no reason or
explanation.

3. Upon his return to Manila, he proceeded immediately to the petitioner's office. He was
transferred employment to another vessel MV Stolt Pride under the same terms and
conditions as the First Contract.

4. POEA approved the Second Contract, however, respondent was not deployed by petitioners
despite the commencement of the contract. POEA subsequently certified the Second
Employment Contract without the knowledge that petitioners failed to deploy the respondent.
5. Because of petitioners alleged non-compliance with the Second Contract, respondent
Medequilla demanded for the return of his passport and other employment documents from the
petitioners. He claimed that he was made to involuntarily sign a document in order to recover
his employment papers.

Medequilla asked for payment of damages for illegal dismissal (First Contract) and non-
compliance in bad faith with the Second Contract.

ISSUE:

Whether or not petitioners have the obligation to deploy the respondent by virtue of the
perfected contract, and thus will be held liable for damages in case of non-deployment.

HELD:

Yes, petitioners are liable for damages. The petitioners argue that under the POEA Contract,
actual deployment of the seafarer is a suspensive condition for the commencement of
the employment. The Court agreed with petitioners on such point. However, even without
actual deployment, the perfected contract gives rise to obligations on the part of
petitioners. Parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in keeping
with good faith, usage and law.

Thus, even if by the standard contract employment commences only upon actual departure of
the seafarer, this does not mean that the seafarer has no remedy in case of non-deployment
without any valid reason.

The Court further made a distinction between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract occurred
when petitioner and respondent agreed on the object and the cause, as well as the rest of the
terms and conditions therein. The commencement of the employer-employee relationship would
have taken place had petitioner been actually deployed from the point of hire. Thus, even
before the start of any employer-employee relationship, contemporaneous with the
perfection of the employment contract was the birth of certain rights and obligations,
the breach of which may give rise to a cause of action against the erring party.

10. G.R. No. 121777 January 24, 2001

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
CAROL M. DELA PIEDRA, accused-appellant.
ILLEGAL RECRUITMENT:
Illegal recruitment is committed when two elements concur. First, the offender has no valid
license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers. Second, he or she undertakes either any activity within the meaning of
"recruitment and placement" defined under Article 13 (b), or any prohibited practices
enumerated under Article 34 of the Labor Code.38 In case of illegal recruitment in large scale, a
third element is added: that the accused commits said acts against three or more persons,
individually or as a group.

A conviction for large scale illegal recruitment must be based on a finding in each case of
illegal recruitment of three or more persons whether individually or as a group.

FACTS:

Carol M. dela Piedra is convicted for illegal recruitment in large scale and assails, as well,
the constitutionality of the law defining and penalizing said crime.
On January 30, 1994, at exactly 10:00 in the morning, Erlie Ramos, Attorney II of the
Philippine Overseas Employment Agency (POEA), received a telephone call from an
unidentified woman inquiring about the legitimacy of the recruitment conducted by a
certain Mrs. Carol Figueroa.
Bellotindos entered the house and pretended to be an applicant; She received a bio-data
form from a Carol Fegueroa
Ramos contacted a friend, Mayeth Bellotindos, so they could both go to No. 26-D, Tetuan
Highway, Sta. Cruz, Zamboanga City, where the recruitment was reportedly being
undertaken
A raiding team was planned between POEA and CIS team led by Capt. Mendoza to
commence the next day with SPO2 Fermindoza posing as a would-be-applicant
Fermindoza talked personally with Carol and as the latter was filling up the application
form, Fermindoza signaled to the raiding party waiting outside the house. Carol Fegueroa
was caught holding filled up application forms
The CIS asked Figueroa if she had a permit to recruit. Figueroa retorted that she was not
engaged in recruitment. Capt. Mendoza nevertheless proceeded to arrest Figueroa. He took
the application forms she was holding as the raiding party seized the other papers on the
table.
The CIS team then brought Figueroa, a certain Jasmine Alejandro, and the three women
suspected to be applicants, to the office for investigation.
In the course of their investigation, the CIS discovered that Carol Figueroa had many
aliases, among them, Carol Llena and Carol dela Piedra. The accused was not able to
present any authority to recruit when asked by the investigators. A check by Ramos
with the POEA revealed that the acused was not licensed or authorized to conduct
recruitment. A certification dated February 2, 1994 stating thus was executed by Renegold
M. Macarulay, Officer-in-Charge of the POEA.

