LAW 113: LABOR STANDARDS LAW

_____________________________________________________________________________________
_____________________________
INTRODUCTION TO LABOR LAW
1. LABOR: Concept
a. In its general sense:
Labor -- work; toil; service; continued exertion, of the more onerous and
inferior kind, usually and chiefly consisting in the protracted expenditure of
muscular force, adapted to the accomplishment of specific useful ends
(Blacks Law Dictionary)
1) Labor of the poor is the exercise of their skill and the employment of
their strength in the culture of land and the workshops to trade (Pope
Leo XIII, Rerum Novarum)
2) Labor is the physical toil although it does not necessarily exclude the
application of skill, thus there is skilled and unskilled labor
i. Skill is the familiar knowledge of any art or science, united with
readiness and dexterity in execution or performance or in the
application of the art or sciences to practical purposes
b. In its technical sense:
Labor as the workforce
1) Worker means any member of the labor force, whether employed or
unemployed (Art. 13(a))
2. LABOR LAW
a. Definition
Labor law consists of statutes, regulations and jurisprudence governing the
relations between capital and labor, by providing for certain employment
standards and a legal framework for negotiating, adjusting, and administering
those standards and other incidents of employment (Azucena)
b. Inherent inequality in the employer-employee relations:
Labor law does not impair the equality of rights. There is labor legislation to
level the playing field/equalize opportunities, because capital already has the
upper hand/full control of resources thats why workers rights should be
protected.
LEGEND HOTEL (MANILA) v HERNANI REALUYO (July 18. 2012; J.
Del Castillo)
SUMMARY: Hernani Realuyo (a.k.a. Joey Roa) worked as a pianist at
Legend Hotels Tanglaw Restaurant, three to six times a week from 710 pm. Legend Hotel discontinued his services due to cost-cutting

measures. Roa filed a complaint for unlawful termination and unfair

labor practice. Legend Hotel averred there was no employer-employee
relationship between the two of them, as Realuyo was not an employee
but a mere talent. The Court held that there was employer-employee
relationship, as all the elements---power of selection, power of
dismissal, payment of wages, and power of control--were satisfied. The
Court also ruled that the retrenchment was not validly justified.
DOCTRINE: The law affords protection to an employee, and does not
countenance any attempt to subvert its spirit and intent. Any
stipulation in writing can be ignored when the employer utilizes the
stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relationship generally
tips the scales in favor of the employer, such that the employee is
often scarcely provided real and better options.

c. Justification
1) Social Justice
1987 Constitution, Art. II, Section 10. The State shall promote
social justice in all phases of national development.
1987 Constitution, Art. XIII, Section 1. 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.
1987 Constitution, Art. XIII, Section 2. The promotion of social
justice shall include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
1987 Constitution, Art. XIII, Section 3. The State shall afford full
protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work, and
a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by
law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of voluntary
modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and

employers, recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
i. When to/not to tilt the scales of justice as a measure of equity
and compassionate social justice
JEROME M. DAABAY v COCA-COLA BOTTLERS PHIL., INC. (August
19. 2013; J. Reyes)
SUMMARY: Jerome Daabay, a Sales Logistics Checker, was dismissed
from work due to pilferage, serious misconduct, and loss of benefits.
He filed a labor complaint against the Coca-Cola, and the NLRC, albeit
finding Daabay at fault, granted him retirement benefits. Coca-Cola
appealed the said award to the CA, who ruled that the award of
retirement benefits lacked legal basis. The SC affirmed the CA and
ruled that Daabay was not entitled to retirement benefits.
DOCTRINE: Retirement benefits, which is akin to financial assistance
or separation pay, shall only be allowed as a measure of equity and
social justice where instances show that the employee is validly
dismissed for causes other than serious misconduct or those reflecting
his moral character.
While there is a need to humanize the severe effects of
dismissal and tilt the scale of justice in favor of labor as a measure of
equity and compassionate social justice, dismissal due to serious
misconduct or moral turpitude does not entitle the employee to such
benefits. To allow in the contrary will have the effect of rewarding,
rather than punishing the erring employee for his offense. This kind of
misplaced compassion will not do labor any good as it will encourage
infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.

MA. WENELITA TIRAZONA v PHIL. EDS TECHNO-SERVICE INC.

(January 20. 2009; J. Del Castillo)
SUMMARY: Petitioner Tirazona was dismissed from service by
Respondent PET, Inc. for her willful breach of trust reposed upon her by
her employer. The NLRC, CA, and SC all found her dismissal as justified.
In her 2nd Motion for Reconsideration, she prayed for the invalidation
of her dismissal and for the award of separation pay for just causes on
the basis of equity. The SC denied her petition for lack of merit.
Petitioner is not entitled to the award of separation pay for violating
the trust and confidence reposed in her by her employer
DOCTRINE: The general rule is that an employee who has been
dismissed for any of the just causes enumerated under Art. 282 of the
Labor Code is not entitled to separation pay. Only unjustly dismissed

employees are entitled to retirement benefits and other privileges

including reinstatement and backwages.
An exception, however, is that separation pay or other financial
assistance may be allowed to an employee dismissed for just causes
on the basis of equity. This shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his
moral character.

HA YUAN RESTAURANT v NLRC and JUVY SORIA (January 27.

2006; J. Austria Martinez)
SUMMARY: Respondent Juvy Soria was dismissed from her work after
assaulting her co-worker. NLRC rendered a decision awarding her
separation pay, which the CA affirmed. SC deleted the award of
separation pay because her cause of dismissal amounted to serious
misconduct.
DOCTRINE: Separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his
moral character. The policy of social justice is not intended to
countenance wrongdoing simply because it is committed by the
underprivileged. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so
only if their hands are clean and their motives blameless and not
simply because they happen to be poor.

2) Foundation or basis: Police power of the state

ST. LUKEs MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW
and MARIBEL SANTOS v NLRC (May 7. 2007; J. Azcuna)
SUMMARY: Lacking the certificate of registration required to work as a
radiology technologist, Maribel Santos was dismissed from her job at
St. Luke's. Contrary to Santos' claim of illegal dismissal, her
termination from her job was a valid and just exercise of the State's
police power to regulate the health profession.
DOCTRINE: While the right of the workers is guaranteed by the
Constitution, its exercise may be reasonably regulated pursuant to the
police power of the State to safeguard health, morals, peace,
education, order, safety, and the general welfare of the people. It
should be noted that the police power embraces the power to prescribe
regulations to promote the health, morals, education, good order,
safety, or general welfare of the people. The State is therefore justified
in prescribing specific requirements to certain professions connected
with the health and safety of its citizens.

3) Ultimate goal: Industrial Peace

Article XIII, Sec. 3 (par. 3). supra
CALALANG v WILLIAMS (December 2, 1940; J. Laurel)
SUMMARY: Rules and regulations regarding the traffic situation in
Manila were promulgated by the Public Works and Communications
Department, pursuant to the authorization given by CA 548. Calalang
contends that this is unconstitutional and that such rules do not
promote social justice.
DOCTRINE: Social justice is neither communism, nor despotism, nor
atomism, nor anarchy, but the humanization of laws and the
equalization of social and economic forces by the State so that justice
in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all
people, the adoption by the Government of measures calculated to
insure economic stability of all the competent elements of society,
through the maintenance of proper economic and social equilibrium in
the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extraconstitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus
populi est suprema lex.

4) Management prerogative/state regulation

Art. II, Section 20. The State recognizes the indispensable role of the
private sector, encourages private enterprise, and provides incentives
to needed investments.
Art. XIII, Section 3 (pars. 3 and 4). Supra
ST. LUKES MEDICAL CENTER, INC. v MA. THERESA SANCHEZ
(March 11. 2015;)
SUMMARY: Maria Theresa Sanchez, a nurse, was caught leaving with
a pouch of medical supplies. In a letter to the security office, she
admitted to the deed and apologized. However, she eventually averred
that the medical supplies were the excess stocks from the medication
drawers of discharged patients which the staff members save as
backup in case of emergencies, and this practice has been tolerated by
the hospital. She was preventively suspended, and eventually she was
terminated. The Court ruled that there was a valid dismissal due to her
willful disregard and disobedience of the hospitals Code of Discipline.
DOCTRINE: Employers have the right to regulate all aspect of
employment. This management prerogative, includes the right to
prescribe reasonable rules and regulations necessary or proper for
conduct of its business or concern, to provide certain disciplinary

measures to implement said rules, and to assure that the same would
be complied with. Employees, in turn, have the corollary duty to obey
all reasonable rules, orders, and instructions of the employer; and
willful or intentional disobedience thereto justifies termination of the
contract of service and dismissal of employee.

ERNESTO YMBONG v ABS-CBN BROADCASTING CORP. (March 7,

2012;)
SUMMARY: ABS-CBN had a policy that employees who run for office
must resign and those who actively campaign must take a leave of
absence. Ymbong said he was only going to actively campaign for
someone so he only took a leave of absence. Turns out he ran for
councilor and when he lost, he wanted his job back. ABS-CBN had
already considered him resigned but he insists he had been illegally
dismissed. SC ruled Ymbong is considered to have resigned when he
ran for office, and company policy is valid because it was the
managements prerogative to aim for a politically independent
character.
DOCTRINE: Management prerogative is valid even if they appear to
limit the rights of employees as long as there is no showing that
management prerogative was exercised in a manner contrary to law.
Even as the law is solicitous of the welfare og the employees, it must
also protect he right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.

NEGROS SLASHERS, INC. v ALVIN TENG (February 22, 2012;)

SUMMARY: Alvin Teng, a basketball player, was illegally dismissed
from his team after its management decided that his act of untying his
shoelace and not showing up for a basketball game, when the coaching
staff pulled him for a below average performance, constituted serious
misconduct and thus are valid grounds for dismissal. However, the SC
ruled that such isolated acts of foolishness do not justify the extreme
penalty of dismissal from service. Other forms of disciplinary action
could have been resorted to.
DOCTRINE: While the employer has the inherent right to discipline,
including that of dismissing its employees, this prerogative is subject to
the regulation by the State in the exercise of its police power. In this
regard, it is a hornbook doctrine that infractions committed by an
employee should merit only the corresponding penalty demanded by
the circumstance. The penalty must be commensurate with the act,
conduct or omission imputed to the employee and must be imposed in
connection with the disciplinary authority of the employer.

i. Social Justice vis--vis Management Prerogative

COCA-COLA EXPORT CORP. v CLARITA P. GACAYNA (June 22.

