UY VS CENTRO

Petitioner: Jhorizaldy Uy
Respondent: Centro Ceramica Corporation, Ramonita Y. Sy, and Milagro U. Garcia
Citation: GR No. 174631
Date of Promulgation: October 19, 2011
Ponente: Villarama, J.
FYI:
FACTS
1. Jhorizaldy Uy was hired by Centro Ceramica Corporation.
- as a full-time sales executive
- hired on May 21, 1999, under probationary employment for 6 months
- became a regular employee May 1, 2000
2. Milagros Garcia was rehired by the company in the last quarter of 2001
- petitioner alleged that this is when his predicament began
3. On February 19, 2002, he was informed by his superior, Richard Agcaoili, that he was to assume a new
position in the marketing department.
- he was warned by his friends to be careful saying "mainit ka kay Ms. Garcia".
4. On the same day, he was summoned by Milagros Garcia and Sy who informed him of the termination of
his services due to insubordination.
- Sy even commented "member ka pa naman ng Single for Christ pero napakatigas naman ng ulo
mo."
5. Agcaoili informed Uy that the Sy spouses will give him all that is due him plus goodwill money to settle
everything.
6. On February 21, 2002, Uy was again summoned by Sy, wherein Uy asked for his termination paper.
- Sy told him "If that's what you want I will give it to you." And added, "Pag-isipan mo dahil kilala mo
naman kami we are powerful."
7. Uy turned over all bis samples, accounts and receivables to Agcaoili on February 22, 2002. After which he
did not report for work.
8. On March 6, 2002, Uy received a memorandum dated February 21, 2002, from the company stating:
- that he has failed to meet the quota for sales executives, set fro the period from 1999 to 2001
(which was said to be a violation of his contract of employment)
- that he has to explain in writing within 24 hours why the company should not terminate his contract.
Uy was unable to reply because he did not receive the memo since he was already dismissed. However, he
was surprised about the letter's content
- because he was informed by Agcaoili that management was satisfied with his performance and he
ranked second top performer for January 2002.
9. Uy received another memorandum on March 13, 2002.
- the letter alleged that the company's records show that Uy has failed to report for work without
informing his employer of the reason, and without securing proper leave (which was said to be in violation of
his contract)
- the letter also mentioned that Uy has refused to receive any of his monetary entitlements despite
notice that they are available.
- it asked for an explanation letter, within 24 hours, about why he should not be terminated.
10. Uy sought counsel who assisted him by replying to the memorandum.
11. Respondent denied dismissing petitioner and claimed he abandoned his job.
- they claim that petitioner's poor performance did not improve even after regularization;
- the possibility of him being transferred to a different department was due to his poor sales
performance;
- because he was aware of his problem and a possible termination, it was Uy's idea to voluntarily
resign rather than be terminated;
- Uy angrily stated that the company should just terminate him and walked out after learning that he
will receive the commissions of those sold but not yet delivered only upon their delivery;
- it was Uy who had a grudge against Garcia, that the Uy was discourteous and abusive;
12. Centro Ceramica Corporation presented two affidavits to prove their claim.
- Rommel Azarraga:
1. he was the one who told Uy to be careful
2. that Garcia did not harbour any ill feelings against Uy, nor did he know of
any incident that may cause such;
- Richard Agcaoili
1. denied Uy was terminated

2. denied that Uy was performing well and that he mentioned that

management was satisfied with his performance
- Arnulfo Merecido
1. claimed he has a fistfight with Uy because of the latter's insulting remarks against
his (Merecido) family.
13. Labor Arbiter ruled in favor of the respondent basing on his finding that it was Uy who opted not to
report for work after offering to resign.
14. NLRC reversed the Labor Arbiter's ruling. It found the dismissal of Uy questionable.
- no sanction was imposed on Uy or any other employee for the supposed failure to meet the
quota
- Uy was being singled out notwithstanding that all sales personnel similarly could not meet
the Php 1.5 million monthly quota.
15. CA reversed the NLRC's decision on account of the evidence on record.
- Uy, by his own account, has admitted that it was he who asked for his dismissal.
- the memorandums showed that the company has not yet terminated Uy's employment.
ISSUE
Whether or not the dismissal was legal.
HELD
No. Dismissal was illegal. The petition for review on certiorari was granted. The SC set aside the decision of
the CA and affirmed the decision of the NLRC.
The SC found that the NLRC's finding of illegal dismissal is supported by the totality of evidence and more
consistent with logic and ordinary human experience.
- after declining his supposed transfer to another department per his supervisor's advise, it is hard to
believe that he would just readily turn over his files and samples unless something critical had happened
during his talk with Garcia and Sy
- it is irrelevant whether he had earlier inquired from his supervisor what he will receive if he offers
instead to resign--what matters is the action of Sy on his employment status
- a crucial factor is the verbal order directly given by Sy for him to immediately turn over his
accountabilities
- it is his right to be furnished with a written notice in order to inform him of the real ground
for his termination
- the subsequent memorandums sent only reinforce the conclusion that the belated written
notice of charge against him on having failed to meet the prescribed sales quota was an afterthought
on the part of the company who may have realized that they failed to observe due process in
terminating him
- he was not given the chance to defend himself from whatever charges the management hurled
against him
- NLRC duly noted the discriminatory treatment accorder to petitioner when it declared that there is
no evidence at all that other sales personnel who failed to meet the prescribed sales quota were similarly
reprimanded
The SC found the affidavits to be at best self-serving having been executed by employees beholden to their
employer.
Fairness requires that dismissal, being the ultimate penalty that can be meted out to an employee
must have a clear basis. Any ambiguity in the ground of termination of an employee should be
interpreted against the employer, who ordained such ground in the first place.
When there is no showing of a clear, valid and legal cause for the termination of employment, the law
considers it a case of illegal dismissal. Furthermore, Article 4 of the Labor Code expresses the basic
principle that all doubts in the interpretation and implementation of the Labor Code should be
interpreted in favor of the workingman.
- This principle has been extended by jurisprudence to cover doubts in the evidence
presented by the employer and the employee. Thus we have held that if the evidence presented by
the employer and the employee are in equipoise, the scales of justice must be tilted in favor of the
latter.

The award of back wages and separation pay in lieu of reinstatement should be modified. Under the doctrine
of strained relations, the payment of separation pay has been considered an acceptable alternative to
reinstatement when the latter option is no longer viable or desirable.
Under the facts established, petitioner is entitled to the payment of full back wages, inclusive of allowances,
and other benefits or their monetary equivalent, computed from the date of his dismissal on February 19,
2002 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one month
salary for every year of service, computed from the time of his engagement by respondents on March 21,
1999 up to the finality of this decision.
DE CASTRO vs LIBERTY BROADCASTING NETWORK
Petitioner: Carlos C. De Castro
Respondents: Liberty Broadcasting Network Inc, Edgardo Quiogue
Citation: GR No. 165153
Date of Promulgation: September 23, 2008
Ponente: Brion
FACTS:
Petition for Review on Certitorari to annul, reverse and/or set aside the Decision dated May 25,
2004, and the Resolution dated August 30, 2004 of the Former Special Third Division of CA
FACTUAL BACKGROUND
Carlos De Castro: Building Administrator of Liberty Broadcasting. He started his employment on
August 7, 1995
May 16, 1996: Bernard Mandap (HRM Senior Manager) sent a notice to Carlos requiring him to
explain within 48 hours why he should not be made liable for violation of the Company Code of
Conduct for acts constituting serious misconduct, fraud and willful breach of trust reposed in him as
a managerial employee
De Castros ANSWER: denied the allegations against him in the Affidavits of Libertys witnesses:
Vicente Niguidula and Gil Balais. He says such accusations are baseless and sham, designed to
protect Niguidula and Balais who were the favorite boys of Edgardo Quiogue (EVP of Liberty
Broadcasting)
At De Castros request, a formal hearing was scheduled at 2pm of May 28, 1996, but he thereafter
sent a notice that he would not participate when he learned from his wife that estafa and qualified
theft had been filed against him
He felt that the formal hearing would just be a more-more investigation
May 24, 1996: Liberty Broadcasting charged De Castro with Violation of Company Code of Conduct
based on the Affidavits of Balais, Cristino Samarita and Jose Aying
May 31, 1996: Notice of Dismissal
Grounds for De Castros Dismissal
1. Soliciting and/or receiving money for his own benefit from suppliers/dealers/traders Aying
and Samarita, representing commissions for job contracts involving the airconditioning units
at the company, and the installation of fire exits at Technology Centre
2. Diversion of company funds by soliciting and receiving commissions amounting to a 14k
from Aying for a job contract
3. Theft of company property involving the unauthorized removal of 1 gallon of Delo Oil from
the storage room
4. Disrespect/discourtesy towards his co-employee, Niguidula
5. Disorderly behavior for challenging Niguidula for a fight during working hours
6. Threat and coercion against Niguidula and for coercing Balais to solicit money in his behalf
from suppliers/contractors
7. Abuse of authority for instructing Balais to collect commissions from Aying and Samarita,
and for requiring Raul Pacaldo to exact 2-5% of the price of contracts awarded to suppliers
8. Slander against Niguidula
De Castro then filed a Complaint for Illegal Dismissat at NLRC. During the Arbitration, he denied
the offenses charged, stating that:
1. He was just new in the office and could not encourage solicitation of commission from
suppliers
2. The accusations are belated for the imputed acts happened in 1995

3. The gallon of Delo Oul carted away was at the room of Balais that, which circumstance he
relayed to Mandap
4. Affidavits of Niguidula and Balais are not reliable because they had altercations for De
Castro reprimanded Balais for incurring unnecessary OT work
5. Niguidula verbally assaulted and challenged him to a fight which he reported to Quiogue and
Makati Police
Labor Arbiter Felipe Pati: rendered a decision on April 30, 1999, holding the respondent liable for illegal
dismissal. He disbelieved the affidavits of the respondents witnesses in view of the circumstances prior
to the execution.
NLRC: reversed the LAs decision and adopted the findings of Labor Arbiter Tamayo who reviewed the
Appeal on NLRCs instructions. It ruled that Arbited Pati erred in disregarding the Affidavits of the
witnesses.
MR by De Castro: NLRC granted it in a Resolution dated September 20, 2002. NLRC held the charges
against De Castro were never substantiated other than by bare allegations of the companys employees
whom he had altercations with prior to the execution of Affidavits
MR by Liberty Broadcasting: denied
Certiorari at CA: granted the Petition in its Decision on May 25, 2004, confirming the validity of De
Castos dismissal. NLRC abused its discretion when it disregarded the Affidavits of the witnesses

ISSUES:
1. W/N CA erred when it substituted its judgment for that of LA and NLRC who were the triers of facts
who had the opportunity to review the evidence extensively
HELD:
1. YES. CA erred in the appreciation of the evidence surrounding the petitioners termination from
employment. The cited grounds are at best doubtful under the proven surrounding circumstances,
and should have been interpreted in the petitioners favor pursuant to Article 4 of the Labor Code.
1.The petitioner had not stayed long in the company and had not even passed
his probationary period when the acts charged allegedly took place. This fact
carries several significant implications. First, being new, his natural motivation
was to make an early positive impression on his employer. Thus, it is believable
that as building administrator, he diligently, zealously, and faithfully performed
his tasks, working in excess of eight hours per day to maintain the company
buildings and facilities in excellent shape; he even lent the company his personal
tools and equipment to facilitate urgent repairs and maintenance work on
company properties. Second, because of his natural motivation as a new
employee and his lack of awareness of the dynamics of relationships within the
company, he must have been telling the truth when he said that he objected to
the way the contract for the installation of fire escapes was awarded to Samarita.
Third, his being new somehow rendered doubtful the charge that he had already
encouraged solicitation of commission from suppliers, especially if considered
with the timing of the charges against him and the turnaround of witness Ayings
testimony.
2.The relationships within the company at the time the charges were filed
showed that he was a stranger who might not have known the dynamics of
company inter-relationships and might have stepped on the wrong toes in the
course of performing his duties. Respondent Quiogue was the Executive VicePresident of the company, a very powerful official with a lot of say in company
operations. Since Samarita was doing the fabrication of steel balusters for
Quiogues home in New Manila, Quezon City, there is a lot of hidden dynamics in
their relationship and it is not surprising that Samarita testified against the
petitioner. Both Samarita and Quioque have motives to resent the petitioners
comments about the irregular award of a contract to Samarita.
3. Mandap, as Personnel Manager, is a subordinate of Quiogue. The proposal to
secure commissions from company suppliers reportedly took place in a very
public gatheringa drinking sessionin his house. Why Mandap did not take
immediate action when he knew of the alleged plan as early as December 1995
was never explained although the petitioner raised the issue squarely. The time

gapfrom December 1995 to May 1996is an incredibly long time under the
evidence available and can be accounted for only by the fact that there was no
intention to terminate the services of the petitioner in December; the motivation
and the scheme to do this came only sometime in April-May 1996.
3.The timing of the filing of charges was, as the petitioner pointed out,
unusual. Indeed, if the proposal to solicit commissions had transpired in
December, the charges were quite late when they came in May.
All these considerations render the cited causes for the petitioners dismissal tenuous as the
evidence supporting these grounds from suspect sources: they come either from people who
harbor resentment; those whose positions have inherent conflict points with that of De Castro,
or from business dealings with the company.
Under the circumstances, we join the NLRC in concluding that the employer failed to prove a
just cause for the termination of the petitioners employmenta burden the company, as
employer, carries under the Labor Code31and the CA erred when it saw grave abuse of
discretion in the NLRCs ruling.
The evidentiary situation, at the very least, brings to the fore the dictum we stated in Prangan
v. NLRC32 and in Nicario v. NLRC33 that if doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be tilted in favor of the latter. It is a
time-honored rule in controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writing should be resolved in the
formers favor

PEAFLOR V OUTDOOR
PETITIONER: Manolo A. Peaflor
RESPONDENTS:
OUTDOOR CLOTHING MFG CORP
Nathaniel T. Syfu
Medylene M. Demogena
Paul U. Lee
DOCKET NO.: G.R. No. 177114
PROMUL DATE:
Jan. 21, 2010
PONENTE:
Brion, J.
FACTS

Peaflor hired Sept. 2, 1999 as HRD Mgr of Outdoor. As HRD head, he was expected to:
secure and maintain the right quality and quantity of people needed by the company
maintain the harmonious relationship between the employees and management in a role
that supports organizational goals and individual aspirations
o
represent the company in labor cases or proceedings
His relationship with Outdoor went well during the first few months. Problems started when
VP for Operations Edgar Lee left the company after a big fight between Lee and Chief Corporate Officer
Nathaniel Syfu.
Outdoor began its alleged downsizing program due to negative business returns.
o
Retrenchment Peaflors two staffs were dismissed leaving only him in the HRD. He
worked as a one-man department, carrying out all clerical, administrative and liaison work; he
personally went to various government offices to process the companys papers.
Employee Lynn Padilla suffered a bombing incident. Outdoor required Peaflor to attend to
his hospitalization needs. Working outside office.
o
As he was acting on the companys orders, Peaflor considered himself to be ON
OFFICIAL BUSSINESS, but was surprised when the company DEDUCTED SIX DAYS SALARY
corresponding to the time he assisted Padilla.
o
o

Finance Mgr Medylene Demogena: he failed to submit his trip ticket, but Peaflor belied
this claim as a trip ticket was required only when a company vehicle was used and he did not
use any company vehicle when he attended to his off-premises work.
Returned from field work on Mar 13, 2000
o
While he was away, Nathaniel Syfu had appointed Nathaniel Buenaobra as the new HRD
Mgr
o
Syfus memorandum dtd Mar 10, 2000: Buenaobra was the concurrent HRD and Acctg
Mgr
Peaflor was surprised by the news; he also felt betrayed and discouraged. He tried to talk
to Syfu to clarify the matter, but was unable to do so. He had no option but to resign. Letter to Syfu
declaring his irrevocable resignation from his employment with Outdoor effective at the close of office
hours on Mar 15, 2000.
o
Filed a complaint for illegal dismissal with labor arbiter. Claim: constructively dismissed.
Prayer: reinstatement, payment of backwages, illegally deducted salaries, damages, attys fees,
etc.
Outdoor denied Peaflors allegations:
o
Peaflor had voluntarily resigned from work
o
Had continued working for the company until his resignation on Mar 15, 200, as evidenced
by the security report that Peaflor himself prepared and signed on Mar 13, 2000
o
Also denied making any illegal salary deductions. Those deductions were due to
Peaflors failure to report during work during the dates the company questioned. As a
probationary employee, he was not yet entitled to any leave credit that would offset his
absences.
Aug 15, 2001 Labor Arbiters decision finding Peaflor had been illegally dismissed.
Outdoor was ordered to:
o
reinstate Peaflor to his former or to an equivalent position
o
pay him his illegally deducted salary for six days, proportionate 13th month pay, attorneys
fees, moral and exemplary damages
Outdoor appealed w the NLRC.
o
Claimed that Peaflor tendered his resignation on Mar 1, 2000 because he saw no future
with the corporation due to its dire financial standing.
o
Syfu alleged that he was compelled to appoint Buenaobra as concurrent HRD Manager
through a memorandum dated Mar 1, 2000 to cover the position that Peaflor would soon
vacate.
o
Peaflor was given 2 notices (Mar 6 & 11) for his unauthorized absences.
Peaflors contentions:
o
Syfus Mar 1 memo, Buenaobras Mar 3 memo, and the AWOL memo ALL FABRICATED
and were never presented before the labor arbiter
o
Was never furnished with the AWOL Memo
o
he could not be on prolonged absence without official leave, as his residence was just a
few meters away from the office.
NLRC:
o
Peaflors resignation was a response to the Outdoor Clothings downward financial spiral
o
Buenaobras appointment was made only after Peaflor had submitted his resignation
letter, and this was made to cover the vacancy Peaflors resignation would create.
o
No malice likewise was present in the companys decision to dismiss Peaflors two staff
members; the company simply exercised its management prerogative to address the financial
problems it faced.
o
OVERTURNED LABOR ARBITERS DECISION.
CA: affirmed NLRCs decision, stating that Peaflor failed to present sufficient evidence
supporting his claim that he had been constructively dismissed. Dismissed certiorari petition against
NLRC, and denied his MR as well.
ISSUE: WON Peaflors resignation was a voluntary or forced one, the latter making it a
constructive dismissal equivalent to illegal dismissal
HELD: YES. Peaflor has been constructively dismissed.
o
The issue gives rise to the question of when was Peaflors resignation letter submitted.
o

SC finds that letter was indeed submitted on March 15, 2000, proving that he had been
constructively dismissed as his resignation was a response to the unacceptable appointment of
another person to a position he still occupied.
Peaflor was never informed of Syfus Mar. 1 memo and Buenaobras Mar. 3 memo,
even though those were directly concerning him
Said memoranda were only presented to the NLRC for appeal, not before the labor
arbiter.
The memorandum on Mar. 10 by Syfu informing the whole office about Buenaobras
appointment was properly signed by at least 5 company officials, showing that indeed
the appointment was only that day disclosed.
We find it highly unlikely that Peaflor would resign on March 1, 2000 and would then simply
leave given his undisputed record of having successfully worked within his probationary period. It
does not appear sound and logical to us that an employee would tender his resignation on the
very same day he was entitled by law to be considered a regular employee, especially when a
downsizing was taking place and he could have availed of its benefits if he would be separated
from the service as a regular employee.
Another basic principle is that expressed in Article 4 of the Labor Code that all doubts in the
interpretation and implementation of the Labor Code should be interpreted in favor of the
workingman. As shown above, Peaflor has, at very least, shown serious doubts about the
merits of the companys case, particularly in the appreciation of the clinching evidence on which
the NLRC and CA decisions were based.
REVERSED the decision of the CA, and REINSTATED the decision of the labor arbiter, with
the MODIFICATION that, due to the strained relations between the parties, respondents are
additionally ordered to pay separation pay equivalent to the petitioners one months salary.

