Cyrus Vincent Tronco

LABOR STANDARDS

University of San Carlos

School of Law and Governance

LABOR STANDARDS
CASE DIGESTS
(School Year 2017-2018)

SUBMITTED BY:

TRONCO, CYRUS VINCENT L.

EH-405

SUBMITTED TO:

ATTY. JEFFERSON M. MARQUEZ

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Table of Contents
185449 BASIC PRINCIPLES............................................................................................................. 5
Sonza vs. ABS-CBN (GR No. 138051 June 10, 2004)........................................................................................ 5
Lazaro vs. Social Security Commission (G.R. No. 138254 July 30, 2004)....................................................... 6
Philippine Global Commission, Inc. vs. De Vera (G.R. No. 157214 June 7, 2005) ........................................ 7
ABS-CBN vs. Nazareno (G.R. 164156 September 26, 2006) ............................................................................ 9
Francisco vs. NLRC (GR No. 170087 August 31, 2006) ................................................................................. 11
Nogales et. al. vs. Capitol Medical Center (G.R. No. 142625 December 19, 2006) ...................................... 13
Coca-Cola Bottlers vs. Dr. Climaco (GR No. 146881 February 5, 2007)....................................................... 15
Calamba Medical center VS. NLRC, et. Al. (GR No. 176484 November 28, 2008) ..................................... 17
Escasias, et. al. vs. Shangri-La Mactan Island Resort, et. al (G.R. No. 178827 March 4, 2009) ................ 18
Tongko vs. The Manufacturers Life Insurance Co., Inc. (G.R. No. 167622 November 7, 2008) ................ 19
Semblante et al., vs. Court of Appeals, et al. (G.R. No. 196426 August 15, 2011) ....................................... 21
Bernarte vs. Phil. Basketball Association et al. (G.R. No. 192084 September 14, 2011) .............................. 23
Lirio vs Genovia (G.R. No. 169757 November 23, 2011)............................................................................... 25
Charlie Jao vs BCC Products Sales, Inc. (GR No. 163700 April 18, 2012) .................................................... 28
Legend Hotel vs Realuyo (GR 153511 July 18, 2012) .................................................................................... 30
The New Philippine Skylanders, Inc., vs. Dakila (G.R. No. 199547 Sept. 24, 2012).................................... 32
Tesoro et al., vs. Metro Manila Retreaders Inc., et al. (GR No. 171482 March 12, 2014) ............................ 34
Royale Homes Marketing Corp. vs. Alcantara (G.R. No. 195190 July 28, 2014) ......................................... 36
Fuji Television Network, Inc., vs. Arlene S. Espiritu (G.R. No. 204944-45 December 3, 2014).................. 38
Cabaobas et. al. vs. Pepsi Cola (G.R. No. 176908 March 25, 2015) ............................................................... 41
Begino et.al. v. ABS-CBN Corp. (G.R. No. 199166 April 20, 2015) ............................................................... 43
Social Security System vs Ubana (G.R. No 200144 August 25, 2015) .......................................................... 45
Century Properties, Inc., v. Edwin Babiano and Emma Concepcion (G.R. No. 220978 July 5, 2016) ....... 47
Lu vs. Enopia (G.R. No. 197899 March 6, 2017)............................................................................................. 49
185450 HIRING OF EMPLOYEE ................................................................................................... 51
PT &T vs. NLRC (G.R. No. 118978 May 23, 1997) ......................................................................................... 51
Duncan Asso. Of Detailman-PTGWO vs. GlaxoSmithKlein Phils. (G.R. No. 162994 Sept. 17, 2004) ....... 53
Star Paper Corp., vs Simbol (G.R. 164774 April 12, 2006) ............................................................................ 55
Del Monte Phils. V. Velasco (G.R. No. 153477 March 6, 2007) ..................................................................... 56
Yrasuegui vs. Philippine Airline (G.R No. 168081 Oct. 17, 2008) ................................................................ 57
185451 WAGE & THE WAGE RATIONALIZATION ACT ....................................................... 58
SIP Food House et al vs. Batolina (G.R. No. 192473 October 11, 2010) ....................................................... 58
SLL International Cables Specialist vs. NLRC (G.R. No. 172161 March 2, 2011) ....................................... 60
Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. (G.R. No. 176985 April 1, 2013) ............................................ 62
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Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc. (GR No. 198783 April 15, 2013) ..... 64
The National Wages and Productivity Commission et. al. vs. The Alliance of Progressive Labor et. al.
(G.R. No. 150326 March 12, 2014) ................................................................................................................... 66
David/Yield Hog Dealer v. Macasio (G.R. No. 195466 July 2, 2014) ........................................................... 69
Our Haus Realty Corporation vs. Parian (G.R. No. 204651 August 6, 2014) .............................................. 71
Milan, et al vs. NLRC and Solid Mills (G.R. No. 202961 February 4, 2015) ................................................ 73
185452 WAGE ENFORCEMENT AND RECOVERY.................................................................. 76
Tiger Construction and Development Corp. vs. Abay et al. (G.R. No. 164141 February 26, 2010) .......... 76
Peoples Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al. (G.R. No. 179652 May 8, 2009)........ 78
Superior Package Corp. v. Balagsay (G.R. No. 178909 October 10, 2012) ................................................... 80
SHS Perforated Materials, Inc. et al., vs. Diaz (GR No. 185814 Oct. 13, 2010) ............................................ 82
Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo (G.R. No. 188169 November 28, 2011) .. 84
Locsin II vs. Mekeni Food Corp. (GR No. 192105 December 9, 2013) ......................................................... 86
TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union (G.R. No. 191714 February 26, 2014) ..... 88
Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso. (G.R. No. 181806
March 12, 2014) ................................................................................................................................................ 90
Bluer Than Blue Joint Ventures Co., vs. Esteban (G.R. No. 192582 April 7, 2014) ..................................... 92
Netlink Computer Inc. v. Delmo (G.R. No. 160827 June 18, 2014) .............................................................. 93
PLDT vs Estraero (G.R. No. 192518 October 15, 2014) ............................................................................... 95
Milan et al vs. NLRC (G.R. No. 202961 February 4, 2015) ............................................................................ 97
185453 PAYMENT OF WAGES ................................................................................................... 102
Congson vs. NLRC (G.R. No. 114250 April 5, 1995) ................................................................................... 102
North Davao Mining vs. NLRC (G.R. No. 112546 March 13, 1996) ........................................................... 103
Heirs of Sara Lee vs. Rey (G.R. No. 149013 August 31, 2006) .................................................................... 104
185454 CONDITIONS OF EMPLOYMENT ............................................................................... 106
San Juan De Dios Hospital vs. NLRC (G.R. No. 126383 November 28, 1997) .......................................... 106
Sime Darby Pilipinas, Inc. vs. NLRC (G.R. No. 119205 April 15, 1998) .................................................... 107
Phil. Airlines vs. NLRC (G.R. No. 132805 February 2, 1999) ...................................................................... 108
Linton Commercial Co., Inc., vs. Hellera et al. (G.R. No. 163147 October 10, 2007) ................................ 110
Bisig Manggagawa sa Tryco vs. NLRC (G.R. No. 151309 October 15, 2008) ............................................ 111
HSY Marketing Ltd., Co., vs. Virgilio O. Villastique (G.R. No. 219569 August 17, 2016) ....................... 115
A. Nate Casket Maker vs. Elias V. Arango (G.R. No. 192282 October 5, 2016) ........................................ 117
185455 MINIMUM LABOR STANDARD BENEFITS............................................................... 119
San Miguel Corp., vs. CA (G.R. No. 146775 January 30, 2002) .................................................................. 119
Tan vs. Lagrama (G.R. No. 151228 August 15, 2002) .................................................................................. 122
Lambo vs. NLRC (G.R. No. 111042 October 26, 1999) ................................................................................ 124

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R&E Transport vs. Latag (G.R. No. 155214 February 13, 2004).................................................................. 126
Asian Transmission vs. CA (G.R. No. 144664 March 15, 2004) .................................................................. 127
Autobus Transport System vs. Bautista (G.R. No. 156364 May 16, 2005) ................................................. 128
San Miguel Corp., vs. Del Rosario (G.R. No. 168194 Dec. 13, 2005) .......................................................... 130
Penaranda vs. Baganga Plywood Corp. (G.R. No. 159577 May 3, 2006) ................................................... 133
Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, (G.R. No. 1577745 October
19, 2007) .......................................................................................................................................................... 135
Bahia Shipping Services vs. Chua (G.R. No. 162195 April 8, 2008) ........................................................... 137
PNCC Skyway Traffic Management and Security Division Workers Organization (G.R. No. 171231
February 17, 2010) .......................................................................................................................................... 138
Radio Mindanao Network, Inc. vs. Ybarola (G.R. No. 198662 September 12, 2012) ................................ 139
Robina Farms Cebu vs. Villa (GR No. 175869 April 18, 2016) .................................................................... 141
De La Salle Araneta University v. Juanito Bernardo (G.R. No. 190809 February 13, 2017) ..................... 143
185456 OTHER SPECIAL BENEFITS.......................................................................................... 147
185457 Reyes vs. NLRC et al. (GR No. 160233 August 8, 2007) ............................................... 147
185458 Acro Metal Products Co., Inc., et. Al., vs Samahan ng mga Manggagawa sa Acro . 149
185459 Metal-NAFLU (G.R. No. 170734 May 14, 2008) ............................................................ 149
185460 Universal Robina Sugar Milling Corp. vs Caballeda (GR No. 156644 July 28, 2008) 150
185461 Cercado vs. Uniprom, Inc. (GR No. 199338 January 21, 2013) .................................... 152
185462 Radio Mindanao Network Inc., et al., vs Ybarola, Jr. Et al. (GR No. 198662
September 12, 2012) ............................................................................................................................. 153
185463 Padillo vs Rural Bank of Nabunturan Inc. (G.R. No. 199338 January 21, 2013) ........ 154
185464 Grace Christian High School vs Lavandera (G.R. No. 177845 August 20, 2014) ...... 156
185465 Goodyear Philippines Inc., and Remegio M. Ramos vs. Marina L. Angus (G.R. No.
185466, November 12, 2014) ............................................................................................................... 157
185466 Banco De Oro Unibank vs Sagaysay (G.R. No. 214961 September 16, 2015) ............ 159
185467 Maureen P. Perez vs. Comparts Industries, Inc. (G.R. No. 197557 October 5, 2016) 161
185468 Editha M. Catotocan vs. Lourdes School of Quezon City, Inc. (G.R. No. 213486 April
26, 2017) 162
185469 Philippine Airlines, Inc. vs. Arjan T. Hassaram (G.R. No. 217730 June 5, 2017)....... 165

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185449 BASIC PRINCIPLES

Sonza vs. ABS-CBN (GR No. 138051 June 10, 2004)

FACTS:

In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and Developments
Corporation (MJMDC), a television program. Referred to in the Agreement as Agent, MJMDC agreed
to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed
to pay Sonzas services a monthly talent fee of P310, 000 for the first year and P317,000 for the second
and third year of the agreement.

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he will
irrevocably resign in view of the recent events concerning his program and career, that he is waiving
and renouncing recovery of the remaining amount stipulated in the Agreement, but reserves the right
to seek recovery of the other benefits under said agreement.

On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and

Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service incentive
leave, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock
Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the ground that there was
no employer-employee relationship between them. ABS-CBN insists that Sonza was an independent
contractor.

ISSUE: Whether an employer-employee relationship exists.

RULING:

The Court sustained ABS-CBNs contention and hence, dismissed the petition.

The Supreme Court ratiocinated that Independent contractors often present themselves to possess
unique skills, expertise, talent, to distinguish them from ordinary employees. The specific selection and
hiring of Sonza, because of his unique skills, talent, and celebrity status not possessed by an ordinary
employee, is a circumstance indicative of an independent contractual relationship. Whatever benefits
Sonza enjoyed arose from a contract and not because of an employer-employee relationship. Sonzas
talent fees are so huge and out of the ordinary that they indicate more an independent contractual
relationship.

Applying the control test in the case at bar, the Court found that Sonza is not an employee but an
independent contractor. First, ABS-CBN engaged Sonzas services specifically to co-host the Mel and
Jay program. ABS-CBN did not assign any other work to Sonza. To perform his work, Sonza only
needed his skills and talent. Sonza delivered his lines appeared on the television and sounded on radio,
all outside the control of ABS-CBN. Sonza did not have to work eight hours a day. The Agreement
required Sonza to attend only rehearsals and tapings. ABS-CBN could not dictate the contents of Sonzas
script. Sonza had a free hand on what to say or discuss in his shows. Clearly, ABS-CBN did not exercise
control over the means and methods of performance of Sonzas work.

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Lazaro vs. Social Security Commission (G.R. No. 138254 July 30, 2004)

FACTS:

Private respondent Laudato filed a petition before the SSC for social security coverage and remittance
of unpaid monthly social security contributions against her three employers. Among the respondents
was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star Marketing (Royal Star),
which is engaged in the business of selling home appliances. Petitioner states that 1) Laudato was not a
sales supervisor of Royal Star, but was a mere sales agent whom he paid purely on commission basis.2)
Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be
deemed an employee of Royal Star while respondents contended that despite her employment as sales
supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed
during the said period, to report her to the SSC for compulsory coverage or remit Laudatos social
security contributions.

ISSUE: Whether or not respondent is an employee, bringing her under the coverage of the Social Security
Act.

RULING:

Ladato is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under
the Social Security Act, the determination of employer-employee relationship warrants the application
of the control test, that is, whether the employer controls or has reserved the right to control the
employee, not only as to the result the of work done, but also as to the means and methods by which
the same is accomplished. The fact that Laudato was paid by way of commission does not preclude the
establishment of an employer-employee relationship.

The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right
to control the "employee" not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished. Neither does it follow that a person who does not
observe normal hours of work cannot be deemed an employee. A supervisor is exempt from the
observance of normal hours of work for his compensation is measured by the number of sales he
makes. Laudato oversaw and supervised the sales agents of the company, and thus was subject to the
control of management as to how she implements its policies and its end results. Royal Star exercised
control over its sales supervisors or agents such as Laudato as to the means and methods through which
these personnel performed their work.

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Philippine Global Commission, Inc. vs. De Vera (G.R. No. 157214 June 7, 2005)

FACTS:

Philippine Global Communications Inc. is a corporation engaged in the business of communication

services and allied activities while Ricardo de Vera is a physician by profession whom petitioner enlisted
to attend to the medical needs of its employees. The controversy arose when petitioner terminated his
engagement.

In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the
respondents proposal in a document denominated as retainership contract which will be for a period
of one year, subject to renewal and clearly stated that respondent will cover the retainership the
company previously with Dr. Eulau. The agreement went until 1994, in the years 1995-1996, it was
renewed verbally. The turning point of the parties relationship was when petitioner, thru a letter
bearing the subject TERMINATION RETAINERSHIP CONTRACT, informed Dr. de Vera of its
decision to discontinue the latters retainer contract because the management has decided that it would
be more practical to provide medical services to its employees through accredited hospitals near the
company premises.

On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC, alleging that he had
been actually employed by the company as its company physician since 1991. The commission rendered
decision in favor of Philcom and dismissed the complaint saying that de Vera was an independent
contractor. On appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a
regular employee and directed the company to reinstate him. Philcom appealed to the CA where it
rendered decision deleting the award but reinstating de Vera. Philcom filed this petition involving the
difference of a job contracting agreements from employee-employer relationship.

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

RULING:

SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com.

Upon reading the contract dated September 6, 1982, signed by the complainant himself, it clearly states
that is a retainership contract. The retainer fee is indicated thereon and the duration of the contract for
one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot
claim that he was unaware that the contract was good only for one year, as he signed the same without
any objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate
person and educated person, the complainant cannot claim that he does not know what contract he
signed and that it was renewed on a year to year basis. The labor arbiter added the indicia, not disputed
by respondent, that from the time he started to work with petitioner, he never was included in its
payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and
was in fact subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in
accordance with the National Internal Revenue Code, matters which are simply inconsistent with an
employer employee relationship. The elements of an employer-employee relationship are wanting in
this case. The record is replete with evidence showing that respondent had to bill petitioner for his
monthly professional fees. It simply runs against the grain of common experience to imagine that an
ordinary employee has yet to bill his employer to receive his salary.

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The power to terminate the parties relationship was mutually vested on both. Either may terminate the
arrangement at will, with or without cause. Remarkably absent is the element of control whereby the
employer has reserved the right to control the employee not only as to the result of the work done but
also as to the means and methods by which the same is to be accomplished.

Petitioner had no control over the means and methods by which respondent went about performing his
work at the company premises. In fine, the parties themselves practically agreed on every terms and
conditions of the engagement, which thereby negates the element of control in their relationship.

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ABS-CBN vs. Nazareno (G.R. 164156 September 26, 2006)

FACTS:

ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants
(PAs) on different dates. They were assigned at the news and public affairs, for various radio programs
in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN
employees identification cards and were required to work for a minimum of eight hours a day,
including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial
broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate,
arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news
reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public
service announcement and complaints; e) Assist, anchor program interview, etc.; and f) Record, log
clerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement
(CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner
refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio operations
would be handled by the studio technician. There was a revision of the schedule and assignments and
that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly
to Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and
13th Month Pay with Damages against the petitioner before the NLRC.

ISSUE: WON the respondents are regular employees?

RULING:

Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to
all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent, the employment is considered regular as
long as the activity exists. The reason being that a customary appointment is not indispensable before
one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:
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.

Any employee who has rendered at least one year of service, whether continuous or intermittent, is
deemed regular with respect to the activity performed and while such activity actually exists. The fact
that respondents received pre-agreed talent fees instead of salaries, that they did not observe the
required office hours, and that they were permitted to join other productions during their free time are
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not conclusive of the nature of their employment. They are regular employees who perform several
different duties under the control and direction of ABS-CBN executives and supervisors.