2011;)
SUMMARY: Gacayan was terminated from employment by Coca-Cola
for altering three receipts she submitted for reimbursement of her
meal costs. The Court held that there was a valid dismissal, as
Gacayans act of submitting fraudulent items of expense adversely
reflected on her integrity and honesty, which is an ample basis for
petitioner-company to lose its trust and confidence in her.
DOCTRINE: While the Constitution is committed to the policy of social
justice and the protection to the working class, it should not be
expected that every labor dispute will be automatically decided in
favor of labor. Management also has its own rights which, as such, are
entitled to respect and enforcement in the interest of simple fair play.

ii. Limitation on Management Prerogative

NATHANIEL DONGON v RAPID MOVERS ad FORWARDERS CO.,
INC. (August 28, 2013;)
SUMMARY: Dongon, a truck helper leadman for Rapid Movers, lebt his
ID to their driver Villaluz so they can enter the warehouse and get the
delivery. Employer discovered it and Dongon was dismissed. The Court
ruled that the dismissal was illegal, stating that there was no willful
disregard and disobedience of company rules. Dongons conduct was
not willful as it was not aimed to beneft him; Rapid Movers was not
prejudiced but rather benefited as Dongons conduct was to facilitate
the loading for the distribution to Rapid Movers clients.
DOCTRINE: It is true that an employer is given a wide latitude of
discretion in managing its own affairs. But the exercise of a
management prerogative like this is not limitless, but hemmed in by
good faith and a due consideration of the rights of the worker. The
management prerogative will be upheld for as long as it is not wielded
as an implement to circumvent the laws and oppress labor

5) Specific Rights of the Employer

INTERNATIONAL SCHOOL MANILA v ISAE and EVANGELINE
SANTOS (February 5, 2014; J. Leonardo-De Cstro)
SUMMARY: Santos was a full time Spanish language teacher since
1978. In 1993, she was given Filipino classes to teach. However, her
evaluation showed unsatisfactory performance, so, she was made to
undergo a Professional Growth Plan (PGP). Despite this, she failed to
meet the criteria for improvement in the PGP and showed substandard
performance, thus, her employment was terminated.
DOCTRINE: Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just
cause for dismissal. Gross inefficiency is closely related to gross

neglect, for both involve specific acts of omission on the part of the
employee resulting in damage to the employer or to his business.

6) Balancing of Interests
Art. XIII, Section 3 (par. 3 and 4). supra
ELIZABETH GAGUI v SIMEON DEJERO and TEODORO PERMEJO
(October 23, 2012; C.J. Sereno)
SUMMARY: The May 1998 decision rendered PRO Agency and Abdul
liable to pay the respondents. Due to unsatisfied writs of execution,
respondents tried to implead other officers, including Gagui and they
were able to garnish from her bank deposit and to levy 2 of her lands.
The Court held that she cannot be held solidarily liable since there was
no finding that she was remiss in directing the affairs of the company,
resulting to the offense. Moreover, the May 1998 decision did not
include her name.
DOCTRINE: While labor laws should be construed liberally in favor of
labor, we must be able to balance this with the equally important right
of petitioner to due process.

HOTEL ENTERPRISES OF THE PHILIPPINES v SAMAHAN NG MGA

MANGGAGAWA SA HYATT (June 5, 2009;)
SUMMARY: The Respondent Union filed for unfair labor practices
against the Petitioner HEPI because of the latters downsizing schemes.
The Court held that the Petitioners downsizing schemes and
subsequent actions were valid business practices in order to keep the
company alive, despite the subsequent termination of its employees.
DOCTRINE: The Constitution affords full protection to labor, but the
policy is not to be blindly followed at the expense of capital. Always,
the interests of both sides must be balanced in light of the evidence
adduced and the peculiar circumstances surrounding each case.

3. CLASSIFICATION
a. Labor Standards that which sets out the least or basic terms, conditions,
and benefits of employment that employers must provide or comply with and
to which employees are entitled as a matter of legal right
-- the minimum requirements prescribed by existing rules, laws,
and regulations relating to wages, hours of work, cost-of-living
allowance, and other monetary and welfare benefits, including
occupational, safety, and health standards
b. Labor Relations that which defines the status, rights, and duties, and the
institutional mechanisms that govern the individual and collective
interactions of employers, employees or their representatives

c. Welfare Legislation also social legislation; those laws that provide

particular kinds of protection or benefits to society or segments thereof in the
furtherance of social justice.
4. BASIS
a. Economic Basis
Art. II, Section 18. The State affirms labor as a primary social economic force.
It shall protect the rights of workers and promote their welfare.
b. Legal Basis
1) 1987 Constitution: State Mandate to Afford Full Protection to Labor/ to
guarantee workers seven (7) cardinal rights
1987 Constitution, Art. II, Section 5. The maintenance of peace
and order, the protection of life, liberty, and property, and promotion of
the general welfare are essential for the enjoyment by all the people of
the blessings of democracy.
1987 Constitution, Art. II, Section 9. The State shall promote a just
and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life
for all.
1987 Constitution, Art. II, Section 10. supra
1987 Constitution, Art. II, Section 11. The State values the dignity
of every human person and guarantees full respect for human rights.
1987 Constitution, Art. II, Section 13. The State recognizes the
vital role of the youth in nation-building and shall promote and protect
their physical, moral, spiritual, intellectual, and social well-being. It
shall inculcate in the youth patriotism and nationalism, and encourage
their involvement in public and civic affairs.
1987 Constitution, Art. II, Section 14. The State recognizes the
role of women in nation-building, and shall ensure the fundamental
equality before the law of women and men.
1987 Constitution, Art. II, Section 18. The State affirms labor as a
primary social economic force. It shall protect the rights of workers and
promote their welfare.
1987 Constitution, Art, II, Section 20. supra
1987 Constitution, Art. III, Section 1. 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.

1987 Constitution, Art. III, Section 4. No law shall be passed

abridging the freedom of speech, of expression, or of the press, or the
right of the people peaceably to assemble and petition the government
for redress of grievances.
1987 Constitution, Art. III, Section 8. The right of the people,
including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall
not be abridged.
1987 Constitution, Art. III, Section 18 (2). No involuntary
servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.
1987 Constitution, Art. XIII, Section 1. supra
1987 Constitution, Art. XIII, Section 2. supra
1987 Constitution, Art. XIII, Section 3. supra
1987 Constitution, Art. XIII, Section 14. The State shall protect
working women by providing safe and healthful working conditions,
taking into account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable them to
realize their full potential in the service of the nation.
1935 Constitution, Art. XIII, SEC. 6. The State shall afford
protection to labor, especially to working women and minors, and shall
regulate the relations between landowner and tenant, and between
labor and capital in industry and in agriculture. The State may provide
for compulsory arbitration.
1973 Constitution, Art. II, SEC. 6. The State shall promote social
justice to ensure the dignity, welfare, and security of all the people.
Towards this end, the State shall regulate the acquisition, ownership,
use, enjoyment, and disposition of private property, and equitably
diffuse property ownership and profits.
1973 Constitution, Art. II, SEC. 9. The State shall afford protection
to labor, promote full employment and equality in employment, ensure
equal work opportunities regardless of sex, race, or creed, and regulate
the relations between workers and employers. The State shall assure
the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work. The State
may provide for compulsory arbitration.
DIAMOND TAXI v FELIPE LLAMAS (March 12, 2014;)

SUMMARY: Diamond Taxi dismissed Llamas who is a taxi cab driver.

Llamas filed a complaint for illegal dismissal before the Labor Arbiter
which was dismissed. The case was directed to the NLRC which denied
the complaint for it lacked the certification of non-forum shopping. The
SC said NLRC committed a grave abuse of discretion.
DOCTRINE: The dismissal of an employees appeal on purely technical
ground is inconsistent with the constitutional mandate on protection to
labor. Under the Constitution and the Labor Code, the State is bound to
protect labor and assure the rights of workers to security of tenure,-tenurial security being a preferred constitutional right that, under these
fundamental guidelines, technical infirmities in labor pleadings cannot
defeat.

i.

Entitlement of all Filipinos to Constitutional Protection

SAUDI ARABIA AIRLINES AND BRENDA BETIA v MA. JOPETTE M.
REBESENCIO (January 14, 2015;)
SUMMARY: Four flight attendants were asked to resign from Saudi
Arabia Airlines upon getting pregnant. They filed for an illegal dismissal
complaint. Petitioner airlines ask to dismiss the complaint primarily on
the grounds that the Philippines does not have jurisdiction over the
case. They invoke forum non conveniens. The Court held that forum
non conveniens is different from the question of the choice of the
governing law. The Court also held that they were constructively
dismissed as they were given the option between executing their
resignation or forfeiting their benefits, and that Saudias policy is
glaringly discriminating.
DOCTRINE: Art. II, Section 14 of the 1987 Constitution provides that
[t]he Stateshall ensure the fundamental equality before the law of
women and men. Art. III, Sec. 1 states that [n]o person shallbe
denied the equal protection of the laws. This does not only mean that
the Philippines shall not countenance nor lend legal recognition and
approbation to measures that discriminate on the basis of ones being
male or female. It imposes an obligation to actively engage in securing
the fundamental equality of men and women. This is a point so basic
and central that all discussions and pronouncements, regardless of
whatever averments there may be of foreign law, must proceed form
this premise.
Apart from the constitutional policy on the fundamental equality
before the law of men and women, it is settled that contracts relating
to labor and employment are impressed with public interest. The
otherwise applicable Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon some other law to
govern their relationship.

PNB v CABANSAG (June 21, 2005; J. Panganiban)

SUMMARY: While in Singapore on a tourist status, Cabansag was hired

as a Credit Officer at the Singapore branch of PNB. She filed a case
with the Labor Arbiter after she was suddenly dismissed from her job.
PNB argues that Cabansag was locally hired and totally governed by
and subject to the laws, common practices and customs of
Singaporei.e. that she is beyond the jurisdiction of Philippine laws
and of the NLRC.
DOCTRINE: Whether employed locally or overseas, all Filipino workers
enjoy the protective mantle of Philippine labor and social legislation,
contract stipulations to the contrary notwithstanding. This
pronouncement is in keeping with the basic public policy of the State to
afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers.

ii.

Overarching Right to Human Dignity

1987 Constitution, Art. II, Section 11. supra
1987 Constitution, Art. XIII, Section 1. supra

iii.

Right to Security of Tenure

LC, Art. 3. Declaration of basic policy. The State shall afford
protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the
relations between workers and employers. The State shall assure
the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work.
1987 Constitution, Art. XIII, Section 3 (par. 2). supra

INNODATA PHILIPPINES, INC. v QUEJADA-LOPEZ (October 12,

2006; C.J. Panganiban)
SUMMARY: Estrella Natividad and Jocelyn Quejada, former formatters
of Innodata Philippines filed an action for illegal dismissal, alleging that
the contracts they entered into, which stipulates an expiration of one
year, are void, following the ruling in Villanueva v NLRC and Servidad v
NLRC, where the Court ruled that the nature of employment in
Innodata is regular and not on a fixed term basis. The Court ruled that
the said contracts are void and that Natividad and Quejada are regular
employees, their work being necessary and desirable in the usual
business of the employer.
DOCTRINE: The Court recognizes the validity of fixed-term
employment contracts in a number of cases, but when the
circumstances of a case show that the periods were imposed to block
the acquisition of security of tenure, they should be struck down for

being contrary to law, morals, good customs, public order or public

policy.
Contract of employment is impressed with public interest.
Parties are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply contracting
with each other

iv.