Norkis Union vs. Norkis Trading

Petitioner: Independent Workers Union
Respondent: Norkis Trading Company
Citation: GR No. 157098
Date of Promulgation: June 30, 2005
Ponente: PANGANIBAN, J.
FACTS: The instant case arose as a result of the issuance of Wage Order No. ROVII-06 by the
Regional Tripartite Wages and Productivity Board (RTWPB) increasing the minimum daily wage
by P10.00, effective October 1, 1998. Prior to said issuance, herein parties entered into a
Collective Bargaining Agreement (CBA) effective from August 1, 1994 to July 31, 1999.
Sec. 1. Salary Increase. The Company shall grant a FIFTEEN (P15.00) PESOS per day
increase to all its regular or permanent employees effective August 1, 1994.
Sec. 2. Minimum Wage Law Amendment. In the event that a law is enacted increasing
minimum wage, an across-the-board increase shall be granted by the company according to
the provisions of the law.On January 27, 1998, a re-negotiation of the CBA was terminated and
pursuant to which a Memorandum of Agreement was forged between the parties. It was therein
stated that petitioner shall grant a salary increase to all regular and permanent employees as
follows:
Ten (10) pesos per day increase effective August 1, 1997; Ten (10) pesos per day
increase effective August 1, 1998.
Pursuant to said Memorandum of Agreement, the employees received wage increases
of P10.00 per day effective August 1, 1997 and P10.00 per day effective August 1, 1998. As a
result, the agreed P10.00 re-negotiated salary increase effectively raised the daily wage of the
employees to P165.00 retroactive August 1, 1997; and another increase of P10.00, effective
August 1, 1998, raising the employees daily wage to P175.00.
On March 10, 1998, the Regional Tripartite Wage Productivity Board (RTWPB) of Region VII
issued Wage Order ROVII-06 which established the minimum wage of P165.00, by mandating a
wage increase of five (P5.00) pesos per day beginning April 1, 1998, thereby raising the daily
minimum wage to P160.00 and another increase of five (P5.00) pesos per day beginning
October 1, 1998, thereby raising the daily minimum wage to P165.00 per day.
In accordance with the Wage Order and Section 2, Article XII of the CBA, [petitioner] demanded
an across-the-board increase. [Respondent], however, refused to implement the Wage Order,
insisting that since it has been paying its workers the new minimum wage of P165.00 even
before the issuance of the Wage Order, it cannot be made to comply with said Wage Order.

Thus, [respondent] argued that long before the passage of Wage Order ROVII-06 on March 10,
1998, and by virtue of the Memorandum of Agreement it entered with herein [petitioner],
[respondent] was already paying its employees a daily wage of P165.00 per day retroactive on
August 1, 1997, while the minimum wage at that time was still P155.00 per day. On August 1,
1998, [respondent] again granted an increase from P165.00 per day to P175.00, so that at the
time of the effectivity of Wage Order No. 06 on October 1, 1998 prescribing the new minimum
wage of P165.00 per day, [respondents] employees were already receiving P175.00 per day.
CA ruled in favour of the respondent.
ISSUE: WON respondent violated the CBA in its refusal to grant its employees an across-theboard increase as a result of the passage of Wage Order No. ROVII-06
HELD: No, we hold that the issue here is not about creditability, but the applicability of Wage
Order No. ROVII-06 to respondents employees. The Wage Order was intended to fix a new
minimum wage only, not to grant across-the-board wage increases to all employees in Region
VII. The intent of the Order is indicated in its title, Establishing New Minimum Wage Rates, as
well as in its preamble: the purpose, reason or justification for its enactment was to adjust the
minimum wage of workers to cushion the impact brought about by the latest economic crisis
not only in the Philippines but also in the Asian region.
Parenthetically, there are two methods of adjusting the minimum wage. In Employers
Confederation of the Phils. v. National Wages and Productivity Commission, these were
identified as the floor wage and the salary-ceiling methods. The floor wage method involves the
fixing of a determinate amount to be added to the prevailing statutory minimum wage rates.
On the other hand, in the salary-ceiling method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers already
being paid more than the existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.
A cursory reading of the subject Wage Order convinces us that the intention of the Regional Board of
Region VII was to prescribe a minimum or floor wage; not to determine a salary ceiling. Had the latter
been its intention, the Board would have expressly provided accordingly. The text of Sections 2 and 3
of the Order states:
Section 2. AMOUNT AND MANNER OF INCREASE. Upon the effectivity of this Order, the
daily minimum wage rates for all the workers and employees in the private sector shall
be increased by Ten Pesos (P10.00) per day to be given in the following manner:
i. Five Pesos (P5.00) per day effective April 1, 1998, and
ii. Additional Five Pesos (P5.00) per day effective October 1, 1998.
Section 3. UNIFORM WAGE RATE PER AREA CLASSIFICATION. To effect a uniform wage
rate pursuant to Section 1 hereof, the prescribed minimum wage after full
implementation of this Order for each area classification shall be as follows:
Area Classification Non-Agriculture Sector Agriculture Sector
*Class A 165.00 150.00
*Class B 155.00 140.00Class
*C 145.00 130.00 Class
*D 135.00 120.00
At the risk of being repetitive, we stress that the employees are not entitled to the claimed
salary increase, simply because they are not within the coverage of the Wage Order, as they
were already receiving salaries greater than the minimum wage fixed by the Order.
Concededly, there is an increase necessarily resulting from raising the minimum wage level,
but not across-the-board. Indeed, a double burden cannot be imposed upon an employer
except by clear provision of law. It would be unjust, therefore, to interpret Wage Order No.
ROVII-06 to mean that respondent should grant an across-the-board increase.
In the resolution of labor cases, this Court has always been guided by the State policy
enshrined in the Constitution: social justice and the protection of the working class. Social
justice does not, however, mandate that every dispute should be automatically decided in
favor of labor. In every case, justice is to be granted to the deserving and dispensed in the light
of the established facts and the applicable law and doctrine.
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED.

SY v. PHILIPPINE TRANSMARINE
COMPLAINANT: Susana R. Sy
RESPONDENT: Philippine Transmarine Carriers, Inc., and/or SSC Ship Management Pte., Ltd.
CITATION: G.R. No. 191740
DATE OF PROMULGATION: February 11, 2013
PONENTE: J. Peralta
FACTS:

June 23, 2003 Alfonso N. Sy (Sy) was hired by respondent Philippine Transmarine Carriers
Incorporated for and in behalf of its foreign principal, co-respondent SSC Ship Management Pte.
Ltd., as Able Seaman (AB) to work for ten months.

The contract of Sys employment, called Philippine Overseas Employment AdministrationStandard Employment Contract (POEA-SEC), incorporates a set of standard provisions
established and implemented by POEA, called the Amended Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels

October 1, 2005 The vessel was at the Port of Jakarta, Indonesia when Sy went on shore leave
and left the vessel. A few hours later, the vessels agent from Jardine received an advice from local
police that one of the vessels crew members died ashore. The vessels master, Capt. Norman C.
Marquez went to the hospital and confirmed the cadaver to be that of Sy.

The local police found that Sy was riding on a motorcycle when he stopped the driver to urinate at
the riverside of the road; Sy had not returned for a while, so the driver went to look for him but he
was nowhere to be found. A few hours later, his body was found.

A forensic pathologist certified that the death was an accident due to drowning, and that there was
20% alcohol in his urine.

October 8, 2005 Sys body was repatriated to the Philippines. NBIs post-mortem examination
certified that the cause of death was Asphyxia by drowning.

Petitioner Susana Sy, widow of Alfonso Sy, demanded from respondents the payment of her
husbands death benefits and compensation. Respondents denied such claim, since Sys death
occurred while he was on shore leave, hence his death was not work-related and therefore, not
compensable.

LABOR ARBITER RULING: (August 28, 2007)

Respondent is ordered to pay complainant death benefits and burial expenses.

Even if while he was on shore leave, he was still under the control and supervision of the
master or captain of the vessel as it was provided under Section 13 of the Contract that the
seafarer before taking a shore leave must secure the consent of the master of the vessel.

Another indication that a seafarer is considered to be doing work-related functions even when on
shore leave is found in subparagraph 4, paragraph B, section 1 of the Contract where the duties of
the seafarer are not limited to his stay while on board, but extend to his stay ashore.

Only a finding that his death was self-inflicted or attributable to him would bar the payment of death
benefits. The Autopsy Report did not establish that the death was the result of Sys willful act
on his own life; that there were traces of alcohol in his blood did not make him intoxicated as there
was no proof that he was; and granting that he was intoxicated, such was accidental drowning and
not an intentional taking of his life.

NLRC RULING: (October 17, 2008)

Respondents appeal was dismissed for lack of merit; complainants entitled to attorneys fees

Affirmed the decision of Labor Arbiter but modified the monetary award

CA RULING: (September 17, 2009)

Petition granted. NLRCs decision and resolution ordering respondents to pay Mrs. Sy were
reversed.

Mrs. Sy was ordered to return to the respondents the monetary award she received.

Sys death was not work-related. Under Section 20 (A) of POEA Memorandum Circular No. 9,
series of 2000, it was not sufficient to establish that Sys death had occurred during the term of his
contract, but there must be a causal connection between his death and the work for which he
had been contracted. When he died, he was on shore leave and left the vessel, and his death
neither occurred at his workplace nor while performing an act within the scope of his employment.

ISSUE:

Whether or not petitioner/complainant is entitled to death compensation benefits from respondents

SC RULING: (February 11, 2013)

The petition is devoid of merit, denied. To be entitled for death compensation benefits from the
employer, the death of the seafarer (1) must be work-related; and (2) must happen during the
term of the employment contract. The qualification that death must be work-related has made it
necessary to show a causal connection between a seafarers work and his death to be
compensable.

Under the 2000 POEA Amended Employment Contract, work-related injury is defined as an
injury(ies) resulting in disability or death arising out of and in the course of employment.

Iloilo Dock & Engineering Co. v. Workmens Compensation Commission the words arising out
of refer to the origin or cause of the accident, while the words in the course of refer to the
time, place, and circumstances under which the accident takes place.

At the time of the accident, Sy was on shore leave and there was no showing that he was doing
an act in relation to his duty as a seaman. Because of the 20% alcohol found in his urine, it can
be presumed that he just came from a personal social function which was not related at all to his job
as a seaman. His death could not be considered work-related to be compensable.

Their contract clearly provides that it is not enough that death occurred during the term of the
contract, but must be work-related to be compensable.

Hocheng vs. Farrales

Facts:
On December 2, 2009, Hocheng Philippines Corporation (HPC) received a report
that a motorcycle helmet was stolen at the parking lot within its premises. The theft was
recorded in the company CCTV showing Antonio Farrales, an employee taking the missing
helmet from a parked motorcycle. Farrales subsequently sent a notice to explain. According to
him, he asked a co-worker named Eric Libutan if he could borrow his helmet and that since they
reside in the same barangay Eric could pick it up from his house afterwards. In the parking lot,
he asked Andy Lopega to hand him a yellow helmet hanging from a motorcycle parked next to
him. Upon seeing Eric again, he asked why Eric did not get the helmet from his house to which
he replied, Hindi po sa akin yung nakuha nyong helmet. Farrales then informed the HPC
guard and upon finding out who owned the helmet, returned it and apologized saying it was an
honest mistake. A hearing regarding the incident was consequently set by the company.
On February 15, 2010, the company dismissed Farrales from service for violating the HPC Code
of Discipline, which provides that stealing from the company, its employees and officials, or
from its contractors, visitors or clients, is akin to serious misconduct and fraud which are
just causes for termination of employment.
On March 25, 2010, Farrales filed a complaint for illegal dismissal. The Labor Arbiter ruled in
favor of Farrales, ordering HPC to pay Farrales. Upon appeal, the NLRC reversed the LAs
decision. However, the CA agreed with the LA that Farrales act of taking Reymars helmet did
not amount to theft, since Eric did admit letting Farrales borrow his helmet, only Farrales
mistook which helmet was his.
Issue: WON Farrales was validly dismissed
Held: To validly dismiss an employee, the law requires the employer to prove the existence of
any of the valid or authorized causes, which, as enumerated in Article 282 of the Labor Code,
are: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his

employer or the latters representative in connection with his work; (b) gross and habitual
neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
reposed in him by his employer or his duly authorized representative; (d) commission of a
crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and (e) other causes analogous to
the foregoing.
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. The Court previously held that to
be lawful, the cause for termination must be a serious and grave malfeasance to justify the
deprivation of a means of livelihood. Moreover, the penalty imposed on the erring employee
ought to be proportionate to the offense, taking into account its nature and surrounding
circumstances.
The Court agrees with the CA that Farrales committed no serious or willful misconduct or
disobedience to warrant his dismissal. Farrales lost no time in returning the helmet the moment
he learned of his mistake and immediately admitted his error to the company guard and sought
help to find the owner of the yellow helmet. Misconduct is willful in character, and implies
wrongful intent and not mere error in judgment, and it must be in connection with the
employees work to constitute just cause for his separation. But where there is no showing of a
clear, valid and legal cause for termination of employment, the law considers the case a matter
of illegal dismissal. If doubts exist between the evidence presented by the employer and that of
the employee, the scales of justice must be tilted in favor of the latter.

Serrano vs Severino Santos

Petitioner: Rodolfo Serrano
Respondent: Severino Santos Transit/ Severino Santos
Citation:627 SCRA 483
Date of Promulgation: August 9, 2010
Ponente: Carpio, J
FACTS:

Rod
olfo J. Serrano was hired on September 28, 1992 as bus conductor by Severino Santos
transit, a bus company owned and operated by Severino Santos.

Afte
r 14 years of service or on July 14, 2006, petitioner applied for optional retirement from the
company whose representative advised him that he must first sign the already prepared
Quitclaim before his retirement pay could be released.

As
petitioners request to first go over the computation of his retirement pay was denied, he
signed the Quitclaim on which he wrote U.P. (under protest) after his signature, indicating
his protest to the amount of P75,277.45 which he received, computed by the company at
15 days per year of service.

Peti
tioner soon after filed a complaint, alleging that the company erred in its computation
since under Republic Act No. 7641, otherwise known as the Retirement Pay Law, his
retirement pay should have been computed at 22.5 days per year of service to include the
cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay
which the company did not.
Severino Santos Defense

The
Quitclaim signed by petitioner barred his claim and, in any event, its computation was
correct since petitioner was not entitled to the 5-day SIL and pro-rated 13th month pay for,
as a bus conductor, he was paid on commission basis.
ISSUE: Whether or not 22.5 days retirement pay per year of service is the correct formula.

RULING:
Republic Act No. 7641 which was enacted on December 9, 1992 amended Article 287 of
the Labor Code by providing for retirement pay to qualified private sector employees in the
absence of any retirement plan in the establishment. The pertinent provision of said law reads:
Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as the
Labor Code of the Philippines, is hereby amended to read as follows:
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall
mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent
of not more than five (5) days of service incentive leaves.
Admittedly, petitioner worked for 14 years for the bus company which did not adopt any
retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he
falls within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the
Labor Arbiter, petitioners retirement pay should include the cash equivalent of the 5-day SIL
and 1/12 of the 13th month pay.
Autobus vs Bautista
Petitioner: Autobus Transport Systems, Inc.
Respondent: Antonio Bautista
Citation: GR 156367
Date of Promulgation: May 16, 2005
Ponente: Chico- Nazaro, J
FActs:

Ant
onio Bautista has been employed by Autobus, as driver-conductor and was paid
oncommission basis, seven percent (7%) of the total gross income per travel, on a twice a
monthbasis.

Whi
le Bautista was driving Autobus No. 114, he accidentally bumped the rear portion of
Autobus No. 124.

Bau
tista averred that the accident happened because he was compelled by the management
to go back to Roxas, Isabela, although he had not slept for almost 24 hours, as he had just
arrived in Manila from Roxas, Isabela.

Furt
hermore, he alleged that he was not allowed to work until he fully paid 30% of the cost of
repair of the damaged busesand that his pleas for reconsideration were ignored by
management.

Afte
r a month, management sent him a letter of termination.

Th
us, he instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of
13th month pay and service incentive leavepay.

Aut
obus maintained that Bautistas employment was replete with offenses.

Furt
hermore,Autobus avers that in the exercise of its management prerogative, Bautista's
employment was terminated only after the latter was provided with an opportunity to
explain.

The
Labor Arbiter dismissed the complaint but ordered Autobus to pay his 13th month pay

fromthe date of his hiring to the date of his dismissal, as well as his service incentive leave
pay for allthe years he had been in service.
Aut
obus appealed to the NLRC which deleted the award of 13thmonth pay based on the Rules
and Regulations Implementing Presidential Decree No. 851,particularly Sec. 3 which
exempts employers of those who are paid on purely commission,boundary, or task basis.
Rec
ords showed that Bautista, in his position paper, admitted that he was paid on a
commission basis. The award of service incentive leave pay was maintained.
Thu
s, Autobus sought a reconsideration which was denied by NLRC.
CA
affirmed the decisionof the NLRC

ISSUE: Whether or not Bautista is entitled to Service Incentive Leave.

RULING:
What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is a field personnel.
Field personnel is further elaborated in the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial Employees Association[10] which states
that:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty;
hence, they are paid specific amount for rendering specific service or performing specific work.
If required to be at specific places at specific times, employees including drivers cannot be said
to be field personnel despite the fact that they are performing work away from the principal
office of the employee
Along the routes that are plied by these bus companies, there are its inspectors assigned
at strategic places who board the bus and inspect the passengers, the punched tickets, and the
conductors reports. There is also the mandatory once-a-week car barn or shop day, where the
bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or nott
here are problems thereon as reported by the driver and/or conductor. They too, must be at a
specific place at a specified time, as they generally observe prompt departure and arrival from
their point of origin to their point of destination. In each and every depot, there is always the
Dispatcher whose function is precisely to see to it that the bus and its crew leave the
premisesat specific times and arrive at the estimated proper time. These, are present in the
case at bar. The driver, the complainant herein, was therefore under constant supervision while
in the performance of this work. He cannot be considered a field personnel.
Therefore, Bautista is not a field personnel but a regular employee who performs tasks
usually necessary and desirable to the usual trade of business of Autobus. Accordingly,
Bautista is entitled to the grant of service incentive leave.
David vs Macasio
Petitioner: Ariel David
Respondent: John Macasio
Citation: GR 195466
Date of Promulgation: July 2, 2014
Ponente: Brion, J
FACTS:

Ma
casio fled beore the Labor Arbiter a complaint against petitioner Ariel L. David for
nonpayment of overtime pay, holiday pay, and 13th month pay.

a)
b)
c)

Ma
casio had been working as a butcher for David since January 6, 1995. Macasio claimed that
David exercised effective control and supervision over his work
Dav
id claimed that he started his hog dealer business in 2005 and alleged that he hired
Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled
to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor Code.
Da
vid pointed out that Macasio:
usu
ally starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier,
depending on the volume of the delivered hogs;
rec
eived the fixed amount of P700.00 per engagement, regardless of the actual number of
hours that he spent chopping the delivered hogs; and
wa
s not engaged to report for work and, accordingly, did not receive any fee when no hogs
were delivered.
Ma
casio disputed Davids allegations .He argued that, first, David did not start his business
only in 2005. He pointed to the Certificate of Employment that David issued in his favor
which placed the date of his employment, albeit erroneously, in January 2000. Second, he
reported for work every day which the payroll or time record could have easily proved had
David submitted them in evidence.
Ref
uting Macasios submissions, David claims that Macasio was not his employee as he hired
the latter on "pakyaw" or task basis. He also claimed that he issued the Certificate of
Employment, upon Macasios request, only for overseas employment purposes.

ISSUE: Whether or not a worker paid in "pakyaw" basis is entitled to holiday pay m overtime
pay, 13th month pay and Service Incentive Leave.
RULING:
SIL and Holiday Pay
The payment of an employee on task or pakyaw basis alone is insufficient to exclude one
from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore
validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82
from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the
determination of excluded workers who are paid by results from the coverage of Title I is
"determined by the Secretary of Labor in appropriate regulations.
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to
holiday and SIL pay, the presence (or absence) of employer supervision as regards the workers
time and performance is the key: if the worker is simply engaged on pakyaw or task basis, then
the general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the
exceptions specifically provided under Article 94 (holiday pay) and Article95 (SIL pay) of the
Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the
meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.
Macasio does not fall under the classification of "field personnel"
13th Month pay
13th month pay benefits generally cover all employees; an employee must be one of those
expressly enumerated to be exempted. Section 3 of the Rules and Regulations Implementing
P.D. No. 85154 enumerates the exemptions from the coverage of 13th month pay benefits.
Under Section 3(e), "employers of those who are paid on xxx task basis, and those who are

paid a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules
and Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any
reference to "field personnel." This could only mean that insofar as payment of the 13th month
pay is concerned, the law did not intend to qualify the exemption from its coverage with the
requirement that the task worker be a "field personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition
insofar as the payment of 13th month pay to respondent is concerned. In all other aspects, we
AFFIRM the decision dated November 22, 2010 and the resolution dated January 31, 2011 of
the Court of Appeals in CA-G.R. SP No. 116003.
Robina Farms vs Villa
Petitioner: Robina Farms/ Universal Robina Corporatioj
Respondent: Elizabeth Villa
Citation: GR 175869
Date of Promulgation: April 18, 2016
Ponente: Bersamin, J
FACTS:

Eliz
abeth Villa brought against the petitioner her complaint for illegal suspension, illegal
dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay

Vill
a averred that she had been employed by petitioner Robina Farms as sales clerk since
August 1981;
1)
tha
t in the later part of 2001, the petitioner had enticed her to avail herself of the company's
special retirement program;
2)
tha
t on March 2, 2002, she had received a memorandum from Lily Ngochua requiring her to
explain her failure to issue invoices for unhatched eggs in the months of January to
February 2002;
3)
tha
t she had explained that the invoices were not delivered on time because the delivery
receipts were delayed and overlooked;
4)
tha
t despite her explanation, she had been suspended for 10 days from March 8, 2012 until
March 19, 2002;
5)
tha
t upon reporting back to work, she had been advised to cease working because her
application for retirement had already been approved;
6)
tha
t she had been subsequently informed that her application had been disapproved, and had
then been advised to tender her resignation with a request for financial assistance;
7)
tha
t she had manifested her intention to return to work but the petitioner had confiscated her
gate pass;
8)
an
d that she had since then been prevented from entering the company premises and had
been replaced by another employee.