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

What determines whether a certain employment is regular or otherwise is the character of the activities
performed in relation to the particular trade or business taking into account all the circumstances, and
in some cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the
following:

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity
status was required from them because they were merely hired through petitioners personnel
department just like any ordinary employee.

Second. The so-called talent fees of respondents correspond to wages given as a result of an employer
employee relationship. Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the employer
and when the worker, relative to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such employee and not an independent
contractor.

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Francisco vs. NLRC (GR No. 170087 August 31, 2006)

FACTS:

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated
as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company. In 1996, she was
designated Acting Manager, and was able to perform the duties of such for 5 years. As of December 31,
2000, her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation. In January 2001, Liza R. Fuentes as Manager replaced her. She alleged that she was
required to sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. 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, she 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. 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. 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. The Labor Arbiter ruled
in favor of the petitioner.

The NLRC affirmed with modification the Decision of the Labor Arbiter. On appeal, the Court of
Appeals reversed the NLRC decision. The appellate court denied petitioners motion for
reconsideration, hence, the present recourse.

ISSUE: Whether there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation.

RULING:

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. In the United States, the touchstone of economic reality in analyzing possible
employment relationships for purposes of the Federal Labor Standards Act is dependency. By analogy,
the benchmark of economic reality in analyzing possible employment relationships for purposes of the
Labor Code ought to be the economic dependence of the worker on his employer. Under the broader
economic reality test, the petitioner can likewise be said to be an employee of respondent corporation
because she had served the company for six years before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13 month pay, bonuses and allowances, as well as deductions
and Social Security contributions from August 1, 1999 to December 18, 2000. When petitioner was
designated General Manager, respondent corporation made a report to the SSS signed by Irene
Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature

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card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-
line inquiry system of the SSS evinces the existence of an employer-employee relationship between
petitioner and Respondent Corporation. It is therefore apparent that petitioner is economically
dependent on Respondent Corporation for her continued employment in the latters line of business.
The petition is GRANTED.

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

FACTS:

Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr.
Estrada"). Corazon was admitted at the CMC. Dr. Estrada ordered the injection of ten grams of
magnesium sulfate. However, Dr. Ely Villaflor ("Dr. Villaflor"), who was assisting Dr. Estrada,
administered only 2.5 grams of magnesium sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low
forceps to extract Corazon's baby. In the process, piece of cervical tissue was allegedly torn. The baby
came out in an panic, cyanotic, weak, and injured condition. Corazon began to manifest moderate
vaginal bleeding which rapidly became profuse. Dr. Noe Espinola ("Dr. Espinola"), head of the
Obstetrics Gynecology Department of the CMC, was apprised of Corazon's condition by telephone.
Upon being informed that Corazon was bleeding profusely, Dr. Espinola ordered immediate
hysterectomy. Despite Dr. Espinola's efforts, Corazon died.

Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners mainly contended
that defendant physicians and CMC personnel were negligent in the treatment and management of
Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of
defendant physicians and hospital staff.

Trial court rendered judgment finding Dr. Estrada solely liable for damages. The Court of Appeals
upheld the trial court's ruling, finding Dr. Estrada as an independent contractor-physician. The Court
of Appeals applied the "borrowed servant" doctrine considering that Dr. Estrada was an independent
contractor who was merely exercising hospital privileges. This doctrine provides that once the surgeon
enters the operating room and takes charge of the proceedings, the acts or omissions of operating room
personnel, and any negligence associated with such acts or omissions, are imputable to the surgeon.

ISSUE: WON there is employer-employee relationship between Dr. Estrada and CMC.

RULING:

Dr. Estrada is not an employee of CMC, but an independent contractor. However, CMC is still
vicariously liable.

The Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment
and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she
was under the exclusive prenatal care of Dr. Estrada. Dr. Estrada is not an employee of CMC, but an
independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however, an exception to this principle. The hospital may be liable if the physician is the "ostensible"
agent of the hospital. This exception is also known as the "doctrine of apparent authority." The doctrine
of apparent authority essentially involves two factors to determine the liability of an independent-
contractor physician. The first factor focuses on the hospital's manifestations and is sometimes described
as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude
that the individual who was alleged to be negligent was an employee or agent of the hospital. In this
regard, the hospital need not make express representations to the patient that the treating physician is
an employee of the hospital; rather a representation may be general and implied. The doctrine of
apparent authority is A specie of the doctrine of estoppel. Article 1431 of the Civil Code provides that
"through estoppel, an admission or representation is rendered conclusive upon the person making it,

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and cannot be denied or disproved as against the person relying thereon." CMC impliedly held out Dr.
Estrada as a member of its medical staff.

Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses
Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such
authority. First, CMC granted staff privileges to Dr. Estrada. Second, CMC made Rogelio sign consent
forms printed on CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding to
Dr. Espinola, who was then the Head of the Obstetrics and Gynecology Department of CMC, gave the
impression that Dr. Estrada as a member of CMC's medical staff was collaborating with other CMC
employed specialists in treating Corazon. WHEREFORE, the Court PARTLY GRANTS the petition. The
Court finds respondent Capitol Medical Center vicariously liable for the negligence of Dr. Oscar
Estrada.

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Coca-Cola Bottlers vs. Dr. Climaco (GR No. 146881 February 5, 2007)

FACTS:

Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-Cola Bottlers Phil.(petitioner) by
virtue of a Retainer Agreement. Among the terms and conditions under their retainer agreement are:

That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either party may
terminate the contract upon giving a 30-day written notice to the other;

That petitioner shall compensate respondent a retainer fee of P3,800/month. The DOCTOR may charge
professional fee for hospital services rendered in line with his specialization;

That in consideration of the retainers fee, the DOCTOR agrees to perform the duties and obligations in
the COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer agreement;

That the DOCTOR shall observe clinic hours at the companys premises from Monday to Saturday of a
minimum of two (2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30
a.m. to 8:30 a.m. and 3:00pm to 4:00pm. It is further understood that the DOCTOR shall be on call at all
times during the other work shifts to attend to emergency case(s);

That no employee-employer relationship shall exist between the company and the DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of the agreement,
respondent continued to perform his functions as company doctor to petitioner until he received a letter
dated March 9, 1995 from the company ending their retainership agreement.

Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular employee of
petitioner and thus prayed from payment of all the benefits of a regular employee including 13th month
pay, COLA, holiday pay, service incentive leave, and Christmas bonus. Also, respondent filed another
complaint for illegal dismissal against petitioner.

In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed by the
Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer-employee
relationship existed between petitioner company and respondent.

However, when it was elevated to CA for review, the latter ruled that employer-employee relationship
existed between the parties after applying the four-fold test: (1) power to hire employee (2) payment of
wages (3) power to dismissal (4) and power to control over the employee with respect to the means and
methods by which the work is to be accomplished.

The CA held it in this wise:

First, the agreement provides the company desires to engage on a retainer basis the services of a
physician and the said DOCTOR is accepting such engagement. This clearly shows that Coca-Cola
company exercised its power to hire.

Secondly, the agreement showed that petitioner would compensate the doctor for P3,800/month. This
would represent the element of payment of wages.

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Thirdly, it was provided in the agreement that the same shall be valid only for 1 year. the said term
notwithstanding, either party may terminate the contract upon giving 30-day written notice. This
would show that petitioner had the power to dismissal.

Lastly, the agreement reveals that Coca-Cola control over the conduct of respondent in the latters
performance of his duties as a doctor for the company.

Hence, this petition filed by Coca-Cola company

ISSUE: Whether or not there exist an employer-employee relationship between the parties.

RULING:

The Court agrees with the finding of the Labor Arbiter and the NLRC.

The Court held that the Labor Arbiter and the NLRC correctly found that petitioner company lacked the
power of control over the performance by respondent of his duties.

The Court citing the case of Neri vs. NLRC said, petitioner company, through the Comprehensive
Medical Plan, provided guidelines merely to ensure that the end result was achieved. In other words,
what was sought to be controlled by the petitioner company was actually the end result of the task. The
guidelines or the Comprehensive Medical Plan were laid down merely to ensure that the desired end
result was achieved but did not control the means and methods by which respondent performed his
assigned tasks.

The Supreme Court further held that, an employee is required to stay in the employers workplace or
proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose.
Such is not the prevailing situation here. The respondent does not dispute that fact that outside of the
two (2) hours that he is required to be at petitioner companys premises, he is not at all further required
to just sit around in the premises and wait for an emergency to occur so as to enable him from using
such hours for his own benefit and advantage. In fact, respondent maintains his own private clinic
attending his private practice in the city, where he services his patients and bills them accordingly.

The Court finds that the requirement to be on call for emergency cases do not amount to such control,
but are necessary incidents to the Retainership Agreement.

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

Therefore, the petition was GRANTED.

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Calamba Medical center VS. NLRC, et. Al. (GR No. 176484 November 28, 2008)

FACTS:

Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr.
Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week
on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also, resident
physicians were also given a percentage share out of fees charged for out-patient treatments, operating
room assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioner's medical
director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.

After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow
employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha
was not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a
complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

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

RULING: Drs. Lanzanas are declared employee by the petitioner hospital. 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.

That petitioner exercised control over respondents gains light from the undisputed fact that in the
emergency room, the operating room, or any department or ward for that matter, respondents' work is
monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or
consent of petitioner or its medical director, no operations can be undertaken in those areas. For control
test to apply, it is not essential for the employer to actually supervise the performance of duties of the
employee, it being enough that it has the right to wield the power.

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

Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of
which cover administrative and disciplinary measures on negligence of duties, personnel conduct and
behavior, and offenses against persons, property, and the hospital's interest.

More importantly, petitioner itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the pay slips and BIR W-2 (now 2316)
Forms which reflect their status as employees, and the classification as "salary" of their remuneration.
Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this
juncture that mandatory coverage under the SSS Law is premised on the existence of an employer-
employee relationship, except in cases of compulsory coverage of the self-employed.

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Escasias, et. al. vs. Shangri-La Mactan Island Resort, et. al (G.R. No. 178827 March 4,
2009)

FACTS:

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

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for
regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th
month pay differential against respondents, claiming that they are regular employees of Shangri-La.
Shangri-La claimed, however, that petitioners were not its employees but of respondent doctor, that
Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to
employ health personnel, that the services of nurses is not germane nor indispensable to its operations,
and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and
supervise the work of nurses under her.

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

between Shangri-La and petitioners.

RULING:

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

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

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, Clinic Policies and Employee Manual claimed to have been prepared by respondent doctor
exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus
employment status. It is thus presumed that said document, and not the employee manual being
followed by Shangri-La's regular workers, governs how they perform their respective tasks and
responsibilities.

In fine, as Shangri-La does not control how the work should be performed by petitioners, it is not
petitioners employer.

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Tongko vs. The Manufacturers Life Insurance Co., Inc. (G.R. No. 167622 November 7,
2008)

FACTS: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in
life insurance business. Renato A. Vergel De Dios was, during the period material, its President, and
Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July
1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein
shall be construed or interpreted as creating an employer-employee relationship between the Company
and the Agent.

The 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.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he
became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife,
consisting of commissions, persistency income, and management overrides. The problem started
sometime in 2001, when Manulife instituted manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko
regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was
the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues
to remain one of the laggards in this area. Other issues were: "Some Managers are unhappy with their
earnings and would want to revert to the position of agents." And "Sales Managers are doing what the
company asks them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for
illegal dismissal In the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the
complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife and
Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an
appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the
absence of an employer-employee relationship between the parties, and deeming the NLRC with no
jurisdiction over the case. Hence, Tongko filed this petition.

ISSUE: Whether or not Tongko was an employee of Manulife and that he was illegally dismissed.

RULING:

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Yes. 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. 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. 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.

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain
number of agents, in addition to his other administrative functions, leads to no other conclusion that he
was an employee of Manulife.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of
proving the validity of the termination of employment rests on the employer. Failure to discharge this
evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just cause
and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial
proceedings is that proof beyond reasonable doubt is not required in determining the legality of an
employer's dismissal of an employee, and not even a preponderance of evidence is necessary as
substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of
evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might conceivably opine otherwise.

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed
to identify the specific acts by which Tongko's employment was terminated much less support the same
with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their means
of livelihood. Thus, it must be concluded that Tongko was illegally dismissed.

Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being
its employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however,
Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of
illegal dismissal.

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

FACTS:

Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by respondents-spouses
Vicente and Maria Luisa Loot, the owners of Galleria de Mandaue (the cockpit), as the official masiador
and sentenciador, respectively, of the cockpit sometime in 1993.

As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and
orders the start of the cockfight. He also distributes the winnings after deducting the arriba, or the
commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks physical condition and capabilities to continue the cockfight, and
eventually declares the result of the cockfight.

For their services as masiado rand sentenciador, Semblante receives Php 2,000 per week or a total of Php

8,000 per month, while Pilar gets Php 3,500 a week or Php 14,000 per month. They work every Tuesday,
Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on
special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early
hours of the morning depending on the needs of the cockpit. Petitioners had both been issued
employees identification cards that they wear every time they report for duty. They alleged never
having incurred any infraction and/or violation of the cockpit rules and regulations.

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

Respondents denied that petitioners were their employees and alleged that they were associates of
respondents independent contractor, Tomas Vega. Respondents claimed that petitioners have no
regular working time or day and they are free to decide for themselves whether to report for work or
not on any cockfighting day. In times when there are few cockfights in Galleria de Mandaue, petitioners
go to other cockpits in the vicinity. Lastly, petitioners, so respondents assert, were only issued
identification cards to indicate that they were free from the normal entrance fee and to differentiate them
from the general public.

In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be regular
employees of respondents as they performed work that was necessary and indispensable to the usual
trade or business of respondents for a number of years. The Labor Arbiter also ruled that petitioners
were illegally dismissed, and so ordered respondents to pay petitioners their back wages and separation
pay.

Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And within the 10-
day appeal period, he filed the respondents appeal with the NLRC on September 24, 2004, but without
posting a cash or surety bond equivalent to the monetary award granted by the Labor Arbiter.

The NLRC held in its Resolution of October 18, 2006 that there was no employer-employee relationship
between petitioners and respondents, respondents having no part in the selection and engagement of
petitioners, and that no separate individual contract with respondents was ever executed by petitioners.

The CA upheld the NLRC decision.

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ISSUE: Whether or not there exists an employer/employee relationship between Semblante, et al. and
the spouses LOOT.

RULING:

The petitioners are NOT employees of respondents, since their relationship fails to pass muster the
fourfold test of employment We have repeatedly mentioned in countless decisions: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employees conduct, which is the most important element.

As found by both the NLRC and the CA, respondents had no part in petitioners selection and
management; petitioners compensation was paid out of the arriba (which is a percentage deducted
from the total bets), not by petitioners; and petitioners performed their functions as masiador and
sentenciador free from the direction and control of respondents. In the conduct of their work, petitioners
relied mainly on their expertise that is characteristic of the cockfight gambling, and were never given
by respondents any tool needed for the performance of their work.

Respondents, not being petitioners employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so in the first place.

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

FACTS:

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

Bernarte, was not made to sign a contract during the first conference of the All-Filipino Cup which was
from February 23, 2003 to June 2003. It was only during the second conference when he was made to
sign a one-and-a-half-month contract for the period July 1 to August 5, 2003.

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

Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March 1, 2001,
he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee.
On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction
over his questioning on the assignment of referees officiating out-of-town games. Beginning February
2004, he was no longer made to sign a contract.

The Court of Appeals denied the motion for reconsideration.

Complainants entered into two contracts of retainer with the PBA in the year 2003. The first contract
was for the period January 1, 2003 to July 15, 2003; and the second was for September 1 to December
2003. After the lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not employees of the PBA. Their
respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to
renew their contracts, which they knew were fixed.

Labor Arbiters decision, on 31 March 2005, declared petitioner an employee whose dismissal by
respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the
payment of back wages, moral and exemplary damages, and attorneys fees.

In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiters judgment. The dispositive
portion of the NLRCs decision reads:

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor Arbiter Teresita D. Castillon-
Lora dated March 31, 2005 is AFFIRMED.

The Court of Appeals found petitioner an independent contractor since respondents did not exercise
any form of control over the means and methods by which petitioner performed his work as a basketball
referee. The Court of Appeals held:

While the NLRC agreed that the PBA has no control over the referees acts of blowing the whistle and
making calls during basketball games, it, nevertheless, theorized that the said acts refer to the means
and methods employed by the referees in officiating basketball games for the illogical reason that said
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acts refer only to the referees skills. How could a skilled referee perform his job without blowing a
whistle and making calls? Worse, how can the PBA control the performance of work of a referee without
controlling his acts of blowing the whistle and making calls?

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

RULING:

At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision moot as
respondents appeal was considered in the interest of substantial justice. We agree with the NLRC. The
ends of justice will be better served if we resolve the instant case on the merits rather than allowing the
substantial issue of whether petitioner is an independent contractor or an employee linger and remain
unsettled due to procedural technicalities.

The existence of an employer-employee relationship is ultimately a question of fact. As a general rule,

factual issues are beyond the province of this Court. However, this rule admits of exceptions, one of
which is where there are conflicting findings of fact between the Court of Appeals, on one hand, and
the NLRC and Labor Arbiter, on the other, such as in the present case.

To determine the existence of an employer-employee relationship, case law has consistently applied the
four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employers power to control the employee on the means and
methods by which the work is accomplished. The so-called control test is the most important indicator
of the presence or absence of an employer-employee relationship.