Right to Humane Conditions at work

LC Art. 3. supra
1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS v HON.
QUISUMBING (June 1, 2000; J. Kapunan)
SUMMARY: Respondent School hires both foreign and local teachers,
with the former enjoying higher wages, among other benefits.
Petitioner, a labor union and collective bargaining representative of all
faculty members of said school, contend it is discriminatory for foreignhires to be paid higher wages than local-hires, notwithstanding certain
differences in their circumstances. A question also arose as to whether
or not both the foreign- and local-hires belonged to the same
bargaining unit. The Court found no justification for the point-hire
classification used by the school, stating that the practice of according
higher salaries to foreign-hires contravenes public policy. Nonetheless,
the Court also ruled that foreign-hires should not belong in the same
bargaining unit as the local-hires, as such will not assure either group
the exercise and enjoyment of their respective collective bargaining
rights.
DOCTRINE: That public policy abhors inequality and discrimination is
beyond contention. Our Constitution and laws reflect the policy against
these evils. The humane conditions of work mandate in the
Constitution extends to the manner by which employers treat their
employees. Similar to the constitutional mandate to promote equality
of employment opportunities for all, the LC provides that the State
shall ensure equal work opportunities regardless of sex, race or
creed.

v.

Right to a living wage

1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra
1987 Constitution, Art. XV, Sec. 1. The State recognizes the
Filipino family as the foundation of the nation. Accordingly, it
shall strengthen its solidarity and actively promote its total
development.
1987 Constitution, Art. XV, Sec. 3. The State shall defend:
(3) The right of the family to a family living wage and
income

vi.

Right to participate in policy and decision-making processes

affecting their rights and benefits
1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra

vii.

Three Rights pertinent to Labor relations: (a) Rights to Selforganization; (b) Collective Bargaining and Negotiations; and (c)
Peaceful concerted activities including the right to strike in
accordance with law
1987 Constitution, Art. XIII, Sec. 3 (par. 2). supra

2) Civil Code
i.

Contract as the law between the parties/freedom to contract

MAYNILAD WATER SUPERVISORS ASSOCIATION v MAYNILAD
WATER SERVICES (November 27, 2013; )
SUMMARY: Some members of MWSA seek payment of COLA from
their new employer Maynilad, claiming that they were receiving it
when they were still employed in MWSS. However, in the new
employment contract between such members and Maynilad, there was
no stipulation of payment of COLA. The Court held that Maynilad is not
bound by the agreement between MWSA members and the MWSS. The
employment contracts of the MWSA members with MWSS were
terminated prior to their employment with Maynilad. A new
employment contract governed the employment of the MWSA
members, even though they might be performing the same functions.
DOCTRINE: The rule is that a contract is the law between the parties,
and courts have no choice but to enforce such contract so long as it is
not contrary to law, morals, good customs or public policy. Otherwise,
courts would be interfering with the freedom of contract of the parties.
Simply put, courts cannot stipulate for the parties or amend the latters
agreement, for to do so would be to alter the real intention of the
contracting parties when the contrary function of courts is to give force
and effect to the intention of the parties

ii.

Relations
between
labor
and
capital;
contractual/impressed with public interest

not

merely

CC, Art. 1700. The relations between capital and labor are not
merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good. Therefore,
such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.

CC Art. 1701. Neither capital nor labor shall act oppressively

against the other, or impair the interest or convenience of the
public
CC, Art. 19. Every person must, in the exercise of his rights
and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.
CC Art. 20. Every person who, contrary to law, wilfully or
negligently causes damage to another, shall indemnify the
latter for the same.
CC Art. 21. Any person who wilfully causes loss or injury to
another in manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.
SEE AGAIN: INNODATA PHILIPPINES INC. v QUEJADA-LOPEZ
3) Labor Code (PD No. 442) and Omnibus Rules Implementing the Labor
Code
4) International Conventions, Recommendations
1987 Constitution, Art. II, Sec. 2. The Philippines renounces war as
an instrument of national policy, adopts the generally accepted
principles of international law as part of the law of the land and
adheres to the policy of peace, equality, justice, freedom, cooperation,
and amity with all nations.
SEE AGAIN: ISAE v QUISUMBING
5. THE LABOR CODE OF THE PHILIPPINES
a. Brief History
1968: the writing of the Labor Code began under the leadership of then
Minister of Labor, Mr. Blas F. Ople (now called the Father of the Labor
Code)
o Objective:
to consolidate the at least sixty pieces of existing labor laws
which were passed during and after Commonwealth
Reorient labor legislation to the needs of economic development
and justice, in line with the prescribed standards of the
Comprehensive Employment Strategy Mission of the International
Labor Organization (elevation of real wages, incomes, and living
standards as a function of employment generation and economic
expansion)
In creating the Code, contributions were gathered from different bureaus
of the Department of Labor, the Department of Industry and the Board of
Investments, the UP Law Center, Integrated Bar of the Philippines,

Personnel Management Association of the Philippines, National Economic

and Development Authority, and various trade union centers.
The Labor Code went into seven times of drafting and redrafting
April 28, 1973: National Tripartite Congress satisfied the Code, and it was
sent to the President on May 1, 1973, where it underwent to further
revisions
May 1, 1974: the Labor Code was signed into law as Presidential Decree
442.

b. Name of Decree
LC Art. 1. Name of Decree. This Decree shall be known as the "Labor Code
of the Philippines".
c. Date of Effectivity
LC Art. 2. Date of effectivity. This Code shall take effect six (6) months
after its promulgation.
d. Declaration of Basic Policy
LC Art. 3. Declaration of basic policy. The State shall afford protection to
labor, promote full employment, ensure equal work opportunities regardless of
sex, race or creed and regulate the relations between workers and employers.
The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.
Seven underlying Principles of the Labor Code (according to then Minister
of Labor Blas Ople)
o Labor relations must be made both responsive and responsible to
national development
o Labor laws or labor relations during a period of national emergency
must substitute rationality for confrontation; therefore, strikes or
lockouts should give way to the rational process of arbitration
o Laggard justice in the labor filed is injurious to the workers, the
employers, and the public; labor justice can be made expeditious
without sacrificing due process
o Manpower development and employment must be regarded as a major
dimension of labor policy, for there can be no real equality of bargaining
power under conditions of severe mass unemployment
o There is a global labor market available to qualified Filipinos, especially
those who are unemployed or those whose employment is tantamount
to unemployment because of their very little earnings
o Labor laws must command adequate resources and acquire a capable
machinery for effective and sustained implementation; otherwise, they
merely breed resentment not only of the workers but also of the
employers. When labor laws cannot be enforced, both the employers
and the workers are penalized, and only a corrupt few those who are
in charge of implementation may get the reward they do not deserve
o There should be popular participation in national policy-making through
what is now called tripartism

e. Construction in favor of labor

LC Art. 4. Construction in favor of labor. All doubts in the implementation
and interpretation of the provisions of this Code, including its implementing
rules and regulations, shall be resolved in favor of labor.
CC, Art. 1702. 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.
HOCHENG PHIL. CORP. v ANTONIO M. FARRALES (March 18,
2015;)
SUMMARY: Farrales mistakenly took a helmet belonging to another
employee of the HPC. The company conducted a hearing, and later on
issued a notice of termination to Farrales dismissing him for violation of
the HPC Code of Discipline. LA and CA ruled that Farrales act did not
amount to theft. SC then held that Farrales was not validly dismissed.
DOCTRINE: Article 4 of the Labor Code mandates that all doubts in
the implementation and interpretation of the provisions thereof shall
be resolved in favor of labor. This is merely in keeping with the spirit of
our Constitution and laws which lean over backwards in favor of the
working class, and mandate that every doubt must be resolved in their
favor

MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE v

VIRGILIO M. CAGALAWAN (September 2012;)
SUMMARY: Virgilio Cagalawan was an acting head of the
disconnection crew of MONESCO. He was transferred to a different suboffice as a disconnection crew member without any reason. He
eventually stopped working and filed a complaint for constructive
dismissal. MORESCO failed to file their position paper and LA ruled in
favor of Virgilio. On appeal, NLRC admitted MORESCOs evidence of
certification showing the transfer was due to an alleged lack of crew
members in the sub-office. SC held that the admission of evidence
constituted grave abuse of discretion as there was no adequate
explanation for the delay. Moreover, the evidence presented was not
enough to justify that the transfer was a result of an exigency in
MORESCOs business interest.
DOCTRINE: When there is doubt between the evidence submitted by
the employer and that submitted by the employee, the scales of justice
must be tilted in favor of the employee. This is consistent with the rule
that an employers cause could only succeed on the strength of its own
evidence and not on the weakness of the employees evidence.

DANSART SECURITY FORCE AND ALLIED SERVICES CO. v SG

JEAN O. BAGOY (July 2, 2010; J. Peralta)

SUMMARY: Jean Bagoy was a security guard employed by Dansart

Security Force. She alleges that she was underpaid and did not receive
overtime/holiday/13th mo. pays. Dansart offered certification from
DOLE that from its records the petitioner has complied with the
prescribed labor standards salaries and had paid due backwages it
owed its employees. Dansart heavily relied on these certifications in
making its case. SC denies Dansart, holding that the said certifications
were insufficient to prove that Bagoy was paid of what is due to her.
DOCTRINE: Any doubt arising from the evaluation of evidence as
between the employer and the employee must be resolved in favor of
the latter.
Moreover, the burden of proving payment of monetary claims
rests on the employer. This is because the pertinent documents such
personnel files, payrolls, records, remittances and other similar
documents which 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.

f.

Labor Arbiters jurisdiction over labor cases

LC Art. 223. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes,
the following cases involving all workers, whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or

enforcement of company personnel policies shall be disposed of by the

Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements. (As
amended by Section 9, Republic Act No. 6715, March 21, 1989)
RA 8042, 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 damage. Consistent with this
mandate, the NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to de
filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.
Any compromise/amicable settlement or voluntary agreement on
money claims inclusive of damages under this section shall be paid within
thirty (30) days from approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant workers salary, the worker shall be entitled to
the full reimbursement if his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less.
In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it fully
satisfies the judgement award.
Noncompliance with the mandatory periods for resolutions of case
provided under this section shall subject the responsible officials to any or all
of the following penalties:

(a) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any
appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be without
prejudice to any liability which any such official may have incured under other
existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph.

MA. MERCEDES L. BARBA v LICEO DE CAGAYAN UNIVERSITY

(November 28, 2012; J. Villarama)
SUMMARY: Mercedes was a medical officer/school physician at LDCU
who was granted a scholarship grant in exchange for her subsequent
return and service to LDCU for a period of 10 years. After the College of
Physical Therapys ceased operations due to a significant decline in
enrollees, she was revoked of her deanship. She went on leave and
upon return, she refused to work as professor in the College of Nursing,
alleging that it was tantamount to a demotion and that teaching was
not covered in the terms of her scholarship. Mercedes filed for illegal
dismissal before the LA, and on appeal before the NLRC, LDCU alleges
that she is a corporate officer under LDCUs by-laws, therefore she is
not subject under the jurisdiction of the NLRC. SC ruled that Mercedes
was not a corporate officer, hence the LA and the NLRC has jurisdiction
over the case. The Court stated that LDCU confused Mercedes position
as College Dean with a College Director which is a corporate officer
under the by-laws.
DOCTRINE: The LA and NLRC only has jurisdiction over employees,
not corporate officers. The Board may create appointive positions other
than the position of corporate officers, but the persons occupying such
positions are not considered as corporate officers within the meaning
of Section 25 of the Corporation Code and are not empowered to
exercise functions of the corporate officers.