Accused was charged before RTC of Zamboanga in an information alleging:

 1 That on or about January 30, 1994, in the City of Zamboanga, Philippines, Carol dela
Piedra, having no POEA license or authority to engage in recruitment and overseas
placement of workers willfully, unlawfully, and feloniously, offered and promised for a
fee an employment in Singapore to: Maria Lourdes Modesto [y] Gadrino, Nancy Araneta
y Aliwanag and Jennelyn Baez y Timbol
2 Maria Lourdes had already advanced P2k to accused in consideration of the promised
employment.
The accused denied in court that she went to Jasmine's residence to engage in recruitment.
She claimed she came to Zamboanga City to visit her friends, to whom she could confide
since she and her husband were having some problems. She denied she knew Nancy
Araneta or that she brought information sheets for job placement. She also denied
instructing Jasmine to collect P2,000 from alleged applicants as processing fee.
RTC: finds the accused Carol dela Piedra alias Carol Llena and Carol Figueroa guilty
beyond reasonable doubt of Illegal Recruitment committed in a large scale and hereby
sentences her to suffer the penalty of LIFE IMPRISONMENT and to pay a fine of
P100,000.00, and also to pay the costs. Being a detention prisoner, the said accused is
entitled to the full time of the period of her detention during the pendency of this case
under the condition set forth in Article 29 of the Revised Penal Code

Appellant submits that Article 13 (b) of the Labor Code defining "recruitment and
placement" is void for vagueness and, thus, violates the due process clause

ISSUES:
1 Constitutionality of Sec 13(B) of PD 442, as amended Illegal Recruitment Law
2 Absence of illegal recruitment in the alleged victims of Carol dela Piedra
3 Alleged crime of illegal recruitment was not committed on a Large Scale, hence penalty
should not be life imprisonment

HELD:
IT IS CONSTITUTIONAL.
In the first assigned error, appellant maintains that the law defining "recruitment and
placement" violates due process. Appellant also aver, that she was denied the equal
protection of the laws.

Due process requires that the terms of a penal statute must be sufficiently explicit to inform
those who are subject to it what conduct on their part will render them liable to its penalties.
As a rule, a statute or act may be said to be vague when it lacks comprehensible standards
that men "of common intelligence must necessarily guess at its meaning and differ as to its
application." It is repugnant to the Constitution in two respects: (1) it violates due process for
failure to accord persons, especially the parties targeted by it, fair notice of the conduct to
avoid; and (2) it leaves law enforcers unbridled discretion in carrying out its provisions and
become an arbitrary flexing of the Government muscle.
We added, however, that:
x x x the act must be utterly vague on its face, that is to say, it cannot be clarified by either a
saving clause or by construction.
 As we see it, the proviso (see ARTICLE 13(B) of the Illegal Recruitment Law) was intended
neither to impose a condition on the basic rule nor to provide an exception thereto but
merely to create a presumption. The presumption is that the individual or entity is engaged
in recruitment and placement whenever he or it is dealing with two or more persons to
whom, in consideration of a fee, an offer or promise of employment is made in the course of
the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers."
The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in
Article 13(b) will constitute recruitment and placement even if only one prospective worker
is involved. The proviso merely lays down a rule of evidence that where a fee is collected in
consideration of a promise or offer of employment to two or more prospective workers, the
individual or entity dealing with them shall be deemed to be engaged in the act of
recruitment and placement. The words "shall be deemed" create that presumption.

2. In this case, the first element of illegal recruitment is present.

The certification of POEA Officer-in-Charge Macarulay states that appellant is not licensed
or authorized to engage in recruitment and placement.
The second element is also present. Appellant is presumed engaged in recruitment and
placement under Article 13 (b) of the Labor Code. Both Nancy Araneta and Lourdes
Modesto testified that appellant promised them employment for a fee. Their testimonies
corroborate each other on material points: the briefing conducted by appellant, the time
and place thereof, the fees involved.
Affirmative testimony of persons who are eyewitnesses of the fact asserted easily overrides
negative testimony.
That appellant did not receive any payment for the promised or offered employment
is of no moment. From the language of the statute, the act of recruitment may be
"for profit or not;" it suffices that the accused "promises or offers for a fee
employment" to warrant conviction for illegal recruitment.