The
petitioner admitted that Villa had been its sales clerk at Robina Farms.
1)
It
stated that on December 12, 2001, she had applied for retirement under the special

privilege program offered to its employees in Bulacan and Anti polo who had served for at
least
10
years;
2)
tha
t in February 2002, her attention had been called by Anita Gabatan of the accounting
department to explain her failure to issue invoices for the unhatched eggs for the month of
February;
3)
tha
t she had explained that she had been busy; that Gabatan had referred the matter to
Florabeth Zanoria who had in turn relayed the matter to Ngochua;
4)
that the latter had then given Villa the chance to explain, which she did.

and

The
petitioner added that after the administrative hearing Villa was found to have violated the
company rule on the timely issuance of the invoices that had resulted in delay in the
payment of buyers considering that the payment had depended upon the receipt of the
invoices
She
had been suspended from her employment as a consequence; that after serving the
suspension, she had returned to work and had followed up her application for retirement
with Lucina de Guzman, who had then informed her that the management did not approve
the benefits equivalent to 86% of her salary rate applied for, but only Yz month for every
year of service; and that disappointed with the outcome, she had then brought her
complaint against the petitioners.

ISSUE: Whether or not Villa had been ilegally dismissed.

RULING:
Villa had not been dismissed from employment, holding thusly:
Complainant's application, insofar the benefits are concerned, was not approved which
means that while her application for retirement was considered, management was willing to
give her retirement benefits equivalent only to half-month pay for every year of service and
not 86% of her salary for every year of service as mentioned in her application. Mrs. De
Guzman suggested that if she wanted to pursue her supposed retirement despite thereof, she
should submit a resignation letter and include therein a request for financial assistance. We do
not find anything illegal or violative in the suggestion made by Mrs. De Guzman. There was no
compulsion since the choice was left entirely to the complainant whether to pursue it or not.
Although ordering Villa's reinstatement, the Labor Arbiter denied her claim for backwages
and overtime pay because she had not adduced evidence of the overtime work actually
performed. The Labor Arbiter declared that Villa was entitled to service in
MAXICARE VS CONTRERAS
Petitioner: Maxicare PCIB Cigna Healthcare, Eric S. Nubla, M.D. and Ruth A. Asis, M.D.
Respondent: Marian Brigitte A. Contreras, M.D.
Citation: GR No. 194352
Date of Promulgation: January 30, 2013
Ponente: Velasco Jr., J.
FYI: Constructive Dismissal is an employer's act amounting to dismissal but made to appear as if it were
not; a dismissal in disguise, i.e. an employee is allowed to continue to work but it is simply reassigned, or
demoted, or his pay diminished without a valid reason to do so
FACTS

1. Dr. Marian Contreras was hired by Maxicare as a retainer doctor at the Philippine National Bank Head
Office sometime in March 2003. By virtue of a verbal agreement:
- she would render medical services for one year at Php 250 per hour
- her retainer fee would be paid every 15th and 30th of each month
- her retainer fee would based on her work schedule which was every Tuesday, Thursday and Friday
from 6am to 5pm
2. On July 3, 2003, Dr. Ruth Asis, Maxicare's medical specialist on Corporate Accounts, informed Dr.
Contreras that she was going to be transferred to another account after a month.
- Dr. Contreras agreed on the terms of the Service Agreement with Dr. Eric Nubla, Maxicare's VP for
Medical Services; such was executed on August 4, 2003
1. regarding her transfer to Maybank
Philippines for a period of 4 months
(Aug 5 - Nov 29, 2003)
2. retainer fee of Php 168 per hour
3. Dr. Contreras reported to work for one day only.
4. On August 8, 2003, she filed a complaint before the Labor Arbiter claiming that she was constructively
dismissed.
- Maxicare insisted that there was no constructive dismissal
5. Labor Arbiter dismissed the complaint of Dr. Contreras for lack of merit.
- if she was forced to sign the Service Agreement, she could have not reported to that assignment
(Maybank)
- her reporting to work for one day ratified the Service Agreement she signed and waived all her
rights under the previous agreement (PNB) she is supposed to be entitled to reinforce
- she should have ventilated the matter before signing and executing the questioned Service
Agreement
6. NLRC reversed the Labor Arbiter's decision.
- the Service Agreement's execution does not negate constructive dismissal arising from the
termination of Dr. Contreras' PNB retainership without either just or authorized cause
- she signed the Service Agreement but later repudiated it with a notice to Maxicare that she could
not go on serving under such a disadvantageous situation (decrease of retainer fee)
- the clear economic prejudice validated her claim of having reservation on the Service Agreement
prior to her signature (she signed because it gave her no realistic chance to haggle for her job)
7. CA affirmed the conclusions of the NLRC
- her transfer to Maybank resulting to the diminution of her salary was prejudicial to her interest and
amounted to a constructive dismissal
- Maxicare had the burden of proving that 1) the transfer made was valid or for legitimate grounds, 2)
such transfer was not unreasonable, inconvenient or prejudicial.
8. Maxicare filed a petition before the SC.
- there is no employer-employee relationship
- Dr. Contreras was an independent contractor (she rendered services for a few hours a week, giving
her free time to pursue her private practice)
- terms of their agreement include that either party could terminate the arrangement upon one
month's advance notice
- Dr. Contreras is a highly educated person who freely, willingly, and voluntarily signed the new
Medical Retainership Agreement. There is no truth that she was forced to sign the Service Agreement.
ISSUE
Whether or not there was an employee-employer relationship.
HELD
Yes. Petition of Maxicare was denied.
Maxicare is not unaware of Article 217 of the Labor Code which enumerates the cases where the Labor
Arbiter has exclusive and original jurisdiction: cases only when there is an employer-employee relationship
between the parties in dispute.
- if Maxicare was at the position that there was no employer-employee relationship, it should
questioned the jurisidiction of the Labor Arbiter right away
- while it is true that the question of jurisdiction may be raised at any stage, it is also true that in the
interest of fairness, questions challenging the jurisdiction of courts will not be tolerated if the party
questioning such jurisdiction actively participates in the court proceedings and allows the court to
pass judgement on the case.

Review of labor cases is confined to questions of jurisdiction or grave abuse of discretion. The alleged
absence of employer-employee relationship cannot be raised for the first time on appeal (Duty Free
Philippines Services inc. v. Manolito Tria).
SEMBLANTE VS CA
Petitioner: Marticio Semblante and Dubrick Pilar
Respondent: Court of Appeals, Gallera De Mandaue/spouses Vicente and Maria Luisa Loot
Citation: GR No. 196426
Date of Promulgation: August 15, 2011
Ponente: Velasco Jr., J.
FYI: Four-fold Test refers to the usual test used to determine the existence of employer-employer
relationship.
FACTS
1. Marticio Semblante and Dubrick Pilar claim that they were hired by respondent-spouses Vicente and
Maria Luisa Loot, owners of Gallera de Mandaue--a cockpit.
- Semblante, as the official masiador, calls and takes bets from the gamecock owners and other
bettors and orders the start of the cockfight; he also distributes the winnings after deducting the commission
for the cockpit
- Pilar, as the sentenciador, oversees the proper gaffing of fight cocks, determines the fighting cocks'
physical condition and capabilities, and declares the result of the cockfight
- Semblante receives Php 8,000 per month and Pilar receives Php 14,000 pero month. They work
Tuesdays, Wednesdays, Saturdays and Sundays, excluding monthly derbies and special holidays. They
work from 1pm-12mn or depending on the needs of the cockpit
- Semblante and Pilar have been issued employee identification cards that they wear everytime they
go to work
- they allege not having incurred any infraction and/or violation
2. On November 14, 2003, petitioners were denied entry into the cockpit upon the instructions of the
respondents. They were informed of the termination of their services effective that day. Petitioners then file a
complaint for illegal dismissal.
3. Respondents denied that petitioners were their employees and claim that they were associates of
respondents' independent contractor, Tomas Vega.
- respondent are free to decide whether they will report to work or not
- identification cards were given to them only to indicate that they were free from the normal entrance
fee and to differentiate them from the general public
4. The Labor Arbiter found petitioners to be regular employees of the cockpit as they performed work
that was necessary and indispensable to the usual trade or business of respondents for a number of
year.
5. Respondents upon receiving the Labor Arbiter's decision dated September 14, 2004, filed an appeal with
the NLRC on September 24, 2004.
- this was however without posting a cash or surety bond equivalent to the monetary award granted
by the Labor Arbiter
- it was only on Octobr 11, 2004 that respondents filed an appeal bond dated October 6, 2004.
6. In a Resolution dated August 25, 2005, the NLRC denied the appeal for non-perfection.
- however, upon acting on respondents' Motion for Reconsideration, the NLRC reversed its
Resolution on the ground that their appeal was meritorious
7. The NLRC, in a Resolution dated October 18, 2006, held that there was no employer-employee
relationship between petitioners and respondents.
- there was no separate individual contract with respondents was ever executed by petitioners
8. Petitioners went to the CA on a petition for certiorari.
- they argued that the NLRC gravely abused its discretion in entertaining an appeal that was not
perfected in the first place (the appeal bond being filed late)
9. The CA decided in favor of the respondents.
- in some circumstances, the NLRC is allowed to be liberal in the interpretation of the rules in
deciding labor cases. Although the appeal bond was filed late, an exceptional circumstance--the appeal
being highly meritorious--in the case at bench warrants a relaxation of the bond requirement as a
condition for perfecting the appeal
- there is no employer-employee relationship
1. petitioners are akin to independent contractors who possess unique skills, expertise, and
talent that distinguishes them from ordinary employees

2. they are not given salaries by the cockpit owners; their compensation is based on the
arriba (commission)
3. respondents have no control over the means and methods of the manner by which
petitioners should perform their work
4. petitioners are free to choose which cockpit arena to enter and offer their expertise
5. respondents did not supply petitioners with the tools and instrumentalities they need to
perform their work
6. respondents only needed their talent and skills to be masiador and sentenciador.
10. Petitioners came to the SC arguing that the CA committed a reversible error in entertaining an appeal
which was not perfected in the first place.
ISSUE
1. Whether or not the CA committed reversible error in entertaining an appeal which was not perfected int he
first place.
2. Whether or not there existed an employer-employee relationship.
HELD
No. The SC denied the petition for lack of merit.
1. Indeed, the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the Decision of the Labor Arbiter.
Article 223, Labor Code
Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions,
awards, or orders. Such appeal may be entertained only on any of the following grounds:
xxxx
In case of a judgment involving 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
Commission in the amount equivalent to the monetary award in the judgment appealed from.
The SC, time and again, has relaxed this rule on appeal bond when there are strong and compelling reasons
for liberality, such as the prevention of miscarriage of justice extant in the case or the special circumstances
in the case combined with its legal merits or the amount and the issue involved.
- technical rules cannot prevent courts from exercising their duties to determine and settle, equitable
and completely, the rights and obligations of the parties.
2. While the bond was filed late, it is evident that petitioners are not employees of respondents, since
their relationship failed the four-fold test of employment.
1. the selection and engagement of the employee
2. the payment of wages
3. the power of dismissal
4. the power to control the employee's conduct (the most important element).
As found by the NLRC and the CA:
- the respondents had no part in petitioners' selection and management
- petitioners were paid out of the arriba
- petitioners performed their functions free from the direction and control of respondents
- petitioners relied on their expertise and was never given by the respondents any tool
needed for the performance of their work.
PSI VS CA
Petitioner: Professional Services Inc.
Respondent: Leonardo de Castro, Brion, Peraltam Bersamin, Del Castillo, Abad, Villarama Jr.,
Perez and Mendoza, JJ., the Court of Appeals, and Natividad and Enrique Agana
Citation: GR No. 126297
Date of Promulgation: November 25, 2008
Ponente: Puno, J.

FYI: Principle of Ostensible Agency/Doctrine of Apparent Authority imposes liability, not as the result of
the reality of a contractual relationship, but rather because of the actions of a principal or an employer in
somehow misleading the public into believing that the relationship or the authority exists; under the rule, the
principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent
to assume, or which he holds to the agent out to the public as possessing
FACTS
1. Enrique and Natividad Agana (later substituted by her heirs) filed a complaint for damages against Dr.
Miguel Ampil and Dr. Juan Fuentes when the two doctors neglected to remove from Natividad's body 2
gauzes.
2. The RTC, in a decision dated March 17, 1993, held PSI with Dr. Ampil and Dr. Fuentes liable for damages.
3. On appeal, the CA absolved Dr. Fuentes but affirmed the liability of PSI and Dr. Ampil, subject to the right
of PSI to claim reimbursement from Dr. Ampil.
4. The SC affirmed the CA's decision in January 31, 2007.
- PSI filed a Motion for Reconsideration but the Court denied it in a Resolution dated February 11,
2008.
5. The SC premised the direct liability of PSI to the Aganas incident on the following facts and law:
a. There existed an emploter-employee relationship between PSI and Dr. Ampil.
- as held in Ramos v CA, for purposes of allocating responsibility in medical
negligence cases, an employer-employee relationship exists between
hospitals
and consultants
b. PSI's accreditation and advertisement of Dr. Ampil created the public impression that he was its
agent.
- Enrique testified that it was on account of PSI's accreditation of Dr. Ampil
that he conferred with him about his wife's condition
- when Enrique engaged the services of Dr. Ampil, at the back of his mind
was that the doctor was a staff member of a prestigious hospital
- under the doctrine of apparent authority applied in Nogales, et al v. Capitol
Medical Center, et al, PSI was liable for the negligence of Dr. Ampil
c. As operator of Medical City General hospital, PSI was bound by its duty to provide comprehensive
medical services to Natividad Agana: 1) to exercise reasonable care to protect her from harm, 2) to
oversee or supervise all persons who practiced medicine within its walls, and 3) to take active steps
in fixing any form of negligence committed within its premises.
- PSI committed a serious breach of its corporate duty when it failed to conduct an
immediate investigation into the reported missing gauzes
6. PSI filed a second Motion for Reconsideration. Other hospitals, as intervenors, filed their petitions as well
ISSUE
Whether or not PSI should be held liable.
HELD
Yes. Petition was dismissed.
The SC held that due to lack of evidence of an employment relationship with Dr. Ampil, the principle of
respondeat superior cannot be applied. However, under the principle of ostensible agency, PSI is found
liable.
- there is ample evidence that the hospital (PSI) held out to the patient (Natividad) that the doctor
(Dr. Ampil) was its agent.
- present are the 2 factors that determine apparent authority: 1) the hospital's implied
manifestation to the patient which led the latter to conclude that the doctor was the hospital's agent;
2) the patient's reliance upon the conduct of the hospital and the doctor, consistent with ordinary
care and prudence.
When Enrique was asked why he chose Dr. Ampil, he replied by stating that he has known Dr. Ampil to be a
specialist as a surgeon, that he knows him as a staff member of the Medical City, and because he is a
neighbor.
- clearly, the decision made by Enrique to consult Dr. Ampil was significantly influenced by the
impression that Dr. Ampil was a staff member of Medical City general hospital
- Enrique looked upon Dr. Ampil not as an independent of but as integrally related to Medical
City.

Furthermore, PSI required a consent for hospital care to be signed preparatory to the surgery of Natividad.
The form reads:
Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General
Hospital to perform such diagnostic procedures and to administer such medications and treatments as may
be deemed necessary or advisable by the physicians of this hospital for and during the confinement of
xxx.
And by such statement, PSI virtually reinforced the public impression that Dr. Ampil was a physician of its
hospital, rather than one independently practicing; that the medications and treatments he prescribed were
necessary and desirable; that the hospital staff was prepared to carry them out. This Court must therefore
maintain the ruling that PSI is vicariously liable for the negligence of Dr. Ampil as its ostensible agent.
It should be borne in mind that the corporate negligence ascribed to PSI is different from the medical
negligence attributed to Dr. Ampil. The duties of the hospital are distinct from those of the doctor-consultant
practicing within its premises in relation to the patient; hence, the failure of PSI to fulfill its duties as a hospital
corporation gave rise to a direct liability to the Aganas distinct from that of Dr. Ampil.
All this notwithstanding, we make it clear that PSIs hospital liability based on ostensible agency and
corporate negligence applies only to this case, pro hac vice. It is not intended to set a precedent and
should not serve as a basis to hold hospitals liable for every form of negligence of their doctorsconsultants under any and all circumstances. The ruling is unique to this case, for the liability of PSI
arose from an implied agency with Dr. Ampil and an admitted corporate duty to Natividad
CALAMBA VS NLRC
Petitionert: Calamba Medical Center
Respondent: National Labor Relations Commission, Ronald Lanzanas and Merceditha
Lanzanas
Citation: GR No. 176484
Date of Promulgation: November 25, 2008
Ponente: Carpio Morales, J.
FYI: Control Test, being part of the four-fold test as its most important element, refers to the employers
power to control the employees conduct not only as to the result of the work to be done but also with respect
to the means and methods by which the work is to be accomplished
FACTS
1. Dr. Ronaldo Lanzanas and Dr. Merceditha Lanzanas was hired by the Calamba Medical Center as part of
its team of resident physicians.
- Dr. Lazanas on March 1992, paid Php 4,800
- Dr. Merceditha on August 1995, paid Php 4,800
- it appears that resident physicians were also given a percentage share out of fees charged for outpatient treatments, operating room assistance and discharge billings.
- Dr. Raul Desipeda, the hospital's medical director, fixed the work schedules of the resident
physicians
- resident physicians are issued identification cards, enrolled in the SSS, and have income taxes
withheld from them.
2. On March 7, 1998, Dr. Meluz Trinidad, another resident physician, overheard a telephone conversation
between Dr. Lanzanas with Diosdado Miscala.
- Dr. Lanzanas and Miscala were discussing about the low admission of patients to the hospital.
- Dr. Trinidad called the attention of Dr. Desipeda regarding the issue.
3. Dr. Desipeda issued a memorandum against Dr. Lanzanas.
- his conversation was alleged to be an act inimical to the interest of the hospital
- he was given 24 hours to explain why no disciplinary action should be taken against him
- he was placed under 30-days of preventive suspension pending the investigation of the case.
4. Dr. Desipeda did not give Dr. Merceditha, who was not involved in the issue, any work schedules after
sending her husband the memorandum. She was not informed of the reason, but she was later informed by
Human Resources that that was part of the hospital's cost-cutting measures.
5. Dr. Lanzanas responded to the memorandum and explained that his conversation with Miscala was taken
out of context by Dr. Trinidad.
6. On March 14, 1998, rank-and-file employees union of the hospital went on strike due to unresolved
grievances over terms and conditions of employment.
7. On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension before the NLRC. Subsequently,
Dr. Merceditha filed a complaint for illegal dismissal.