MA. ANA TAMONTE & EDILBERTO TAMONTE v HONGKONG &

SHANGHAI BANKING CORP., LTD. (August 17, 2011;)
SUMMARY: Ana Tamonte applied for a housing loan with HSBC SRP,
secured by a mortgage contract and paid through automatic payroll
deductions. She was eventually dismissed from service for
participating in an illegal strike. The bank made demands for payment
of her loan, but she defaulted in payment HSBC SRP foreclosed her
mortgaged property. Ana argues that the default which led to the
foreclsure was due to her dismissal from service. The Court held that
she was already in default in the payment of their loan obligations.

Respondents, in foreclosing the mortgaged property, were only

enforcing the civil obligation of petitioners under their mortgage
contract. There is no labor aspect involved in the enforcement of
petitioners obligation.
DOCTRINE: Demand for payment of the employees amortizations or
loans is not a labor, but a civil, dispute. It involves debtor-creditor
relations, rather than employee-employer relations. It is not dependent
on or related to any labor aspect under which a labor injunction can be
issued. Whether or not the debtors remain as employees of the
petitioner, there is no escape from their obligation to pay their
outstanding accountabilities to the company.

LA DEL VALLE JR. AND SHERIFF v DY (April 16, 2009;)

SUMMARY: Deocariza filed a complaint for illegal dismissal and
monetary benefits against Big Mak Burger, who then failed to file a
position paper. Labor Arbiter Del Valle ruled in favor of Deocariza, and
a writ of execution was issued to satisfy judgment. Big Mak and its
owner, Dy then opposed, alleging they were not informed of said
decision. LA continued with the execution, and property owned by Dy
was levied. Dy filed a complaint for injunction and damages before the
trial court, challenging the execution and LAs finding that Deocariza
was Dys employee. The Court ruled that the trial court has no
jurisdiction over Dys case since its subject matter is an incident of a
labor case. It is within the jurisdiction of the labor arbiter and not the
trial court.
DOCTRINE: Regular courts have no jurisdiction to act on labor cases
or various incidents arising therefrom, including the execution of
decisions, awards or orders. Jurisdiction to try and adjudicate such
cases pertain exclusively to the proper labor official concerned under
the Department of Labor and Employment. To hold otherwise is to
sanction split jurisdiction which is obnoxious to the orderly
administration of justice.

1) DOLE v NLRC jurisdiction

LC Art. 128. Visitorial and enforcement power.
2. The Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation
officers, shall have access to employers records and
premises at any time of the day or night whenever work is
being undertaken therein, and the right to copy therefrom, to
question any employee and investigate any fact, condition or
matter which may be necessary to determine violations or
which may aid in the enforcement of this Code and of any
labor law, wage order or rules and regulations issued
pursuant thereto.

3. 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. (As amended by
Republic Act No. 7730, June 2, 1994).
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. (As amended by Republic Act No. 7730, June 2, 1994)
4. The Secretary of Labor and Employment may likewise order
stoppage of work or suspension of operations of any unit or
department of an establishment when non-compliance with
the law or implementing rules and regulations poses grave
and imminent danger to the health and safety of workers in
the workplace. Within twenty-four hours, a hearing shall be
conducted to determine whether an order for the stoppage of
work or suspension of operations shall be lifted or not. In
case the violation is attributable to the fault of the employer,
he shall pay the employees concerned their salaries or wages
during the period of such stoppage of work or suspension of
operation.
5. It shall be unlawful for any person or entity to obstruct,
impede, delay or otherwise render ineffective the orders of
the Secretary of Labor and Employment or his duly
authorized representatives issued pursuant to the authority
granted under this Article, and no inferior court or entity shall
issue temporary or permanent injunction or restraining order
or otherwise assume jurisdiction over any case involving the
enforcement orders issued in accordance with this Article.

6. Any government employee found guilty of violation of, or

abuse of authority, under this Article shall, after appropriate
administrative investigation, be subject to summary
dismissal from the service.
7. The Secretary of Labor and Employment may, by appropriate
regulations, require employers to keep and maintain such
employment records as may be necessary in aid of his
visitorial and enforcement powers under this Code.
LC Art. 217. supra
KAPISANAN NG KABABAIHANG POTRERO INC. v REMEDIOS
BARRENO (June 2013; J. Perlas-Bernabe)
SUMMARY: Respondents filed a Complaint before the DOLE for the
violation of labor standards against KPKPI. During the pendency of this
case, one of the respondents was fired, and so she filed another case,
but this time for illegal dismissal at the NLRC. The NLRC and CA found
respondents guilty of committing forum shopping. However, the SC
held that they did not commit forum shopping because there is no
identity of cases of action between the cases pending with the DOLE
and NLRC.
DOCTRINE: Termination cases falls under the jurisdiction of the NLRC,
while violation of labor standards law falls within the powers of the
Secretary of Labor.
Thus, in cases where the complaint for violation of labor
standard laws preceded the termination of the employee and the filing
of the illegal dismissal case, it would not be consonance with justice to
charge the complainants with engaging in forum shopping when the
remedy available to them at the time their causes of action arose was
to file separate cases before different fora.

2) Labor dispute v civil dispute

CECILIA T. MANESE v JOLLIBEE FOOD CORP. (Oct. 11, 2012; J.
Peralta )
SUMMARY: Manese was one of the members of the team of
employees of Jollibee who were tasked to open a new Jollibee branch.
She owns a car loan with the company. Due to postponements in the
opening of the branch, the pre-ordered Chickenjoy deteriorated. To
save themselves and the chicken from wastage, they tampered the
product by washing them in soda. The management discovered and
they were terminated due to loss of trust and confidence. They filed a
complaint for illegal dismissal. The Court ruled there was valid
dismissal. The Court also held that the car loan cannot be offset
against the monetary benefits due to her.

DOCTRINE: Demand for payment of the employees amortizations or

loans is not a labor, but a civil, dispute. It involves debtor-creditor
relations, rather than employee-employer relations. The legal remedy
of the company is civil in nature, arising from a contractual obligation.

MARIETTA PORTILLO v RUDOLF LIETZ (October 10, 2012; J. Perez)

SUMMARY: Portillo was hired by Lietz, Inc. under the Goodwill
clause, or the condition that Portillo will not engage in any other
gainful employment by yourself or with any other company, either
directly or indirectly without written consent of Lietz Inc. Portillo
resigned from Lietz, stating that she intends to engage in a rice
business. Eventually, she was hired by Ed Keller Phils, a competitor of
Lietz. Portillo then demanded from Lietz her remaining salary, and Lietz
admitted its liability but raised the defense that Portillos money claims
should be offset against the her liability to Lietz due to her breach of
the Goodwill Clause. The Court ruled that there can be no offset
because the money claim for damages arise post-employment
relations and is under the jurisdiction of regular courts.
DOCTRINE: Article 217 (4) does not automatically cover all disputes
between an employer and employee. The money claims of workers
which now fall within the original and exclusive jurisdiction of Labor
Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship. If the cause of
action was within the realm of Civil Law, such as tort, malicious
prosecution, or breach of contract , jurisdiction over the controversy
belongs to the regular courts.

3) Labor dispute v intra-corporate dispute

RAUL COSARE v BROADCOM ASIA (Feb. 5, 2014;)
SUMMARY: Cosare, an incorporator and AVP for Sales of Broadcom,
was precluded from entering the premises of his office due to alleged
inimical acts against the company. Cosare filed a case for illegal
dismissal but it was contended that the case involved an intracorporate dispute, because of his being an incorporator and AVP, and
thus should be tried in the RTC instead of LA/NLRC. The Court held that
Cosare was not a corporate officer, and thus, the dispute is not an
intra-corporate one. Cosares being a stockholder also does not
automatically make it an intra-corporate controversy.
DOCTRINE: Intra-corporate disputes are tried in the RTC and not the
LA/NLRC. For a controversy to be intra-corporate, the controversy must
not only be rooted in the existence of an intra-corporate relationship,
but must as well pertain to the enforcement of the parties correlative
rights and obligations under the Corporation Code and the internal and
intra-corporate regulatory rules of the corporation

An intra-corporate controversy involve any of the following

relationships:
1. the corporation, partnership or association and the public
2. Between the corporation, partnership or association and the State in
so far as its franchise, permit or license to operate is concerned;
3. Between the corporation, partnership or association and its
stockholders, partners, members or officers; and
4. Among the stockholders, partners or associates, themselves

g. Technical Rules, not binding

MANILA ELECTRIC COMPANY v JAN CARLO GAL (Feb. 29., 2012; J.
Brion)
SUMMARY: A probationary lineman was dismissed from work due to
his involvement in a pilferage incident. He filed an illegal dismissal
complaint, alleging that he was not directly involved in pilfering since
he was at a distance and he assumed that there was nothing illegal
going on as his superiors were involved. In his reply to the instant
petition, he sought the dismissal of the case on procedural grounds.
The Court relaxed the rules in the interest of justice and proceeded
with the cases merits. It ruled that the lineman was complicit in the
commission, although not by direct participation, but by his inaction
and failure to report the incident to the proper authorities. His
dismissal was thus valid as he failed to qualify as a regular employee.
DOCTRINE: The application of technical rules of procedure in labor
cases may be relaxed to serve the demands of substantial justice. It is
in the spirit and intention of labor legislation that the NLRC and the
labor arbiter use every reasonable means to ascertain the facts in each
case speedily and objectively, without regard to technicalities of law or
procedure, provided due process is duly observed.

Liberality in application of rules

INDUSTRIAL TIMBER CORP. v ABABON (Jan. 25, 2006; J. YnaresSantiago)
SUMMARY: Petitioner ITC decided to shut down the plywood plant
after several months of suspension of operation due to lack of raw
materials used for milling operations, the expiration of the antipollution permit in April 1990, and the termination of the lease contract
with IPGC in August 1990. This forced respondent Ababon to file a case
against petitioner for illegal dismissal. In the course of the proceedings
before the CA, ITCs motion for reconsideration was denied for being
three-days late. The Court found that CA erred in rigidly applying the
procedural rules, thus doing greater injustice to ITC who will be ordered
to reinstate its employees to their positions that no longer exist due to
valid and legitimate cessation.
DOCTRINE: Ordinarily, once a judgment has become final and
executory, it can no longer be disturbed, altered or modified. However,
this principle admits of exceptions, as where facts and circumstances

transpire which render its execution impossible or unjust and it

therefore becomes necessary, in the interest of justice, to direct its
modification in order to harmonize the disposition with the prevailing
circumstances.
Moreover, the NLRC may, in the exercise of its appellate
powers, correct, amend, or waive any error, defect or irregularity
whether in substance or in form. The rules of evidence prevailing in
courts of law or equity shall not be controlling as it is the spirit and
intention of this Code that the Commission and its members and the
Labor Arbiters to use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process.

1) Substantial compliance with the rules

MA. LIGAYA B. SANTOS v LITTON MILLS INC. (June 22, 2011; J. Del
Castillo)
SUMMARY: A criminal complaint for robbery/extortion was filed by
Litton Mills against Ma. Ligaya B. Santos after having been caught
engaging in an unauthorized arrangement with a waste buyer. Her
petition was dismissed by the CA for failure to comply with the
provisions of Sec. 3, Rule 46 of the Rules of Court or the failure to
indicate the complete addresses of the parties and of their counsels,
and for failure to state in the Certificate of non-forum shopping that
there were no other pending case between the parties. Santos filed an
MR explaining that her petition subsequently complied. The SC set
aside the resolution of the CA and ruled that there was substantial and
subsequent compliance on the part of Santos.
DOCTRINE: Subsequent and substantial compliance may call for the
relaxation of the rules of procedure. The Court has time and again
relaxed the rigid application of the rules to offer full opportunity for
parties to ventilate their causes and defenses in order to promote
rather than frustrate the ends of justice.