We agree with respondents that once in the playing court, the referees exercise their own independent
judgment, based on the rules of the game, as to when and how a call or decision is to be made. The
referees decide whether an infraction was committed, and the PBA cannot overrule them once the
decision is made on the playing court. The referees are the only, absolute, and final authority on the
playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make
or not to make and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referees. The very nature of petitioners job of officiating a professional
basketball game undoubtedly calls for freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the
referees are required to report for work only when PBA games are scheduled, which is three times a
week spread over an average of only 105 playing days a year, and they officiate games at an average of
two hours per game; and (2) the only deductions from the fees received by the referees are withholding
taxes. In other words, unlike regular employees who ordinarily report for work eight hours per day for
five days a week, petitioner is required to report for work only when PBA games are scheduled or three
times a week at two hours per game. In addition, there are no deductions for contributions to the Social
Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees salaries. These
undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an
employee of respondents.

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Lirio vs Genovia (G.R. No. 169757 November 23, 2011)

FACTS:

On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or
Celkor Ad Sonic Mix Recording Studio for illegal dismissal, non-payment of commission and award of
moral and exemplary damages.

In his Position Paper, respondent Genovia alleged, among others, that on August 15, 2001, he was hired
as studio manager by petitioner Lirio, owner of Celkor Ad Sonic Mix Recording Studio (Celkor). He was
employed to manage and operate Celkor and to promote and sell the recording studio's services to
music enthusiasts and other prospective clients. He received a monthly salary of P7,000.00. They also
agreed that he was entitled to an additional commission of P100.00 per hour as recording technician
whenever a client uses the studio for recording, editing or any related work. He was made to report for
work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day
only, but most of the time, he still rendered eight hours of work or more. All the employees of petitioner,
including respondent, rendered overtime work almost every day, but petitioner never kept a daily time
record to avoid paying the employees overtime pay.

Respondent stated that a few days after he started working as a studio manager, petitioner approached
him and told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio,
a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs
for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation
for such services. As agreed upon, the additional services that respondent would render included
composing and arranging musical scores only, while the technical aspect in producing the album, such
as digital editing, mixing and sound engineering would be performed by respondent in his capacity as
studio manager for which he was paid on a monthly basis. Petitioner instructed respondent that his
work on the album as composer and arranger would only be done during his spare time, since his other
work as studio manager was the priority. Respondent then started working on the album.

Respondent alleged that before the end of September 2001, he reminded petitioner about his
compensation as composer and arranger of the album. Petitioner verbally assured him that he would
be duly compensated. By mid-November 2001, respondent finally finished the compositions and
musical arrangements of the songs to be included in the album. Before the month ended, the lead and
back-up vocals in the ten (10) songs were finally recorded and completed. From December 2001 to
January 2002, respondent, in his capacity as studio manager, worked on digital editing, mixing and
sound engineering of the vocal and instrumental audio files.

Thereafter, petitioner tasked respondent to prepare official correspondence, establish contacts and
negotiate with various radio stations, malls, publishers, record companies and manufacturers, record
bars and other outlets in preparation for the promotion of the said album. By early February 2002, the
album was in its manufacturing stage. ELECTROMAT, manufacturer of CDs and cassette tapes, was
tapped to do the job. The carrier single of the album, which respondent composed and arranged, was
finally aired over the radio on February 22, 2002.

On February 26, 2002, respondent again reminded petitioner about the contract on his compensation as
composer and arranger of the album. Petitioner told respondent that since he was practically a nobody
and had proven nothing yet in the music industry, respondent did not deserve a high compensation,
and he should be thankful that he was given a job to feed his family. Petitioner informed respondent
that he was entitled only to 20% of the net profit, and not of the gross sales of the album, and that the

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salaries he received and would continue to receive as studio manager of Celkor would be deducted from
the said 20% net profit share. Respondent objected and insisted that he be properly compensated. On
March 14, 2002, petitioner verbally terminated respondents services, and he was instructed not to report
for work.

Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds,
and no hearing was conducted before he was terminated, in violation of his constitutional right to due
process. Having worked for more than six months, he was already a regular employee. Although he
was a so called studio manager, he had no managerial powers, but was merely an ordinary employee.

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that he
be paid separation pay, back wages and overtime pay; and that he be awarded unpaid commission in
the amount of P2,000.00 for services rendered as a studio technician as well as moral and exemplary
damages.

Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which was certified
correct by petitioner,[2] and Petty Cash Vouchers[3] evidencing receipt of payroll payments by
respondent from Celkor.

In defense, petitioner stated in his Position Paper[4] that respondent was not hired as studio manager,
composer, technician or as an employee in any other capacity of Celkor. Respondent could not have
been hired as a studio manager, since the recording studio has no personnel except petitioner. Petitioner
further claimed that his daughter Celine Mei Lirio, a former contract artist of ABS-CBN Star Records,
failed to come up with an album as the latter aborted its project to produce one. Thus, he decided to
produce an album for his daughter and established a recording studio, which he named Celkor Ad Sonic
Mix Recording Studio. He looked for a composer/arranger who would compose the songs for the said
album. In July 2001, Bob Santiago, his son-in-law, introduced him to respondent, who claimed to be an
amateur composer, an arranger with limited experience and musician without any formal musical
training. According to petitioner, respondent had no track record as a composer, and he was not known
in the field of music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to
co-produce the album based on the following terms and conditions: (1) petitioner shall provide all the
financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent
shall act as composer and arranger of all the lyrics and the music of the five songs he already composed
and the revival songs; (4) petitioner shall have exclusive right to market the album; (5) petitioner was
entitled to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the
net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a month, which shall be
deductible from his share of the net profits and only until such time that the album has been produced.

According to petitioner, they arrived at the foregoing sharing of profits based on the mutual
understanding that respondent was just an amateur composer with no track record whatsoever in the
music industry, had no definite source of income, had limited experience as an arranger, had no
knowledge of the use of sound mixers or digital arranger and that petitioner would help and teach him
how to use the studio equipment; that petitioner would shoulder all the expenses of production and
provide the studio and equipment as well as his knowledge in the use thereof; and Celine Mei Lirio
would sing the songs. They embarked on the production of the album on or about the third week of
August 2002.

Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is one
of an informal partnership under Article 1767of the New Civil Code, since they agreed to contribute
money, property, or industry to a common fund with the intention of dividing the profits among

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themselves. Petitioner had no control over the time and manner by which respondent composed or
arranged the songs, except on the result thereof. Respondent reported to the recording studio between
10:00 a.m. and 12:00 noon. Hence, petitioner contended that no employer-employee relationship existed
between him and the respondent, and there was no illegal dismissal to speak of.

ISSUE: Whether or not employer-employee relationship exists?

RULING: Yes. The elements to determine the existence of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employers power to control the employees conduct. The most important element is the
employers control of the employees conduct, not only as to the result of the work to be done, but also
as to the means and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of an employer
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.

In this case, the documentary evidence presented by respondent to prove that he was an employee of
petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15,
2002) certified correct by petitioner,[31] which showed that respondent received a monthly salary of
P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with the
corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash
vouchers,[32] showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid monthly
wages of P7, 000.00. Petitioner wielded the power to dismiss as respondent stated that he was verbally
dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against
petitioner. The power of control refers merely to the existence of the power. It is not essential for the
employer to actually supervise the performance of duties of the employee, as it is sufficient that the
former has a right to wield the power. Nevertheless, petitioner stated in his Position Paper that it was
agreed that he would help and teach respondent how to use the studio equipment. In such case,
petitioner certainly had the power to check on the progress and work of respondent.

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Charlie Jao vs BCC Products Sales, Inc. (GR No. 163700 April 18, 2012)

FACTS:

Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent
Terrance Ty (Ty), employed him as comptroller starting from September 1995 with a monthly salary of
P20,000.00 to handle the financial aspect of BCC's business; that on October 19, 1995, the security guards
of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC where he then
worked; that his attempts to report to work in November and December 12, 1995 were frustrated
because he continued to be barred from entering the premises of BCC; and that he filed a complaint
dated December 28, 1995 for illegal dismissal, reinstatement with full back wages, non-payment of
wages, damages and attorney's fees.

Respondents countered that petitioner was not their employee but the employee of Sobien Food
Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its
comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's interests
or investments in BCC.; that their issuance of the ID to petitioner was only for the purpose of facilitating
his entry into the BCC premises in relation to his work of overseeing the financial operations of BCC for
SFC; that the ID should not be considered as evidence of petitioner's employment in BCC; that petitioner
executed an affidavit in March 1996, 20 stating, among others, as follows:

I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed by,
Sobien Food Corporation with the same business address as above stated;

In the course of my association with, or employment by, Sobien Food Corporation (SFC, for short), I
have been entrusted by my employer to oversee and supervise collections on account of receivables due
SFC from its customers or clients; for instance, certain checks due and turned over by one of SFC's
customers is BCC Product Sales, Inc., operated or run by one Terrance L. Ty, (President and General
manager).

Petitioner counters, however, that the affidavit did not establish the absence of an employer-employee
relationship between him and respondents because it had been executed in March 1996, or after his
employment with respondents had been terminated on December 12, 1995; and that the affidavit
referred to his subsequent employment by SFC following the termination of his employment by BCC.

ISSUE: The sole issue is whether or not an employer-employee relationship existed between petitioner
and BCC.

RULING: In determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element.

Petitioner presented no document setting forth the terms of his employment by BCC. The failure to
present such agreement on terms of employment may be understandable and expected if he was a
common or ordinary laborer who would not jeopardize his employment by demanding such document
from the employer, but may not square well with his actual status as a highly educated professional.

Petitioner's admission that he did not receive his salary for the three months of his employment by BCC,
as his complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he later
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filed against the respondents for non-payment of wages indicated, further raised grave doubts about
his assertion of employment by BCC. If the assertion was true, we are puzzled how he could have
remained in BCC's employ in that period of time despite not being paid the first salary of
P20,000.00/month. Moreover, his name did not appear in the payroll of BCC despite him having
approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the
insincerity of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he
averred that he had been barred from entering the premises of BCC on October 19, 1995, 27 and thus
was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally
dismissed on December 12, 1995 when respondents' security guards barred him from entering the
premises of BCC, 28 causing him to bring his complaint only on December 29, 1995, and after BCC had
already filed the criminal complaint against him. The wide gap between October 19, 1995 and December
12, 1995 cannot be dismissed as a trivial inconsistency considering that the several incidents affecting
the veracity of his assertion of employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the other
proofs he presented, like the affidavits of some of the employees of BCC, the ID, and the signed checks,
bills, and receipts. Suffice it to be stated that such other proofs were easily explainable by respondents
and by the aforestated circumstances showing him to be the employee of SFC, not of BCC.

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Legend Hotel vs Realuyo (GR 153511 July 18, 2012)

FACTS:

This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel.
On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair
labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay
for holidays, separation pay, service incentive leave pay, and 13th month pay.

Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each nights
performance; that his rate had increased to P750.00/night; and that during his employment, he could
not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six
times/week. He added that the Legend Hotels restaurant manager had required him to conform with
the venues motif; that he had been subjected to the rules on employees representation checks and chits,
a privilege granted to other employees; that on July 9, 1999, the management had notified him that as a
cost-cutting measure his services as a pianist would no longer be required effective July 30, 1999; that
he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his
complaint; and that the loss of his employment made him bring his complaint.2 ISSUE: Whether there
exists an employer-employee relationship

RULING:

Employer-employee relationship existed between the parties. The issue of whether or not an employer
employee relationship existed between petitioner and respondent is essentially a question of fact. The
factors that determine the issue include who has the power to select the employee, who pays the
employees wages, who has the power to dismiss the employee, and who exercises control of the
methods and results by which the work of the employee is accomplished.10 Although no particular
form of evidence is required to prove the existence of the relationship, and any competent and relevant
evidence to prove the relationship may be admitted, a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a conclusion.

A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was
undeniably employed as a pianist in petitioners Madison Coffee Shop/Tanglaw Restaurant from
September 1992 until his services were terminated on July 9, 1999.

First of all, petitioner actually wielded the power of selection at the time it entered into the service
contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioners insistence
that respondent had only offered his services to provide live music at petitioners Tanglaw Restaurant,
and despite petitioners position that what had really transpired was a negotiation of his rate and time
of availability. The power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioners restaurant manager, for the
increase of his remuneration.

Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent
fees that were not included in the definition of wage under the Labor Code. Respondent was paid
P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate
of remuneration was later increased to P750.00 upon restaurant manager Velazcos recommendation.
There is no denying that the remuneration denominated as talent fees was fixed on the basis of his talent

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and skill and the quality of the music he played during the hours of performance each night, taking into
account the prevailing rate for similar talents in the entertainment industry

Respondents remuneration, albeit denominated as talent fees, was still considered as included in the
term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate
the remuneration.

Thirdly, the power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship. This is the so-called
control test, and is premised on whether the person for whom the services are performed reserves the
right to control both the end achieved and the manner and means used to achieve that end.

A review of the records shows, however, shows that respondent performed his work as a Pianist under
petitioners supervision and control. Specifically, petitioners control of both the end achieved and the
manner and means used to achieve that end was demonstrated by the following, to wit:

He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to

10:00 pm, three to six times a week;

He could not choose the place of his performance;

The restaurants manager required him at certain times to perform only Tagalog songs or music, or to
wear barong Tagalog to conform to the Filipiniana motif; and

He was subjected to the rules on employees representation check and chits, a privilege granted to other
employees.

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The New Philippine Skylanders, Inc., vs. Dakila (G.R. No. 199547 Sept. 24, 2012)

FACTS:

November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated
with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the
certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI).
Its rival union, Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately
protested the result of the election before the Secretary of Labor.

In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLUs
supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a
copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local
union to disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to
Philippine Skylanders Employees Association -National Congress of Workers (PSEA-NCW), and to
maintain continuity within the organization, allowed the former officers of PSEA-PAFLU to continue
occupying their positions as elected officers in the newly-forged PSEA-NCW.

On 17, March 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was
immediately registered with the Department of Labor and Employment.

PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the
request.

PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president
Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSIs refusal
to bargain collectively with its workers, the company through its president and personnel manager, was
also liable for interfering with its employees union activities

Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila.
Through Ayroso PAFLU claimed that Dakila was present in PSEAs organizational meeting thereby
confirming his illicit participation in union activities. Ayroso added that the members of the local union
had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a
collective bargaining agreement which was detrimental to their interests.

PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party
respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito
Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba,
Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia
Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be
manipulated and influenced by petitioner Francisco Dakila.

Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an
inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer
affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint.

Labor Arbiter declared PSEAs disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their
respective officers guilty of unfair labor practice.

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As PSEA-NCWs personality was not accorded recognition, its collective bargaining agreement with PSI
was struck down for being invalid.

PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC).
But the NLRC upheld the Decision of the Labor Arbiter.

RULING: Local unions have a right to separate from their mother federation on the ground that as
separate and voluntary associations, local unions do not owe their creation and existence to the national
federation to which they are affiliated but, instead, to the will of their members. The sole essence of
affiliation is to increase, by collective action, the common bargaining power of local unions for the
effective enhancement and protection of their interests. Admittedly, there are times when without
succor and support local unions may find it hard, unaided by other support groups, to secure justice for
them. Yet the local unions remain the basic units of association, free to serve their own interests subject
to the restraints imposed by the constitution and by-laws of the national federation, and free also to
renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into
existence.

There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly
forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid
breakaway. As such, the pendency of an election protest involving both the mother federation and the
local union did not constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111
signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union
membership supported the claim of disaffiliation and had in fact deauthorized PAFLU from instituting
any complaint in their behalf.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW.
As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly
hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement
in behalf of its members.

The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the
license to act independently of the local union.

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

This case concerns the effect on the status of employment of employees who entered into a Service
Franchise Agreement with their employer.

FACTS:

On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp
used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders,
Inc., or Power Tire and Rubber Corporation. These are sister companies collectively called Bandag.
Bandag offered repair and retread services for used tires. In 1998, however, Bandag developed a
franchising scheme that would enable others to operate tire and retreading businesses using its trade
name and service system. Petitioners quit their jobs as salesmen and entered into separate Service
Franchise Agreements (SFAs) with Bandag for the operation of their respective franchises. Under this
SFA, Bandag would provide funding with the petitioners subject to regular liquidation of revolving
funds. The expenses of these funds will be deducted from their sale in order to determine their income.
After some time, petitioners began to default on their obligations to submit periodic liquidations of their
operational expenses in relation to the revolving funds Bandag provided them. Bandag terminated their
SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of wages, incentive
pay, 13th month pay and damages against Bandag with the National Labor Relations Commission
(NLRC). Petitioners contend that despite the SFA, they remained employees of Bandag. For its part,
Bandag pointed out that petitioners freely resigned from their employment and decided to avail
themselves of the opportunity to be independent entrepreneurs under the franchise scheme that Bandag
had. Thus, no employeremployee relationship existed between petitioners and Bandag.

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

RULING:

No, petitioners were no longer employees of Bandag the moment they entered into the SFA. Franchising
is a business method of expansion that allows an individual or group of individuals to market a product
or a service and to use of the patent, trademark, trade name and the systems prescribed by the owner.

The tests for determining employeremployee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control
the employee with respect to the means and methods by which the work is to be accomplished. The last
is called the control test, the most important element.

When petitioners agreed to operate Bandags franchise branches in different parts of the country, they
knew that this substantially changed their former relationships. They were to cease working as Bandags
salesmen, the positions they occupied before they ventured into running separate Bandag branches.
They were to cease receiving salaries or commissions. Their incomes were to depend on the profits they
made. Yet, petitioners did not then complain of constructive dismissal. They took their chances, ran their
branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro Ang
in Pangasinan for over a year. Clearly, their belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners work. It
points out that Bandag: (a) retained the right to adjust the price rates of products and services; (b)
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imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications;
and (d) retained the power to suspend petitioners services for failure to meet service standards. But
uniformity in prices, quality of services, and good business practices are the essence of all franchises. A
franchisee will damage the franchisors business if he sells at different prices, renders different or
inferior services, or engages in bad business practices. These business constraints are needed to maintain
collective responsibility for faultless and reliable service to the same class of customers for the same
prices.