Considering that the two elements of lack of license or authority and the undertaking of
an activity constituting recruitment and placement are present, appellant, at the very
least, is liable for "simple" illegal recruitment.

3. NO, She is not guilty of illegal recruitment in a large scale

A conviction for large scale illegal recruitment must be based on a finding in each case of
illegal recruitment of three or more persons whether individually or as a group. In this case,
only two persons, Araneta and Modesto, were proven to have been recruited by appellant.
The third person named in the complaint as having been promised employment for a fee,
Jennelyn Baez, was not presented in court to testify.
It is true that law does not require that at least three victims testify at the trial;
nevertheless, it is necessary that there is sufficient evidence proving that the offense was
committed against three or more persons. In this case, evidence that appellant likewise
promised her employment for a fee is sketchy. The only evidence that tends to prove this
fact is the testimony of Nancy Araneta, who said that she and her friends, Baez and Sandra
Aquino, came to the briefing and that they (she and her "friends") filled up application
forms.
 Baez affidavit executed with Araneta cannot support Aranetas testimony. Insofar as it
purports to prove that appellant recruited Baez, therefore, the affidavit is hearsay and
inadmissible.
Neither can appellant be convicted for recruiting CIS agent Eileen Fermindoza or even the
other persons present in the briefing of January 30, 1994. Appellant is accused of
recruiting only the three persons named in the information Araneta, Modesto and Baez.
The information does not include Fermindoza or the other persons present in the briefing
as among those promised or offered employment for a fee.

Section 19 (1), Article III of the Constitution states: "Excessive fines shall not be imposed,
nor cruel, degrading or inhuman punishment inflicted."
The penalty of life imprisonment imposed upon appellant must be reduced. Because the
prosecution was able to prove that appellant committed recruitment and placement against two
persons only, she cannot be convicted of illegal recruitment in large scale, which requires that
recruitment be committed against three or more persons.

Appellant can only be convicted of two counts of "simple" illegal recruitment, one for that
committed against Nancy Araneta, and another count for that committed against Lourdes
Modesto. Appellant is sentenced, for each count, to suffer the penalty of four (4) to six (6)
years of imprisonment and to pay a fine of P30,000.00.
WHEREFORE, the decision of the regional trial court is MODIFIED. Appellant is hereby
declared guilty of illegal recruitment on two (2) counts and is sentenced, for each count, to
suffer the penalty of four (4) to six (6) years of imprisonment and to pay a fine of
P30,000.00.

11. ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY,
Petitioner,
- versus
ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC.,
Respondents.

THIRD DIVISION, Justice J. Peralta

FACTS:
Nelson R. Dulay was employed by General Charterers Inc. (GCI), a subsidiary of co-
petitioner Aboitiz Jebsen Maritime Inc. since 1986.
He initially worked as an ordinary seaman and later as bosun on a contractual
basis. From September 3, 1999 up to July 19, 2000, Nelson was detailed in
petitioners vessel, the MV Kickapoo Belle.
After the completion of his employment contract, Nelson died due to acute renal failure
secondary to septicemia.
At the time of his death, Nelson was a bona fide member of the Associated Marine
Officers and Seamans Union of the Philippines (AMOSUP), GCIs collective bargaining
 agent.
Nelsons widow, Merridy Jane, thereafter claimed for death benefits through the
grievance procedure of the Collective Bargaining Agreement (CBA) between AMOSUP
and GCI.
However, the grievance procedure was declared deadlocked as petitioners refused to
grant the benefits sought by the widow. Merridy Jane filed a complaint with the NLRC
Sub-Regional Arbitration Board in General Santos City against GCI for death and
medical benefits and damages.
The amount claimed by Nelsons widow is $90,000 however GCI awarded P20,000 in
favor of the deceaseds brother. Merridy claims the remaining amount less the P20,000
her brother-in-law received.
Respondent on the other hand refused to award the same on the ground that there is
no employer-employee relationship between GC and Nelson at the time of his death. His
contract with respondent was already completed upon his death.
The Labor Arbiter ruled in favor of petitioner, ordering respondents to pay the $90,000
death benefits less the P20,000 already received.
NLRC affirmed the decision of the Labor Arbiter during appeal. When the matter was
brought before the Court of Appeals for certiorari, the CA granted the petition and
referred the case to the National Conciliation and Mediation Board (NCMB) for the
designation of the Voluntary Arbitrator. The CA ruled that since the case involve
interpretation of the CBA, the Voluntary Arbitrator has jurisdiction and not the CA.