2) Non-applicability of technical rules of procedure in labor cases, not

a license to disregard right of employer against unreasonable
claims
RICARDO N. AZUELO v ZAMECO II ELECTRIC COOPERATIVE.
(October 22, 2014; J. Reyes)
SUMMARY: Ricardo Azuelo filed a complaint against his employer
ZAMECO before the NLRC for illegal dismissal. Despite repeated
extensions, Azuelo wasnt able to file his position paper on time,
prompting the LA to dismiss his complaint. Consequently, Azuelo filed
another complaint with essentially the same facts, which was struck
down by the NLRC and later affirmed by the CA. SC affirmed, stating
that the unjustified failure to submit his position paper is akin to failure

to prosecute his action, and that the dismissal of the case on failure to
prosecute bars the filing of another complaint based on same
allegations.
DOCTRINE: Indeed, technical rules of procedure are not binding in
labor cases. The LAs and the NLRC are mandated to use every and all
reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of the law or procedure.
The non-applicability of technical rules of procedure in labor cases
should not be made a license to disregard the rights of employers
against unreasonable and/or unjustified claims.
The expeditious disposition of labor cases is mandated not only
for the benefit of the employees but of the employers as well.
It should be made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition of the inherent economic
inequality between labor and management. The intent is to balance
the scale of justice; to put up the two parties on relatively equal
positions. There may be cases where the circumstances warrant
favoring labor over the interests of management but never should the
scale be so tilted if the result is an injustice to the employer

h. Rule-making/Limitation
LC Art. 5. Rules and regulations. The Department of Labor and other
government agencies charged with the administration and enforcement of this
Code or any of its parts shall promulgate the necessary implementing rules
and regulations. Such rules and regulations shall become effective fifteen (15)
days after announcement of their adoption in newspapers of general
circulation.
KAPISANANG MANGAGAWANG PINAGYAKAP v NLRC &
FRANKLIN BAKER CO. OF THE PHILIPPINES (July 16, 1987; C.J.
Teehankee)
SUMMARY: The Labor Arbiter ruled that the negotiated daily wage
increase in the parties CBA (Jan 1977) could be deducted from what
was later required by PD 1123 (May 1977), based on the IRR the
Secretary of Labor issued. However, this provision in the IRR was struck
down by the SC as unconstitutional in another case. The SC granted
the petitioners appeal and emphasized that the rules on statutory
construction should be followed in issuing the implementing rules and
regulations.
DOCTRINE: When the language of the law is clear and unequivocal,
the law must be taken to mean exactly what it says. All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in
favor of labor.

i.

Applicability

LC Art. 6. Applicability. All rights and benefits granted to workers under this
Code shall, except as may otherwise be provided herein, apply alike to all
workers, whether agricultural or non-agricultural. (As amended by Presidential
Decree No. 570-A, November 1, 1974)
LC Art. 282. Government Employees. The terms and conditions of
employment of all government employees, including employees of
government-owned and controlled corporations, shall be governed by the Civil
Service Law, rules and regulations. Their salaries shall be standardized by the
National Assembly as provided for in the New Constitution. However, there
shall be no reduction of existing wages, benefits and other terms and
conditions of employment being enjoyed by them at the time of the adoption
of this Code.
1987 Constitution, Art. IX-B, Sec. 2.
(1) The civil service embraces all branches, subdivisions, instrumentalities,
and agencies of the Government, including government-owned or
controlled corporations with original charters
PNOC ENERGY DEVELOPMENT CORP. v NLRC & DANILO
MERCADO (September 11, 1991; J. Paras)
SUMMARY: Danilo Mercado, an employee of Philippine National Oil
Company-Energy Development Corporation (PNOC-EDC), was
dismissed from his work on the grounds of serious acts of dishonesty.
He filed a complaint for illegal dismissal and the LA ruled in favor of
him due to lack of evidence. One of the contentions is whether or not
the provisions of the Labor Code will apply to him when PNOC-EDC is in
fact a GOCC. The Court ruled in the affirmative, stating that since
PNOC-EDC was incorporated under the General Corporation Law, its
employees are subject to the provisions of the Labor Code.
DOCTRINE: Under the present state of the law, the test in determining
whether a GOCC is subject to the Civil Service Law is the manner of its
creation such that government corporations created by special charter
are subject to its provisions while those incorporation under the
General Corporation Law are not within its coverage.
Moreover, the fact that the case arose under the 1973
Constitution does not deprive NLRC of jurisdiction because it is the
1987 Constitution that governs at the time of the decision.

j.

Enforcement and Sanctions

LC Art. 128. supra
LC Art. 129. Recovery of wages, simple money claims and other
benefits. Upon complaint of any interested party, the Regional Director of the
Department of Labor and Employment or any of the duly authorized hearing
officers of the Department is empowered, through summary proceeding and
after due notice, to hear and decide any matter involving the recovery of

wages and other monetary claims and benefits, including legal interest, owing
to an employee or person employed in domestic or household service or
househelper under this Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim for reinstatement:
Provided further, That the aggregate money claims of each employee or
househelper does not exceed Five thousand pesos (P5,000.00). The Regional
Director or hearing officer shall decide or resolve the complaint within thirty
(30) calendar days from the date of the filing of the same. Any sum thus
recovered on behalf of any employee or househelper pursuant to this Article
shall be held in a special deposit account by, and shall be paid on order of, the
Secretary of Labor and Employment or the Regional Director directly to the
employee or househelper concerned. Any such sum not paid to the employee
or househelper because he cannot be located after diligent and reasonable
effort to locate him within a period of three (3) years, shall be held as a special
fund of the Department of Labor and Employment to be used exclusively for
the amelioration and benefit of workers.
Any decision or resolution of the Regional Director or hearing officer
pursuant to this provision may be appealed on the same grounds provided in
Article 223 of this Code, within five (5) calendar days from receipt of a copy of
said decision or resolution, to the National Labor Relations Commission which
shall resolve the appeal within ten (10) calendar days from the submission of
the last pleading required or allowed under its rules.
The Secretary of Labor and Employment or his duly authorized
representative may supervise the payment of unpaid wages and other
monetary claims and benefits, including legal interest, found owing to any
employee or househelper under this Code. (As amended by Section 2,
Republic Act No. 6715, March 21, 1989)
LC Art. 225. Ocular inspection. The Chairman, any Commissioner, Labor
Arbiter or their duly authorized representatives, may, at any time during
working hours, conduct an ocular inspection on any establishment, building,
ship or vessel, place or premises, including any work, material, implement,
machinery, appliance or any object therein, and ask any employee, laborer, or
any person, as the case may be, for any information or data concerning any
matter or question relative to the object of the investigation.
LC Art. 294. Penalties. Except as otherwise provided in this Code, or unless
the acts complained of hinge on a question of interpretation or
implementation of ambiguous provisions of an existing collective bargaining
agreement, any violation of the provisions of this Code declared to be unlawful
or penal in nature shall be punished with a fine of not less than One Thousand
Pesos (P1,000.00) nor more than Ten Thousand Pesos (P10,000.00) or
imprisonment of not less than three months nor more than three years, or
both such fine and imprisonment at the discretion of the court.
In addition to such penalty, any alien found guilty shall be summarily
deported upon completion of service of sentence.
Any provision of law to the contrary notwithstanding, any criminal
offense punished in this Code, shall be under the concurrent jurisdiction of the

Municipal or City Courts and the Courts of First Instance. (As amended by
Section 3, Batas Pambansa Bilang 70)
LC Art. 295. Who are liable when committed by other than natural
person. If the offense is committed by a corporation, trust, firm, partnership,
association or any other entity, the penalty shall be imposed upon the guilty
officer or officers of such corporation, trust, firm, partnership, association or
entity.
LC Art. 296. Offenses. Offenses penalized under this Code and the rules and
regulations issued pursuant thereto shall prescribe in three (3) years.
All unfair labor practice arising from Book V shall be filed with the
appropriate agency within one (1) year from accrual of such unfair labor
practice; otherwise, they shall be forever barred.
LC Art. 296. Money claims. All money claims arising from employeremployee relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued; otherwise
they shall be forever barred.
All money claims accruing prior to the effectivity of this Code shall be
filed with the appropriate entities established under this Code within one (1)
year from the date of effectivity, and shall be processed or determined in
accordance with the implementing rules and regulations of the Code;
otherwise, they shall be forever barred.
Workmens compensation claims accruing prior to the effectivity of this
Code and during the period from November 1, 1974 up to December 31, 1974,
shall be filed with the appropriate regional offices of the Department of Labor
not later than March 31, 1975; otherwise, they shall forever be barred. The
claims shall be processed and adjudicated in accordance with the law and
rules at the time their causes of action accrued.
LC Art. 298. Institution of money claims. Money claims specified in the
immediately preceding Article shall be filed before the appropriate entity
independently of the criminal action that may be instituted in the proper
courts.
Pending the final determination of the merits of money claims filed
with the appropriate entity, no civil action arising from the same cause of
action shall be filed with any court. This provision shall not apply to employees
compensation case which shall be processed and determined strictly in
accordance with the pertinent provisions of this Code.
1987 Constitution, Art. III, Sec. 11. Free access to the courts and quasijudicial bodies and adequate legal assistance shall not be denied to any
person by reason of poverty.
1987 Constitution, Art. III, Sec. 16. All persons shall have the right to a
speedy disposition of their cases before all judicial, quasi-judicial, or
administrative bodies.