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

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

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employeremployee
relationship with Bandag. These funds do not represent wages. They are more in the nature of capital
advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners
incomes depended on the profits they make, controlled by their individual abilities to increase sales,
and reduce operating costs.

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Royale Homes Marketing Corp. vs. Alcantara (G.R. No. 195190 July 28, 2014)

FACTS:

Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its Marketing
Director for a fixed period of one year. His work consisted mainly of marketing Royale Homes' real
estate inventories on an exclusive basis. Royale Homes reappointed him for several consecutive years
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes alleging
that he was dismissed from work without any valid or just cause and in gross disregard of the proper
procedure for dismissing employees. He prayed t to be reinstated to his former position without loss of
seniority rights and other privileges, as well as to be paid back wages, moral and exemplary damages,
and attorney's fees

Royale Homes denied that Alcantara is its employee because: (1) it engaged his services as an
independent sales contract for one year only; (2) he never received any salary, 13th month pay, overtime
pay or holiday pay; (3) he was paid on commission basis; (4) it had no control on how Alcantara would
accomplish his tasks

Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale Homes

NLRC rendered its Decision ruling that Alcantara is not an employee but a mere independent contractor
of Royale Homes. It based its ruling mainly on the contract

CA promulgated its Decision reversing the NLRC's Decision pointing out that Royale Homes exercised
some degree of control over Alcantara since his job is subject to company rules, regulations, and periodic
evaluations.

ISSUE: whether Alcantara was an independent contractor or an employee of Royale Homes

RULING:

Alcantara is not an employee of Royal Home but a mere independent contractor

The juridical relationship of the parties based on their written contract

The primary evidence of the nature of the parties' relationship in this case is the written contract that
they signed. 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 at the time they entered into it.

In this case, the contract duly signed and not disputed by the parties, conspicuously provides that "no
employer-employee relationship exists between" Royale Homes and Alcantara, as well as his sales
agents. It is clear that they did not want to be bound by employer-employee relationship at the time of
the signing of the contract

Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulations should control. No construction is even needed as they already
expressly state their intention.

The juridical relationship of the parties based on Control Test

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In determining the existence of an employer-employee relationship, this Court has generally relied on
the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the 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".

In the case, the CA ratiocinated that since the performance of his tasks is subject to company rules,
regulations, code of ethics, and periodic evaluation, the element of control is present.

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

In this case, the rules, regulations, code of ethics, and periodic evaluation alluded to by Alcantara do not
involve control over the means and methods by which he was to perform his job. In Tongko Case, this
Court held that guidelines or rules and regulations that do not pertain to the means or methods to be
employed in attaining the result are not indicative of control as understood in labor law

Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship.
The continuous rehiring of Alcantara simply signifies the renewal of his contract with Royale Homes,
and highlights his satisfactory services warranting the renewal of such contract

Payment of Wages

The element of payment of wages is also absent in this case. Alcantara's remunerations consist only of
commission override of 0.5%, budget allocation, sales incentive, and other forms of company support.
There is no proof that he received fixed monthly salary. No pay slip or payroll was ever presented and
there is no proof that Royale Homes deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine Health Insurance Corporation, or Pag-Ibig
Fund

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Fuji Television Network, Inc., vs. Arlene S. Espiritu (G.R. No. 204944-45 December 3,
2014)

FACTS:

In 2005, Fuji Television Network engaged Arlene, Inc. (Fuji) as a news correspondent/producer. Her
employment contract initially provided for a term of one (1) year but was successively renewed on a
yearly basis with salary adjustment upon every renewal

In 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition. In turn, the
Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene that the company will have a problem
renewing her contract since it would be difficult for her to perform her job.

Then Arlene and Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that her
contract would no longer be renewed. The day after Arlene signed the non-renewal contract, on May 6,
2009, she filed a complaint for illegal dismissal.

She alleged that she was forced to sign the non-renewal contract when Fuji came to know of her illness
and that Fuji withheld her salaries and other benefits for March and April 2009 when she refused to
sign. She further alleged that claimed that she was left with no other recourse but to sign the non-
renewal contract, and it was only upon signing that she was given her salaries and bonuses, in addition
to separation pay equivalent to four (4) years.

Labor Arbiter Borbolla dismissed Arlene's complaint because applying the four-fold test Arlene was not
Fuji's employee but an independent contractor.

National Labor Relations Commission reversed the Labor Arbiter's decision and held that Arlene was a
regular employee with respect to the activities for which she was employed since she continuously
rendered services that were deemed necessary and desirable to Fuji's business

Court of Appeals affirmed the National Labor Relations Commission with the modification that Fuji
immediately reinstate Arlene to her position as News Producer without loss of seniority rights, and pay
her back wages, 13th-month pay, mid-year and year-end bonuses, sick leave and vacation leave with
pay until reinstated, moral damages, exemplary damages, attorney's fees, and legal interest of 12% per
annum of the total monetary awards

CONTENTION OF FUJI: that Arlene was hired as an independent contractor; that Fuji had no control
over her work; that there was no illegal dismissal because she freely agreed not to renew her fixed-term
contract as evidenced by her e-mail correspondences with Yoshiki Aoki ISSUE: W/N Arlene was a
regular employee, not an independent contractor

RULING:

The Court has often used the four-fold test to determine the existence of an employer-employee
relationship. Under the four-fold test, the "control test" is the most important. In proving employer
employee relationship through evidence, the Court ruled that:

There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant
evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security

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registration, appointment letters or employment contracts, payrolls, organization charts, and personnel
lists, serve as evidence of employee status.

Arlene claims to be a regular employee. However, Fuji insists that she was an independent employee.
The burden of proving that she was an independent contractor lies with Fuji. In labor cases, the quantum
of proof required is substantial evidence.

Under Article 280, the provision classifies employees into regular, project, seasonal, and casual. It further
classifies regular employees into two kinds:

Those "engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer" (regular employees)

Casual employees who have "rendered at least one year of service, whether such service is continuous
or broken."

The Court defines independent contractor as:

. . . one who carries on a distinct and independent business and undertakes to perform the job, work, or
service on its own account and under one's own responsibility according to one's own manner and
method, free from the control and direction of the principal in all matters connected with the
performance of the work except as to the results thereof.

Moreover, no employer-employee relationship exists between independent contractors and their

principals who engage the contractor's services, but there is an employer-employee relationship
between the contractor and workers hired to accomplish the work for the principal. Thus, their contracts
are governed by the Civil Code provisions on contracts and other applicable laws.

In the facts of the case and using the four-fold test, Arlene was hired by Fuji as a news producer, but
there was no showing that she was hired because of unique skills that would distinguish her from
ordinary employees. Neither was there any showing that she had a celebrity status. Her monthly salary
amounting to US$1,900.00 appears to be a substantial sum. Fuji had the power to dismiss Arlene, as
provided for in her professional employment contract. Even the mode of transportation in carrying out
Fuji controlled her functions. Therefore, Arlene is a regular employee and not an independent
contractor.

There is also a test for determining regular employment where there is a reasonable connection between
the employee's activities and the usual business of the employer. Article 280 provides that the nature of
work must be "necessary or desirable in the usual business or trade of the employer" the test for
determining regular employment. However, there may also be a situation where an employee's work is
necessary but is not always desirable in the usual course of business of the employer. In this situation,
there is no regular employment.

Fuji is engaged in the business of broadcasting, including news programming. It is based in Japan and
has overseas offices to cover international news. Based on the record, Fuji's Manila Bureau Office is a
small unit and has a few employees. Arlene had to do all activities related to news gathering.

Arlene's tasks included "monitoring and getting news stories, reporting, and interviewing subjects in
front of a video camera, timely submission of news and current events reports pertaining to the
Philippines and going to Fuji's regional office in Thailand." She also had to report for work in Fuji's
office in Manila from Mondays to Fridays, eight (8) hours per day. She had no equipment and had to
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use the facilities of Fuji to accomplish her tasks. Therefore, the successive renewals of Arlene's contract
indicated the necessity and desirability of her work in the usual course of Fuji's business. Arlene had
become a regular employee with the right to security of tenure.

Also, Arlene's contract indicating a fixed term did not automatically mean that she could never be a
regular employee. An employee can be a regular employee with a fixed-term contract. The law does not
preclude the possibility that a regular employee may opt to have a fixed-term contract for valid reasons.
In the case of Brent: for as long as it was the employee who requested, or bargained, that the contract
have a "definite date of termination," or that the fixed-term contract be freely entered into by the
employer and the employee, then the validity of the fixed-term contract will be upheld.

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Cabaobas et. al. vs. Pepsi Cola (G.R. No. 176908 March 25, 2015)

FACTS:

Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in manufacturing,

bottling and distribution of soft drink products, which operates plants all over the country. One of which
is in Tanauan, Leyte. The Tanauan Plant allegedly incurred business losses in the amount of
Php29,167,390.00. Thus, PCPPI implemented a company-wide retrenchment program denominated as
Corporate-Wide Rightsizing Program from 1999 to 2000. In July 31, 1999, it retrenched 47 employees
from the Tanauan Plant, 27 of which filed complaints for illegal dismissal entitled Molon, et.al. v. Pepsi-
Cola Products, Philippines, Inc. Another batch of employees were retrenched on January 15, 2000. These
are the petitions in this case.

Petitioners allege that PCPPI was not facing serious financial losses because after their termination, it
regularized four employees and hired replacements for the 47 previously dismissed employees. They
also allege that the retrenchment was designed to prevent their union, Leyte Pepsi-Cola Employees
Union Associated Labor Union (LEPCEU-ALU) from becoming the certified bargaining agent of
PCPPIs rank and-file employees.

PCPPI countered that petitioners were dismissed to save the company from total bankruptcy and
collapse. It also submitted audited financial statements showing that it suffered financial reverses in
1998 in the amount of 700 million pesos where 27 million pesos were incurred in the Tanauan Plant.

The Labor Arbiter found the dismissal of petitioners as illegal. Upon appeal by PCPI, the NLRC found
that it was not guilty of union-busting/unfair labor practice and declared LEPCEU-ALUs strike as
illegal. The NLRC also dismissed the complaints for illegal dismissal and declared the retrenchment
program a valid exercise of management prerogative. It also ordered PCPPI to pay the employees their
package separation benefits. From the NLRC decision, both petitioners and PCPPI appealed to the CA.
The CAs 18th division rendered a decision affirming the NLRC decision.

In contrast, when Molon, et.al earlier questioned the consolidated decision of the NLRC, the CAs 20th
division rendered a Decision granting their petition and reversing the NLRC. Aggrieved, petitioners
come before the Court in this petition for review on certiorari assailing the CA 18th Decision.

ISSUE: The issues raised by petitioner boil down to the legality of their dismissal pursuant to PCPPIs
retrenchment program.

RULING:

Petition has no merit.

During the pendency of this petition, the Court rendered a Decision which reversed the CA ruling on
the Molon, et.al petition. In the same petition, the Court ruled that PCPPI had validly implemented its
retrenchment program. The prerogative of an employer to retrench its employees must be exercised
only as a last resort. The requirements have been fulfilled in this case. Firstly, records disclose that both
the CA and the NLRC had already determined that Pepsi complied with the requirements of substantial
loss and due notice to both the DOLE and the workers to be retrenched. Secondly, records show that
the respondents had already been [aid the requisite separation pay as evidenced by the quitclaims
signed by them. Thirdly, the Corporate Rightsizing Program was a company-wide program which had
been implemented in its other plants in Bacolod, Iloilo, Davao, General Santos, and Zamboanga. Pepsis

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management also exerted conscious efforts to incorporate employee participation during the
implementation of its retrenchment program.

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Begino et.al. v. ABS-CBN Corp. (G.R. No. 199166 April 20, 2015)

FACTS:

ABS-CBN Regional Network Group in Naga City employed Amalia Villafuerte as a manager. In 1996,
ABS-CBN employed then petitioners Begino and Del Valle as cameramen/Editors for TV broadcasting,
ABS-CBN also employed Sumayao and Monina. Petitioners engaged their services thru Talent Contracts
which are regularly renewed over three months to 1 year. Petitioners were also given Project
Assignment forms which determined the duration of a particular project as well as the budget and the
technical requirements thereof. Petitioners were then tasked to work on subsequent daily airings in
respondents TV Patrol Bicol Program. The Talent contracts specifically provided that there is no
employee-employer (ER-EE) relationship between petitioners and respondents, but it additionally
provided for:

Creation and performance of work according to ABS-CBNs standards, policies, and guidelines;

The petitioners should not work for ABS-CBNs competing companies or any of the same that had an
adverse interest to that of ABS-CBN;

The work they are doing is results oriented, which does not require them to have fixed or normal hours
of work;

Petitioners remunerations were denominated as talent fees.

Petitioners, claiming that they are employees of the respondent, filed a complaint against ABS-CBN in
the

NLRC Sub-Regional Arbitration Branch for regularization, underpayment of overtime pay, holiday pay,
13th month pay, Service incentive leave pay, damages and Attys fees, contending that:

They performed functions necessary and desirable in ABS-CBN business;

They are mandated to wear company IDs;

They are provided all the equipment needed;

They worked under the direct control and supervision of respondent Villafuerte;

They were also bound on ABS-CBNs policy on attendance and punctuality;

That ABS-CBN due to the Contracts, they earn less than what respondents usually pay their regular
rank-and-file employees.

Respondents refuted the petitioners claim saying that:

The petitioners are independent contractors, they employed them due to lack of manpower to man the
business;

They are known as talents and required to inform ABS-CBN of their availability through Talent
Information Forms to facilitate their appearance on designated project days;

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They cannot afford employing regular workers due to unpredictable viewer preferences;

That through the talent contracts, petitioners were engaged because of their skills, knowledge and
expertise;

That the policies were general guidelines only and does not subject petitioners to control; 6. They
were never subjected to control over the means and methods by which they do their tasks.

During the pendency of their case, petitioners were dismissed and they filed a second complaint, adding
illegal dismissal and unfair labor practice to their previous claims 2nd claim of petitioners were
dismissed for violation of rules against non-forum shopping because the issues in the 1st complaint
must be resolved first before resolving the 2nd complaint.

Labor Arbiter resolved the first complaint in favor of petitioners, ordering ABS-CBN to pay a total of
P2, 440,908.36 representing salaries/wage differentials, holiday pay, SIL, 13th month pay and Attys
fees. LA also ordered respondents to admit back complainants under the same terms prevailing prior
to their separation. LA said that they are employees because:

Petitioners have worked for more than a year;

Petitioners are bound by exclusivity clause in the talent contracts;

There was substantial control over them;

Respondents appealed to the NLRC which affirmed the LAs decision. Appealed to the CA, CA
reversed,

Petitioners then appealed to SC

RULING:

SC finds the petition impressed with merit. SC applied the four-fold test and the control test and found
that there is a presence of an EE-ER relationship. Based on article 280 of the Labor Code, petitioners are
regular employees of ABS-CBN due to the reasonable connection between the activity performed by the
petitioners and the business or trade of ABS-CBN. Also, petitioners were continuously rehired over the
years for its long running news program which indicates that petitioners are regular employees. Even
if the performance is not continuous or merely intermittent, the law deems the repeated or continuing
performance as sufficient evidence of the necessity, if not indispensability of that activity in the business.
Indeed, an employment stops being co-terminus with specific projects where the employee is
continuously re-hired due to the demands of the employers business. Exclusivity clause and the
provision on equipments essential for their functions shows that petitioners were subject to control of
the respondents. Even if the performance is not continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient evidence of the necessity, if not indispensability of that
activity in the business.29 Indeed, an employment stops being co-terminus with specific projects where
the employee is continuously re-hired due to the demands of the employers business. SC Reversed the
CA decision and reinstated NLRC decision.

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Social Security System vs Ubana (G.R. No 200144 August 25, 2015)

FACTS:

On May 28, 1996, she was made to sign a six-month Service Contract Agreement by DBP Service
Corporation, appointing her as clerk for assignment with SSS Daet branch effective May 27, 1996, with
a daily wage of only P171.00. - She was assigned as "Frontliner" of the SSS Members Assistance Section
until December 15, 1999. - From December 16, 1999 to May 15, 2001, she was assigned to the Membership
Section as Data Encoder. - On December 16, 2001, she was transferred to the SSS Retirees Association as
Processor at the Membership Section until her resignation on August 26, 2002. - As Processor, she was
paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives a monthly salary
of P18,622.00 or P846.45 daily wage. - On December 26, 2002, respondent Debbie Ubana filed a civil case
for damages against the DBP Service Corporation, petitioner Social Security System (SSS), and the SSS
Retirees Association before the RTC of Daet, Camarines Norte. The case was docketed as Civil Case No.
7304 and assigned to RTC Branch 39. - Petitioner and its co-defendants SSS Retirees Association and
DBP Service Corporation filed their respective motions to dismiss, arguing that the subject matter of the
case and respondent's claims arose out of employer-employee relations, which are beyond the RTC's
jurisdiction and properly cognizable by the National Labor Relations Commission (NLRC). Ruling of
the Regional Trial Court - Motion to Dismiss the complaint of the herein plaintiff for lack of jurisdiction
is hereby GRANTED. - Motion for Reconsideration is hereby GRANTED. Ruling of the Court of Appeals
The instant petition is DENIED. - Petitioner filed a Motion for Reconsideration, but the CA denied the
same in its January 10, 2012 Resolution. Hence, the present Petition.

ISSUE: WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND DECIDE CIVIL CASE
NO.

7304.