8. On April 21, 1998, Sec. Trajano of the DOLE certified the labor dispute to the NLRC for compulsory
arbitration and issued a Return-to-Work Order to the striking union officers and employees pending the
resolution of the labor dispute.
9. On April 22, 1998, Dr. Desipeda echoed the Return-to-Work Order of the Secretary of Labor directing all
union officers and members to return to work on April 23, 1998, except those employees that were
already terminated or are serving disciplinary action.
10. Calamba Medical Center sent a Notice of Termination to Dr. Lanzanas on April 25, 1998.
- it indicated as grounds his supposed failure to report back to work despite the DOLE order and his
supposed role in the striking union
- Dr. Lanzanas then amended the information on his complaint to include illegal dismissal.
11. The Labor Arbiter dismissed the spouses' complaints for want of jurisdiction upon finding that there was
no employer-employee relationship (the 4th requisite--control test-- being absent)
12. The NLRC, by a Decision dated May 3, 2002, reversed the Labor Arbiter's findings.
13. The CA, by a Decision dated June 30, 2004, initially granted Calamba Medical Center's petition and set
aside the NLRC's ruling.
- however, upon respondents' subsequent Motion for Reconsideration, the CA reinstated the NLRC
decision in an Amended Decision dated September 26, 2006.
- the CA found that there is in existence an employer-employee relationship
1. Medical Director still has direct supervision and control over
respondents
2. Medical Director has to approve the schedule of duties of
respondents
3. Medical Director issues instructions or orders to the respondents
relating to the means and methods of performing their duties
4. Medical Director has the power to overrule, review or revise the
decision of the resident physicians.
- petitioner failed to prove that Dr. Lanzanas participated in the strike
- petitioner's explanation that "her marriage to complainant Ronaldo has given rise to the
presumption that her sympathies are likewise with her husband" as a ground for dismissal is unacceptable.
Such is not a ground.
ISSUES
Whether or not there is an employer-employee relationship between petitioner and respondent-spouses.
HELD
Yes. Decision of the CA is affirmed.
Under the control test, there exist an employment relationship between a physician and a hospital if
the hospital controls both the means and the details of the process by which the physician is to
accomplish his task.
- petitioner exercised control over respondents as proven from the fact that in the emergency room,
operating room, or any department or ward for that matter, respondents' work is monitored through nursing
supervisors, charge nurses and orderlies; without the petitioner's or the Medical Director's consent, no
operations can be undertaken in such areas.
- respondents were subject to the Code of Ethics of the hospital which cover administrative and
disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against
persons, property and the hospital's interest
Proof of the respondents' employment status is the issuance of identification cards, the payslips and
BIR W-2 (2316) Forms which reflect their status as employees, and the classification as "salary" of their
remuneration. Moreover, it enrolled respondents in the SSS and Philhealth program.
Furthermore, the issuance of the memorandum explicitly stating that respondent is "employed" and the
termination letter indicating Lanzanas' employment status prove the employer-employee relationship. Finally,
under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employeremployee relationship exists between the resident physicians and the training hospitals, unless
there is a training agreement between them, and the training program is duly accredited or approved
by the appropriate government agency. Respondents were not undergoing any specialization training and
were considered non-training general practitioners.

Dr. Lanzanas claimed that after his 30-day preventive suspension, he was never given any work schedule.
Petitioner did not even release any findings of its supposed investigation of Dr. Lanzanas' alleged inimical
acts. Petitioner failed to observe two requirements before dismissal can be effected: 1) notice and 2) hearing,
which constitute the essential elements of the statutory process.
For the case of Dr. Merceditha, her dismissal was worse. It was without any just or authorized cause and
without observance of due process. It was just her link to Dr. Lanzanas' that the petitioner found as a "valid
cause for dismissal."
The issue on respondents getting a share from hospital fees does not sever the employment tie between
them and petitioner as this merely mirrors additional form of compensation or incentive similar to what
commission-based employees receive as contemplated in Article 97 of the Labor Code.
"Wage" paid to any employee shall mean the remuneration or earning, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee. x x x
TONGKO vs MANUFACTURERS LIFE
Petitioner: Gregorio V. Tongko
Respondents: The Manufacturers Life Insurance Co. Inc, (Manulife) Renato Vergel De Dios
Citation: GR No. 167622
Date of Promulgation: November 7, 2008
Ponente: Velasco
FACTS:
Petition for Review on Certiorari: seeking the reversal of March 29, 2005 decision of CA, which
set aside he Decision dated Sept. 27, 2004 and Resolution dated Dec. 16, 2004 rendered by NLRC
Manulife: engaged in the life insurance business. Renato Vergel de Dios was the President and
CEO
Gregorio Tongko: started his professional relationship with Manulife on July 1, 1977 by a Career
Agents Agreement (Please see yung naka-green sa next case. Ayun yung content nung
Agreement. Same lang kasi)
1983: Tongko was named as Unit Manager in Manulifes Sales Agency
1990: He became Branch Manager
Tongkos gross earnings from his work, consisted of commission, persisteny income and
management override
2001: The problem started when Manulife instituted development programs in the Regional Sales
Management Level. De Dios then sent Tongko a letter dated Nov. 6, 2001 stating his concerns over
the latters ability to lead his group (Please see the whole case for the letter. Medyo mahaba eh, di
ko na sinama)
Dec. 18, 2001: De Dios terminated Tongkos employment through a letter
Tongko then filed a Complaint for Illegal Dismissal at NLRC. Such was raffled to LA Marita V.
Padolina.
Allegations of Tongko
- In a bid to establish an E-E relationship, he alleged that De Dios gave him specific directives
on how to manage his area of responsibility in the latters letter dated Nov. 6, 2001
- Manulife exercised control over him
- He cited Insular Life Assurance Co Ltd v NLRAC and Great Pacific Life Insurance which he
claimed to be similar to his case
- His dismissal was without basis and he was not afforded with due process
- His actions were said to be controlled by Manulife Code of Conduct
Manulife filed a Position Paper with Motion to Dismiss. It alleged that Tongko is not its employee
and that it did not exercise control over him, and NLRC has no jurisdiction

DECISION dated April 15, 2004 by LA Padolina: no E-E relationship. The 4-fold test cant be
applied
NLRC: reversed LAs decision. The NLRCs First Division, while finding an E-E relationship applying
the 4-fold test held Manulife liable for illegal dismissal. Further, Manulife has control over Tongko as
evidenced by a letter dated Nov. 6, 2001
MR to NLRC by Manulife: denied
CA: no E-E relationship

ISSUE:
1. W/N there exist E-E relationship between the parties
2. W/N Tongko was illegally dismissed
HELD:
1. Yes. In the determination of whether an employer-employee relationship exists between two
parties, this Court applies the four-fold test to determine the existence of the elements of such
relationship. In Pacific Consultants International Asia, Inc. v. Schonfeld, the Court set out the
elements of an employer-employee relationship, thus:
Jurisprudence is firmly settled that whenever the existence of an employment relationship
is in dispute, four elements constitute the reliable yardstick: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer's power to control the employee's conduct. It is the so-called "control
test" which constitutes the most important index of the existence of the employeremployee relationship that is, whether the employer controls or has reserved the right to
control the employee not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished. Stated otherwise, an
employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be achieved but also the
means to be used in reaching such end.
The NLRC, for its part, applied the four-fold test and found the existence of all the elements and
declared Tongko an employee of Manulife. The CA, on the other hand, found that the element of
control as an indicator of the existence of an employer-employee relationship was lacking in
this case. The NLRC and the CA based their rulings on the same findings of fact but differed in
their interpretations.
The NLRC arrived at its conclusion, first, on the basis of the letter dated November 6, 2001
addressed by De Dios to Tongko. According to the NLRC, the letter contained "an abundance of
directives or orders that are intended to directly affect complainant's authority and manner of
carrying out his functions as Regional Sales Manager
The NLRC further ruled that the different codes of conduct that were applicable to Tongko
served as the foundations of the power of control wielded by Manulife over Tongko that is
further manifested in the different administrative and other tasks that he was required to
perform.
The NLRC also found that Tongko was required to render exclusive service to Manulife, further
bolstering the existence of an employer-employee relationship.
Finally, the NLRC ruled that Tongko was integrated into a management structure over which
Manulife exercised control, including the actions of its officers. The NLRC held that such
integration added to the fact that Tongko did not have his own agency belied Manulife's claim
that Tongko was an independent contractor.
The CA, however, considered the finding of the existence of an employer-employee relationship
by the NLRC as far too sweeping having as its only basis the letter dated November 6, 2001 of
De Dios. The CA did not concur with the NLRC's ruling that the elements of control as pointed
out by the NLRC are "sufficient indicia of control that negates independent contractorship and

conclusively establish an employer-employee relationship between" 15 Tongko and Manulife. The

CA ruled that there is no employer-employee relationship between Tongko and Manulife.
An impasse appears to have been reached between the CA and the NLRC on the sole issue of
control over an employee's conduct. It bears clarifying that such control not only applies to the
work or goal to be done but also to the means and methods to accomplish it.
In the instant case, Manulife had the power of control over Tongko that would make him its employee.
Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as herein
provided as well as maintain a standard of knowledge and competency in the sale of the Company's
products which satisfies those set by the Company and sufficiently meets the volume of new
business required of Production Club membership.21
Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the
regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's
products that is satisfactory to the company; and (3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of
Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which
demonstrate the power of control exercised by the company over Tongko. The fact that Tongko was obliged
to obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of
Manulife may already be established. Certainly, these requirements controlled the means and methods by
which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative
duties that establishes his employment with Manulife.
2. Yes. In its Petition for Certiorari dated January 7, 2005 filed before the CA, Manulife argued that even if
Tongko is considered as its employee, his employment was validly terminated on the ground of gross and
habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of Manulife.
Manulife stated:
In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape up
and altogether disregarded the latter's advice resulting in his laggard performance clearly indicative of his
willful disobedience of the lawful orders of his superior. x x x
xxxx
As private respondent has patently failed to perform a very fundamental duty, and that is to yield obedience
to all reasonable rules, orders and instructions of the Company, as well as gross failure to reach at least
minimum quota, the termination of his engagement from Manulife is highly warranted and therefore, there is
no illegal dismissal to speak of.
It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota of
evidence to support its claims. Manulife did not even point out which order or rule that Tongko disobeyed.
More importantly, Manulife did not point out the specific acts that Tongko was guilty of that would constitute
gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's alleged "laggard
performance," without substantiating such claim, and equated the same to disobedience and neglect of duty.
WHEREFORE, the petition is hereby GRANTED. The assailed March 29, 2005 Decision of the CA in CAG.R. SP No. 88253 is REVERSED and SET ASIDE. The Decision dated September 27, 2004 of the NLRC
is REINSTATED with the following modifications:
Manulife shall pay Tongko the following:
(1) Full backwages, inclusive of allowances and other benefits or their monetary equivalent from January 2,
2002 up to the finality of this Decision;
(2) Separation pay of one (1) month salary for every year of service from 1977 up to 2001 amounting to PhP
12,435,474.24;
(3) Nominal damages of PhP 30,000 as indemnity for violation of the due process requirements; and
(4) Attorney's fees equivalent to ten percent (10%) of the aforementioned backwages and separation pay.

FRANCISCO v NLRC
Petitioner: Angelina Francisco
Respondents: NLRC, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN
LIZA, IRENE BALLESTEROS, TRINIDAD LIZA And RAMON ESCUETA
Citation: GR No. 170087
Date of Promulgation: August 31, 2006
Ponente: Ynares-Santiago
FACTS:
Angelina Francisco: hired by Kaeri Corporation during its incorporation stage as an Accountant and
Corporate Secretary. She was assigned to handle all the accounting needs of the company, and was
also designated as Liaison Officer in its office in Makati, to secure business permits, construction
benefits and other licenses for the initial operation of the company

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

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

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

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

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

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was
informed that she is no longer connected with the company. 11

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

Respondents contends that: 1) petitioner is not their employee; 2) As technical consultant, petitioner
performed her work at her own discretion without control and supervision of Kasei Corporation; 3)
Petitioner had no daily time record and she came to the office any time she wanted; 4) The company
never interfered with her work except that from time to time, the management would ask her opinion on
matters relating to her profession; 5) The money received by petitioner from the corporation was her
professional fee subject to the 10% expanded withholding tax on professionals, and that she was not
one of those reported to the BIR or SSS as one of the companys employees; 6) Petitioners designation
as technical consultant depended solely upon the will of management. As such, her consultancy may be
terminated any time considering that her services were only temporary in nature and dependent on the
needs of the corporation

LA: illegally dismissed

NLRC: affirmed LAs decision with Modifications
CA: reversed NLRCs decision

ISSUES: W/N there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation
HELD:
Yes. The court held that in this jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally, courts have relied on the so-called right
of control test where the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, can help in determining
the existence of an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which
the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence
of an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the extent of the workers
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that
line of business. The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporations Technical Consultant. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latters line of
business.
There can be no other conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to Respondent
Corporation on a regular basis over an indefinite period of engagement. Respondent
Corporation hired and engaged petitioner for compensation, with the power to dismiss her for
cause. More importantly, Respondent Corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
TONGKO vs MANUFACTURERS LIFE
Petitioner: Gregorio V. Tongko
Respondents: The Manufacturers Life Insurance Co. Inc, (Manulife) Renato Vergel De Dios
Citation: GR No. 167622
Date of Promulgation: June 29, 2010
Ponente: Brion
FACTS:

Motion for Reconsideration dated Dec. 3, 2008: filed by the Respondent to set aside the DECISION of
Nov. 7, 2008, finding that an employer-employee relationship existed between Tongko and Manulife, and
ordered the latter to pay Tongko backwages and separation pay to pay for illegal dismissal
CONTENTS OF THE ASSAILED DECISION:
The contractual relationship between Tongko and Manulife had two basic phases. The first or
initial phase began on July 1, 1977 under a Career Agents Agreement, that provided:
- It is understood and agreed that the Agent is an independent contractor and
nothing contained herein shall be construed or interpreted as creating an employeremployee relationship between the Company and the Agent.
xxxx
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group
policies and other products offered by the Company, and collect, in exchange for
provisional receipts issued by the Agent, money due to or become due to the
Company in respect of applications or policies obtained by or through the Agent or
from policyholders allotted by the Company to the Agent for servicing, subject to
subsequent confirmation of receipt of payment by the Company as evidenced by an
Official Receipt issued by the Company directly to the policyholder.
xxxx
The Company may terminate this Agreement for any breach or violation of any of
the provisions hereof by the Agent by giving written notice to the Agent within
fifteen (15) days from the time of the discovery of the breach. No waiver,
extinguishment, abandonment, withdrawal or cancellation of the right to terminate
this Agreement by the Company shall be construed for any previous failure to
exercise its right under any provision of this Agreement
Either of the parties hereto may likewise terminate his Agreement at any time
without cause, by giving to the other party fifteen (15) days notice in writing.

The second phase started in 1983 when Tongko was named Unit Manager in Manulifes Sales
Agency Organization. In 1990, he became a Branch Manager. Six years later (or in 1996),
Tongko became a Regional Sales Manager
- Tongkos gross earnings consisted of commissions, persistency income and management
overrides
- He declared himself self-employed in his income tax returns
- Under oath, he de declared his gross business income and deducted his business expenses
to arrive at his taxable business income. Manulife withheld the corresponding 10% tax on
Tongkos earnings
2001: Manulife instituted manpower development programs at the Regional Sales Management.
RENATOR VERGEL DE DIOS wrote Tongko
Letter:
- The first step to transforming Manulife into a big league player has been very clear to increase
the number of agents to at least 1,000 strong for a start. This may seem diametrically opposed to
the way Manulife was run when you first joined the organization. Since then, however,
substantial changes have taken place in the organization, as these have been influenced by
developments both from within and without the company.
- Issue #2: "Some Managers are unhappy with their earnings and would want to revert to the
position of agents."
- Issue # 3: "Sales Managers are doing what the company asks them to do but, in the process,
they earn less."
December 18, 2001: De Dios wrote Tongko another letter terminating the latters services
Tongko: Complaint for Illegal Dismissal at NLRC
LA:
no E-E relationship
NLRC: reversed the LAs decision
CA: NLRC gravely abused its discretion in its ruling and reverted to LAs decision that no E-E
relationship existed. It applied the four-fold test for determining control and found the elements in this
case to be lacking, basing its decision on the same facts used by the NLRC. It found that Manulife did
not exert control over Tongko, there was no employer-employee relationship and thus the NLRC did not
have jurisdiction over the case.
SC (Nov. 7, 2008 decision): there is an E-E relationship

SC (June 29, 2010 Resolution): reversed the Nov 7, 2008 decision

Manulife then filed a Motion for Recon

ISSUE: W/N there exist an employer-employee relationshiop between Tongko and Manulife?
HELD: NO.
The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the
performance of the task of one providing service both with respect to the means and manner,
and the results of the service is the primary element in determining whether an employment
relationship exists. The Supreme Court ruled petitioners Motion against his favor since he failed
to show that the control Manulife exercised over him was the control required to exist in an
employer-employee relationship; Manulifes control fell short of this norm and carried only the
characteristic of the relationship between an insurance company and its agents, as defined by
the
Insurance
Code
and
by
the
law
of
agency
under
the
Civil
Code.
In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of
control specific to an insurance agency, which do not amount to the elements of control that
characterize an employment relationship governed by the Labor Code.The Insurance Code
provides definite parameters in the way an agent negotiates for the sale of the companys
insurance products, his collection activities and his delivery of the insurance contract or policy.
They do not reach the level of control into the means and manner of doing an assigned task
that invariably characterizes an employment relationship as defined by labor law.
To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of
dictating the means and methods to be employed in attaining the result. Tested by this norm,
Manulifes instructions regarding the objectives and sales targets, in connection with the
training and engagement of other agents, are among the directives that the principal may
impose on the agent to achieve the assigned tasks.They are targeted results that Manulife
wishes to attain through its agents. Manulifes codes of conduct, likewise, do not necessarily
intrude into the insurance agents means and manner of conducting their sales. Codes of
conduct are norms or standards of behavior rather than employer directives into how specific
tasks
are
to
be
done.
In sum, the Supreme Court found absolutely no evidence of labor law control.
BENARES v PANCHO
Petitioner: Josefina Benares
Respondents: Jaime Pancho, Rodolfo Pancho, Jr., Joselito Medalla, Paquito Magallanes, Alicia
Magallanes, Evelyn Magallanes, Violeta Villacampa, Maritess Pancho, Rogelio Pancho And
Arnolfo Pancho
Citation: GR No. 151827
Date of Promulgation: April 29, 2005
Ponente: Tinga
FACTS:
Petition for Review on Certiorari: Decision of CA which affirmed the NLRCs decision holding that
respondents were illegally dismissed and ordering petitioner to pay respondents separation pay,
backwages, 13th month pay, cost of living allowances, emergency relief allowance, salary differentials
and attorneys fee
Respondents alleged to have started working as sugar farm workers on various occasions in a sugar
cane plantation (Had Maasin II) in Murcia, Negros Occidental owned and managed by Josefina Benares
July 24, 1991: Respondents thru counsel wrote the Regional Director of the Department of Labor and
Employment, Bacolod City for intercession particularly in the matter of wages and other benefits
mandated by law.
September 24, 1991: a routine inspection was conducted by personnel of the Bacolod District Office of
the Department of Labor and Employment. Accordingly, a report and recommendation was made, hence,
the endorsement by the Regional Director of the instant case to the Regional Arbitration Branch, NLRC,
Bacolod City for proper hearing and disposition

October 15, 1991: Respondents alleged to have been terminated without being paid termination
benefits by respondent in retaliation to what they have done in reporting to the Department of Labor and
Employment their working conditions viz-a-viz (sic) wages and other mandatory benefits.
July 14, 1992: notification and summons were served to the parties wherein complainants were directed
to file a formal complaint
July 28, 1992: a formal complaint was filed for illegal dismissal with money claims.

From the records, summons and notices of hearing were served to the parties and apparently no
amicable settlement was arrived, hence, the parties were directed to file their respective position papers.

January 22, 1993: complainant submitted their position paper, while respondent filed its position paper
on June 21, 1993.

March 17, 1994: complainants filed their reply position paper and affidavit. Correspondingly, a rejoinder
was filed by respondent on May 16, 1994.

August 17, 1994: from the Minutes of the scheduled hearing, respondent failed to appear, and that the
Office will evaluate the records of the case whether to conduct a formal trial on the merits or not, and that
the corresponding order will be issued.

January 16, 1996, the Labor Arbiter issued an order to the effect that the case is now deemed submitted
for resolution.

April 30, 1998: the Labor Arbiter a quo issued the assailed decision dismissing the complaint for lack of
merit.