6. WORK RELATIONSHIP
a. Definition:
1)
Employer
Art. 97. Definitions. As used in this Title:
(b) "Employer" includes any person acting directly or indirectly in the
interest of an employer in relation to an employee and shall include
the
government
and
all
its
branches,
subdivisions
and
instrumentalities, all government-owned or controlled corporations
and institutions, as well as non-profit private institutions, or
organizations.
LC Art. 173. Definition of terms. As used in this Title, unless the
context indicates otherwise:
(f) Employer" means any person, natural or juridical, employing the
services of the employee.
LC Art. 218. Definitions.
(e) Employer" includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include any labor
organization or any of its officers or agents except when acting as
employer.
2)
Employee
LC Art. 97. Definitions. As used in this Title:
(c) Employee" includes any individual employed by an employer.
LC Art. 173. Definition of terms. As used in this Title, unless the
context indicates otherwise:
(g) Employee" means any person compulsorily covered by the GSIS
under Commonwealth Act Numbered One hundred eighty-six, as
amended, including the members of the Armed Forces of the
Philippines, and any person employed as casual, emergency,
temporary, substitute or contractual, or any person compulsorily
covered by the SSS under Republic Act Numbered Eleven hundred
sixty-one, as amended
LC Art. 218. Definitions
(f) "Employee" includes any person in the employ of an employer. The
term shall not be limited to the employees of a particular employer,
unless the Code so explicitly states. It shall include any individual
whose work has ceased as a result of or in connection with any
current labor dispute or because of any unfair labor practice if he has
not obtained any other substantially equivalent and regular
employment.

b. Employer-Employee Relationship
1) Factors/Tests/Four-fold Test
NELSON V. BEGINO (AND 3 OTHERS) v ABS-CBN CORP. &
AMALIA VILLAFUERTE (April 20. 2015;)
SUMMARY: Petitioners were hired as cameramen/editors and
reporters for TV Patrol Bicol. They have been rehired continuously over
the years and subject to policies of ABS-CBN but they are supposedly
covered by Talent Contracts. They filed complaints as regular workers
but ABS-CBN averred that they are talents and not regular employees.
Supreme Court used the four-fold test and concluded that they are
indeed regular workers regardless of the nomenclature of their
contract.
DOCTRINE:
Four-fold test for ER-EE Relationship:
(a) The selection and engagement of the employee;
(b) The payment of wages;
(c) The power of dismissal; and
(d) The employer's power to control the employee on the means and
methods by which the work is accomplished control test - most
crucial and determinative indicator; the employer has the right to
control not only the end result but also the manner and means utilized
to achieve the same.
Regardless of the name of the contract, the test to determine
whether employment is regular or not is the reasonable connection
between the activity performed by the employee in relation to the
business or trade of the employer. If the employee has been
performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated or
continuing performance as sufficient evidence of the necessity, if not
indispensability of that activity in the business. Indeed, an employment
stops being co-terminous with specific projects where the employee is
continuously re-hired due to the demands of the employers business

SOUTH EAST INTERNATIONAL RATTAN, INC. v J.J. COMING (March

12, 2014; J. Villarama)
SUMMARY: Jesus Coming was hired by petitioner as a Sizing Machine
Operator. At one point of his employment, he was told not to report for
work until two months later, which he did. He was eventually dismissed
because of financial reasons so he filed a complaint for illegal
dismissal before the LA. On petitioners part, they denied having hired
Coming as their employee. The Court, using the four-fold test and
basing its decision on evidence presented, ruled that the employeremployee relationship existed between the petitioners and the
respondent.

DOCTRINE: To prove the existence of ER-EE relationship, substantial

evidence that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion is sufficient. In any
controversy between a laborer and his master, doubts reasonably
arising from the evidence are resolved in favor of the laborer.

CESAR C. LIRIO, DOING BUSINESS AS CELKOR AD SONICMIX v

WILMER D. GENOVIA (November 23, 2011;)
SUMMARY: Wilmer was hired by Cesar as studio manager of Celkor.
Later, Wilmer was additionally tasked with composing and promoting
songs for Cesars daughter and Wilmer was promised to be
compensated accordingly. When Wilmer finished the songs, he asked
for his compensation but he was only given 20% share of net profits.
Also, his salary as studio manager was to be deducted from that 20%
share. He objected and he was terminated. He filed a complaint for
illegal dismissal. The SC found that an employer-employee relationship
existed and that he was illegally dismissed for lack of due process.
DOCTRINE: The elements to determine the existence 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.
The most important element is the employers control of the
employees conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it. The power of
control refers merely to the existence of the power. It is not essential
for the employer to actually supervise the performance of duties of the
employee, as it is sufficient that the former has a right to wield the
power.

MARTICIO SEMBLANTE AND DUBRICK PILAR v CA, GALLERA DE

MANDAUE (August 15, 2011; J. Velasco)
SUMMARY: Petitioners, who were the official masiador and
sentenciador of the Gallera de Mandaue (cockpit), were one day denied
entry into the cockpit upon the instructions of the Respondents, and
were informed of the termination of their services effective that date.
Petitioners cry illegal dismissal. SC said there was no illegal dismissal
because there was no employer-employee relationship between the
Petitioner and Respondent, as they failed to pass the four-fold test.
DOCTRINE: Those who possess a kind of expertise are not mere
employees. They are akin to independent contractors who possess
unique skills and talent to distinguish them from ordinary employees.

i.

Control Test v Economic Reality Test

OROZCO v FIFTH DIVISION, CA (August 13, 2008; J. Nachura)

SUMMARY: Orozco writes for Philippine Daily Inquirer Lifestyle
Column. She submits her articles weekly. She receives compensation of
P250 (later became P300) for every column published. On Nov.1992,
her editor told her that PDI wanted to stop the publication of her
articles because of there are too many columnists and they wanted to
keep only those that are well-written and with regular feedbacks and
following. Apostol, PDIs Chairperson, thinks that Orozcos column
failed to improve, is superficially and poorly written, and failed to meet
the high standards of PDI. Thus, Orozco filed for illegal dismissal,
backwages, moral and exemplary damages and other money claims
before NLRC. Contrary to Orizcos claim that she is an employee
because PDI wield control over her output (i.e. content, deadline,
length), the Court held that Orozco is not an employee of PDI but an
independent contractor. The power that PDI wield over her is not the
control as to the means and methods, but the results.
DOCTRINE: Not every form of control over the conduct of the party
hired in relation to the services rendered establishes an employeremployee relationship. The main determinant of the control test:
whether the rules set by the employer are meant to control not just the
results of the work but also the means and method to be used by the
hired party in order to achieve such results
Moreover, in 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.
The benchmark in using this test is the economic dependence of
worker on his employer.

ii.

Evidence of Employee Status

BERNARD A. TENAZAS ET. AL. v VILLEGAS TAXI TRANSPORT
(April 2, 2014; J. Reyes)
SUMMARY: The 3 employees assert that they are employees.
Francisco claims he was illegally dismissed upon the company's
unfounded suspicion that he was organizing a labor union. . Villegas
denies that Jaime Francisco was their employee. The SC ruled that the
party who alleges he is an employee must prove it with substantial
evidence. Jaime has failed to present any substantial proof (no
attendance logbook, payroll, SSS record or any personnel file). He
simply relied on his allegation that he is an employee without any
proof. This mere allegation in the position paper is insufficient given
the companys denial.
DOCTRINE: In labor cases, as in other administrative and quasijudicial proceedings, the quantum of proof necessary is substantial
evidence- such amount of relevant evidence which a reasonable mind

might accept as adequate to justify a conclusion. The burden of proof

rests upon the party who asserts the affirmative of an issue.

2) Burden of Proving employer-employee relationship vis--vis burden of

proving illegality of dismissal
BITOY JAVIER v FLY ACE CORPORATION (February 15, 2012;)
SUMMARY: Bitoy Javier worked as a pahinante or extra help to Fly
Ace, when the latters contracted hauler was unavailable. When Bitoy
was prevented from working, he filed for illegal dismissal and claimed
that he was in fact an employee despite the irregular nature of his
work. The Court ruled that he failed to prove the existence of an
employer-employee relationship through substantial evidence.
DOCTRINE: In an illegal dismissal case the onus probandi rests on the
employer to prove that its dismissal was for a valid cause. However,
before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established. It is incumbent upon the one
alleging the existence of employer-employee relationship to prove it by
substantial evidence.

3) Piercing the corporate veil

TIMOTEO H. SARONA v NLRC, ROYALE SECURITY AGENCY
(FORMERLY SCEPTRE) (January 18, 2012; J. Reyes)
SUMMARY: Timoteo Sarona was a security guard at Sceptre security
agency. One day, the Operation Manager asked him to submit a
resignation letter as a requirement for applying for a position at Royale
Security Agency (new Sceptre). After being transferred from one client
to another, he was informed that he would no longer be given any
assignment. Sarona filed for illegal dismissal. LA, NLRC, CA upheld
illegality of dismissal but had conflicting decisions on computation of
backwages. Court held that it should be computed from 1976
(employment in Sceptre) because Sceptre and Royale are one and the
same entity.
DOCTRINE: The corporate mask may be removed or the corporate veil
pierced when the corporation is just an alter ego of a person or of
another corporation. For reasons of public policy and in the interest of
justice, the corporate veil will justifiably be impaled only when it
becomes a shield for fraud, illegality or inequity committed against
third persons.
The doctrine of piercing the corporate veil applies only in three
(3) basic areas, namely
1) defeat of public convenience as when the corporate fiction is used
as a vehicle for the evasion of an existing obligation

2) fraud cases or when the corporate entity is used to justify a wrong,

protect fraud, or defend a crime;
3) alter ego cases, where a corporation is merely a farce since it is a
mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit
or adjunct of another corporation.

c. Independent Contractor and Labor-only Contractor

LC 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.
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to protect the
rights of workers established under this Code. In so prohibiting or restricting,
he may make appropriate distinctions between labor-only contracting and
job contracting as well as differentiations within these types of contracting
and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
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.
LC 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.
LC Art. 108. Posting of bond. An employer or indirect employer may
require the contractor or subcontractor to furnish a bond equal to the cost of
labor under contract, on condition that the bond will answer for the wages
due the employees should the contractor or subcontractor, as the case may
be, fail to pay the same.
LC 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.
Omnibus Rules Implementing the Labor Code, Book III, Rule VIII-A
(incorporated through Department Order No. 10, S. of 1997, as amended by
Department Order No. 03 S. of 2001, Department Order No. 18-02, S. of
2002, and Department Order No. 18-A, S. of 2011).
1) Guiding principles
Department Order No. 18-A-11, Sec. 1. Guiding Principles.
Contracting and subcontracting arrangements are expressly allowed by
law and are subject to regulations for the promotion of employment
and the observance of the rights of workers to just and humane
conditions of work, security of tenure, self-organization and collective
bargaining. Labor-only contracting as defined herein shall be
prohibited.
2) Coverage
Department Order No. 18-A-11, Sec. 2. Coverage. These Rules
shall apply to all parties of contracting and subcontracting
arrangements where employer-employee relationship exist. It shall also
apply to cooperatives engaging in contracting and subcontracting
arrangements.
Contractors and subcontractors referred to in these Rules are
prohibited from engaging in recruitment and placement activities as
defined in Article 13(b) of the Labor Code, whether for local or
overseas employment.
3) Trilateral Relationship
Department Order No. 18-A-11, Sec. 3. Definition of terms. The
following terms as used in these Rules, shall mean:
(m) Trilateral Relationship refers to the relationship in a contracting
or subcontracting arrangement where there is a contract for a specific
job, work, or service between the principal and the contractor, and a
contract of employment between the contractor and its workers. There
are three (3) parties involved in these arrangements: the principal who
decides to farm out a job, work or service to a contractor; the
contractor who has the capacity to independently undertake the
performance of the job, work or service; and the contractual workers
engaged by the contractor to accomplish the job, work, or service.
Department Order No. 18-A-11, Sec. 5. Trilateral Relationship
in contracting arrangements; Solidary liability. In legitimate labor
contracting or subcontracting arrangement there exists:
(a) An employer-employee relationship between the contractor and
the employees it engaged to perform the specific job, work, or
service being contracted; and

(b) A contractual relationship between the principal and the

contractor as governed by the provisions of the Civil Code
In the event of any violation of any provision of the Labor Code,
including the failure to pay wages, there exists a solidary liability on
the part of the principal and the contractor for purposes of enforcing
the provisions of the Labor Code and other social legislation, to the
extent of the work performed under the employment contract.
However, the principal shall be deemed the direct employer of
the contractors employee in cases where there is a finding by a
competent authority of labor-only contracting or commission of
prohibited activities as provided in Section 7, or a violation of either
Section 8 or 9 hereof.
i.