RULING: The rule is that, the nature of an action and the subject matter thereof, as well as, which court
or agency of the government has jurisdiction over the same, are determined by the material allegations
of the complaint in relation to the law involved and the character of the reliefs prayed for, whether or
not the complainant/plaintiff is entitled to any or all of such reliefs. Article 217 of the Labor Code as
amended vests upon the labor arbiters exclusive original jurisdiction only over the following:

Unfair labor practices;

Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates
of pay, hours of work and other terms and conditions of employment;

Claims for actual, moral, exemplary, and other forms of damages arising from employer employee
relations;

Cases arising from any violation of Article 264 of this Code, including questions involving legality of
strikes and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer- employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
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In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite. Since

there is no employer-employee relationship between the parties herein, then there is no labor dispute
cognizable by the Labor Arbiters or the NLRC. There being no employer-employee relation or any other
definite or direct contract between respondent and petitioner, the latter being responsible to the former
only for the proper payment of wages, respondent is thus justified in filing a case against petitioner,
based on Articles 19 and 20 of the Civil Code, to recover the proper salary due her as SSS Processor. In
this jurisdiction, the "long honored legal truism of 'equal pay for equal work" has been "impregnably
institutionalized;" persons who work with substantially equal qualifications, skill, effort, and
responsibility, under similar conditions, should be paid similar salaries. The very broad Article 19 of the
Civil Code requires every person, 'in the exercise of his rights and in the performance of his duties, to
act with justice, give everyone his due, and observe honesty and good faith'. WHEREFORE, the Petition
is DENIED. The assailed July 29, 2011 Decision and January 10, 2012 Resolution of the Court of Appeals
in CAG.R. SP No. 110006 are AFFIRMED. The case is ordered remanded with dispatch to the Regional
Trial

Court of Daet, Camarines Norte, Branch 39, for continuation of proceedings

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Century Properties, Inc., v. Edwin Babiano and Emma Concepcion (G.R. No. 220978
July 5, 2016)

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 effective September 1, 2007. As Vice President, his
monthly salary was 70,000.00 pesos and 0.5% override commission for completed sales. His
employment contract contained a Confidentiality of Documents and Non-Compete Clause which bars
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 (1) year from date of
resignation or termination. If Babiano breaches the terms, his forms of compensation, including
commissions and incentives will be forfeited.

Concepcion was also hired by the company during the same period. She was hired as a Sales Agent and
was eventually promoted as Project Director. Her employment contract provided that she would
directly report to Babiano and that there is no employer-employee relationship existing between
Concepcion and CPI.

Sometime in February 2009, it was discovered that Babiano breached his employment contract by,
among others, providing a competitor with information regarding CPI and spreading false information
regarding CPI. On February 5, 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 also resigned as CPIs Project Director on February 23, 2009.

On August 8, 2011, respondents filed a complaint before the NLRC for non-payment of commission and
damages against CPI claiming that their repeated demands for the payment and release of their
commissions remained unheeded.

CPI contended that it validly withheld Babianos commissions because he violated the Confidentiality
of Documents and Non-compete Clause. CPI also contended that there was no employer-employee
relationship between CPI and Concepcion, and thus Concepcion should have filed the case in a civil
court and not with the NLRC.

The Labor Arbiter ruled in CPIs favor. Upon respondents appeal, the NLRC reversed the Labor
Arbiters decision and ordered CPI to pay Babiano and Concepcion the commissions due them from
August 9, 2008 to August 8, 2011. Upon CPIs appeal, the Court of Appeals affirmed the ruling of NLRC
with a modification increasing the payment to Babiano and Concepcion. Hence, CPI elevated the case
to the Court with the following contentions.

ISSUES:

The CA erred in holding CPI liable for the unpaid commission of Babiano.

There was no employer-employee relationship between CPI and Concepcion.

The CA erred increasing the amount of unpaid commissions due to Concepcion considering that she
did not appeal the NLRCs computation of the same.

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RULING:

The Court of Appeals erred in holding CPI liable for the unpaid commissions. The contract between
Babiano and CPI was clear. 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 stipulation shall
control. The contract between Babiano and CPI clearly stated that should Babiano violate its terms,
forms of compensation including commissions shall be forfeited. Obligations arising from contracts,
including employment contracts, have the force of law between the contracting parties and should be
complied with in good faith.

Babiano himself categorically admitted in his resignation letter that he sought employment from First
Global (while still employed by CPI) and five days later he was admitted thereto as Vice President. This
is glaring violation of the contract between CPI and Babiano as he was still employed with CPI when he
sought employment with First Global, thus, the forfeiture of his unpaid commissions is justified.

There exists an employer-employee relationship between CPI and Concepcion. The presence of (a)
power to hire (selection and engagement), (b) payment of wages, (c) power of dismissal, and (d) power
to control the employees conduct (or the so-called control test) determines the existence of an
employer-employee relationship.

The Court finds that Concepcion was an employee of CPI considering that (a) CPI continuously hired
and promoted Concepcion, thus showing that CPI had the power of selection and engagement over
Concepcion, (b) Concepcion was receiving remuneration from CPI, (c) CPI had the power to discipline
or dismiss Concepcion as the contract between CPI and Concepcion states that CPI can terminate her if
she fails to comply with CPIs performance standards, and (d) CPI possessed the power of control over
Concepcion because she was subject to the direct supervision of CPI, through Babiano.

The Court of Appeals correctly ruled that CPI remains liable remains liable for the unpaid commissions
of Concepcion and in increasing the amount of the said commission. Concepcions right to her unpaid
commissions is a substantive right which cannot be impaired by an erroneous computation of what she
really is entitled to. The ruling of the CA increasing the amount of unpaid commissions of Concepcion
is correct as CA aptly pointed out that NLRC failed to account for all the unpaid commissions due to
Concepcion for the period of August 9, 2008 and August 8, 2011. Thus, CA correctly recomputed
Concepcions unpaid commission, notwithstanding her failure to seek a review of NLRCs computation.

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Lu vs. Enopia (G.R. No. 197899 March 6, 2017)

FACTS:

Respondents were hired in January 20, 1994 to March 20, 1996 as crew members of the fishing mother
boat F/B MG-28 owned by petitioner Joaquin Jake Lu who is the sole proprietor of Mommy Gina
Tuna Resources (MTGR for brevity) based in General Santos City. Petitioner and respondents have an
income sharing agreement of 55% and 45% respectively. With an additional 4% thereof, as backing
incentive. Both parties also equally share in the maintenance and repair of the said boat.

On August 25, 1997 petitioner asked respondents to sign a Joint Venture Fishing Agreement, to which
respondents refused due to the yearly renewal. In lieu of the refusal, petitioner dismissed the
respondents on August 18, 1997. On August 25, 1997 respondents filed a case for illegal dismissal,
monetary claims, and damages. Amicable settlement did not prosper in the case, and the case
proceeded.

Respondents alleged that the dismissal for refusal to sign the Joint Venture is not a just cause for their
termination. Petitioner denied such allegation and averred that what they have is a joint venture and
not an employee-employer Relationship.

Petitioner further argues that: it was the piado who hired the respondents, no wages was paid as it was
a sharing agreement, and they were not subject to his discipline and control over their fishing
operations, albeit, they stayed in contact with petitioners radio operator. He alleged this was for
logistics purposes vis a vis the need to resupply and transfer the fish.

Labor Arbiter dismissed the case, an appeal was filed with the National Labor Relations Commission

(NLRC for brevity) who affirmed decision of the arbiter, appeal was course through Court of Appeals
(CA for brevity) which reversed the decision. Hence, the petition at bar.

ISSUES:

Whether or not there was an Employee-Employer Relationship?

Whether or not the dismissal was illegal?

RULING:

(1) Yes, there was an employee-employer relationship existing between the parties.

All the elements of an Employee-Employer Relationship which is: (1) the selection and engagement of
the workers; (2) the power to control the workers conduct; and (3) the payment of wages by whatever
means.

The fact that the respondents have in their possession proof in the form of their Social Security System
(SSS for brevity), the employer as MGTR. Furthermore, the said dates of contributions coincided with
their employment with said petitioner. Failure to rebut, proves that said respondents are indeed
employee of the petitioner.

In control, what is surmised is only the existence of the right to control and not actual control thereof.
The constant communication between petitioner, through its radio operator, showed their control and
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supervision of the said fishing operation. Furthermore, the fact that petitioner has already invested
millions in the venture further strengthens such control.

Lastly, there is a payment of wages, taken in the form of their sharing agreement. Payment through
commission is construed as wage as enunciated in previous jurisprudence on the same.

(2) Yes, the dismissal of Petitioner of the Respondent is illegal.

Petitioner wielded the power of dismissal, when he dismissed the respondents when they refused to
sign the joint fishing venture agreement. The respondents being regular employee, they are being
directly related and necessary to petitioners business operations and the fact that they have been
performing their respective jobs for more than a year construes that they are regular employees.

Being regular employees, the said respondents are entitled to their security of tenure as enunciated in
the Constitution and the Labor Code. Wherefore, the act of the petitioner of asking the respondents to
sign said joint venture, and dismissing them for their refusal. Is a clear act of an illegal dismissal,
furthermore, the stipulation in the joint venture wherein, the petitioner is given the discretion to end
said venture or non-renewal thereof is a clear violation of their security of tenure.

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185450 HIRING OF EMPLOYEE

PT &T vs. NLRC (G.R. No. 118978 May 23, 1997)

FACTS:

Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21,
1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever
Agreement which she signed with Petitioner Company, her employment was to be immediately
terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from
July 19, 1991 to August 8, 1991, private respondents services as reliever were again engaged by
petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods.
After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.

It now appears that private respondent had made the representation that she was single even though
she contracted marriage months before, in the two successive reliever agreements which she signed on
June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch
supervisor sent to private respondent a memorandum requiring her to explain the discrepancy. In that
memorandum, she was reminded about the companys policy of not accepting married women for
employment.

Private respondent was dismissed from the company effective January 29, 1992, which she readily
contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision declaring
that private respondent, who had already gained the status of a regular employee, was illegally
dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of
an unjust and unlawful discrimination by her employer, PT&T.

ISSUE: Whether or not discrimination merely by reason of the marriage of a female employee is
expressly prohibited by Article 136.

RULING:

SC ruled that the stipulation is violative of Art. 136 of the Labor Code.

An employer is free to regulate, according to his discretion and best business judgment, all aspects of
employment, from hiring to firing, except in cases of unlawful discrimination or those which may be
provided by law. Petitioners policy of not accepting or considering as disqualified from work any
woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination,
afforded all women workers by our labor laws and by no less than the Constitution.

Respondents act of concealing the true nature of her status from PT&T could not be properly
characterized as willful or in bad faith as she was moved to act the way she did mainly because she
wanted to retain a permanent job in a stable company. In other words, she was practically forced by that
very same illegal company policy into misrepresenting her civil status for fear of being disqualified from
work.

The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner
PT&T. The Labor Code states, in no uncertain terms, as follows:

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ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee
merely by reason of marriage. Under American jurisprudence, job requirements which establish
employer preference or conditions relating to the marital status of an employee are categorized as a
sex-plus discrimination where it is imposed on one sex and not on the other. Further, the same should
be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by
federal job discrimination laws.

Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the
right of a woman to be free from any kind of stipulation against marriage in connection with her
employment, but it likewise assaults good morals and public policy, tending as it does to deprive a
woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as
an intangible and inalienable right.

Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions
that they may deem convenient, the same should not be contrary to law, morals, good customs, public
order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy
against legitimate marital bonds would encourage illicit or common-law relations and subvert the
sacrament of marriage.

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Duncan Asso. Of Detailman-PTGWO vs. GlaxoSmithKlein Phils. (G.R. No. 162994

Sept. 17, 2004)

FACTS:

Petitioner Pedro Tecson was hired by respondent GlaxoSmithKlein Philippines(Glaxo) as medical

representative on Oct.24,1994 thereafter signed a contract of employment which stipulates among others
that he agrees to study and abide existing company rules; to disclose to management any existing of
future relationship by consanguinity or affinity with co-employees or employees of competing drug
companies and if ever that such management find such conflict of interest, he must resign. The
Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform
management of any existing or future relationship by consanguinity or affinity with co-employees or
employees of competing drug companies. If management perceives a conflict of interest or a potential
conflict between such relationship and the employees employment with the company, the management
and the employee will explore the possibility of a transfer to another department in a non-
counterchecking position or preparation for employment outside the company after six months.

Reminders from Tecsons district manager did not stop him from marrying. Tecson married Betsy, an
Astras Branch Coordinator in Albay. She supervised the district managers and medical representatives
of her company and prepared marketing strategies for Astra in that area.

Tecson was reassigned to another place and was not given products that the Astra company has and he
was not included in products seminars and training.

Tecson requested for time in complying said policy by asking for a transfer in the Glaxos milk division
in which the other company had no counterpart. Thereafter, he bought the matter to Grievance
Committee but the parties failed to resolve such issue, Glaxo offered Tecson a separation pay of one-
half () month pay for every year of service, or a total of P50,000.00 but he declined the offer. On
November 15, 2000, the National Conciliation, and Mediation Board (NCMB) rendered its Decision
declaring as valid Glaxos policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxos right to transfer Tecson to another sales territory.

Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not err in
rendering its decision. A recon was filed in appellate court but it was denied, hence this petition for
certiorari. Petitioners contention it was violative of constitutional law which is the equal protection
clause and he was constructively dismissed while the respondents contention that it is a valid exercise
of its management prerogatives.

ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying
employees of another pharmaceutical company is valid?

RULING:

This petition was denied. Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from competitors, especially so
that it and Astra are rival companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies upon
Glaxos employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims

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to protect its interests against the possibility that a competitor company will gain access to its secrets
and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the
Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth.

The challenged company policy does not violate the equal protection clause of the Constitution as
petitioners erroneously suggest. It is a settled principle that the commands of the equal protection clause
are addressed only to the state or those acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee handbook, it is clear that
Glaxo does not impose an absolute prohibition against relationships between its employees and those
of competitor companies. Its employees are free to cultivate relationships with and marry persons of
their own choosing. What the company merely seeks to avoid is a conflict of interest between the
employee and the company that may arise out of such relationships.

There was no merit in Tecsons contention that he was constructively dismissed when he was transferred
from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur
sales area, and when he was excluded from attending the companys seminar on new products which
were directly competing with similar products manufactured by Astra. Constructive dismissal is
defined as a quitting, an involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when
a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.
The record does not show that Tecson was demoted or unduly discriminated upon by reason of such
transfer.

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Star Paper Corp., vs Simbol (G.R. 164774 April 12, 2006)

FACTS:

Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the
company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide
to get married, one of them should resign pursuant to a company policy to which Simbol complied.

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

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

ISSUE: WON the policy of the employer banning spouses from working in the same company violates
the rights of the employee under the Constitution and the Labor Code or is a valid exercise of
management prerogative?

RULING:

Petitioners sole contention that "the company did not just want to have two or more of its employees
related between the third degree by affinity and/or consanguinity" is lame.

Article 136 of the Labor Code which provides:

It shall be unlawful for an employer to require as a condition of employment or continuation of

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

The requirement is that a company policy must be reasonable under the circumstances to qualify as a
valid exercise of management prerogative. It is significant to note that in the case at bar, respondents
were hired after they were found fit for the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to
Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business
operations. The policy is premised on the mere fear that employees married to each other will be less
efficient. If we uphold the questioned rule without valid justification, the employer can create policies
based on an unproven presumption of a perceived danger at the expense of an employees right to
security of tenure.

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

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Del Monte Phils. V. Velasco (G.R. No. 153477 March 6, 2007)

FACTS:

Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized by Del
Monte. On June 1987, petitioner warned Velasco of its absences and was repeatedly reminded that her
absence without permission may result to forfeiture of her vacation leave.

Another warning was sent due to her absences without permission which eventually led to the forfeiture
of her vacation entitlement. On September 1994, a notice of hearing was sent to Velasco informing her
of the charges filed against her for violating the Absence without leave rule. On January 1995, after the
hearing, Del Monte terminated the services of Velasco due to excessive absence without leave. Feeling
aggrieved, Velasco filed a case for illegal dismissal. She asserted that she was absent since she was
suffering urinary tract infection and she was pregnant.

She sent an application for leave to the supervisor. Upon check-up of the company doctor, Velasco was
advised to rest. On the following check-ups, she was again advised to rest where this time, she was not
able to get secure a leave.

The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent appealed to the
NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that respondent was illegally
dismissed and was entitled to reinstatement. Petitioner appealed to CA where it dismissed its claim and
affirmed NLRC, thus, this petition.

ISSUE: Whether or not the dismissal was illegal?

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

The termination was illegal since it comes within the purview of the prohibited acts provided in Article
137 of the Labor Code. Based on Article 137, it shall be unlawful for any employer (1) to deny any woman
employee the benefits provided for in this Chapter or to discharge any woman employed by him for the
purpose of preventing her from enjoying any of the benefits provided under this Code; (2) to discharge
such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy;
and (3) to discharge or refuse the admission of such woman upon returning to her work for fear that
she may again be pregnant.

The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act of the
employer is unlawful, it being contrary to law.

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Yrasuegui vs. Philippine Airline (G.R No. 168081 Oct. 17, 2008)

FACTS:

This case portrays the peculiar story of an international flight steward who was dismissed because of
his failure to adhere to the weight standards of the airline company.

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

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

The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight
standards of PAL are reasonable in view of the nature of the job of petitioner.[15] However, the weight
standards need not be complied with under pain of dismissal since his weight did not hamper the
performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions
where his weight would not be a negative factor. NLRC affirmed the decision of the Labor Arbiter, with
modifications.

The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are
meant to be a continuing qualification for an employees position. The failure to adhere to the weight
standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code
in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest.

ISSUE: Whether or not the petitioner was illegally dismissed.

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

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

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

Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his regular
allowances.