June 26, 1998: Appeal anchored on the ground that THE HONORABLE LABOR ARBITER GRAVELY
ABUSED ITS DISCRETION AND SERIOUSLY ERRED IN HOLDING THAT THE COMPLAINANTS
FAILED TO DISCUSS THE FACTS AND CIRCUMSTANCES SURROUNDING THEIR DISMISSAL,
HENCE, THERE IS NO DISMISSAL TO SPEAK OF AND THAT COMPLAINANTS FAILED TO ALLEGE
AND PROVE THAT THEIR CLAIMS ARE VALID, HENCE THE DISMISSAL OF THEIR COMPLAINT
WOULD CAUSE GRAVE AND IRREPARABLE DAMAGE TO HEREIN COMPLAINANTS

NLRC: respondents attained the status of seasonal workers of Had Maasin II having worked from 19641985. Petitioner failed to discharge the burden of proving that the termination was a just or authorized
cause. Hence, respondents were illegally dismissed and should be awarded with money claims
CA: affirmed NLRCs decision with the modification that the backwages and other monetary benefits
shall be computed from the time compensation was withheld in accordance with Article 279 of the Labor
Code, as amended by Republic Act No. 6715.

ISSUE:
1. W/N respondents are regular employees of Hacienda Maasin and thus entitled to their
money claims?
2. W/N respondents were illegally terminated
HELD:
1. This case presents a good opportunity to reiterate the Courts rulings on the subject of seasonal
employment. The Labor Code defines regular and casual employment, viz:
Art. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That,
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
The law provides for three kinds of employees: (1) regular employees or those who have been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the employer; (2)
project employees or those whose employment has been fixed for a specific project or undertaking, the

completion or termination of which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the employment is for the duration of
the season; and (3) casual employees or those who are neither regular nor project employees.
In this case, petitioner argues that respondents were not her regular employees as they were merely
"pakiao" workers who did not work continuously in the sugar plantation. They performed such tasks as
weeding, cutting and loading canes, planting cane points, fertilizing, cleaning the drainage, etc. These
functions allegedly do not require respondents daily presence in the sugarcane field as it is not everyday
that one weeds, cuts canes or applies fertilizer. In support of her allegations, petitioner submitted "cultivo"
and milling payrolls.
The probative value of petitioners evidence, however, has been passed upon by the labor arbiter, the NLRC
and the Court of Appeals. Although the labor arbiter dismissed respondents complaint because their
"position paper is completely devoid of any discussion about their alleged dismissal, much less of the
probative facts thereof,"20 the ground for the dismissal of the complaint implies a finding that respondents are
regular employees.
The NLRC was more unequivocal when it pronounced that respondents have acquired the status of regular
seasonal employees having worked for more than one year, whether continuous or broken in petitioners
hacienda.
According to petitioner, however, the NLRCs conclusion is highly suspect considering its own admission that
there are "gray areas which requires (sic) clarification." She alleges that despite these gray areas, the NLRC
"chose not to remand the case to the Labor Arbiter.as this would unduly prolong the agony of the
complainants in particular." 21
Petitioner perhaps wittingly omitted mention that the NLRC "opted to appreciate the merits of the instant
case based on available documents/pleadings." 22 That the NLRC chose not to remand the case to the labor
arbiter for clarificatory proceedings and instead decided the case on the basis of the evidence then available
to it is a judgment call this Court shall not interfere with in the absence of any showing that the NLRC abused
its discretion in so doing.
The Court of Appeals, in fact, found no such grave abuse of discretion on the part of the NLRC. Accordingly,
it dismissed the petition for certiorari and affirmed with modification the findings of the NLRC. It is well to note
at this point that in quasi-judicial proceedings, the quantum of evidence required to support the findings of
the NLRC is only substantial evidence or that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion The issue, therefore, of whether respondents were regular
employees of petitioner has been adequately dealt with. The labor arbiter, the NLRC and the Court of
Appeals have similarly held that respondents were regular employees of petitioner. Since it is a settled rule
that the factual findings of quasi-judicial agencies which have acquired expertise in the matters entrusted to
their jurisdiction are accorded by this Court not only respect but even finality, 24 we shall no longer disturb this
finding.
Petitioner next underscores the NLRC decisions mention of the "payroll" she presented despite the fact that
she allegedly presented 235 sets of payroll, not just one payroll. This circumstance does not in itself evince
any grave abuse of discretion on the part of the NLRC as it could well have been just an innocuous
typographical error.
Verily, the NLRCs decision, affirmed as it was by the Court of Appeals, appears to have been arrived at after
due consideration of the evidence presented by both parties.
2. YES. We also find no reason to disturb the finding that respondents were illegally terminated. When there
is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter
a case of illegal dismissal and the burden is on the employer to prove that the termination was for a just or
authorized cause.25 In this case, as found both by the NLRC and the Court of Appeals, petitioner failed to
prove any such cause for the dismissal of respondents.
REYES V GLAUCOMA RESEARCH
PETITIONER: Jesus G. Reyes
RESPONDENTS:
Glaucoma Research Foundation, Inc.,
Eye Referral Center
Manuel B. Agulto
DOCKET NO.:
G.R. No. 189255
DATE:
June 17, 2015

PONENTE:

Peralta, J

FACTS
Reyes filed a complaint for illegal dismissal against the respondents with the NLRC, NCR, QC.
o Aug 1 2003 hired by Glaucoma Research Foundation, Inc as administrator of its Eye Referral
Center (ERC). Continuously received his monthly salary of P20,000 until the end of Jan 2005
o Feb 2005 Glaucoma withheld Reyes salary w/o notice but he still continued to report for work
o Apr 11 2005 Reyes wrote a letter to Manuel Agulto, Executive Director of Glaucoma, informing
Agulto that he has not been receiving his salaries since Feb 2005 as well as his 14 th month pay
for 2004. No response.
o Apr 21 2005 Reyes was informed by the Asst to the Executive Director as well as the Asst
Administrative Officer, that he is no longer the Administrator of the ERC. His office was
padlocked and closed w/o notice. Still continued to report for work but on
o Apr 29 2005 no longer allowed by the security guard on duty to enter the premises of the ERC
Respondents contentions:
o Upon Reyes representation that he is an expert in corporate organizational structure and
management affairs, they engaged his services as a consultant/adviser in the formulation of an
updated organizational set-up and employees manual w/c is compatible w their present
condition
o Reyes claimed that there is a need for an administrator for the ERC, he later designated himself
as such on a trial basis
o No EE Relationship because respondents had no control over Reyes in terms of working hours
as he reports for work anytime of the day and leaves as he pleases
o Also no control as to the manner he performs his alleged duties as consultant
o Reyes became overbearing and his relationship w the employees and the officers of the
company soured leading to the filing of 3 complaints against him
o Reyes was not dismissed as he was the one who voluntarily severed his relations w the
respondents
Jan 30 2006 the Labor Arbiter DISMISSED PETITIONERS COMPLAINT.
o Reyes failed to establish that the elements of an EE relationship existed b/w him and
respondents, because he was unable to show that he was appointed as administrator of the
ERC. And received salaries as such
o Failed to deny that during his stint with the respondents, he was, at the same time, a consultant
of various govt agencies (Manila Intl Airport Authority, Manila Intercontinental Port Authority,
Anti-Terrorist Task Force for Aviation and Air Transportation Sector)
o His actions were neither supervised nor controlled by the management of the ERC
o Did not observe working hours by reporting for work and leaving therefrom as he pleased
o He was receiving allowances, NOT SALARIES, as a consultant
NLRC: Set aside the Decision of the LA
o Declared petitioner as illegally dismissed
o Ordered respondents to reinstate him to his former position w/o loss of seniority rights and
privileges w full backwages
o It was incumbent for the respondent to discharge the burden of proving that petitioners
dismissal was for cause and effected after due process was observed
Respondents filed an MR. Denied by the NLRC on its Decision dtd May 30 2008
Respondents filed a Petition for Certiorari w CA. CA: set aside the NLRC Decision and reinstated the LA
Decision.
o Under the control test and the economic reality test, no EE relationship existed b/w respondents
and petitioner
Petitioner Reyes filed and MR but CA denied in its Reso dtd Aug 25 2009
ISSUE: WON CA erred and abused its discretion in ruling that NO EE RELATIONSHIP EXISTS B/W
RESPONDENT AND PETITIONER
HELD: No. The CA did not err in said ruling because THERE EXISTS NO EE RELATIONSHIP B/W
RESPONDENT AND PETITIONER.
o In an illegal dismissal case, the burden of proof rests on the employer to prove that its dismissal
of an employee was for a valid cause. However, an EE R must first be established.
o The power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an EE R.

o
o
o

In the present case, petitioner showed as evidence of respondents supposed control over him,
the organizational plans he has drawn were subject to the approval of respondent corporations
Board of Trustees.
The SC, however, agreed with the CA on this matter that respondents power to approve
or reject the organizational plans drawn by petitioner cannot be the control contemplated
in the control test.
The SC also held that there is no EE R where the supposed employee is not subject to a set of
rules and regulations governing the performance of his duties under the agreement w the
company and is not required to report for work at any time, nor to devote his time exclusively to
working for the company.
Further findings show that there are no deductions for SSS and withholding tax from his
compensation, w/c are usual deductions from employees salaries. Thus the alleged pay slips he
showed my not be treated as competent evidence of his claim that he is a respondents
employee.
Additional evidence: affidavits of Roy Olivares (Medical Records Custodian) and Aurea Luz
Esteva (Administrative Officer) stating that he was hired as a consultant and not as an employee
of respondent corporation
Petitioners designation as an administrator neither disproves respondents contention that he
was engaged ONLY AS A CONSULTANT.
PETITION DENIED. CA AFFIRMED.

PAGUIO V NLRC
PETITIONER: Efren P. Paguio
RESPONDENT:
National Labor Relations Commission
Metromedia Times Corporation
Robina Y. Gokongwei
Liberato Gomez, Jr.
Yolanda E. Aragon
Frederick D. Go
Alda Iglesia
DOCKET NO. G.R. No. 147816
PROMUL:
May 9, 2003
PONENTE:
Vitug, J
FACTS

June 22, 1992 Metromedia entered for the 5 th time into an agreement with Paguio,
appointing Paguio to be the acct exec of the firm
o
Paguio was to solicit advertisements from The Manila Times (newspaper of gen. circ
published by Metromedia)
o
Paguio was to receive compensation consisting of:
15% commission on direct advertisements less withholding tax
10% compensation on agency advertisements based on gross revenues less agency
commission and the corresponding withholding tax
Commissions were to be released every 15 days of each month, to be given to Paguio
only after the clients would have paid for the advertisements
o
Paguio was also entitled to a monthly allowance of P2,000 as long as he met the
P30,000 monthly quota.

Contentious raised by the parties had something to do with the following stipulations of
the agreement:
o
12.) You are not an employee of the Metromedia Times Corporation nor does the
company have any obligations towards anyone you may employ, nor any responsibility for your
operating expenses or for any liability you may incur. The only rights and obligations between us
are those set forth in this agreement. This agreement cannot be amended or modified in any
way except with the duly authorized consent in writing of both parties.
o
13.) Either party may terminate this agreement at any time by giving written notice to the
other, thirty (30) days prior to effectivity of termination.

Aug 15, 1992 (2 months after the renewal of the contract) Paguio received the
following notice from Metromedia:

Dear Mr. Paguio,

Please be advised of our decision to terminate your services as Account Executive of
Manila Times effective September 30, 1992.

This is in accordance with our contract signed last July 1, 1992.

Paguio was not given the opportunity to defend himself from the vague allegations of
misconduct thrown at him:
o
Pirating clients from his co-executives
o
Failing to produce results
Paguio filed a case before the labor arbiter asking:
o
that his dismissal be declared unlawful
o
reinstatement, with entitlement to backwages w/o loss of seniority rights
o
company officials be held accountable for acts of unfair labor practice, for P500,000
moral damages and for P200,000 exemplary damages
Metromedia defense: it did not enter into any agreement with petitioner outside of the
contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.
Labor arbiter:
o
DECLARED THE DISMISSAL ILLEGAL
o
Ordered Metromedia and its officers to reinstate Paguio to his former position w/o loss of
seniority rights, to pay him his commissions and other remuneration accruing from the date of
dismissal on 15 August 1992 up until his reinstatement.
o
Also adjudged that Liberato I. Gomez, gen mngr of Metromedia, liable to Paguio for
moral damages in the amount of P20,000
NLRC:
o
REVERSED THE LABOR ARBITER DECISION
o
Declared the contractual relationship b/w the parties as being for a fixed-term
employment, one which lawful as long as it was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being brought to bear upon the worker
and absent any other circumstances vitiating his consent.
CA: upheld the decision of the NLRC
ISSUE: WON Paguio has been justly dismissed from service
HELD: No. Paguio has been unjustly dismissed.
RELATED LAW:
o
Art 280 LC: Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the proceeding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
RATIO:
o
The nature of the contractual relationship between petitioner and respondent company
was of REGULAR EMPLOYMENT, as rightly taken into acct by the labor arbiter. Metromedia
reserves not only of the right to control the results to be achieved but likewise the manner and
the means used in reaching that end.
o
The petitioner performed activities which were necessary and desirable to the business
of the employer, and that the same went on for more than a year, could hardly be denied.
Petitioner was an account executive in soliciting advertisements, clearly necessary and
desirable, for the survival and continued operation of the business of respondent corporation.
Robina Gokongwei, its President, herself admitted that the income generated from paid
advertisements was the lifeblood of the newspapers existence. Implicitly, respondent

corporation recognized petitioners invaluable contribution to the business when it renewed, not
just once but five times, its contract with petitioner.
o
A stipulation in an agreement can be ignored as and when it is utilized to deprive
the employee of his security of tenure.
o
A lawful must be for a just or authorized cause and must comply with the rudimentary
due process of notice and hearing. It is not shown that respondent company has fully bothered
itself with either of these requirements in terminating the services of petitioner. The notice of
termination recites no valid or just cause for the dismissal of petitioner nor does it appear that he
has been given an opportunity to be heard in his defense.
NLRC and CA decisions SET ASIDE. The decision of the Labor Arbiter is REINSTATED
except with respect to the P20,000.00 moral damages adjudged against respondent Liberato I. Gomez
which award is deleted. (The evidence, found by the appellate court is wanting that would indicate bad
faith or malice on the part of respondents, particularly by respondent Liberato I. Gomez)

CORPORAL V NLRC
PETITIONERS:
Osias I. Corporal, Sr.
Pedro Tolentino
Manuel Caparas
Elpidio Lacap
Simplicio Pedelos
Patricia Nas
Teresita Flores
RESPONDENTS:
National Labor Relations Commission
Lao Enteng Company, Inc.
Trinidad Lao Ong
DOCKET NO.:
G.R. No. 129315
DATE:
Oct. 2, 2000
PONENTE:
Quisumbing, J
FACTS:

Male petitioners, Corporal, Sr., Tolentino, Caparas, Lacap, Padelos barbers; Female
petitioners Flores and Nas; at New Look Barber Shop (New Look) at 651 P. Paterno Street, Quiapo,
Manila, owned by Lao Enteng Co. Inc.

Petitioners claim that at the start of their employment, New Look was a single
proprietorship owned by Mr. Vicente Lao. Jan. 1982, children of Vicente organized a corporation w/c was
registered w/ Securities and Exchange Commission (SEC) as Lao Enteng Co, Inc., with Trinidad Ong as
president. Upon incorporation, Lao Enteng Co Inc took over the assets, equipment, and properties of the
New Look and continued the business.

All petitioners were allowed to continue working w the new company until Apr 15, 1995,
when Trinidad Ong informed them that the building wherein the New Look was located had been sold
and that their services were no longer needed.

Apr 28 1995 petitioners filed with the Arbitration Branch of NLRC:

o
A complaint of illegal dismissal, illegal deduction, separation pay, non-payment of 13month pay, salary differentials
o
Only Patricia Nas asked for payment of salary differentials as she alleged that she was
paid a daily wage of P25.00 throughout her period of employment
o
Petitioners also sought the refund of the P1.00 that the respondent company collected
from each of them daily as salary of the sweeper of the barber shop

Lao Enteng Company Inc in its position paper:

o
Petitioners were joint ventures of the company and were receiving 50% commission of
the amount charged to customers, thus, there was no employer-employee relationship
o
Assuming there was EE relationship, still petitioners are not entitled to separation pay
because the cessation of operations of the barber shop was due to serious business losses.

Trinidad Lao Ong in her affidavit dtd Sept 06 1995:

o
After the death of Lao Enteng, (siguro si Vicente Lao ito? Hindi kasi inindicate sa kaso
tapos may grammatical error pa) petitioners were verbally informed time and again that the

partnership may fold up anytime because nobody in the family had the time to be at the barber
shop to look after their interest
o
Eventually, they were forced to close the barber shop because they continued to lose
money while petitioners earned from it.
o
Trinidad avers that without any employee-employer relationship petitioners claim for
13th month pay and separation pay have no basis in fact and in law.
Labor Arbiter Potenciano S. Caizares, Jr. dtd Sept 28 1995 ORDERED THE DISMISSAL
OF THE COMPLAINT on the basis of his findings that the complainants and the respondents were
engaged in a joint venture and that there existed no employer-employee relation between them. Also
found that the barber shop was closed due to serious business losses or financial reverses and
consequently declared that the law does not compel the establishment to pay separation pay to whoever
were its employees.
NLRC affirmed the Labor Arbiter decision
Petitioners filed the instant petition assigning that the NLRC committed grave abuse of
discretion in:
o
Arbitrarily disregarding substantial evidence proving that petitioners were employees of
respondent company in ruling that petitioners were independent contractors.
o
Not holding that petitioners were illegally dismissed and in not awarding their money
claims
Petitioners contentions:
o
Public respondent NLRC gravely erred in declaring that petitioners were independent
contractors
o
They did not cut hair, manicure, and do their work in their own manner and method.
They insist they were not free from the control and direction of private respondents in all matters,
and their services were engaged by the respondent company to attend to its customers in its
barber shop.
o
Petitioners also stated that, individually or collectively, they do not have substantial
capital nor investments in tools, equipment, work premises and other materials necessary in the
conduct of the barber shop. What the barbers owned were merely combs, scissors, and razors,
while the manicurists owned only nail cutters, nail polishes, nippers and cuticle removers.
o
Petitioners fault the NLRC for arbitrarily disregarding substantial evidence on record
showing that petitioners Pedro Tolentino, Manuel Caparas, Simplicio Pedelos, and Patricia Nas
were registered with the Social Security System as regular employees of the respondent
company.
ISSUE: WON an employer-employee relationship (EER) existed between petitioners
and Lao Enteng Co Inc
HELD: (Explanation first)
o
The ff elements must be present for EER to exist:
the selection and engagement of the workers
power of dismissal
the payment of wages by whatever means
the power to control the workers conduct, with the latter assuming primacy in the overall
consideration
o
In the ff facts, clearly, the first three elements exist in petitioners and private
respondents working arrangements:
that the late Vicente Lao engaged the services of the petitioners to work as barbers and
manicurists in the New Look Barber Shop
that in January 1982, his children organized a corporation which they registered with the
Securities and Exchange Commission as Lao Enteng Company, Inc. and that upon its
incorporation, it took over the assets, equipment, and properties of the New Look Barber
Shop and continued the business
that the respondent company retained the services of all the petitioners and continuously
paid their wages
o
As per THE POWER TO CONTROL, it refers to the existence of the power and not
necessarily to the actual exercise thereof, nor is it essential for the employer to actually
supervise the performance of duties of the employee. It is enough that the employer has the right
to wield that power.
o
The ff facts indubitably reveal that respondent company wielded control over the work
performance of petitioners:

o
o

they worked in the barber shop owned and operated by the respondents
they were required to report daily and observe definite hours of work
they were not free to accept other employment elsewhere but devoted their full time
working in the New Look Barber Shop for all the 15 years they have worked until April
15, 1995
that some have worked with respondents as early as in the 1960s
that petitioner Patricia Nas was instructed by the respondents to watch the other six (6)
petitioners in their daily task
Certainly, respondent company was clothed with the power to dismiss any or all of them
for just and valid cause. Petitioners were unarguably performing work necessary and desirable in
the business of the respondent company.
Private respondent showed no proof to their claim that petitioners were the ones who
solely paid all SSS contributions. It is unlikely that respondents would report certain persons as
their workers, pay their SSS premium as well as their wages if it were not true that they were
indeed their employees.
(Ruling) We hold that THE SEVEN PETITIONERS ARE EMPLOYEES OF THE
PRIVATE RESPONDENT COMPANY.
they are to be accorded the benefits provided under the Labor Code, specifically Article
283 which mandates the grant of separation pay in case of closure or cessation of
employers business which is equivalent to 1 month pay for every year of service.
the separation pay due them may be computed on the basis of the minimum wage
prevailing at the time their services were terminated by the respondent company.
The Revised Guidelines on the Implementation of the 13th Month Pay Law states that
all rank and file employees are now entitled to a 13th month pay regardless of the
amount of basic salary that they receive in a month. Such employees are entitled to the
benefit regardless of their designation or employment status, and irrespective of the
method by which their wages are paid, provided that they have worked for at least one
(1) month during a calendar year and so all the seven (7) petitioners who were not paid
their 13th month pay must be paid accordingly.
PETITION IS GRANTED. NLRC decision is set aside. Private respondents are hereby
ordered to pay, severally and jointly, the seven (7) petitioners their (1) 13th month pay and (2)
separation pay equivalent to one month pay for every year of service, to be computed at the then
prevailing minimum wage at the time of their actual termination which was April 15, 1995.