ISSUE:
Whether or not the Labor Arbiter has no jurisdiction over the case. YES, the Voluntary
Arbitrator must take cognizance of the case.

RULING:
The Court agrees with the CA in holding that this issue clearly involves the
interpretation or implementation of the said CBA. Thus, the specific or special provisions of the
Labor Code govern. Articles 217(c) and 261 of the Labor Code are very specific in stating that
voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements.

In any case, the Court agrees with petitioner's contention that the CBA is the law or
contract between the parties. Article 13.1 of the CBA entered into by and between respondent
GCI and AMOSUP, the union to which petitioner belongs, provides as follows:

The Company and the Union agree that in case of dispute or conflict in the
interpretation or application of any of the provisions of this Agreement, or enforcement
of Company policies, the same shall be settled through negotiation, conciliation or
voluntary arbitration.
In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing
the Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the
Philippine Overseas Employment Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedures. In cases of claims and disputes arising from
this employment, the parties covered by a collective bargaining agreement shall submit
the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator
or panel of arbitrators.

It is clear from the above that the interpretation of the DOLE, in consultation with their
counterparts in the respective committees of the Senate and the House of Representatives, as
well as the DFA and the POEA is that with respect to disputes involving claims of Filipino
seafarers wherein the parties are covered by a CBA, the dispute or claim should be submitted
to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a
CBA that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration.

On the basis of the foregoing, the Court finds no error in the ruling of the CA that the
voluntary arbitrator has jurisdiction over the instant case.

12. Santiago v. CF Sharp Crew Management Inc.

FACTS:
Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for
about five (5) years. He signed a new contract of employment with the duration of 9 months on
Feb 3 1998 and he was to be deployed 10 days after. This contract was approved by POEA. A
week before the date of departure, the respondent received a phone call from petitioners wife
and some unknown callers asking not to send the latter off because if allowed, he will jump
ship in Canada.

Because of the said information, petitioner was told that he would not be leaving for Canada
anymore. This prompted him to file a complaint for illegal dismissal against the respondent.
The LA held the latter responsible. On appeal, the NLRC ruled that there is no employer-
employee relationship between petitioner and respondent, hence, the claims should be
dismissed. The CA agreed with the NLRCs finding that since petitioner had not departed from
the Port of Manila, no employer-employee relationship between the parties arose and any claim
for damages against the so-called employer could have no leg to stand on.

On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award
petitioners monetary claims. His employment with respondent did not commence because his
deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC
cannot entertain adjudication of petitioners case much less award damages to him. The
controversy involves a breach of contractual obligations and as such is cognizable by civil
courts.
ISSUES:
1) When does the employer-employee relationship involving seafarers commence?
2) Assuming that there is no employer-employee relationship, does the Las of the NLRC have
jurisdiction over the case?

RULING:
#1
A distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in
this case coincided with the date of execution thereof, occurred when petitioner and
respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship by virtue of the Standard
Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going
Vessels (POEA Standard Contract) states that the employment contract shall commence upon
actual departure of the seafarer from the airport or seaport at the point of hire and with a
POEA-approved contract. Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the erring
party.

Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as
agreed upon, he would be liable for damages.

Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV
Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action.
Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and
must therefore answer for the actual damages he suffered.

Despite the fact that the employer-employee relationship did not commence, the perfection of
the contract between petitioner and respondent gave birth to certain contractual obligations
which were clearly violated in the case at bar.

#2
Despite the absence of an employer-employee relationship between petitioner and respondent,
the Court rules that the NLRC has jurisdiction over petitioners complaint. The jurisdiction of
labor arbiters is not limited to claims arising from employer-employee relationships. Section 10
of R.A. No. 8042 (Migrant Workers Act), provides that:

Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters
of the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship OR by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages. x x x