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185451 WAGE & THE WAGE RATIONALIZATION ACT

SIP Food House et al vs. Batolina (G.R. No. 192473 October 11, 2010)

FACTS:

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

In February 2004, GMPC terminated SIPs contract as GMPC concessionaire. The termination of the
concession contract caused the termination of the respondents employment, prompting them to file a
complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. NLRC ruled in
favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate courts
ruling that it was the employer of the respondents, claiming that it was merely a labor-only contractor
of

GMPC

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

RULING: The employer-employee relationship issue.

The CA ruled out SIPs claim that it was a labor-only 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. We thus see no
reason to disturb the CAs findings.

The respondents money claims

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

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

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SLL International Cables Specialist vs. NLRC (G.R. No. 172161 March 2, 2011)

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

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

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

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

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

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

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

On whether the value of the facilities should be included in the computation of the "wages" received by
private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may
provide subsidized meals and snacks to his employees provided that the subsidy shall not be less than
30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the

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wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter,
provided that such deduction is with the written authorization of the employees concerned.

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

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

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

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

The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez.
As correctly pointed out by the CA, he did not work for the project in Antipolo.

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Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. (G.R. No. 176985 April 1, 2013)

Fact: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines,
Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias
City, Metro Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the Annual
Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of
retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which
is the total performance incentive earned during the year immediately preceding 12 months) No. of
Years in Service.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to
the amount of PhP496,016.67which respondent allegedly deducted illegally, representing the unpaid
accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on June 11,
2002 for the payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives, Length
of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."

(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or not
they qualify to the same had ripened into company practice. The only two pieces of evidence that he
stubbornly presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo
(Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and
1998, respectively. They claimed that the SMI was included in their retirement package even if they did
not meet the sales and collection qualifiers. Therefore, the failure of employer to grant him his SMI is a
violation on the principle of non-diminution of benefits.)

Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same
had ripened into company practice

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

There is diminution of benefits when the following requisites are present:

the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;

the practice is consistent and deliberate;

the practice is not due to error in the construction or application of a doubtful or difficult question of
law; and

The employer unilaterally does the diminution or discontinuance.

To be considered as a regular company practice, the employee must prove by substantial evidence that
the giving of the benefit is done over a long period of time, and that it has been made consistently and
deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that
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company practice should have been exercised in order to constitute voluntary employer practice. The
common denominator in previously decided cases appears to be the regularity and deliberateness of
the grant of benefits over a significant period of time. It requires an indubitable showing that the
employer agreed to continue giving the benefit knowing fully well that the employees are not covered
by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be
characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a
considerable period of time.

Upon review of the entire case records, we find no substantial evidence to prove that the grant of SMI
to all retired DSSs regardless of whether or not they qualify to the same had ripened into company
practice.

The granting of the SMI in the retirement package of Velazquez was an isolated incident and could
hardly be classified as a company practice that may be considered an enforceable obligation. To repeat,
the principle against diminution of benefits is applicable only if the grant or benefit is founded on an
express policy or has ripened into a practice over a long period of time which is consistent and
deliberate; it presupposes that a company practice, policy, and tradition favorable to the employees has
been clearly established; and that the payments made by the company pursuant to it has ripened into
benefits enjoyed by them. Certainly, a practice or custom is, as a general rule, not a source of a legally
demandable or enforceable right. Company practice, just like any other fact, habits, customs, usage, or
patterns of conduct, must be proven by the offering party who must allege and establish specific,
repetitive conduct that might constitute evidence of habit or company practice.

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Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc. (GR No. 198783
April 15, 2013)

Facts: Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the
plant in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-
14 bottling operators who man its Bottling Line 2. All of them are male and they are members of herein
respondent Royal Plant Workers Union (ROPWU).

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

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

Issue: Whether or not the removal of the bottling operators chairs was a valid exercise of management
prerogative. ---YES

Ruling: According to the Union, such removal constitutes a violation of the 1) Occupational Health and
Safety Standards which provide that every worker is entitled to be provided by the employer with
appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and humane
condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of
CCBPI which provides for a safe and healthy workplace by maintaining a productive workplace and by
minimizing the risk of accident, injury and exposure to health risks; and 4) diminution of benefits
provided in Article 100 of the Labor Code.

The Court has held that management is free to regulate, according to its own discretion and judgment,
all aspects of employment, including hiring, work assignments, working methods, time, place, and
manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be exercised in good faith and
with due regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant to a
national directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the
Union to perform their duties and responsibilities more efficiently. The chairs were not removed
indiscriminately. They were carefully studied with due regard to the welfare of the members of the
Union. The removal of the chairs was compensated by: a) a reduction of the operating hours of the
bottling operators from a two-and-one-half (2 )-hour rotation period to a one-and-a-half (1 ) hour
rotation period; and b) an increase of the break period from 15 to 30 minutes between rotations.

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Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid
instances of operators sleeping on the job while in the performance of their duties and responsibilities
and because of the fact that the chairs were not necessary considering that the operators constantly move
about while working. In short, the removal of the chairs was designed to increase work efficiency.
Hence, CCBPIs exercise of its management prerogative was made in good faith without doing any harm
to the workers rights.

The rights of the Union under any labor law were not violated. There is no law that requires employers
to provide chairs for bottling operators. There was no violation either of the Health, Safety, and Social
Welfare Benefit provisions under Book IV of the Labor Code of the Philippines. As shown in the
foregoing, the removal of the chairs was compensated by the reduction of the working hours and
increase in the rest period. The directive did not expose the bottling operators to safety and health
hazards.

The Union should not complain too much about standing and moving about for one and one-half (1 )
hours because studies show that sitting in workplaces for a long time is hazardous to ones health. The
CBA between the Union and CCBPI contains no provision whatsoever requiring the management to
provide chairs for the operators in the production/manufacturing line while performing their duties
and responsibilities.

The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general
principles of justice and fair play because the bottling operators working time was considerably
reduced from two and a half (2 ) hours to just one and a half (1 ) hours and the break period, when
they could sit down, was increased to 30 minutes between rotations. The bottling operators new work
schedule is certainly advantageous to them because it greatly increases their rest period and
significantly decreases their working time. A break time of thirty (30) minutes after working for only
one and a half (1 ) hours is a just and fair work schedule.

The operators chairs cannot be considered as one of the employee benefits covered in Article 10016 of
the Labor Code. In the Courts view, the term "benefits" mentioned in the non-diminution rule refers to
monetary benefits or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees wage, salary or compensation making them
enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or
privileges involved in those cases mainly concern monetary considerations or privileges with monetary
equivalents. Without a doubt, equating the provision of chairs to the bottling operators is something
within the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching the
coverage of the law. The interpretations of Article 100 of the Labor Code do not show even with the
slightest hint that such provision of chairs for the bottling operators may be sheltered under its mantle.

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The National Wages and Productivity Commission et. al. vs. The Alliance of
Progressive Labor et. al. (G.R. No. 150326 March 12, 2014)

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different
regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the NWPC
to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise,
industry and national levels; to prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or industry levels; and to review
regional wage levels set by the RTWPBs to determine whether the levels were in accordance with the
prescribed guidelines and national development plans, among others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act No.
6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region,
provinces, or industries therein; and to issue the corresponding wage orders, subject to the guidelines
issued by the NWPC.

Consequently, the RTWPBNCR issued Wage Order No. NCR07 on October 14, 1999 imposing an
increase of P25.50/day on the wages of all private sector workers and employees in the NCR and
pegging the minimum wage rate in the NCR at P223.50/day.6 However, Section 2 and Section 9 of Wage
Order No. NCR07 exempted certain sectors and industries from its coverage

Section 2. The adjustment in this Order does not cover the following:

[W]orkers in the following sectors which were granted corresponding wage increases on January 1, 1999
as prescribed by Wage Order No. NCR06: a.1. Agriculture workers

Plantation P12.00

Nonplantation P18.50

a.2. Cottage/handicraft industry P16.00

a.3. Private hospitals with bed capacity of 100 or P12.00

less

a.4. Retail/Service establishments

Employing 1115 workers P12.00

not more than 10 P19.00

Employing
workers

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Workers in small establishments employing less that ten (10) workers.

xxxx

Section 9. Upon application with and as determined by the Board, based on documentation and other
requirements in accordance with applicable rules and regulations issued by the Commission, the
following may be exempt from the applicability of this Order:

Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;

Exporters including indirect exporters with at least 50% export sales and with forward contracts with
their foreign buyers/principals entered into on or twelve (12) months before the date of publication of
this Order may be exempt during the lifetime of said contract but not to exceed twelve (12) months from
the effectivity of this Order.

Feeling aggrieved by their noncoverage by the wage adjustment, the Alliance of Progressive Labor
(APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC
assailing Section 2(A) and Section 9(2) of Wage Order No. NCR07. They contended that neither the
NWPC nor the RTWPBNCR had the authority to expand the noncoverage and exemptible categories
under the wage order; hence, the assailed sections of the wage order should be voided.

The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR07. It observed
that the RTWPBs power to determine exemptible categories was adjunct to its wage fixing function
conferred by Article 122(e) of the Labor Code, as amended by Republic Act No. 6727; that such authority
of the RTWPB was also recognized in NWPC Guidelines No. 01, Series of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that the
power of the RTWPBNCR to determine exemptible categories was not an adjunct to its wage fixing
function. CA favored the respondents and granted the petition for certiorari.

Hence, this appeal by petition for review on certiorari by the NWPC and RTWPBNCR.

Issue: Whether or not the RTWPBNCR had authority

Ruling: the RTWPBNCR had the authority to provide additional exemptions from the minimum wage
adjustments embodied in Wage Order No. NCR07.

The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on Minimum
Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum wage
rates by region, province, and industry. Section 1 of Rule VIII of NWPC Guidelines No. 00195
recognized the power of the RTWPBs to issue exemptions from the application of the wage orders
subject to the guidelines issued by the NWPC

(this is the rationale behind exemption)

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SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

Exemption of establishments from compliance with the wage increases and cost of living allowances
prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary
difficulties due to losses maintain the financial viability of their businesses and continued employment
of their workers; (2) encourage the establishment of new businesses and the creation of more jobs,
particularly in areas outside the National Capital Region and Export Processing Zones, in line with the
policy on industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail
and service sector, that have a limited capacity to pay.

The following categories of establishments may be exempted upon application with and as determined
by the Board:

Distressed establishments

New business enterprises (NBEs)

Retail/Service establishments employing not more than ten (10) workers

Establishments adversely affected by natural calamities

Under the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as
long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four
exemptible establishments, but the list was not exclusive. The RTWPBs had the authority to include in
the wage orders establishments that belonged to, or to exclude from the four enumerated exemptible
categories.

If the exemption was outside of the four exemptible categories, like here, the exemptible category should
be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC; and (3) upon
review, the RTWPB issuing the wage order must submit a strong and justifiable reason or reasons for
the inclusion of such category. It is the compliance with the second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the RTWPB
NCR had substantial and justifiable reasons in exempting the sectors and establishments enumerated in
Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings, socialeconomic
data and information gathered prior to the issuance of Wage Order No. NCR07.The very fact that the
validity of the assailed sections of Wage Order No. NCR07 had been already passed upon and upheld
by the NWPC meant that the NWPC had already given the wage order its necessary legal imprimatur.
Accordingly, the requisite approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory standards and bound by
the rules and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs
investigate and study all the pertinent facts to ascertain the conditions in their respective regions. Hence,
they are logically vested with the competence to determine the applicable minimum wages to be
imposed as well as the industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPBNCR. The presumption of validity is made
stronger by the fact that its validity was upheld by the NWPC upon review.

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David/Yield Hog Dealer v. Macasio (G.R. No. 195466 July 2, 2014)

Facts: In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing
business under the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay
and 13th month pay. He also claimed payment for moral and exemplary damages and attorneys fees.
Macasio also claimed payment for service incentive leave (SIL).

Macasio alleged before the LA that he had been working as a butcher for David since January 6, 1995.
Macasio claimed that David exercised effective control and supervision over his work, pointing out that
David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he
was to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that
David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also
rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and
delivery drivers.

In his defense, David claimed that he started his hog dealer business in 2005 and that he only has ten
employees. He 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. David pointed out that Macasio: (1)
usually 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; (2) received the fixed amount of P700.00 per engagement, regardless
of the actual number of hours that he spent chopping the delivered hogs; and (3) was not engaged to
report for work and, accordingly, did not receive any fee when no hogs were delivered.

Issue: Whether or not Respondent Macasio is entitled to overtime pay, holiday pay, 13th month pay,
and service incentive leave (SIL)

Ruling: Respondent Macasio is entitled to such monetary claims except 13th month pay. Macasio is
engaged on "pakyaw" or task basis.

At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was
engaged or paid on "pakyaw" or task basis. This factual finding binds the Court under the rule that
factual findings of labor tribunals when supported by the established facts and in accord with the laws,
especially when affirmed by the CA, is binding on this Court.

A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage

payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on
the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of
the number of time spent in the completion of work. Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of time generally used
in pay computation.

In Macasios case, the established facts show that he would usually start his work at 10:00 p.m.
Thereafter, regardless of the total hours that he spent at the workplace or of the total number of the hogs
assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once he had
completed his task. Clearly, these circumstances show a "pakyaw" or task basis engagement that all
three tribunals uniformly found.

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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 Article 95 (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.

As with holiday and SIL 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. 851 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"
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.

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Our Haus Realty Corporation vs. Parian (G.R. No. 204651 August 6, 2014)

Facts: Respondents are laborers of petitioner-corporation (construction business). Because of financial

distress, the corporation suspended some projects, which resulted in giving vacation leaves to the
affected workers, including respondents. Instead of going back to work after their vacation leaves,
respondents filed a complaint with the Labor Arbiter, citing underpayment of wages and Our Haus
failure to pay their holiday, SIL, 13th month and overtime pays.

One of their contentions, respondent-laborers claim that value of their meals should not be considered
in determining their wage total amount since Our Haus failed to comply with the requirement of
agreement in writing under DOLE Memorandum Circular No. 2 and that the value of the facilities was
not fair and reasonable. Labor Arbiter ruled in favor of Our Haus, stating that respondents failed to
substantiate their claims and if the values of board and lodging would be taken into consideration,
respondents wages would meet the minimum wage rate. On appeal to the NLRC, the decision was
reversed, stating that respondents did not authorize Our Haus in writing to charge the values of their
board and lodging to their wages.

Our Haus moved to reconsider but was denied, so they filed a petition for certiorari with the CA with a
new theory regarding a significant distinction between deduction and charging. They contended that
a written authorization is only necessary if the facility's value will be deducted and will not be needed
if it will merely be charged/included in the computation of wages. Thus, according to them, they did
not actually deduct the values of the meals and housing benefits. They only considered these in
computing the total amount of wages paid to the respondents for purposes of compliance with the
minimum wage law. CA denied this contention citing no difference between deduction and charging.
Our Haus filed a petition for review on certiorari under Rule 45 after their motion for reconsideration
was denied.

Issue: Whether or not the facilities value will be deducted or merely included in the computation of the
wages.

Held: Petition DENIED;

In reality, deduction and charging both operate to lessen the actual take-home pay of an employee; they
are two sides of the same coin. In both, the employee receives a lessened amount because supposedly,
the facility's value, which is part of his wage, had already been paid to him in kind. As there is no
substantial distinction between the two, the requirements set by law must apply to both.

Requisites of fair and reasonable facilities:

proof must be shown that the trade customarily furnishes such facilities;

the provision of deductible facilities must be voluntarily accepted in writing by the employee; and

The facilities must be charged at fair and reasonable value.

For the first requisite:

The sinumpaang salaysay presented by Our Haus is (1) self-serving; (2) on a per project basis; and (3)
cannot prove that other employees enjoyed it thus negating its claimed customary nature. Even if the
trade customarily provides the benefit, it must still pass the purpose test set by jurisprudence. Under

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this test, if a benefit or privilege granted to the employee is clearly for the employer's convenience, it
will not be considered as a facility but a supplement.

Our Haus is engaged in the construction business, a labor-intensive enterprise. The success of its projects
is largely a function of the physical strength, vitality, and efficiency of its laborers. Its business will be
jeopardized if its workers are weak, sickly, and lack the required energy to perform strenuous physical
activities. Thus, by ensuring that the workers are adequately and well fed, the employer is actually
investing on its business. Even under the purpose test, the subsidized meals and free lodging provided
by Our Haus are actually supplements. Although they also work to benefit the respondents, an analysis
of the nature of these benefits in relation to Our Haus' business shows that they were given primarily
for Our Haus' greater convenience and advantage. If weighed on a scale, the balance tilts more towards
Our Haus' side. Accordingly, their values cannot be considered in computing the total amount of the
respondents' wages.

For the second requisite:

Oddly, Our Haus only offered these documents when the NLRC had already ruled that respondents
did not accomplish any written authorization, to allow deduction from their wages. The five
kasunduans were also undated, making the SC wonder if they had really been executed when
respondents first assumed their jobs.

For the third requisite:

Our Haus never explained how it came up with the values it assigned for the benefits it provided; it
merely listed its supposed expenses without any supporting document. The records however, are bereft
of any evidence to support Our Haus' meal expense computation. Without any corroborative evidence,
it cannot be said that Our Haus complied with this third requisite.

Respondents are entitled to other monetary benefits. A party who alleges payment as a defense has the
burden of proving it. Particularly in labor cases, the burden of proving payment of monetary claims
rests on the employer. Records will disclose the absence of any credible document which will show that
respondents had been paid their 13th month pay, holiday and SIL pays. Our Haus merely presented a
hand-written certification from its administrative officer that its employees automatically become
entitled to five days of service incentive leave as soon as they pass probation.

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Milan, et al vs. NLRC and Solid Mills (G.R. No. 202961 February 4, 2015)

Facts: Petitioners are the employees of respondent Solid Mills Inc. They are represented by their
collective bargaining agent, NAFLU.