VILLAMARIA V CA
PETITIONER:
Oscar Villamaria, Jr.
RESPONDENT: CA and Jerry Bustamante
DOCKET NO.:
G.R. No. 165881
DATE:
Apr 19 2006
PONENTE:
Callejo, Sr., J.
FACTS

Oscar Villamaria, Jr. owner of Villamaria Motors, sole proprietorship engaged in

assembling passenger jeepneys with a public utility franchise to operate along Baclaran-Sucat road

1995 Villamaria stopped assembling jeepneys, and retained only 9. 4 of which he

operated by employing drivers on a boundary basis

One of the drivers Bustamante. Drove PVU-660. Remitted P450/day as boundary and
kept the residue as his daily earnings as compensation for driving the vehicle.

Aug 1997 Villamaria VERBALLY agreed to sell the jeep to Bustamante under the
BOUNDARY-HULOG SCHEME.
o
Bustamante would remit to Villamaria P550/day for 4 years, after which he would
become owner of jeep under Villamarias franchise
o
Bustamante would make a DP of P10,000

Aug 7, 1997 Villamaria executed a contract Kasunduan ng Bilihan ng Sasakyan sa

Pamamagitan ng Boundary-Hulog
o
Plate No. PVU-660 | Chassis No. EVER95-38168-C | Motor No. SL-26647
o
If Bustamante failed to pay boundary-hulog for 3 days, Villamaria motors would hold on
to the vehicle until Bustamante paid his arrears, inc. P50 penalty a day

Failure to remit the daily boundary-hulog for 1 week, the Kasunduan would cease to
have legal effect, and Bustamante would have to return the vehicle to Villamaria Motors
o
Bustamante was authorized to operate the vehicle to transport passengers only and not
for other purposes
o
Also required to display an ID in front of the windshield of the vehicle failure would
charge him any fine that may be imposed by the govt
o
Bustamante further obliged himself to pay the cost of replacing parts that would be lost
or damaged due to his negligence
o
Not allowed to wear slippers, short pants, or undershirts while driving
o
Also obliged to notify VM in case the jeep was leased for 2 days or more
o
Also obliged to pay for the annual registration fees of the jeep, and the premium for the
jeeps comprehensive insurance

1999 Bustamante and other drivers in the same scheme with VM failed to pay their
boundary-hulog Prompted Villamaria to serve a Paalala

July 24 2004 Villamaria took back the jeep of Bustamante and barred the latter from
driving the vehicle

Aug 15 2000 Bustamante filed a complaint for illegal dismissal against Villamaria and
his wife, Teresita. Under his position paper:
o
In July 2000 he informed the VM that the surplus engine of the jeep needed to be
replaced. However, he was later arrested and drivers license confiscated because apparently,
the replacement engine was taken from a stolen vehicle.
o
Jeep was not impounded and the VM took the jeep from him on Jul 24 2000 and was no
longer allowed to drive the vehicle since unless he pd them P70,000
o
In his prayer:
1. Reinstatement to his former position w/o loss of seniority rights and execute a Deed of
Sale in favour of the complainant (PVU-660)
2. Backwages P400/day and other benefits computed from Jul 24 2000 up to the time of
his actual reinstatement
3. Ordering respondents to return the amount of P10,000 and P180,000 for the expenses
incurred by the complainant in the repair and maintenance of the jeep
4. Respondents to refund the amount of P100/day counted from Aug 7 1997 to June 2000
or a total of P91,200
5. Moral and exemplary damages not less than P200,000
6. Attys fees not less than 10% of the monetary award

Villamarias position paper:

o
Bustamante failed to pay the P10,000 dp and the vehicles annual reg fees
o
Bustamante stopped making his remittances despite his daily trips and even brought the
jeepney to the province w/o permission
o
The jeep figured in an accident and its license plate was confiscated
o
Bustamante abandoned the vehicle in a gas station in Sucat, Paraaque for 2 weeks.
Teresita retrieved the vehicle from the gas stn, he tires were worn, the alternator was gone, and
the battery was no longer working
o
Bustamante was not illegally dismissed because the Kasunduan transformed the EE R
into that of a vendor-vendee

Bustamantes Reply: The Kasunduan was presented to him and the other drivers on a
blank piece of paper where they were mde to affix their signatures purporting to be an attendance sheet.

Mar 15 2002 the LA decided in favour of the Villamaria spouses. ORDERED THE
COMPLAINT BE DISMISSED.

Bustamante appealed to the NLRC insisting that the Kasunduan did not extinguish the
EE R b/w him and Villamaria. NLRC: DISMISSED THE APPEAL FOR LACK OF MERIT. Vendor-vendee
relationship not EE R. Bustamante filed an MR, NLRC also denied on May 30 2003
Elevated to CA thru petition for certiorari. CA: REVERSED AND SET ASIDE NLRC
DECISION. Decided in favour of Bustamante.
o
Under the Kasunduan, the relationship b/w petitioner and respondent was dual: EE R
and vendor-vendee

Villamaria filed an MR and CA denied in its Reso dtd Nov 2 2004

Villamaria sought relief from the SC by filing petition for review on Certiorari alleging that
the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in reversing
the decision of the Labor Arbiter and the NLRC
o

ISSUE: WON an EE R exists between petitioner and respondent

HELD:
The SC agrees with the ruling of the CA that, under the boundary-hulog scheme
incorporated in the Kasunduan, a dual juridical relationship was created between petitioner and
respondent: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish
the employer-employee relationship of the parties extant before the execution of said deed.
The daily remittances had a dual purpose: that of petitioners boundary and respondents
partial payment (hulog) for the vehicle. This dual purpose was expressly stated in the
Kasunduan. The well-settled rule is that an obligation is not novated by an instrument that
expressly recognizes the old one, changes only the terms of payment, and adds other
obligations not incompatible with the old provisions or where the new contract merely
supplements the previous one. The two obligations of the respondent to remit to petitioner the
boundary-hulog can stand together.
Ang mga patakaran, kaugnay ng bilihang ito sa pamamagitan ng boundary hulog ay ang
mga sumusunod:
1. Pangangalagaan at pag-iingatan ng TAUHAN NG IKALAWANG PANIG ang sasakyan
ipinagkatiwala sa kanya ng TAUHAN NG UNANG PANIG.
2. Na ang sasakyan nabanggit ay gagamitin lamang ng TAUHAN NG IKALAWANG PANIG
sa paghahanapbuhay bilang pampasada o pangangalakal sa malinis at maayos na
pamamaraan.
3. Na ang sasakyan nabanggit ay hindi gagamitin ng TAUHAN NG IKALAWANG PANIG sa
mga bagay na makapagdudulot ng kahihiyan, kasiraan o pananagutan sa TAUHAN NG
UNANG PANIG.
4. Na hindi ito mamanehohin ng hindi awtorisado ng opisina ng UNANG PANIG.
5. Na ang TAUHAN NG IKALAWANG PANIG ay kinakailangang maglagay ng ID Card sa
harap ng windshield upang sa pamamagitan nito ay madaliang malaman kung ang
nagmamaneho ay awtorisado ng VILLAMARIA MOTORS o hindi.
6. Na sasagutin ng TAUHAN NG IKALAWANG PANIG ang [halaga ng] multa kung
sakaling mahuli ang sasakyang ito na hindi nakakabit ang ID card sa wastong lugar o
anuman kasalanan o kapabayaan.
7. Na sasagutin din ng TAUHAN NG IKALAWANG PANIG ang materyales o piyesa na
papalitan ng nasira o nawala ito dahil sa kanyang kapabayaan.
8. Kailangan sa VILLAMARIA MOTORS pa rin ang garahe habang hinuhulugan pa rin ng
TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan.
9. Na kung magkaroon ng mabigat na kasiraan ang sasakyang ipinagkaloob ng TAUHAN
NG UNANG PANIG, ang TAUHAN NG IKALAWANG PANIG ay obligadong itawag ito
muna sa VILLAMARIA MOTORS bago ipagawa sa alin mang Motor Shop na awtorisado
ng VILLAMARIA MOTORS.
10. Na hindi pahihintulutan ng TAUHAN NG IKALAWANG PANIG sa panahon ng
pamamasada na ang nagmamaneho ay naka-tsinelas, naka short pants at nakasando
lamang. Dapat ang nagmamaneho ay laging nasa maayos ang kasuotan upang igalang
ng mga pasahero.
11. 11. Na ang TAUHAN NG IKALAWANG PANIG o ang awtorisado niyang driver ay
magpapakita ng magandang asal sa mga pasaheros at hindi dapat magsasalita ng
masama kung sakali man may pasaherong pilosopo upang maiwasan ang anumang
kaguluhan na maaaring kasangkutan.
12. Na kung sakaling hindi makapagbigay ng BOUNDARY HULOG ang TAUHAN NG
IKALAWANG PANIG sa loob ng tatlong (3) araw ay ang opisina ng VILLAMARIA
MOTORS ang may karapatang mangasiwa ng nasabing sasakyan hanggang
matugunan ang lahat ng responsibilidad. Ang halagang dapat bayaran sa opisina ay
may karagdagang multa ng P50.00 sa araw-araw na ito ay nasa pangangasiwa ng
VILLAMARIA MOTORS.
13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi makapagbigay ng BOUNDARY
HULOG sa loob ng isang linggo ay nangangahulugan na ang kasunduang ito ay wala
ng bisa at kusang ibabalik ng TAUHAN NG IKALAWANG PANIG ang nasabing
sasakyan sa TAUHAN NG UNANG PANIG.
14. Sasagutin ng TAUHAN NG IKALAWANG PANIG ang bayad sa rehistro, comprehensive
insurance taon-taon at kahit anong uri ng aksidente habang ito ay hinuhulugan pa sa
TAUHAN NG UNANG PANIG.

o
o

15. Na ang TAUHAN NG IKALAWANG PANIG ay obligadong dumalo sa pangkalahatang

pagpupulong ng VILLAMARIA MOTORS sa tuwing tatawag ang mga tagapangasiwa
nito upang maipaabot ang anumang mungkahi sa ikasusulong ng samahan.
16. Na ang TAUHAN NG IKALAWANG PANIG ay makikiisa sa lahat ng mga patakaran na
magkakaroon ng pagbabago o karagdagan sa mga darating na panahon at hindi
magiging hadlang sa lahat ng mga balakin ng VILLAMARIA MOTORS sa lalo pang
ipagtatagumpay at ikakatibay ng Samahan.
17. Na ang TAUHAN NG IKALAWANG PANIG ay hindi magiging buwaya sa pasahero
upang hindi kainisan ng kapwa driver at maiwasan ang pagkakasangkot sa anumang
gulo.
18. Ang nasabing sasakyan ay hindi kalilimutang siyasatin ang kalagayan lalo na sa umaga
bago pumasada, at sa hapon o gabi naman ay sisikapin mapanatili ang kalinisan nito.
19. Na kung sakaling ang nasabing sasakyan ay maaarkila at aabutin ng dalawa o higit
pang araw sa lalawigan ay dapat lamang na ipagbigay alam muna ito sa VILLAMARIA
MOTORS upang maiwasan ang mga anumang suliranin.
20. Na ang TAUHAN NG IKALAWANG PANIG ay iiwasan ang pakikipag-unahan sa
kaninumang sasakyan upang maiwasan ang aksidente.
21. Na kung ang TAUHAN NG IKALAWANG PANIG ay mayroon sasabihin sa VILLAMARIA
MOTORS mabuti man or masama ay iparating agad ito sa kinauukulan at iwasan na
iparating ito kung [kani-kanino] lamang upang maiwasan ang anumang usapin.
Magsadya agad sa opisina ng VILLAMARIA MOTORS.
1. Ang mga nasasaad sa KASUNDUAN ito ay buong galang at puso kong sinasangayunan at buong sikap na pangangalagaan ng TAUHAN NG IKALAWANG PANIG ang
nasabing sasakyan at gagamitin lamang ito sa paghahanapbuhay at wala nang iba pa.
Petitioners claim that he opted not to terminate the employment of respondent because
of magnanimity is negated by his (petitioners) own evidence that he took the jeepney from the
respondent only on July 24, 2000.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court
of Appeals in CA-G.R. SP No. 78720 is AFFIRMED.

JARDIN vs NLRC
Petitioners: ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO
MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO
Respondents: NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI
(PHILJAMA INTERNATIONAL, INC.)
Citation: GR No. 119268
Date of Promulgation: Feb. 23, 2000
Ponente: QUISUMBING, J.
FACTS: Petitioners were drivers of Respondent (Philjama International Inc.) a domestic
corporation engaged in the operation of Goodman Taxi under a boundary system. Believing
that the deduction for the washing of taxi units in their daily earnings is illegal, Petitioners
decided to form a labor union to protect their rights and interests.
Upon learning about the plan of Petitioners, Respondent refused to let them drive their taxicabs
when they reported for work, and on succeeding days. Aggrieved, Petitioners filed with the
labor arbiter a complaint against Respondent for unfair labor practice, illegal dismissal and
illegal deduction of washing fees. In a decision, the labor arbiter dismissed said complaint for
lack of merit.
On appeal, the NLRC reversed and set aside the judgment of the labor arbiter declaring that
Petitioners are employees of Respondent, and, as such, their dismissal must be for just cause
and after due process.
Respondents first motion for reconsideration having been denied, another motion was filed
and was granted by the NLRC, ruling that the relationship of the parties is not that of an
employer-employee but that of leasehold and thus covered by the Civil Code rather than the
Labor Code. NLRC denied Petitioners reconsideration, hence the instant petition.
ISSUE: Whether or not there exists an employer-employee relationship between petitioner and
private respondent.
HELD: YES. On the issue of whether or not employer-employee relationship exists, admitted is
the fact that complainants are taxi drivers purely on the "boundary system". Under this system
the driver takes out his unit and pays the owner/operator a fee commonly called "boundary" for

the use of the unit. Now, in the determination the existence of employer-employee relationship,
the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October
1988) has applied the following four-fold test: "(1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control
the employees conduct."
"Among the four (4) requisites", the Supreme Court stresses that "control is deemed the most
important that the other requisites may even be disregarded". Under the control test, an
employer-employee relationship exists if the "employer" has reserved the right to control the
"employee" not only as to the result of the work done but also as to the means and methods by
which the same is to be accomplished. Otherwise, no such relationship exists. Verily, all the
foregoing attributes signify that the relationship of the parties is more of a leasehold or one
that is covered by a charter agreement under the Civil Code rather than the Labor Code.
However, in a number of cases decided by this Court, we ruled that the relationship
between jeepney owners/operators on one hand and jeepney drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee.
We explained that in the lease of chattels, the lessor loses complete control over the
chattel leased although the lessee cannot be reckless in the use thereof, otherwise
he would be responsible for the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control
over the latter. The management of the business is in the owner's hands. The owner
as holder of the certificate of public convenience must see to it that the driver
follows the route prescribed by the franchising authority and the rules promulgated
as regards its operation. Now, the fact that the drivers do not receive fixed wages
but get only that in excess of the so-called "boundary" they pay to the
owner/operator is not sufficient to withdraw the relationship between them from
that of employer and employee. We have applied by analogy the abovestated
doctrine to the relationships between bus owner/operator and bus conductor, autocalesa owner/operator and driver and recently between taxi owners/operators and
taxi drivers. Hence, petitioners are undoubtedly employees of private respondent
because as taxi drivers they perform activities which are usually necessary or
desirable in the usual business or trade of their employer.
As consistently held by this Court, termination of employment must be effected in accordance
with law. The just and authorized causes for termination of employment are enumerated under
Articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is set-out
in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent,
can be dismissed only for just and authorized cause, and after affording them notice and
hearing prior to termination. In the instant case, private respondent had no valid cause to
terminate the employment of petitioners. Neither were there two (2) written notices sent by
private respondent informing each of the petitioners that they had been dismissed from work.
These lacks of valid cause and failure on the part of private respondent to comply with the
twin-notice requirement underscored the illegality surrounding petitioners' dismissal.
Under the law, an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual reinstatement.
With regard to the amount deducted daily by private respondent from petitioners for washing
of the taxi units, we view the same as not illegal in the context of the law. We note that after a
tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean
condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi
industry and is in fact dictated by fair play. Hence, the drivers are not entitled to
reimbursement of washing charges.
WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent
dated October 28, 1994, is hereby SET ASIDE. The DECISION of public respondent dated April
28, 1994, and its RESOLUTION dated December 13, 1994, are hereby REINSTATED subject to
MODIFICATION. Private respondent is directed to reinstate petitioners to their positions held at
the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners
their full backwages, to be computed from the date of dismissal until their actual
reinstatement. However, the order of public respondent that petitioners be reimbursed the
amount paid as washing charges is deleted.

MARTINEZ vs. NLRC

Petitioners: NELLY ACTA MARTINEZ
Respondents: NATIONAL LABOR RELATIONS COMMISSION, DOMINADOR CORRO,
PASTOR CORRO, CELESTINO CORRO, LUIS CORRO, EREBERTO CORRO, JAIME CRUZ,
WENCESLAO DELVO, GREGORIO DELVO, HERMEJIAS COLIBAO, JOSE OGANA and
ALONSO ALBAO
Citation: GR No. 11745
Date of Promulgation: May 29, 1997
Ponente: BELLOSILLO, J.
FACTS: RAUL MARTINEZ was operator of two (2) taxicab units under the business name PAMA
TX and two (2) additional units under the name P. J. TIGER TX. Private respondents Dominador
Corro, Pastor Corro, Celestino Corro, Luis Corro, Ereberto Corro, Jaime Cruz, Wenceslao Delvo,
Gregorio Delvo, Hermejias Colibao, Jose Ogana and Alonso Albao worked for him as drivers. On
18 March 1992 Raul Martinez died leaving behind his mother, petitioner Nelly Acta Martinez, as
his sole heir.
On 14 July 1992 private respondents lodged a complaint against Raul Martinez and petitioner
Nelly Acta Martinez before the Labor Arbiter for violation of P. D. 851 and illegal dismissal. They
alleged that they have been regular drivers of Raul Martinez since 20 October 1989 earning no
less than P400.00 per day driving twenty-four (24) hours every other day.For the duration of
employment, not once did they receive a 13th month pay. After the death of Raul Martinez,
petitioner took over the management and operation of the business. On or about 22 June 1992
she informed them that because of difficulty in maintaining the business, she was selling the
units together with the corresponding franchises. However, petitioner did not proceed with her
plan; instead, she assigned the units to other drivers.
Petitioner traversed the claim for 13th month pay by contending that it was personal and
therefore did not survive the death of her son. Besides, private respondents were not entitled
thereto as Sec. 3, par. (e), of the Rules and Regulations Implementing P. D. 851 is explicit that
employers of those who are paid on purely boundary basis are not covered therein. The
relationship between her son and private respondents was not that of employer-employee but
of lessor-lessee. The operation of the business ceased upon the death of her son and that she
did not continue the business because she did not know how to run it.
On 30 August 1993 the Labor Arbiter dismissed the complaint on the following grounds: (a)
private respondents' claims being personal were extinguished upon the death of Raul Martinez;
(b) petitioner was a mere housewife who did not possess the required competence to manage
the business; and, (c) private respondents were not entitled to 13th month pay because the
existence of employer-employee relationship was doubtful on account of the boundary system
adopted by the parties.
However, respondent National Labor Relations Commission viewed the case
differently. According to NLRC, (a) private respondents were regular drivers because payment
of wages, which is one of the essential requisites for the existence of employment relation, may
either be fixed, on commission, boundary, piece-rate or task basis; (b) the management of the
business passed on to petitioner who even replaced private respondents with a new set of
drivers; and, (c) the claims of private respondents survived the death of Raul Martinez
considering that the business did not cease operation outright but continued presumably, in
the absence of proof of sale, up to the moment. As regards the claim for 13th month pay, NLRC
upheld the stand of petitioner based on the express provision of P. D. 851 as reiterated in the
revised guidelines on the implementation thereof. On 28 January 1994 respondent NLRC thus
set aside the appealed decision, and as alternative to reinstatement, ordered petitioner to
grant respondents separation pay equivalent to one (1) month salary for every year of service
a fraction of six (6) months being considered as one (1) whole year. On 30 September 1994 the
motion for reconsideration was denied. Hence, this recourse of petitioner.
ISSUES: 1. Whether or not there exists an employer-employee relationship between drivers
and the deceased Raul Martinez.
2. Whether or not there exists an employer-employee relationship between petitioner Nelly
Acta Martinez and the respondents?
HELD:
1. YES. As early as 3 March 1956, in National Labor Union v. Dinglasan, this Court ruled that the
relationship between jeepney owners/operators on one hand and jeepney drivers on the other