Contracting
Department Order No. 18-A-11, Sec. 3. Definition of
terms. The following terms as used in these Rules, shall mean:
(c) Contracting or Subcontracting refers to an arrangement
whereby a principal agrees to put out or farm out with a
contractor the performance or completion of a specific job, work,
or service within a definite or predetermined period, regardless
of whether such job, work, or service is to be performed or
completed within or outside the premises of the principal.
PHILIPPINE BANK OF COMUNICATIONS v NLRC (;)
SUMMARY: There is a tri-lateral relationship between the principal:
Phil. Bank of Communications (PBC), the contractor: Corporate
Executive Search Inc. (CESI) and the labor/worker: Ricardo Orpiada.
There is contention as to whether the bank is liable to reinstate the
employee and to pay for 13th month pay if there is no employeeemployer relationship between the employee and the bank but rather,
between the employee and the contractor. The Court ruled that since
the contractor engages in labor-only contracting, the bank will be
considered the direct employer of Orpiada and not CESI.
DOCTRINE: 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.
SAN MIGUEL CORPORATION v SEMILLANO (July 5, 2010; J.
Mendoza)
SUMMARY: SMC entered into a Contract of Services with AMPCO
designating the latter as the employer of Semillano. Semillano was

fired, and he sues SMC for illegal dismissal. SMC argues that AMPCO is
liable since it is an independent contractor. The Court held that SMC
was a labor-only contractor, hence it is solidarily liable with AMPCO for
all the rightful claims of respondents.
DOCTRINE: In distinguishing between permissible job contracting and
prohibited labor-only contracting, the totality of facts and the
surrounding circumstances of the case are to be considered. The test
determine the existence of INDEPENDENT CONTRACTORSHIP is
whether or not the one claiming to be dependent contractor has
contracted to the work according to his own methods and without
being subject to the control of the employer, except only as to the
results work.

4) Parties
i.
Principal
Department Order No. 18-A-11, Sec. 3. Definition of
terms. The following terms as used in these Rules, shall mean:
(h) Principal refers to any employer, whether a person or
entity, including government agencies and governmentowned and controlled corporations, who/which puts out or
farms out a job, service, or work to a contractor.
ii.

Contractor
Department Order No. 18-A-11, Sec. 3. Definition of
terms. The following terms as used in these Rules, shall mean:
(d) Contractor refers to any person or entity, including a
cooperative, engaged in a legitimate contracting or
subcontracting arrangement providing either services,
skilled workers, temporary workers, or a combination of
services to a principal under a Service Agreement.

iii.

Contractors employee
Department Order No. 18-A-11, Sec. 3. Definition of
terms. The following terms as used in these Rules, shall mean:
(e) Contractors employee includes one employed by a
contractor to perform a complete job, work, or service
pursuant to a Service Agreement with a principal.
It shall also refer to regular employees of the
contractor whose functions are not dependent on the
performance or completion of a specific job, work or
service within a definite period of time, i.e. administrative
staff.

5) Rights of contractual employees

Department Order No. 18-A-11, Sec. 8. All contractors employees
whether deployed or assigned as reliever, seasonal, week-ender,
temporary, or promo jobbers, shall be entitled to all the rights and

privileges as provided for in the Labor Code, as amended, to include

the following:
(a) Safe and healthful working conditions
(b) Labor standards such as but not limited to service incentive
leave, rest days, overtime pay, holiday pay, 13th month pay, and
separation pay as may be provided in the Service Agreement or
under the Labor Code
(c) Retirement benefits under the SSS or retirement plans of the
contractor, if there is any
(d) Social security and welfare benefits
(e) Self-organization, collective bargaining and peaceful concerted
activities, and
(f) Security of tenure
FVR SKILLS AND SERVICES EXPONENTS INC. v JOVERT SEVA
(AND 27 OTHERS) (October 22, 2014; J. Brion)
SUMMARY: A group of 28 janitorial and maintenance employees were
terminated by their employer, an independent contractor, after its
contract with Robinsons expired. The Court ruled that these employees
are regular employees who are entitled to various benefits, including
the right to security of tenure, as they may only be dismissed with the
proper substantial and procedural requirements.
DOCTRINE: DO 18-02 grants contractual employees all the rights and
privileges due a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime
pay, holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted
action; and
(e) security of tenure

6) Legitimate contracting or subcontracting

Department Order No. 18-A-11, Sec. 4. Legitimate contracting
or subcontracting. Contracting or subcontracting shall be legitimate
if all the following circumstances concur:
(a) The contractor must be registered in accordance with these Rules
and carries a distinct and independent business and undertakes to
perform the job, work or service on its own responsibility, according
to its own manner and method, and free from control and direction
of the principal in all matters connected with the performance of
the work except as to the results thereof;
(b) The contractor has substantial capital and/or investment; and
(c) The Service Agreement ensures compliance with all the rights and
benefits under Labor Laws.

RONNIE L. ABING v NLRC, ALLIED BANKING CORPORATION,

FACILITATORS GENERAL SERVICES AND MARILAG BUSINESS
AND INDUSTRIAL MANAGEMENT SERVICES, INC. (September 10,
2014;)
SUMMARY: Petitioner had been working in Allied Banking through the
employment of various contractors (FGSI and Marilag). Upon
termination of the second contractors service contract with Allied
Banking, he alleges that the latter is his true employer and cries illegal
dismissal. The Court ruled that Ronnie was not an employee of Allied
Bank; he was employed with FGSI, a legitimate job contractor. FGSIs
service contract with Allied Bank further states that the janitorial and
maintenance personnel will remain to be FGSIs employees.
DOCTRINE: Legitimate labor contracting or subcontracting as an
arrangement whereby a principal agrees to put out or farm out with a
contractor or subcontractor the performance or completion of a
specific job, work or service with a definite or predetermined period,
regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal. Under such
an arrangement, no employer-employee relationship is created
between the principal and the contractual worker, who is actually the
employee of the contractor.

FUJI TELEVISION NETWORK, INC. v ARLENE ESPIRITU (December

3, 2014; J. Leonen)
SUMMARY: Fuji Television Network hired Arlene Espiritu as a news
correspondent/producer to report Philippine news to Japan, with her
contract renewed annually. However, when she got diagnosed with
lung cancer, she informs Fuji, who then disclosed that they will have a
hard time renewing the contract, considering her situation. Both
parties sign a contract for non-renewal, which stipulates that she would
not renew and that she would receive $18,050 as compensation for
services, etc. Arlene filed a complaint against Fuji for illegally
dismissing her. SC decides in her favor. Arlene is a regular employee,
not an independent contractor.
DOCTRINE: It is the burden of the employer to prove that a person
whose services it pays for is an independent contractor rather than a
regular employee with or without a fixed term. An independent
contractor is one who carries on a distinct and independent business
and undertakes to perform the job, work, or service on its own account
and under ones own responsibility according to ones own manner and
method, free from the control and direction of the principal in all
matters connected with the performance of the work except as to the
results thereof. No employer-employee relationship exists in
independent contracting.
Moreover, that a person has a disease does not per se entitle
the employer to terminate his or her services.

7) Elements of Labor-only contracting

Department Order No. 18-A-11, Sec. 6. Prohibition against
labor-only contracting. Labor-only contracting is hereby declared
prohibited. For tis purpose, labor only contracting shall refer to an
arrangement where:
(a) The contractor does not have substantial capital or investments in
the form of tools, equipment, machineries, work premises, among
others, and the employees recruited and placed are performing
activities which are usually necessary or desirable to the operation
of the company, or directly related to the main business of the
principal within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed
within or outside the premises of the principal; or
(b) The contractor does not exercise the right to control over the
performance of the work of the employee.
POLYFOAM-RGC INTERNATIONAL CORP. v EDGARDO
CONCEPCION (June 13 2012; J. Peralta)
SUMMARY: Conception, a factory worker at Polyfoam was dismissed
from work due to an alleged infraction of a company rule. He filed for
an illegal dismissal complaint. Gramaje filed a Motion for Intervention,
claiming to be the real employer of Concepcion. The Court, in
assessing Gramajes contractorship using the elements of labor only
contracting, found out that Gramaje is a labor only contractor. Because
of this, the Court rules that there was an employer-employee
relationship between Polyfoam and Concepcion since a finding that a
contractor is a labor only contractor is equivalent to declaring an
employer-employee relationship between Polyfoam and Concepcion.
DOCTRINE: Labor only contracting is a prohibited act where the
contractor merely recruits workers to perform a job for a principal.
These elements are present in labor only contracting: (1) contractor
does not have substantial capital or investment, and (2) employees
recruited, supplied or placed by such contractor are performing
activities which are directly related to the main business of the
principal.
A finding that a contractor is a labor only contractor is
equivalent to declaring an employer-employee relationship between
the worker of the contractor and the principal.
NORKIS TRADING v JOAQUIN BUENAVISTA (October 10. 2012; J.
Reyes)
SUMMARY: Norkis Trading hired Buenavista et. al. as operators and
welders. Norkis recognizes them as members of PASAKA (a cooperative
which is deemed to be an independent contractor). Respondents filed a
complaint for labor-only contracting and non-payment of wages with
DOLE against Norkis Trading and PASAKA. The Court held that PASAKA
was a labor-only contractor.

DOCTRINE: Labor-only contracting is a prohibited act where the

contractor or subcontractor merely recruits, supplies, or places workers
to perform a job, work, or service for a principal. The elements are the
ff:
a. the contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under its
own account and responsibility
b. the employees recruited, supplied or placed by such contractor or
subcontractor perform activities which are directly related to the
main business of the principal.
The Court differentiated labor-only contracting with from legitimate
job contracting, which is an arrangement whereby a principal agrees to
put out or farm out with the contractor or subcontractor the
performance or completion of a specific job, work, or service within a
definite or predetermined period, regardless of whether such job, work,
or service is to be performed or completed within or outside the
premises of the principal. The requisites are:
a. the contractor carries on a distinct and independent business and
partakes the contract work on his own account under his own
responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters
connected with the performance
b. the contractor has substantial capital or investment
c. the agreement between the principal and the contractor or
subcontractor assures 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 welfare
benefits