Petitioners were allowed to occupy SMI Village (property owned by Solid Mills) out of liberality and
for the convenience of its employees. They further agreed that petitioners would vacate the lot anytime
the company deems fit. On October 2003, Solid Mills would cease operations due to serious business
losses.

Petitioners were sent individual notices to vacate SMI Village. They were asked to sign a Memorandum
of Agreement with Release and Quitclaim; employees who signed it were considered to have agreed to
vacate SMI Village as a condition for the release of their termination benefits and separation pay.
Petitioners however refused to sign it and demanded their benefits and separation pay.

Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the ground that their
accrued benefits and separation pay cannot be withheld because it is based on company policy and
practice. Solid Mills countered by saying the complaint was premature because they have not vacated
the property in view of the Memorandum of Agreement.

The Labor Arbiter favored the petitioners, stating Solid Mills illegality of the withholding of benefits.
Solid Mills appealed to the NLRC and reversed pertinent parts of the decision. Petitioners moved to
reconsider but was denied, so they file a petition for certiorari with the CA. This was dismissed, hence
their present petition.

Issue: Whether or not Solid Mills Inc. may validly and legally withhold the benefits of Petitioners

Held: Petition DENIED; Solid Mills may validly and legally withhold the benefits.

The Civil Code provides that the employer is authorized to withhold wages for debts due: Article 1706.
Withholding of the wages, except for a debt due, shall not be made by the employer.

"Debt" in this case refers to any obligation due from the employee to the employer. It includes any
accountability that the employee may have to the employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that
the release of petitioners' benefits shall be "less accountabilities."

"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term
"accountability" does not limit the definition of accountability to those incurred in the worksite. As long
as the debt or obligation was incurred by virtue of the employer-employee relationship, it shall be
included in the employee's accountabilities that are subject to clearance procedures.

Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they do
not claim superior right to it. What can be gathered from the findings of the Labor Arbiter, NLRC, and
the CA is that respondent Solid Mills allowed the use of its property for the benefit of petitioners as its
employees. Petitioners were merely allowed to possess and use it out of respondent Solid Mills'
liberality.

The employer may, therefore, demand the property at will.

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Withholding of payment by the employer does not mean that the employer may renege on its obligation
to pay employees their wages, termination payments, and due benefits. The employees' benefits are also
not being reduced. It is only subjected to the condition that the employees return properties properly
belonging to the employer. This is only consistent with the equitable principle that "no one shall be
unjustly enriched or benefited at the expense of another.]

Toyota v De Peralta

A complaint for illegal dismissal, illegal deduction, unpaid commission, annual profit sharing, damages,
and attorney's fees filed by respondent against petitioner. Respondent alleged that petitioner initially
hired her as a cashier. She worked her way up to the position of Insurance Sales Executive (ISE) which
she held from 2007 to 2012 and where she received various distinctions from petitioner. However, things
turned sour when her husband, Romulo De Peralta, also petitioner's employee and the President of the
Toyota Shaw-Pasig Workers Union - Automotive Industry Workers Alliance (TSPWU-AIWA),
organized a collective bargaining unit through a certification election. According to respondent,
petitioner suddenly dismissed from service the officials/directors of TSPWU-AIWA, including her
husband. Thereafter, petitioner allegedly started harassing respondent for her husband's active
involvement in TSPWU-AIWA. Accordingly, she was preventively suspended and she received a
Notice of Termination, which prompted her to file the instant complaint, where she also prayed for the
payment of her earned substantial commissions, tax rebates, and other benefits dating back from July
2011 to January 2012, amounting to P617, 248.08.

In their defense, petitioner and Lim, et al. maintained that respondent was dismissed from service for
just cause and with due process. They explained that respondent was charged and proven to have
committed acts of dishonesty and falsification by claiming commissions for new business accounts
which should have been duly credited to the dealership's marketing department. They further averred
that respondent's claims for commissions, tax rebates, and other benefits were unfounded and without
documentation and validation.

The CA Ruling

It held that the NLRC did not gravely abuse its discretion in declaring respondent to have been
dismissed for just cause as such finding conform with the facts and the law on the matter. Similarly, it
held that no grave abuse of discretion may be ascribed to the NLRC in awarding respondent her other
monetary claims, considering that petitioner failed to discharge its burden of proving that respondent
was not entitled to the same.

The Issue

Whether or not the CA correctly upheld petitioner's liability to respondent in the amount of P617,248.08
representing the latter's unpaid commissions, tax rebate for achieved monthly targets, salary
deductions, salary for the month of January 2012, and success share/profit sharing.

Ruling:

The CA correctly upheld petitioner's liability to respondent in the amount of P617,248.08 Section 97 (f)
of the Labor Code reads:

(f) "Wage" paid to any employee shall mean the remuneration of earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis.
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The aforesaid provision explicitly includes commissions as part of wages. While commissions are,
indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the
jobs particularly assigned to them, still these commissions are direct remunerations for services
rendered. The nature of the work of a salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of a salesman's wage or salary. This, however,
does not detract from the character of such commissions as part of the salary or wage paid to each of its
salesmen for rendering services to the corporation.

In this case, respondent's monetary claims, such as commissions, tax rebates for achieved monthly
targets, and success share/profit sharing, are given to her as incentives or forms of encouragement in
order for her to put extra effort in performing her duties as an ISE. Clearly, such claims fall within the
ambit of the general term "commissions" which in tum, fall within the definition of wages pursuant to
prevailing law and jurisprudence. Thus, respondent's allegation of nonpayment of such monetary
benefits places the burden on the employer, i.e., petitioner, to prove with a reasonable degree of certainty
that it paid said benefits and that the employee, i.e., respondent, actually received such payment or that
the employee was not entitled thereto.

The Court's pronouncement in Heirs of Ridded v. Gregorio Araneda University Foundation41 is

instructive on this matter

Well-settled is the rule that once the employee has set out with particularity in his complaint, position
paper, affidavits, and other documents the labor standard benefits he is entitled to, and which he alleged
that the employer failed to pay him, it becomes the employer's burden to prove that it has paid these
money claims. One who pleads payment has the burden of proving it, and even where the employees
must allege nonpayment, the general rule is that the burden rests on the employer to prove payment,
rather than on the employees to prove non-payment.

In this case, petitioner simply dismissed respondent's claims for being purely self-serving and
unfounded, without even presenting any tinge of proof showing that respondent was already paid of
such benefits or that she was not entitled thereto. In fact, during the proceedings before the LA,
petitioner was even given the opportunity to submit pertinent company records to rebut respondent's
claims but opted not to do so, thus, constraining the LA to direct respondent to submit her own
computations.

It is well-settled that the failure of employers to submit the necessary documents that are in their
possession gives rise to the presumption that the presentation thereof is prejudicial to its cause.
Indubitably, petitioner failed to discharge its afore-described burden.

Hence, it is bound to pay the monetary benefits claimed by respondent. As aptly pointed out by the
NLRC, since respondent already earned these monetary benefits, she must promptly receive the same,
notwithstanding the fact that she was legally terminated from employment.

THE PETITION IS DENIED.

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185452 WAGE ENFORCEMENT AND RECOVERY

Tiger Construction and Development Corp. vs. Abay et al. (G.R. No. 164141 February
26, 2010)

The general rule is that any decision rendered without jurisdiction is a total nullity and may be struck
down at any time, the party that asserts it must be in good faith and not evidently availing thereof
simply to thwart the execution of an award that has long become final and executory.

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

Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the same

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

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

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

Having the case in her office once more, Director Manalo finally issued an Order dated January 29, 2003
denying petitioners motion for reconsideration for lack of merit

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

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

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

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

In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no
longer be questioned (as it is final and executory), we can no longer entertain petitioners half-hearted
and unsubstantiated arguments that the said Order was allegedly based on erroneous computation and
included non-employees. Likewise, we find no more need to address petitioners contention that the CA
erred in dismissing its petition on the ground of its belated compliance with the requirement of
certification against forum-shopping.

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Peoples Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al. (G.R. No. 179652
May 8, 2009)

March 6, 2012 Resolution on the main Decision of May 8, 2009

Facts: Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo Radyo Phils.
(Bombo Radyo) for illegal deduction, non-payment of service incentive leave, 13th month pay,
premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages
and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE conducted
a plant level inspection. The Labor Inspector in his report wrote, Management representative informed
that (Juezan) complainant is a drama talent hired on a per drama participation basis hence no employer
employee relationship existed between them. As proof of this, management presented photocopies of
cash vouchers, billing statement, employments of specific undertaking, etc. The management has no
control of the talent if he ventures into another contract with other broadcasting industries.

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

Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to determine the existence
of an employer-employee relationship. No procedure was laid down where the DOLE would only make
a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the
DOLE would first seek the NLRCs determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE
would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an
employer employee relationship exists, and from there to decide whether or not to issue compliance
orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of
guidelines to follow, the same guide the courts themselves use. The elements to determine the existence
of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; (4) the employers power to control the employees conduct. The
use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can
utilize the same test, even in the course of inspection, making use of the same evidence that would have
been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be

respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be
rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer
employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration
that at least a prima facie showing of the absence of an employer-employee relationship be made to oust
the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the
DOLE that will weigh it, to see if the same does successfully refute the existence of an employer
employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if
the employer employee relationship has already been terminated, or it appears, upon review, that no
employer employee relationship existed in the first place.

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It must also be remembered that the power of the DOLE to determine the existence of an employer
employee relationship need not necessarily result in an affirmative finding. The DOLE may well make
the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction
over the case. It must not be precluded from being able to reach its own conclusions, not by the parties,
and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a
determination as to the existence of an employer-employee relationship in the exercise of its visitorial
and enforcement power, subject to judicial review, not review by the NLRC.

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions
of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the
DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC.
If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction
is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor
Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of
work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a
complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the
jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned
through a petition for certiorari under Rule 65 of the Rules of Court.

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Superior Package Corp. v. Balagsay (G.R. No. 178909 October 10, 2012)

Facts: Petitioner engaged services of Lancer Staffing and Services (provided respondents as laborers for
petitioner). Herein respondents were engaged for 4 months and included tasks such as loading,
unloading and segregation of boxes.

Pursuant to a complaint filed by respondents against petitioner Superior Package, DOLE conducted an
inspection of petitioners workplace and found several violations (non-presentation of payrolls and
daily time records; non-submission of annual report of safety organization; medical/illness reports; no
trained first aid) Because petitioners failed to appear in the summary investigations conducted by
DOLE, an order was issued ordering petitioners to pay PHP840,463.38.

Petitioners moved to reconsider, stating that the respondents are not their employees, but of Lancer
Staffing and Services, but this was denied. The DOLE stated that petitioners failed to support their claim
and even if they were employees of Lancer they could not escape liability as Section 13 of the
Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the
contractor to contractual employees to the extent of the work performed when the contractor fails to
pay its employees' wages. The appeal to the SOLE, motion for reconsideration to the SOLE, petition for
certiorari to the CA and motion for reconsideration to the CA were all denied, hence the present petition.

The petitioner objects to the finding that it is engaged in labor-only contracting and is consequently an
indirect employer, considering that it is beyond the visitorial and enforcement power of the DOLE to
make such conclusion. According to the petitioner, such conclusion may be made only upon
consideration of evidentiary matters and cannot be determined solely through a labor inspection.

Issue: Whether or not DOLE has the jurisdiction to inspect in petitioners workplace, pursuant to its
visitorial and enforcement power;

Whether or not Superior Package Corp. may be held solidarily liable with Lancer Staffing for
respondents unpaid money claims;

Held: Petition DENIED; DOLE may inspect the petitioners workplace pursuant to its visitorial and
enforcement power; Petitioner may be held solidarily liable;

First Issue:

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

In People's Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and
Employment, the Court stated that it can be assumed that the DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the existence of an employer-employee
relationship. Such determination, however, is merely preliminary, incidental, and collateral to the
DOLE's primary function of enforcing labor standards provisions.

Also, the existence of an employer-employee relationship is ultimately a question of fact. The

determination made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of
DOLE and the CA is beyond the ambit of a petition for review on certiorari.

Second Issue:
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At the time of the respondents' employment in 1998, the applicable regulation was DOLE Department
Order No. 10, Series of 1997. (Labor-only contracting is prohibited and the person acting as contractor
[Lancer] shall be considered merely as an agent or intermediary of the employer [Superior Package]
who shall be responsible to the workers in the same manner and extent as if the latter [Superior Package]
were directly employed by him)

The marked disparity between the petitioner's actual capitalization (P25,000.00) and the resources
needed to maintain its business, i.e., "to establish, operate and manage a personnel service company
which will conduct and undertake services for the use of offices, stores, commercial and industrial
services of all kinds," supports the finding that Lancer was, indeed, a labor-only contractor. Aside from
these is the undisputed fact that the petitioner failed to produce any written service contract that might
serve as proof of its alleged agreement with Lancer.

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

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WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

SHS Perforated Materials, Inc. et al., vs. Diaz (GR No. 185814 Oct. 13, 2010)

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing
under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone
Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president.
Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department
headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was hired by petitioner SHS as
Manager for Business Development on probationary status

During respondents employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed through
telephone or mobile phone. During meetings with the respondent, Hartmannshenn expressed his
dissatisfaction over respondents poor performance. respondent acknowledged his poor performance
and offered to resign from the company.

On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on November
22 and 24, 2005, notified respondent of his arrival through electronic mail messages and advised him to
get in touch with him. Respondent claimed that he never received the messages. Hartmannshenn
instructed Taguiang not to release respondents salary.

Respondent served on SHS a demand letter and a resignation letter. It is precisely because of illegal and
unfair labor practices such as these that I offer my resignation with neither regret nor remorse.

Appealing for the release of his salary respondent filed a Complaint against the petitioners for illegal
dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full
back wages; exemplary damages, and attorneys fees, costs of suit, and legal interest.

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

Ruling: Withholding respondents salary was not a valid exercise of management prerogative.

Management prerogative refers to the right of an employer to regulate all aspects of employment, such
as the freedom to prescribe work assignments, working methods, processes to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and
recall of work. Although management prerogative refers to the right to regulate all aspects of
employment, it cannot be understood to include the right to temporarily withhold salary/wages
without the consent of the employee.

Any withholding of an employees wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below: ART.
113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;

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For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and (c) In cases where the
employer is authorized by law or regulations issued by the Secretary of Labor.

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer

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

In this case, the withholding of respondents salary does not fall under any of the circumstances
provided under Article 113. Neither was it established with certainty that respondent did not work from
November 16 to 30, 2005.

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Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo (G.R. No. 188169
November 28, 2011)

Facts: Respondents were employed as goldsmiths by the petitioner Nia Jewelry Manufacturing of
Metal Arts, Inc. There were incidents of theft involving goldsmiths in Nia Jewelry's employ:

The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or damage
which Nia Jewelry may sustain by reason of the goldsmiths' fault or negligence in handling the gold
entrusted to them, requiring them to post cash bonds or deposits in varying amounts but in no case
exceeding 15% of the latter's salaries per week.

The petitioner alleged that the goldsmiths were given the option not to post deposits, but to sign
authorizations allowing the former to deduct from the latter's salaries amounts not exceeding 15% of
their take home pay should it be found that they lost the gold entrusted to them. The deposits shall be
returned upon completion of the goldsmiths' work and after an accounting of the gold received.

The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option but to
post the deposits. The next day after the policy was imposed, the respondents no longer reported for
work and signified their defiance against the new policy which at that point had not even been
implemented yet. The respondents alleged that they were constructively dismissed by the petitioner as
their continued employments were made dependent on their readiness to post the required deposits.
The respondents then filed a complaint for illegal dismissal and for the award of separation pay against
the petitioner, and later filed their amended complaint which excluded their earlier prayer for
separation pay but sought reinstatement and payment of back wages, attorney's fees and 13th month
pay.

Issues:

Whether or not Nia Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their
goldsmiths requiring them to post cash bonds or deposits; and 2) Whether or not there is constructive
dismissal.

Ruling:1) NO, the Nia Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are
clear as to what are the exceptions to the general prohibition against requiring deposits and effecting
deductions from the employees' salaries.

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

(a)In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;

(b)For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and

(c)In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Article 114.Deposits for loss or damage No employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer, except when the employer is engaged in such trades, occupations,

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or business where the practice of making deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and regulations.

The petitioners should first establish that the making of deductions from the salaries is authorized by
law, or regulations issued by the Secretary of Labor. The petitioners failed to prove that their imposition
of the new policy upon the goldsmiths under Nia Jewelry's employ falls under the exceptions specified
in Articles 113 and 114 of the Labor Code.

There is NO constructive dismissal. Constructive dismissal occurs when there is cessation of work
because continued employment is rendered impossible, unreasonable, or unlikely; when there is a
demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain
by an employer becomes unbearable to the employee.

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

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Locsin II vs. Mekeni Food Corp. (GR No. 192105 December 9, 2013)

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

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

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

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

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

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

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the
cost of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to
him in lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation
package. The vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing

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to refund petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart
contribution to the car plan, as this would unjustly enrich him at Mekeni's expense.

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

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TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union (G.R. No. 191714
February 26, 2014)

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

1st CAUSE:

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

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

2nd CAUSE:

On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued to
hold the certification election in both T&H Shopfitters and Gin Queen.

On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers
and members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of
the field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in
the forthcoming certification election.

When the certification election was scheduled on October 11, 2004, the employees were escorted from
the field trip to the polling center in Zambales to cast their votes. The remaining employees situated at
the SBFZ plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for
"no union" prevailed.

3rd CAUSE:

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

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland.
The said union officers and members were made to work as grass cutters in Cabangan, under the
supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees

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assigned in Cabangan did not report for work. The other employees who likewise failed to report in
Cabangan were meted out with suspension.