under the boundary system is that of employer-employee and not of lessor-lessee. Therein we
explained that in the lease of chattels the lessor loses complete control over the chattel leased
although the lessee cannot be reckless in the use thereof, otherwise he would be responsible
for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the
former exercise supervision and control over the latter. The fact that the drivers do not receive
fixed wages but get only that in excess of the so-called "boundary" they pay to the
owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee. The doctrine is applicable by analogy to the present case. Thus,
private respondents were employees of Raul Martinez because they had been engaged to
perform activities which were usually necessary or desirable in the usual business or trade of
the employer
2. NO. The above findings, however, were culled from mere allegations in private respondents'
position paper. But mere allegation is not evidence. It is a basic rule in evidence that each
party must prove his affirmative allegation. In Opulencia Ice Plant and Storage v. NLRC we ruled
that no particular form of evidence is required to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be
admitted. In that case, the relationship was sufficiently proved by testimonial evidence. In the
present case, however, private respondents simply assumed the continuance of an employeremployee relationship between them and petitioner, when she took over the operation of the
business after the death of her son Raul Martinez, without any supporting
evidence. Consequently, we cannot sustain for lack of basis the factual finding of respondent
NLRC on the existence of employer-employee relationship between petitioner and private
respondents. Clearly, such finding emanates from grave abuse of discretion. With this
conclusion, consideration of the issue on illegal dismissal becomes futile and irrelevant.
WHEREFORE, the petition is GRANTED. The Decision of respondent National Labor Relations
Commission dated 28 January 1994 ordering petitioner Nelly Acta Martinez to grant
respondents separation pay as well as its Order of 30 September 1994 denying reconsideration
is SET ASIDE. The Decision of the Labor Arbiter dated 30 August 1993 dismissing the complaint
is REINSTATED. The temporary restraining order issued on 11 October 1995 is made
PERMANENT.
CALAMBA MEDICAL vs. NLRC
Petitioners: CALAMBA MEDICAL CENTER, INC.
Respondents: NATIONAL LABOR RELATIONS COMMISSION, RONALDO LANZANAS AND
MERCEDITHA*LANZANAS
Citation: GR No. 176484
Date of Promulgation: Nov. 25, 2008
Ponente: CARPIO MORALES, J.
FACTS: Ronaldo Lanzanas and Merceditha Lanzanas are doctors employed by Calamba Medical
Center, Inc. They are given a retainers fee by the hospital as well as shares from fees obtained
from patients.
One time, Ronaldo was overheard by Dr. Trinidad talking to another doctor about how low the
admission rate to the hospital is. That conversation was reported to Dr. Desipeda who was then
the Medical Director of the hospital.
Eventually Ronaldo was suspended. Ronaldo filed a case for Illegal Suspension in March 1998.
In the same month, the rank and file employees organized a strike against the hospital for
unfair labor practices. Desipeda eventually fired Ronaldo for his alleged participation in the
strike, which is not allowed under the Labor Code for he is a managerial employee. Desipeda
also fired Merceditha on the ground that she is the wife of Ronaldo who naturally sympathizes
with him.
The Labor Arbiter ruled that there was no Illegal Suspension for there was no employeremployee relationship because the hospital has no control over Ronaldo as he is a doctor who
even gets shares from the hospitals earnings.
The National Labor Relations Commission as well as the Court of Appeals reversed the LA.
ISSUE: Whether or not there is an employer-employee relationship?
HELD: Yes. Under the control test, an employment relationship exists between a physician and
a hospital if the hospital controls both the means and the details of the process by which the
physician is to accomplish his task. There is control in this case because of the fact that
Desipeda schedules the hours of work for Ronaldo and his wife.

The doctors are also registered by the hospital under the SSS which is premised on an
employer-employee relationship.
There is Illegal Dismissal committed against Rolando for there was no notice and hearing held.
It was never shown that Rolando joined the strike. But even if he did, he has the right to do so
for he is not a part of the managerial or supervisory employees. As a doctor, their decisions are
still subject to revocation or revision by Desipeda.
There is Illegal Dismissal committed against Merceditha for the ground therefor was not
mentioned in Article 282 of the Labor Code.
NOTE:
When is Control (One of the Four Tests of Employer-Employee Relationship) Absent?
Where a person who works for another does so more or less at his own pleasure and is not
subject to definite hours or conditions of work, and is compensated according to the result of
his efforts and not the amount thereof, the element of control is absent.
SIP FOOD HOUSE vs. NLRC
Petitioners: S.I.P. FOOD HOUSE and MR. and MRS. ALEJANDRO PABLO
Respondents: RESTITUTO BATOLINA, ALMER CALUMPISAN, ARIES MALGAPO,
ARMANDO MALGAPO, FLORDELIZA MATIAS, PERCIVAL MATIAS, ARWIN MIRANDA,
LOPE MATIAS, RAMIL MATIAS, ALLAN STA. INES,
Citation: GR No. 192473
Date of Promulgation: October 11, 2010
Ponente: BRION, J.
FACTS: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of
the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to
operate a canteen in the new GSIS Building, but had no capability and expertise in this
area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP), owned by the
spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and
nine (9) others (the respondents) worked as waiters and waitresses in the canteen.
In February 2004, GMPC terminated SIPs contract as GMPC concessionaire, because of GMPCs
decision to take direct investment in and management of the GMPC canteen; SIPs continued
refusal to heed GMPCs directives for service improvement; and the alleged interference of the
Pablos two sons with the operation of the canteen.[5] The termination of the concession contract
caused the termination of the respondents employment, prompting them to file a complaint for
illegal dismissal, with money claims, against SIP and the spouses Pablo.
The respondents alleged before the labor arbiter that they were SIP employees, who were
illegally dismissed sometime in February and March 2004. SIP did not implement Wage Order
Nos. 5 to 11 for the years 1997 to 2004. They did not receive overtime pay although they
worked from 6:30 in the morning until 5:30 in the afternoon, or other employee benefits such
as service incentive leave, and maternity benefit (for their co-employee Flordeliza Matias).
Their employee contributions were also not remitted to the Social Security System.
To avoid liability, SIP argued that it operated the canteen in behalf of GMPC since it had no
authority by itself to do so. The respondents were not its employees, but GMPCs, as shown by
their identification cards. It claimed that GMPC terminated its concession and prevented it from
having access to the canteen premises as GSIS personnel locked the place; GMPC then
operated the canteen on its own, absorbing the respondents for the purpose and assigning
them to the same positions they held with SIP. It maintained that the respondents were not
dismissed, but were merely prevented by GMPC from performing their functions. For this
reason, SIP posited that the legal obligations that would arise under the circumstances have to
be shouldered by GMPC.
ISSUE: Whether or not there is an employer-employee relationship between the Petitioner SIP
and Respondents
HELD: YES. In its Decision promulgated on November 27, 2009, the CA granted the petition in
part. While it affirmed the award, it found merit in SIPs objection to the NLRC computation and
assumption that a month had twenty-six (26) working days, instead of twenty (20) working
days. The CA recognized that in a government agency such as the GSIS, there are only 20
official business days in a month. It noted that the respondents presented no evidence that the
employees worked even outside official business days and hours. It accordingly remanded the

case for a recomputation of the award. Finding substantial evidence in the records supporting
the NLRC conclusions, the CA brushed aside SIPs argument that it could not have been the
employer of the respondents because it was a mere labor-only contractor of GMPC. It sustained
the NLRCs findings that SIP was the respondents employer.
That complainants were employees of respondents is further bolstered by the fact that
respondents do not deny that they were the ones who paid complainants salary. When
complainants charged them of underpayment, respondents even interposed the defense of file
(sic) board and lodging given to complainants. The CA ruled out SIPs claim that it was a laboronly contractor or a mere agent of GMPC. We agree with the CA; SIP and its proprietors could
not be considered as mere agents of GMPC because they exercised the essential elements of
an employment relationship with the respondents such as hiring, payment of wages and the
power of control, not to mention that SIP operated the canteen on its own account as it paid a
fee for the use of the building and for the privilege of running the canteen. The fact that the
respondents applied with GMPC in February 2004 when it terminated its contract with SIP, is
another clear indication that the two entities were separate and distinct from each other.
WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit. The
assailed decision and resolution of the Court of Appeals in CA-G.R. SP No. 101651,
are AFFIRMED.
LETRAN CALAMBA v. NLRC
COMPLAINANT: Letran Calamba Faculty and Employees Association
RESPONDENT: NLRC and Colegio De San Juan De Letran Calamba
CITATION: G.R. No. 156225
DATE OF PROMULGATION: January 29, 2008
PONENTE: J. Austria-Martinez
FACTS:

Petition for Review on Certiorari under Rule 45 of ROC

October 8, 1992 Complainant/Petitioner filed with Regional Arbitration of NLRC a Complaint

against Colegio De San Juan De Letran Calamba for collection of various claims due its members.
They alleged that:
1. Respondent did not include in the computation of the thirteenth month pay of its
academic personnel their compensation for overloads.
2. Respondent has not paid the wage increases required by Wage Order No. 5 to its
employees.
3. Respondent has not followed the formula prescribed by DECS Memorandum Circular
No.2 dated March 10, 1989 in the computation of the compensation per unit of excess
load or overload of faculty members.
4. Respondent has not given the salary increases due the non-academic personnel as a
result of job grading.
5. Respondent has not paid to its employees the balances of seventy (70%) percent of
the tuition fee increases for the years 1990, 1991, and 1992.
6. Respondent has not also paid its employees the holiday pay for the ten (10) regular
holidays as provided for in the Article 94 of the Labor Code.

Petitioner filed a separate complaint against the respondent for money claims with the Regional
Office of DOLE.

Respondent filed with Regional Arbitration of NLRC a petition to declare illegal the strike staged by
petitioner in January 1994.

LABOR ARBITER RULING: (September 28, 1998)

The money claims filed in DOLE and NLRC by the petitioners were dismissed for lack of merit.

The petition to declare strike illegal was dismissed; the officers of the Union were reprimanded.

NLRC RULING: (July 28, 1999)

Dismissed both the appeals of petitioner and respondent.

CA RULING: (May 14, 2002)

Dismissed the petition for special civil action for certiorari filed by petitioner

PETITIONERS ARGUMENTS:
A.
1. Under the Revised Guidelines on the Implementation of the 13 th Month Pay Law, the
basic pay of an employee includes remunerations or earnings paid by his employer for
services rendered, and that excluded therefrom are the cash equivalents of unused
vacation and sick leave credits, overtime, premium, night differential, holiday pay and
cost- of-living allowances.
2. Since the pay for excess loads or overloads does not fall under any of the
enumerated exclusions and considering that overloads are being performed within the normal
working
period of eight hours a day, it only follows that the overloads should be
included in the
computation of the faculty members 13th month pay.
B.
1.DOLE-DECS-CHED-TESDA Order No. 02, Series of 1996 (DOLE Order), which was
relied upon by the LA and the NLRC in their decisions, cannot be applied to the case
because the DOLE Order was issued long after the commencement of
petitioners complaints for monetary claims.
2. To give retroactive application to the DOLE Order issued in 1996 is to deprive workers
of benefits which have become vested and is a clear violation of the constitutional
mandate on protection of labor; and that, in any case, all doubts in the
implementation and interpretation of labor laws, including implementing rules
and
regulations, should be resolved in favor of labor.
C.
Citing Agustilo v. CA, in a special civil action for certiorari brought before the CA, the
appellate court can review the factual findings and the legal conclusions of the NLRC
D.
In concluding that the NLRC Decision was supported by substantial evidence, the CA
failed to specify what constituted said evidence.
RESPONDENTS ARGUMENTS:
A.
The ruling in Agustilo is an exception rather than the general rule. It is not applicable to
the present case because in the former case, the findings of fact of the LA and NLRC
are at variance with each other; while in the present case, the findings of fact and
conclusions of law of the LA and the NLRC are the same.
B.
DOLE Order is an administrative regulation which interprets the 13 th Month Pay Law (P.D.
No. 851 and, as such, it is mandatory for the LA to apply the same to the present case.
C.
Legal Services Office of DOLE issued an opinion dated March 4, 1992, that
remunerations
for teaching in excess of the regular load, which includes overload pay
for work
performed within an eight-hour work day, may not be included as part
of the basic salary in the computation of the 13 th month pay unless this has been
included by the company practice or policy.
D.
Prior to the issuance of the DOLE Order, the prevailing rule is to exclude excess
teaching load, which is akin to overtime, in the computation of a teachers
basic salary and, ultimately, in the computation of his 13th month pay.
ISSUE:

Whether or not the petitioners are entitled to various monetary claims from respondent (General)

Whether or not overload pay is included as basis for determining a teachers 13 th month pay
(Specific)
SC RULING:

CAs decision affirmed. Petition was denied.

A. Wage Order No. 5

The school settled its obligations to its employees, conformably with the agreement
reached during the management-employees meeting of June 26, 1985 with respect to
the alleged non-payment of benefits under Wage Order No. 5. The samples from the
payroll journal of the school shows that the school paid its employees benefits under
Wage Order No. 5 beginning June 16, 1985.
B. Salary Differentials
The claim of the Union for salary differentials due to the improper computation of
compensation per unit of excess load cannot hold water for the simple reason that
during the school year there were no classes from June 1-14 and October 17-31. Since
extra load should be paid only when actually performed by the employees, no salary
differentials are due to the Union members.
C. Job Grading
The non-academic members of the Union cannot legally insist on wage increases due to
Job Grading. The system of Job Grading was initiated by the school in school year 19891990. In 1992, a new Job Grading process was initiated by the School. Since the Job
Grading exercises of the school were neither consistent nor for a considerable period of
time, the monetary claims attendant to an increase job grade are non-existent.
D. Share of Tuition Fee Increases
The claim was belied by the evidence presented by the school that shows that in school
year 1989-1990, the school incurred a deficit of Php 445,942.25, while in school years
1990-1991 and 1991-1992, the school paid out 91% and 77% respectively, of the
increments in the tuition fees collected.
E. Holiday Pay
The individual pay records of the employees shows that they are paid for all days
worked in a year. Stated differently, the factor used in computing the salaries of the
employees is 365, which indicates that their regular monthly salary includes payment of
wages during all legal holidays.
F. Overload Pay to be included in the 13th Month Pay
Overload pay should be excluded from the computation of the 13 th month pay. According
to the DOLE Order, any teaching load in excess of the normal or regular teaching load
shall be considered as overload, and its compensation should be considered as an
overload honorarium if performed within the 8-hour work and does not form part of the
regular or basic pay. Even if overload is performed within 8-hour working day, it is still
an additional or extra teaching work which is performed after the regular teaching load
has been completed. Hence, any pay given as compensation for such additional work
should be considered as extra and not deemed as part of the regular or basic salary.

R.B. MICHAEL PRESS v. GALIT

COMPLAINANT: R.B. Michael Press and Annalene Reyes Escobia
RESPONDENT: Nicasio C. Galit
CITATION: G.R. No. 153510
DATE OF PROMULGATION: February 13, 2008
PONENTE: J. Velasco Jr.
FACTS:

May 1, 1997 respondent was employed by petitioner R.B. Michael Press as an offset machine
operator

During his employment, Galit was tardy 190 times, totaling to 6, 117 minutes, and was absent
without leave for total of nine and a half days.

February 22, 1999 respondent was ordered to render overtime service in ordr to comply with job
order deadline, but he refused to do so.

February 23, 1999 respondent went to work but Escobia told him not to work, and to return later in
the afternoon for a hearing. When he returned, a copy of Office Memorandum was served upon him.

February 24, 1999 respondent was terminated from employment.

Respondent filed a complaint for illegal dismissal and money claims before the NLRC.

Petitioners aver that Galit was dismissed due to (1) tardiness constituting neglect of duty; (2)
serious misconduct; and (3) insubordination or willful disobedience.

LABOR ARBITER RULING: (October 29, 1999)

Petitioner was ordered to reinstate respondent to his former position without loss of seniority rights
and other benefits, and be paid his full back-wages computed from the time he was illegally
dismissed up to the time of his actual reimbursement.

Petitioners cannot use respondents habitual tardiness and unauthorized absences to justify
his dismissal since they had already deducted the corresponding amounts from his salary. Since
respondent was not subjected to any admonition or penalty for tardiness, petitioners then had
condoned the offense or that the infraction is not serious enough to merit any penalty.

NLRC RULING: (April 28, 2000)

Dismissed the appeal for lack of merit.

CA RULING: (November 14, 2001)

Petition was dismissed for lack of merit.

It was not the tardiness and absences committed by respondent, but his refusal to render overtime
work on February 22, 1999 which caused the termination of his employment. The time frame in
which respondent was afforded procedural due process is dubitable; he could not have been
afforded ample opportunity to explain his side and to adduce evidence on his behalf.

For respondents absences, deductions from his salary were made and hence to allow
petitioners to use said absences as ground for dismissal would amount to double jeopardy.

ISSUE:

Whether or not the dismissal of respondent from employment was valid and legal.

SC RULING:

YES. The ruling of LA and CA that there is no evidence that Galit was reprimanded by petitioners,
therefore they cannot draw on formers habitual tardiness to dismiss him, are incorrect. The mere
fact that the numerous infractions of respondent have not been immediately subjected to
sanctions cannot be interpreted as condonation of the offenses or waiver of the company to
enforce company rules. The management prerogative to discipline employees and impose
punishment is a legal right which cannot, as a general rule, be impliedly waived. It is incumbent upon
the employee to adduce substantial evidence to demonstrate condonation or waiver on the part of
management to forego the exercise of its right to impose sanctions for breach of company rules.
Respondent did not adduce any evidence to show waiver or condonation on the part of petitioners.

In the case of Filipio v. The Honorable Minister Blas F. Ople, the Court, quoting then Labor Minister
Ople, ruled that past infractions for which the employee has suffered the corresponding
penalty for each violation cannot be used as a justification for the employees dismissal for
that would penalize him twice for the same offense. In contrast, the petitioners in the case at bar
did not impose any punishment for the numerous absences and tardiness of respondent. Thus, said
infractions can be used collectively by petitioners as a ground for dismissal.

The habitual absences as ground for dismissal wound not amount to double jeopardy. Respondent is
a daily wage earner. For said daily paid workers, the principle of a days pay for a days work is
squarely applicable. Hence it cannot be construed in any wise that such nonpayment of the daily
wage on the days he was absent constitutes a penalty.

The charge of insubordination is meritorious. For willful disobedience to be a valid cause for
dismissal, these two elements must concur: (1) the employees assailed conduct must have been
willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and must pertain to the duties which he
had been engaged to discharge.

The fact that respondent refused to provide overtime work despite his knowledge that there is a
production deadline that needs to be met, and that without him, the offset machine operator, no
further printing can be had, shows his wrongful and perverse mental attitude; thus, there is
willfulness.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give
the employee two written notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying the grounds for which dismissal is
sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice
of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283
and 284, the employer must give the employee and the Department of Labor and Employment
written notices 30 days prior to the effectivity of his separation.

The undue haste in effecting respondents termination shows that the termination process was a
mere simulation of the required notices were given, a hearing was even scheduled and held, but
respondent was not really given a real opportunity to defend himself; and it seems that petitioners
had already decided to dismiss respondent from service, even before the first notice had been given.
Therefore, the termination of respondent was railroaded in serious breach of his right to due
process.

CRUZ v. BPI
COMPLAINANT: Rowena De Leon Cruz
RESPONDENT: Bank of the Philippine Islands (BPI)
CITATION: G.R. No. 173357
DATE OF PROMULGATION: February 13, 2013
PONENTE: J. Peralta
FACTS:

1989 petitioner was hired by Far East Bank and Trust Company (FEBTC)

April 2000 FEBTC and BPI merged and petitioner automatically became an employee of
respondent. Petitioner held the position of Assistant Branch Manager of the BPI Ayala Avenue
Branch in Makati City, and she was in charge of the Trading Section.