8) Other prohibitions
Department Order No. 18-A-11, Sec. 7. Other Prohibitions.
Notwithstanding section 6 of these Rules, the following are hereby
declared prohibited for being contrary to law or public policy:
1) Contracting out of jobs, works or services when the same results
in the termination or reduction of regular employees and
reduction of work hours or reduction or splitting of the bargaining
unit.
2) Contracting out of work with a cabo
3) Taking undue advantage of the economic situation or lack of
bargaining strength of the contractors employees, or
undermining their security of tenure or basic rights, or
circumventing the provisions of regular employment, in any of the
following instances:
i.
Requiring them to perform functions which are currently
being performed by the regular employees of the principal;
and
ii.
Requiring them to sign, as a precondition to employment
or continued employment, an antedated resignation letter;
a blank payroll; a waiver of labor standards including
minimum wages and social or welfare benefits; or a

quitclaim releasing the principal, contractor or from any

liability as to payment of future claims.
4)
Contracting out of a job, work or service
through an in-house agency.
5)
Contracting out of a job, work or service
that is necessary or desirable or directly related to the business or
operation of the principal by reason of a strike or lockout whether
actual or imminent.
6)
Contracting out of a job, work or service
being performed by union members when such will interfere with,
restrain or coerce employees in the exercise of their rights to selforganization as provided in Art. 248 (c) of the Labor Code, as
amended.
7)
Repeated hiring of employees under an
employment contract of short duration or under a Service
Agreement of short duration with the same or different
contractors, which circumvents the Labor Code provisions on
Security of Tenure.
8)
Requiring
employees
under
a
subcontracting arrangement to sign a contract fixing the period of
employment to a term shorter than the term of the Service
Agreement, unless the contract is divisible into phases for which
substantially different skills are required and this is made known
to the employee at the time of engagement.
9)
Refusal to provide a copy of the Service
Agreement and the employment contracts between the contractor
and the employees deployed to work in the bargaining unit of the
principals certified bargaining agent to the sole and exclusive
bargaining agent (SEBA).
10)
Engaging or maintaining by the principal of
subcontracted employees in excess of those provided for in the
applicable Collective Bargaining Agreement (CBA) or as set by the
Industry Tripartite Council (ITC).
9) Registration of contractors
Department
Order
No.
18-A-11,
Sec.
14.
Mandatory
Registration and Registry of Legitimate Contractors. Consistent
with the authority of the Secretary of Labor and Employment to restrict
or prohibit the contracting out of labor to protect the rights of workers,
it shall be mandatory for all persons or entities, including cooperatives,
acting as contractors, to register with the Regional Office of
the Department of Labor and Employment (DOLE) where it principally
operates.
Failure to register shall give rise to the presumption that the
contractor is engaged in labor-only contracting.
Accordingly, the registration system governing contracting
arrangements and implemented by the Regional Offices of the DOLE is

hereby established, with the Bureau of Working Conditions (BWC) as

the central registry.
Department Order No. 18-A-11, Sec. 15. Requirements for
registration. The application for registration as a contractor shall be
filed at the DOLE Regional Office in the region where it seeks to
principally operate. The applicant shall provide in the application form
the following information:
(a) The name and business address of the applicant and the areas
where it seeks to operate
(b) The names and addresses of officers, if the applicant is a
corporation, partnership, cooperative, or a labor organization
(c) The nature of the applicants business and the industry or
industries where the applicant seeks to operate
(d) The number of regular workers and the total workforce
(e) The list of clients, if any, the number of personnel assigned to
each client, if any, and the services provided to the client
(f) The description of the phases of the contract, including the
number of employees covered in each phase, where
appropriate; and
(g) Proof of compliance with substantial capital requirement as
defined in Section 3(l) of these Rules
The application should be supported by:
(a) A certified true copy of a certificate of registration of firm or
business name from the Securities and Exchange Commission
(SEC), Department of Trade and Industry (DTI), Cooperative
Development Authority (CDA),or from the DOLE if the applicant
is a labor organization.
(b) A certified true copy of the license or business permit issued by
the local government units where the contractor operates
(c) A certified listing, with proof of ownership or lease contract, of
facilities, tools, equipment, premises, implements, machineries
and work premises, that are actually and directly used by the
contractor in the performance or completion of the job, work, or
service contacted out. In addition, the applicant shall submit a
photo of the office building and premises where it holds office;
(d) A copy of audited financial statements if the applicant is a
corporation, partnership, cooperative, or a labor organization, or
copy of the latest ITR if the applicant is a sole proprietorship
(e) A sworn disclosure that the registrant, its officers and owners or
principal stockholders or any one of them, has not been
operating or previously operating as a contactor under a
different business name or entity or with pending cases of
violations of these Rules and/or labor standards, or with a
cancelled registration. In case any of the foregoing has a
pending case, a copy of the complaint and the latest status of
the case shall be attached.

The application shall be verified. It shall include a DOLE certification

of attendance to orientation seminar on these Rules and an
undertaking that the contractor shall abide by all applicable labor
laws and regulations.
i.

Bureau of Working Conditions (BWC)/central registry

Department Order No. 18-A-11, Sec. 14 (par. 3). supra

ii.

Effect of Non-Compliance
Department Order No. 18-A-11, Sec. 14 (par. 2). supra

10)
Solidary Liability of Indirect Employer/Direct employer
Department Order No. 18-A-11, Sec. 5 (par. 2). Supra
Department Order No. 18-A-11, Sec. 27. Effects of finding of
labor-only contracting and/or violation of Sections 7, 8, or 9 of
the Rules. A finding by competent authority of labor-only contracting
shall render the principal jointly and severally liable with the contractor
to the latters employees, in the same manner and extent that the
principal is liable to employees directly hired by him/her, as provided in
Article 106 of the Labor Code, as amended.
A finding of commission of any of the prohibited activities in
Section 7, or violation of either Section 8 or 9 hereof, shall render the
principal the direct employer of the employees of the contractor or
subcontractor, pursuant to Article 109 of the Labor Code, as amended.
BENIGNO M. VIGILIA v PHILIPPINE COLLEGE OF CRIMINOLOGY
(June 2013;)
SUMMARY: Petitioners in the case at bar are maintenance personnel
of Philippine College of Criminology (PCCr), but are allegedly under
MBMSI which is a corporation engaged in providing janitorial services
to clients. Upon PCCrs discovery that MBMSIs Certification of
Incorporation was revoked, it dismissed the maintenance personnel.
The dismissed employees filed a complaint for illegal dismissal against
MBMSI, its president, and the president of PCCr. However, quitclaims
executed by the employees were presented by PCCr. The LA, NLRC, CA,
as well as the SC all held that facts show that PCCr was really the
employer and being engaged in a labor-only contracting, shall be held
solidarily liable with MBMSI. However, by virtue of the quitclaims, they
cannot be held liable. In answering the argument that said documents
have no validity for being executed after the dissolution of the
corporation, the SC held that the executed releases, waivers and
quitclaims are valid and binding notwithstanding the revocation of
MBMSIs Certificate of Incorporation.
DOCTRINE: Section 27. Effects of finding of labor-only contracting
and/or violation of Sections 7, 8 or 9 of the Rules A finding by
competent authority of labor-only contracting shall render the principal
jointly and severally liable with the contractor to the latters
employees, in the same manner and extent that the principal is liable

to employees directly hired by him/her, as provided in Article 106 of

the Labor Code, as amended. A finding of commission of any of the
prohibited activities in Section 7, or violation of either Sections 8 or 9
hereof, shall render the principal the direct employer of the employees
of the contractor or subcontractor, pursuant to Article 109 of the Labor
Code, as amended. (Department Order No. 18-A, series of 2011, which
is the latest set of rules implementing Articles 106-109 of the Labor
Code)

SUPERIOR PACKAGING CORP. v ARNEL BALAGSAY (October 10,

2012; J. Reyes)
SUMMARY: Superior Packaging Corporation (Superior) engaged the
services of Lancer Staffing & Services Network, Inc. (Lancer) to provide
reliever services to its business, which involves the manufacture and
sale of commercial and industrial corrugated boxes. Respondents filed
a complaint for non-payment of wages and other benefits. DOLE
ordered Superior to pay, but the latter argues that respondents were
not its employees but of Lancers. The Court held that there was laboronly contracting, therefore Superior is liable for the unpaid money
claims.
DOCTRINE: Labor-only contracting means that there is an employeremployee 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.

EPARWA SECURITY AND JANITORIAL SERVICES v LICEO DE

CAGAYAN UNVERSITY (November 28, 2006; J. Carpio)
SUMMARY: Eparwa and LDCU entered into a Contract for Security
Services. The security guards assigned to LDCU filed a complaint for
underpayment against both Eparwa and LDCU before the NLRC. The
Court held that Eparwa and LCDU are solidarily liable but LDCU has the
ultimate liability. Since there is no privity of contract between the
security guards and LDCU, the security guards immediate recourse for
the payment of the increases is with their direct employer, which is
Eparwa. On the other, there exists a contractual agreement between
the principal and the security agency, wherein the former availed of
the security services provided by the latter. In return, the security
agency collects from its client payment for its security services.
Eparwa can therefore claim reimbursements from LDCU.
DOCTRINE: This joint and several liability of the contractor and the
principal is mandated by the Labor Code to assure compliance of the
provisions therein including the statutory minimum wage [Article 99,
Labor Code]. The contractor is made liable by virtue of his status as
direct employer. The principal, on the other hand, is made the indirect
employer of the contractors employees for purposes of paying the
employees their wages should the contractor be unable to pay them.

This joint and several liability facilitates, if not guarantees, payment of

the workers performance of any work, task, job or project, thus giving
the workers ample protection as mandated by the 1987 Constitution.

11)
i.
ii.

Prohibitions
Against labor-only contracting
Department Order No. 18-A-11, Sec. 6. supra
Other prohibitions
Department Order No. 18-A-11, Sec. 7. supra

12)
Effects of Finding of LOC and/or any violation
Department Order No. 18-A-11, Sec. 5. Trilateral Relationship
in contracting arrangements; Solidary liability.
xxxxxx
In the event of any violation of any provision of the Labor Code,
including the failure to pay wages, there exists a solidary liability on
the part of the principal and the contractor for purposes of enforcing
the provisions of the Labor Code and other social legislation, to the
extent of the work performed under the employment contract.
However, the principal shall be deemed the direct employer of
the contractors employee in cases where there is a finding by a
competent authority of labor-only contracting or commission of
prohibited activities as provided in Section 7, or a violation of either
Section 8 or 9 hereof.
7. EMPLOYMENT CONTRACT
ROYALE HOMES MARKETING CORP. v FIDEL P. ALCANTARA (July
28, 2014; J. Del Castillo)
SUMMARY: Alcantara claimed that he was an employee of Royale
Homes and was therefore illegally dismissed. Contract contained a
stipulation that he was an independent contractor. Court held that the
terms of the contract were clear and therefore there was no employeremployee relationship.
DOCTRINE: The primary evidence of the nature of the parties
relationship in this case is the WRITTEN CONTRACT that they signed
and execute in pursuance of their mutual agreement. The
characterization the parties gave to their relationship in the Agreement
cannot simply be brushed aside because it embodies their INTENT at
the time they entered the Agreement, and they were governed by this
understanding throughout their relationship. At the very least, the
provision on the absence of employer- employee relationship between
the parties can be an aid in considering the Agreement and its
implementation, and in appreciating the other evidence on record.

GLOBAL RESOURCE FOR OUTSOURCED WORKERS (GROW) v

ABRAHAM VELASCO & NANETTE VELASCO (August 22, 2012; J.
Perlas-Bernabe)
SUMMARY: In the employment contract between MS Retail and the
respondents, it was indicated that they would work for 48 hrs/month.
Petitioners promptly informed respondents that this was a typo, and
that it should actually be 48 hrs/week. On filing a case for constructive
dismissal, respondents also claimed overtime pay in excess of the 48
hrs/month. The Court ruled that they were not entitled to overtime pay
because it the true intent of the contract was really 48 hrs/week.
DOCTRINE: In case of conflict between the text of the contract and
the intent of the parties, it is the latter that prevails, for intention is the
soul of the contract, not its wording which is prone to mistakes,
inadequacies or ambiguities. To hold otherwise would give life, validity,
and precedence to mere typographical errors and defeat the very
purpose of agreements.