July 12, 2002 - Respondent terminated petitioner on grounds of gross negligence and breach of
trust. Petitioner's dismissal was brought about by the fraud perpetrated against three depositors,
namely, Geoffrey L. Uymatiao, Maybel Caluag and Evelyn G. Avila, in respondent's Ayala Avenue
Branch. (Illegal Withdrawal and Pre-Termination of Accounts)

April 19, 2002 - BPI Vice-President Edwin S. Ragos issued a memorandum directing petitioner to
explain within 24 hours the aforementioned unauthorized pre-terminations/withdrawals of US dollar
deposits at the BPI Ayala Avenue Branch.

Petitioner averred that she followed the bank procedure/policy on pre-termination of accounts,
opening of transitory accounts and reactivation of dormant accounts.

May 22, 2002 - an administrative hearing was held to give petitioner an opportunity to explain her
side of the controversy.

July 10, 2002 - a notice of termination was issued informing petitioner of her dismissal effective July
12, 2002 on grounds of gross negligence and breach of trust for the following acts: (1) allowing the
issuance of USD CDs under the bank's safekeeping to an impostor without valid consideration; (2)

allowing USD CD pre-terminations based on such irregularly released certificates; and (3) allowing
withdrawals by third parties from clients' accounts, which resulted in prejudice to the bank.

Incidents of fraud resulted in the dismissal of three officers, including petitioner, one trader; the
suspension of two officers and one trader, and the reprimand of one teller.

LABOR ARBITER RULING: (April 1, 2004)

The dismissal of Cruz was illegal. Petitioner cannot be considered a managerial employee, and that
her dismissal on grounds of gross negligence and breach of trust was unjustified.

NLRC RULING: (January 31, 2005)

Reversed LAs ruling. Dismissed Cruz complaint for lack of merit.

Evidence showed that the pre-termination of the accounts of the depositors involved and the
withdrawal of money from such accounts were with the approval of petitioner.

CA RULING: (April 27, 2006)

Affirmed the NLRCs ruling, petition was denied and dismissed. Petitioner is a managerial employee
whose continuous employment is dependent on the trust and confidence reposed on her by
respondent. After the incident wherein respondent lost thousands of U.S. dollars, it could not be
expected that the trust and confidence petitioner was previously enjoying could still be extended by
respondent.

ISSUE:

Whether or not the dismissal of petitioner is valid and legal

SC RULING:

Petitioners dismissal was for a valid cause. Respondent dismissed petitioner from her employment
on grounds of gross negligence and breach of trust reposed on her by respondent under Article 282
(b) and (c) of the Labor Code. Respondent avers that petitioner held the position of Assistant
Manager in its Ayala Avenue Branch. However, petitioner contends that her position was only Cash II
Officer. The test of "supervisory" or "managerial status" depends on whether a person possesses
authority to act in the interest of his employer and whether such authority is not merely routinary or
clerical in nature, but requires the use of independent judgment. Petitioner holds a managerial
status since she is tasked to act in the interest of her employer as she exercises independent
judgment when she approves pre-termination of USD CDs or the withdrawal of deposits.

Petitioner was remiss in the performance of her duty to approve the pre-termination of certificates of
deposits by legitimate depositors or their duly-authorized representatives, resulting in prejudice to
the bank, which reimbursed the monetary loss suffered by the affected clients. Hence, respondent
was justified in dismissing petitioner on the ground of breach of trust. As long as there is some
basis for such loss of confidence, such as when the employer has reasonable ground to believe that
the employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded of his position, a
managerial employee may be dismissed

Petition denied, CAs decision affirmed.

SME v. GUZMAN
COMPLAINANT: SME Bank Inc., Abelardo Samson, Olga Samson, and Aurelio Villaflor, Jr.
RESPONDENT: Peregrin Guzman, Eduardo Agustin, Jr., Elicerio Gaspar, Ricardo Gaspar, Jr.,
Eufemia Rosete, Fidel Espiritu, Simeon Espiritu, Jr., and Liberato Mangoba
CITATION: G.R. No. 184517
DATE OF PROMULGATION: October 8, 2013
PONENTE: CJ. Sereno

FACTS:

Respondents Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.(Ricardo), Eufemia Rosete (Eufemia),
Fidel Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato Mangoba (Liberato) were
employees of Small and Medium Enterprise Bank, Incorporated (SME Bank).

June 2001 SME Bank experienced financial difficulties. To remedy the situation, the bank officials
proposed its sale to Abelardo Samson (Samson).

Simeon Espiritu (Espiritu), then the general manager of SME Bank, held a meeting with all the
employees of the head office and of the Talavera and Muoz branches of SME Bank and persuaded
them to tender their resignations, with the promise that they would be rehired upon
reapplication.

Relying on this representation, Elicerio, Ricardo, Fidel, Simeon, Jr., and Liberato tendered their
resignations dated 27 August 2001. As for Eufemia, the records show that she first tendered a
resignation letter dated 27 August 2001, and then a retirement letter dated September 2001.

September 11, 2001 Agustin and De Guzman (owners) signified their conformity to the Letter
Agreements and sold 86.365% of the shares of stock of SME Bank to spouses Abelardo and Olga
Samson. Spouses Samson then became the principal shareholders of SME Bank, while Aurelio
Villaflor, Jr. was appointed bank president. As it turned out, respondent employees, except for
Simeon, Jr., were not rehired. After a month in service, Simeon, Jr. again resigned on October
2001.

Respondent-employees demanded the payment of their respective separation pays, but their
requests were denied. They filed a complaint for unfair labor practice; illegal dismissal; illegal
deductions; underpayment; and nonpayment of allowances, separation pay and 13th month
pay.

LABOR ARBITER RULING: (October 27, 2004)

The buyer of an enterprise is not bound to absorb its employees, unless there is an express
stipulation to the contrary. However, he also found that respondent employees were illegally
dismissed, because they had involuntarily executed their resignation letters after relying on
representations that they would be given their separation benefits and rehired by the new
management. Accordingly, the labor arbiter decided the case against Agustin and De Guzman, but
dismissed the Complaint against the Samson Group.

Ordered respondents Eduardo Agustin, Jr. and Peregrin De Guzman to pay complainants separation
pay in the total amount of P339,403.00

NLRC RULING:

There was only a mere transfer of shares and therefore, a mere change of management from
Agustin and De Guzman to the Samson Group. As the change of management was not a valid
ground to terminate respondent bank employees, ruled that they had indeed been illegally
dismissed. It further ruled that Agustin, De Guzman and the Samson Group should be held jointly
and severally liable for the employees separation pay and back-wages.

CA RULING: (January 15 & March 13, 2008)

NLRCs decision affirmed.

ISSUE:

Whether or not the respondents were illegally dismissed

Whether or not both parties are liable for the claims of the employees and the extent of the reliefs
that may be awarded to these employees

Whether or not respondents are entitled to separation pay, full back-wages, moral damages,
exemplary damages and attorneys fees

SC RULING:

YES. Respondent employees were illegally dismissed. While resignation letters containing words of
gratitude may indicate that the employees were not coerced into resignation, this fact alone is not
conclusive proof that they intelligently, freely and voluntarily resigned. In order to determine
whether the employees truly intended to resign from their respective posts, we cannot merely rely on
the tenor of the resignation letters, but must take into consideration the totality of circumstances
in each particular case. Their reliance on the representation that they would be reemployed gives
credence to their argument that they merely submitted courtesy resignation letters because it was
demanded of them, and that they had no real intention of leaving their posts.

The facts show that Eufemias retirement was not of her own volition. She could only choose
between resignation and retirement, but was made to understand that she had no choice but to
leave SME Bank. Involuntary retirement is tantamount to dismissal, as employees can only
choose the means and methods of terminating their employment, but are powerless as to the status
of their employment and have no choice but to leave the company.

There are two types of corporate acquisitions: asset sales and stock sales. In this case the Letter
Agreements show that their main object is the acquisition by the Samson Group of 86.365% of the
shares of stock of SME Bank. Following the rule in stock sales, respondent employees may not be
dismissed except for just or authorized causes under the Labor Code.

YES. The fact that there was a change in the composition of its shareholders did not affect the
employer-employee relationship between the employees and the corporation, because an equity
transfer affects neither the existence nor the liabilities of a corporation. SME Bank continued to be
the employer of respondent employees notwithstanding the equity change in the corporation. This
outcome is in line with the rule that a corporation has a personality separate and distinct from that of
its individual shareholders or members, such that a change in the composition of its shareholders or
members would not affect its corporate liabilities.

Both Agustin and De Guzman were corporate directors of SME Bank. An analysis of the facts
likewise reveals that the dismissal of the employees was done in bad faith. Therefore, they are
solidarily liable with SME Bank for the satisfaction of employees lawful claims.

YES. The rule is that illegally dismissed employees are entitled to (1) either reinstatement, if viable,
or separation pay if reinstatement is no longer viable; and (2) backwages.

LRTA vs Pili, et al.

Facts: LRTA is a government-owned and controlled corporation. It entered into a ten-year
operations and management agreement with Meralco Transit Organization, Inc. (MTOI). The
Commission on Audit declared the Agreement as void. As a result, LRTA purchased all the
shares of stock of MTOI and renamed MTOI to Metro Transit Organization, Inc. (Metro) and
formally declared Metro as its wholly-owned subsidiary. The Agreement between LRTA and
Metro expired on 8 June 1994, and was thereafter extended on a month-to-month basis. The
Agreement expired when LRTA decided no longer to renew and on 30 September 2000, Metro
ceased its operations.
Respondents were employees of Metro who have been terminated upon the expiration of the
Agreement. The rest of the respondents filed cases involving purely monetary claims in the
form of separation pays, balances of separation pays, and other unpaid claims, while
respondent Noel B. Pili, in addition to his monetary claims, alleged that he was illegally
dismissed. Pili alleges that the mere fact of the expiration of the Agreement was not sufficient
to justify his dismissal.
The other respondents claim that LRTA contractually bound itself to shoulder and provide all
"Operating Expenses" of Metro including salaries, wages and fringe benefits and that the LRTA
bound itself solidarity liable with Metro.
LRTA, on the other hand, argues that NLRC cannot exercise jurisdiction over it as it is a
government-owned and controlled corporation, and that only the Civil Service Commission
(CSC) can take cognizance of the matter. Further, LRTA maintains that it has a separate legal
personality from Metro, and thus there can be no illegal dismissal and no basis for the
monetary claims of the employees of Metro.

The Labor Arbiter found that Pili was illegally dismissed and that LRTA was solidarity liable with
Metro for the monetary claims. On 24 June 2008, the NLRC modified the decision and found
that there was no illegal dismissal as Pili's dismissal was valid on account of the termination of
the Agreement between Metro and LRTA. The CA subsequently reinstated the Labor Arbiters
decision.
Issue: WON the NLRC has jurisdiction over LRTA and if so, should LRTA be held liable for the
monetary claims by Metro employees
Held: All of the respondents allege that they were employed by Metro. Thus, there is no real
issue as far as the employer-employee relationship is concerned - the respondents themselves
do not claim to be employed by LRTA. The employees were employed solely by Metro as Metro
and LRTA each maintained their separate juridical personalities. Nonetheless, the argument of
LRTA that only the CSC may exercise jurisdiction over it - even for monetary claims, must
necessarily fail. The NLRC acquired jurisdiction over LRTA not because of the employeremployee relationship of the respondents and LRTA (because there is none) but rather because
LRTA expressly assumed the monetary obligations of Metro to its employees. In the Agreement,
LRTA was obligated to reimburse Metro for the latter's Operating Expenses which included the
salaries, wages and fringe benefits of certain employees of Metro. Moreover, the Board of
Directors of LRTA issued Resolution No. 00-44 where again, LRTA assumed the monetary
obligations of Metro more particularly to update the Metro Inc. Employees Retirement Fund and
to ensure that it fully covers all the retirement benefits payable to the employees of Metro.
However, as far as the claim of illegal dismissal is concerned, we find that NLRC cannot
exercise jurisdiction over LRTA. Pili was an employee of Metro alone - the Labor Arbiter and
NLRC could not have acquired jurisdiction over LRTA insofar as the illegal dismissal complaint is
concerned.
This Court has already resolved this very issue on the monetary claims of the employees of
Metro as against LRTA in LRTA v. Mendoza. Accordingly, we find that the application of the
doctrine of stare decisis is in order. Thus, LRTA is liable for the monetary claims of the
respondents therein.

South Cotabato Comms vs Sto. Tomas

Facts: DOLE conducted a Complaint Inspection at the premises of DXCP Radio Station, which is
owned by petitioner South Cotabato Communications Corporation. The inspection yielded a
finding of violation of labor standards provisions of the Labor Code involving the nine (9)
private respondents, such as:
1. Underpayment of Wages
2. Underpayment of 13th Month Pay
3. Non-payment of the five (5) days Service Incentive Leave Pay
4. Non-payment of Rest Day Premium Pay
5. Non-payment of the Holiday Premium Pay
6. Non-remittance of SSS Contributions
7. Some employees are paid on commission basis aside from their
allowances
DOLE scheduled on March 3, 2004 a Summary Investigation at its Regional Office. However,
petitioners failed to appear despite due notice. Petitioners counsel again failed to appear and
requested a resetting, which the DOLE Hearing Officer denied. Thus, the DOLE Regional
Director ordered petitioners to pay private respondents the total amount of P759,752,
representing private respondents' claim for wage differentials, 13 th month pay differentials,
service incentive leave pay, holiday premium pay, and rest day premium.
The Secretary of Labor affirmed the findings of the DOLE Regional Director. The CA
subsequently upheld the Secretary of Labor, holding that petitioners cannot claim denial of due
process since their failure to present evidence is attributed to their negligence. Petitioners
maintain that they were prevented from presenting evidence to prove that private respondents

are not their employees. The lack of categorical finding on the existence of an employeremployee relationship between the parties is an element which petitioners insist is a
prerequisite for the exercise of the DOLE'S jurisdiction.
Issue: WON an employer-employee relationship had sufficiently been established between the
parties as to warrant the assumption of jurisdiction by the DOLE
Held: After a careful review of this case, the Court finds that the DOLE failed to establish its
jurisdiction over the case. It must be emphasized that without an employer-employee
relationship, or if one has already been terminated, the Secretary of Labor is without
jurisdiction to determine if violations of labor standards provision had in fact been
committed, and to direct employers to comply with their alleged violations of labor standards.
In determining the existence of an employer-employee relationship, the case of Bombo Radyo
specifies the guidelines or indicators used by courts, i.e. (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's
power to control the employee's conduct.
Substantial evidence, such as proofs of employment, clear exercise of control, and the power to
dismiss that prove such relationship and that petitioners committed the labor laws violations
they were adjudged to have committed, are grossly absent in this case.
The Court is not unmindful of the State's policy to zealously safeguard the rights of our
workers, as no less than the Constitution itself mandates the State to afford full protection to
labor. Nevertheless, it is equally true that the law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the employer. The constitutional policy to
provide full protection to labor is not meant to be a sword to oppress employers.Certainly, an
employer cannot be made to answer for claims that have neither been sufficiently proved nor
substantiated.

Valeroso vs Sky Cable

Facts: Petitioners Antonio Valeroso and Allan Legatona alleged that they started working on
November 1, 1998 and July 13, 1998, respectively, as account executives tasked to solicit cable
subscriptions for respondent, Sky Cable. Sky Cable claims that they engaged petitioners as
independent contractors under a Sales Agency Agreement.
In 2007, respondents decided to streamline its operations and engaged the services of an
independent contractor, Armada Resources & Marketing Solutions, Inc. As a result, petitioners'
contracts were terminated but they, together with other sales account executives, were
referred for transfer to Armada. Petitioners then became employees of Armada. Sky Cable
Corporation and Armada entered into a Sales Agency Agreement, wherein petitioners were
again tasked to solicit accounts/ generate sales for Sky Cable. They were informed that their
commissions would be reduced. They subsequently informed their manager their intention to
file a labor case with the NLRC. Their manager in turn informed them that they will be dropped
from the roster of its account executives.
Sky Cable claims that there was never an employer-employee relationship to begin with.
Hence, there is no cause for illegal dismissal filed against them by petitioners.
The Labor Arbiters decision provides that petitioners failed to establish by substantial evidence
that respondent was their employer. The NLRC reversed the Labor Arbiter's ruling thus,
declaring complainants to have been illegally dismissed. The CA on the other hand, sustained
the Labor Arbiter's finding that there was no evidence to substantiate the bare allegation of
employer-employee relationship between the parties.
Issue: WON petitionerd
employment was illegal

were

respondents

regular

employees,

whose

dismissal

from

Held: The court ruled that an employer-employee relationship is absent in this case.
To prove the claim of an employer-employee relationship, the following should be established
by competent evidence: (1) the selection and engagement of the employee; (2) the payment of

wages; (3) the power of dismissal; and (4) the employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished. Among the four,
the most determinative factor in ascertaining the existence of employer-employee relationship
is the "right of control test." Under this control test, the person for whom the services are
performed reserves the right to control not only the end to be achieved, but also the means by
which such end is reached.
In the present case, there is a written contract, i.e., the Sales Agency Agreement, which served
as the primary evidence of the nature of the parties' relationship. In this duly executed and
signed agreement, petitioners and respondent unequivocally agreed that petitioners' services
were to be engaged on an agency basis as sales account executives and that no employeremployee relationship is created but an independent contractorship. While the existence
of employer-employee relationship is a matter of law, the characterization made by the parties
in their contract as to the nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties' written contract unequivocally states their intention.
Evidently, the legal relation of petitioners as sales account executives to respondent can be
that of an independent contractor. There was no showing that respondent had control with
respect to the details of how petitioners must conduct their sales activity of soliciting cable
subscriptions from the public.

Century Properties vs Babiano

Facts: On October 2, 2002, Edwin Babiano was hired by Century Properties Inc (CPI) as Director
of Sales, and was eventually appointed as Vice President for Sales. His employment contract
contained a "Confidentiality of Documents and Non-Compete Clause" which, among others,
barred him from disclosing confidential information, and from working in any business
enterprise that is in direct competition with CPI "while he is employed and for a period of one
year from date of resignation or termination from CPI." Should Babiano breach any of the terms
thereof, his "forms of compensation, including commissions and incentives will be forfeited."
During the same period, Emma Concepcion was initially hired as Sales Agent by CPI and was
eventually promoted as Project Director. It was stipulated in her contract that no employeremployee relationship exists between Concepcion and CPI.
On February 25, 2009, Babiano tendered his resignation and revealed that he had been
accepted as Vice President of First Global BYO Development Corporation (First Global), a
competitor of CPI. On the other hand, Concepcion resigned as CPFs Project Director through a
letter dated February 23, 2009, effective immediately. Respondents filed a complaint for nonpayment of commissions and damages against CPI.
The Labor Arbiter ruled in favor of CPI stating that Babiano violated the "Confidentiality of
Documents and Non-Compete Clause" of his employment contract, thus, resulting in the
forfeiture of his unpaid commissions. While in Concepcions case, it ruled that it did not have
jurisdiction over her money claim as she was not an employee but a mere agent of CPI, as
clearly stipulated in her engagement contract with the latter.
However, the NLRC reversed the LAs decision. The CA subsequently affirmed the NLRC ruling
with modification increasing the award of unpaid commissions to Babiano and Concepcion.
Issue: WON CPI is liable for the unpaid commissions of respondents
Held: Article 1370 of the Civil Code provides that "if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control." The court ruled that Babiano violated the stipulations of the
"Confidentiality of Documents and Non-Compete Clause", thus, justifying the forfeiture of his
unpaid commissions.
Based on case law, the presence of the following elements evince the existence of an
employer-employee relationship: (a) the power to hire, i.e., 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's conduct, or the so called "control test." The control test is
commonly regarded as the most important indicator of the presence or absence of an

employer-employee relationship. Under this test, an employer-employee relationship exists

where the person for whom the services are performed reserves the right to control not only
the end achieved, but also the manner and means to be used in reaching that end.
The Court thus, finds that Concepcion was an employee of CPI. While the employment
agreement of Concepcion was denominated as a "Contract of Agency for Project Director," it
should be stressed that the existence of employer-employee relations could not be negated by
the mere expedient of repudiating it in a contract. It was ruled that one's employment status is
defined and prescribed by law, and not by what the parties say it should be.
In sum, the Court thus holds that the commissions of Babiano were properly forfeited for
violating the "Confidentiality of Documents and Non-Compete Clause." On.the other hand, CPI
remains liable for the unpaid commissions of Concepcion in the sum of P591,953.05.