PETITIONERS DEFENSE:

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

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

Ruling: ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article
248) of the Labor Code,13 to wit:

Article 257. Unfair labor practices of employers. It shall be unlawful for an employer to commit any
of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; x x x
x

(c) To contract out services or functions being performed by union members when such will interfere
with, restrain, or coerce employees in the exercise of their right to self-organization; x x x x

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. x x x

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

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

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

(G.R. No. 181806 March 12, 2014)

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

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

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

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

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

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

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

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

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

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

Ruling: The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers
from eliminating or reducing the benefits received by their employees. This rule, however, applies only
if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be
considered a practice, it must be consistently and deliberately made by the employer over a long period
of time. Respondent was able to present substantial evidence in the form of affidavits to support its
claim that there are two retirement plans. Based on the affidavits, petitioner has been giving two
retirement benefits as early as 1997. Petitioner, on the other hand, failed to present any evidence to refute

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the veracity of these affidavits. Petitioner's assertion that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same is not supported by any evidence.

The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave
credits of an employee at the start of the school year. The Memorandum dated imposes a limitation not
agreed upon by the parties nor stated in the CBA, so it must be struck down.

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Bluer Than Blue Joint Ventures Co., vs. Esteban (G.R. No. 192582 April 7, 2014)

Citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

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

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

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

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

SECTION 14. Deduction for loss or damage. Where the employer is engaged in a trade, occupation,
or business where the practice of making deductions or requiring deposits is recognized to answer for
the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees to make deposits from
which deductions shall be made, subject to the following conditions:

That the employee concerned is clearly shown to be responsible for the loss or damage;

That the employee is given reasonable opportunity to show cause why deduction should not be made;

That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage;
and

That the deduction from the wages of the employee does not exceed 20 percent of the employee's wages
in a week.

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

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Netlink Computer Inc. v. Delmo (G.R. No. 160827 June 18, 2014)

In the absence of a written agreement between the employer and the employee that sales commissions
shall be paid in a foreign currency, the latter has the right to be paid in such foreign currency once the
same has become an established practice of the former. The rate of exchange at the time of payment, not
the rate of exchange at the time of the sales, controls.

Facts: Since November 3, 1991, Mr. Eric Delmo was hired as an account manager for Netlink Computer,
Inc. Products, and Services. His job requires him to canvass and source clients. His performance is
compensated by commissions of both Philippine Peso and U.S Dollars. Mr. Delmo able to generate sales
which entitled him to those commissions. Mr. Delmos work required him in the field most of the time
and with his colleagues they are not required to accomplish time cards. His request for his commissions
was denied by Netlink. Instead, they gave him partial cash advances chargeable to the commissions.
Then, Netlink forced to Mr. Delmo to resign by issuing several memoranda detailing his infractions of
the companys attendance policy.

On November 28, 1996, Mr. Delmo was refused entry into the company premises. He filed, then, a
complaint for illegal dismissal. As a response, the company countered that Mr. Delmo is required to
have his attendance recorded per company policies. The company, furthermore, stated that his
performance is dismal and he is outperformed by other account managers.

Decision were made regarding the awards of back wages, 13th month pay, and the unpaid commissions.
The ultimate issue that reached the supreme court was

Issue: The payment of commission by U.S Dollar as a company practice/policy is protected by the
nondimunation rule.

Ruling: As a general rule, all obligations shall be paid in Philippine currency. However, the contracting
parties may stipulate that foreign currencies may be used for settling obligations. This is pursuant to
Republic Act No. 8183, which provides as follows:

1. All monetary obligations shall be settled in the Philippine currency which is legal tender in the
Philippines. However, the parties may agree that the obligation or transaction shall be settled in any
other currency at the time of payment.

As established in Asia World Recruitment, Inc. v. NLRC, the real value of the foreign exchange incurred
obligation up to the date of its payment should be preserved.

Though there was no written contract for the U.S Dollars commission, the payment of which is still
mandated because it is an established practice as a company policy which is protected by the
nondimunitation rule.

The principle of non-diminution of benefits, which has been incorporated in Article 100of the Labor
Code, forbade Netlink from unilaterally reducing, diminishing, discontinuing, or eliminating the
practice. Verily, the phrase "supplements, or other employee benefits" in Article 100 is construed to
mean the compensation and privileges received by an employee aside from regular salaries or wages.

With regard to the length of time the company practice should have been observed to constitute a
voluntary employer practice that cannot be unilaterally reduced, diminished, discontinued, or
eliminated by the employer, we find that jurisprudence has not laid down any rule requiring a specific

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minimum number of years. Several jurisprudence varies on the number of required years for a practice
to ripen.

With the payment of US dollar commissions having ripened into a company practice, there is no way
that the commissions due to Delmo were to be paid in US dollars or their equivalent in Philippine
currency determined at the time of the sales. To rule otherwise would be to cause an unjust diminution
of the commissions due and owing to Delmo.

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

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

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

To be considered for resolution are, therefore, the following, namely: (1) whether or not the payment of
the commissions should be in US dollars; and (2) whether or not the award of attorneys fees was
warranted.

Ruling of the Court

Finally, we affirm the following justification of the CA in granting attorney's fees to Delmo, viz: The
award of attorney's fees must, likewise, be upheld in line of (sic) the decision of the Supreme Court in
the case of Consolidated Rural Bank (Cagayan Valley), Inc. vs. National Labor Relations Commission,
301 SCRA 223, 235, where it was held that "in actions for recovery of wages or where an employee was
forced to litigate and thus incur expenses to protect her rights and interests, even if not so claimed, an
award of attorney's fees equivalent to ten percent (10%) of the total award is legally and morally
justifiable. There is no doubt that in the present case, the private respondent has incurred expenses for
the protection and enforcement of his right to his commissions.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
promulgated on May 9, 2003; and ORDERS the petitioner to pay the costs of suit.

SO, ORDERED

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PLDT vs Estraero (G.R. No. 192518 October 15, 2014)

Facts: On July 1, 1995, PLDT employed the respondent as an Auto-Mechanic/Electrician Helper with a
monthly salary of P15,000 at the time of his separation from the service in 2003.

In the year 1995, PLDT adopted a company-wide Manpower Reduction Program (MRP), aimed at
reducing its work force. To commence with its program, PLDT offered the affected employees an
attractive redundancy pay consisting of 100% of their basic monthly salary for every year of service, in
addition to their retirement benefits, if entitled. For those who were not qualified to the retirement
benefits, they were offered separation or redundancy package of 200% of their basic monthly salary for
every year of service. Among those gravely affected by the MRP was the Fleet Management Division
where the respondent was assigned. Attracted by the separation pay offered by the company, the
respondent expressed his conformity to his inclusion in the MRP in April 25, 2003. He was then made
to sign a deed denominated as a Receipt, Release, and Quitclaim for his severance from employment,
thus availed of the offered personnel reduction program. Thereafter, PLDT proceeded to compute the
respondent's redundancy/separation benefits.

Since his length of service was seven (7) years, eleven (11) months and fifteen (15) days, which was
rounded to 8 years, the respondent was entitled to 200% of his basic monthly salary for every year of
service by way of redundancy pay equivalent to P240,000.00 plus other benefits and bonuses equivalent
to P27,028.37 for a total of P267,028.37.

However, the respondent had outstanding liabilities arising from various loans he obtained from
different entities, namely: The Home Development Mutual Fund (HDMF), PLDT Employees Credit
Cooperative, Inc., PLDT Service Cooperative, Inc., Social Security System (SSS), and the Manggagawa
ng Komunikasyon sa Pilipinas, which summed to P267,028.37. Thus, PLDT deducted the said amount
from the payment that the respondent was supposed to receive as his redundancy pay. As a result, his
take home pay was in the amount of zero pesos. This prompted the respondent to retract his availment
of the separation pay package offered to him through a letter addressed to the company dated May 8,
2003. Despite said retraction, however, the respondent was no longer allowed to report for work.

The respondent filed a complaint for illegal dismissal with reinstatement, as well as moral and
exemplary damages plus attorney's fees against PLDT and Ernani Tumimbang (petitioners), the
Division Head of the Fleet Management Division where the respondent was assigned.

The Labor Arbiter (LA) rendered a decision in favor of Estraero ordering PLDT to pay him P267,038.37
as separation pay. The LA sustained the validity of PLDT's redundancy program as an authorized cause
to terminate the employment of the respondent, and his entitlement to the redundancy/separation pay
pursuant to the MRP, being more advantageous than the benefits allowed under the law. The LA,
however, ruled that the office lacks jurisdiction to pass upon the issue of PLDT's act in deducting the
total outstanding loans which the respondent obtained from different entities since the same does not
involve an employer-employee relationship, and may only be enforced by PLDT through a separate
civil action in the regular courts. On appeal to the NLRC and eventually to the CA, the decision of the
LA was also affirmed.

Issue: Whether or not PLDT can validly deduct the respondent's outstanding loan obligation from his
redundancy pay.

Ruling: It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the employer

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is authorized by law or regulations issued by the Secretary of Labor and Employment, among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides that deductions from the
wages of the employees may be made by the employer when law authorizes such deductions, or when
the deductions are with the written authorization of the employees for payment to a third person. Thus,
any withholding of an employee's wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as well as the Omnibus
Rules implementing it. Further, Article 116 of the Labor Code clearly provides that it is unlawful for any
person, directly or indirectly, to withhold any amount from the wages of a worker without the worker's
consent.

In this case, the deductions made to the respondent's redundancy pay do not fall under any of the
circumstances provided under Article 113, nor was it established with certainty that the respondent has
consented to the said deductions or that the petitioners had authority to make such deductions.
Furthermore, the petitioners may not offset the outstanding loans of the respondent against the latter's
monetary benefits. The records expressly revealed that the respondent has obtained various loans from
different entities and not with PLDT. Accordingly, set-off or legal compensation cannot take place
between PLDT and the respondent because they are not mutually creditor and debtor of each other.
Thus, there can be no valid set-off because the respondent's creditor is not PLDT.

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

The Court rules that PLDT has no legal right to withhold the respondent's redundancy pay and other
benefits to recompense for his outstanding loan obligations to different entities. The respondent's
entitlement to his redundancy pay is mandated by law which the petitioners cannot unjustly deny.

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Milan et al vs. NLRC (G.R. No. 202961 February 4, 2015)

Facts: Petitioners are the employees of respondent Solid Mills Inc. They are represented by their
collective bargaining agent, NAFLU.

Petitioners were allowed to occupy SMI Village (property owned by Solid Mills) out of liberality and
for the convenience of its employees. They further agreed that petitioners would vacate the lot anytime
the company deems fit. On October 2003, Solid Mills would cease operations due to serious business
losses.

Petitioners were sent individual notices to vacate SMI Village. They were asked to sign a Memorandum
of Agreement with Release and Quitclaim; employees who signed it were considered to have agreed to
vacate SMI Village as a condition for the release of their termination benefits and separation pay.
Petitioners however refused to sign it and demanded their benefits and separation pay.

Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the ground that their
accrued benefits and separation pay cannot be withheld because it is based on company policy and
practice. Solid Mills countered by saying the complaint was premature because they have not vacated
the property in view of the Memorandum of Agreement.

The Labor Arbiter favored the petitioners, stating Solid Mills illegality of the withholding of benefits.
Solid Mills appealed to the NLRC and reversed pertinent parts of the decision. Petitioners moved to
reconsider but was denied, so they file a petition for certiorari with the CA. This was dismissed, hence
their present petition.

Issue: Whether or not Solid Mills Inc. may validly and legally withhold the benefits of Petitioners

Held: Petition DENIED; Solid Mills may validly and legally withhold the benefits.

The Civil Code provides that the employer is authorized to withhold wages for debts due: Article 1706.
Withholding of the wages, except for a debt due, shall not be made by the employer.

"Debt" in this case refers to any obligation due from the employee to the employer. It includes any
accountability that the employee may have to the employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that
the release of petitioners' benefits shall be "less accountabilities."

"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term
"accountability" does not limit the definition of accountability to those incurred in the worksite. As long
as the debt or obligation was incurred by virtue of the employer-employee relationship, it shall be
included in the employee's accountabilities that are subject to clearance procedures.

Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they do
not claim superior right to it. What can be gathered from the findings of the Labor Arbiter, NLRC, and
the CA is that respondent Solid Mills allowed the use of its property for the benefit of petitioners as its
employees. Petitioners were merely allowed to possess and use it out of respondent Solid Mills'
liberality. The employer may, therefore, demand the property at will.

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Withholding of payment by the employer does not mean that the employer may renege on its obligation
to pay employees their wages, termination payments, and due benefits. The employees' benefits are also
not being reduced. It is only subjected to the condition that the employees return properties properly
belonging to the employer. This is only consistent with the equitable principle that "no one shall be
unjustly enriched or benefited at the expense of another."

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Galang vs Boie Takeda Chemicals Inc.

FACTS:

Petitioners Galang and Chan were employees of respondent pharmaceutical company, Boie Takeda
Chemicals, Inc (BTCI)since 1975 and 1983 respectively. Through the years, both of them rose from their
ranks until they were promoted as Regional Sales Managers who, in the hierarchy of the sales
department where they belong, shall report to the National Sales Director.

Upon the vacancy of the National Sales Director position, the new General manager Nomura (herein
private respondent), asked petitioners to apply for the vacant position. Simultaneously, Nomura also
asked Villanueva and Escarte, both Group Product Managers in the marketing department, to apply for
the position of Marketing Director. All four submitted their applications however Nomura hired an
outsider to be the Marketing Director while the National Sales Director position remained vacant.

Petitioners later found that BTCI promoted Villanueva as the National Sales Director pursuant to its
management prerogative. Such promotion caused ill-feelings on the petitioners part as they believed
that Villanueva didnt apply for the position; had only 3 years of experience in sales; was responsible
for the losses in the marketing department and that he threatened to leave the office along with the
companys top cardio-medical doctors.

Petitioners also claim that due to Nomuras threat of dismissed if they dont perform well under
Villanueva, they inquired if they could avail of the early retirement package due to health reasons150%
pus 120% of monthly salary for every year of service tax free and full ownership of the service vehicle
tax free. They contend that such package was also given to the previous retirees.

On April 28, 2004, petitioners retired and got their retirement package and other monetary pay from
BTCI. Chan received around P2M worth of check while Galang received around P3M. Upon their
retirement, the Regional Sales Manager position was abolished and replaced with Operations Manager.
Petitioners filed a complaint for constructive dismissal and money claims before the NLRC Regional
Arbitration Branch.

The Labor Arbiter ruled that petitioners were constructively dismissed as they were forced to retire due
to Villanuevas appointment which constituted an abuse of exercise of management prerogative and the
abolition of their positions show that their easing out of service was orchestrated. Also, it showed that
petitioners were discriminated as to their retirement package.

BTCI appealed to the NLRC which reversed and set aside the Labor Arbiters Decision ruling that
petitioners failed to prove that they were constructively dismissed.

Petitioners filed a motion to declare such decision as null and void alleging that they have received a
prior notice of decision where the NLRC affirmed LAs decision but modified the amount of damages.
They further claimed that the later notice had defects such that it lacked a signature, had pages without
the initial of the one preparing it; printed in a higher quality of paper; merely lifted the arguments of
BTCI in contrast to NLRCs February (previous) decision which greatly reviewed the LAs decision.

NLRC denied their motion and upheld the NLRCs March (later) decision. NLRC clarified that the
March Decision is the final one as the earlier one was merely a draft. Petitioners filed for certiorari with
the CA which likewise denied their petition.

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ISSUE: (1) WHETHER PETITIONERS WERE CONSTRUCTIVELY DISMISSED FROM SERVICE

RULING:

NO. Petitioners voluntarily retired from service, thus, were not constructively dismissed.

Constructive dismissal is dismissal in disguise or an act amounting to dismissal but made to appear
as if it were not. It exists where continued employment is impossible, unbearable, or unlikely, as an
offer of demotion in rank or diminution in pay. It may also exist when acts of clear discrimination,
insensibility or disdain by the employer gives the employee no choice but to resign; what is essentially
lacking is the voluntariness in the employees separation from employment.

Petitioners were neither demoted nor did they receive a diminution in pay. Likewise, they failed to show
that employment is rendered impossible, unbearable, or unlikely.

Petitioners have previously intended to retire and requested to avail of the early retirement.

Their claim that Villanueva was unqualified and such appointment eased them out of service affirm the
NLRCs and CAs findings that their resignation was prompted by their disagreement with the
appointment of Villanueva and not because of discrimination.

Labor laws respect the employers inherent right to control and manage effectively its enterprise and do
not normally allow interference with the employers judgment in the conduct of his business.
Management has exclusive prerogatives to determine qualifications and fitness of workers for hiring
and firing, promotion, or reassignment. It is only in instances of unlawful discrimination, limitations
imposed by law and collective bargaining agreement can this prerogative be reviewed.

Labor Arbiters and NLRC and even the courts are not vested with managerial authority. The employers
exercise of management prerogatives with or without reason, does not per se constitute unjust
discrimination, unless there is a showing of grave abuse of discretion. In this case, there is none.

Petitioners failed to establish the fact of their dismissal when they failed to prove that their decision to
retire is involuntary. Hence, no constructive dismissal found.

ISSUE: (2) WHETHER PETITIONERS ARE ENTITLED TO A HIGHER RETIREMENT PACKAGE

RULING:

NO. Petitioners were not discriminated against in terms of their retirement package.

The entitlement of employees to retirement benefits must specifically be granted under existing laws, a
collective bargaining agreement or employment contract or an established employer policy.

Petitioners are not covered by any agreement. They received more retirement benefit than that provided
under Art 287 of the Labor Code. They complain that previous employees received more retirement
benefits.

The burden of proof that a benefit has ripened into company practice and that it has been made
consistently and deliberately, rests with the employee.

CA was correct in saying that this concession given to such an employee was not proved to be company
practice or policy such that petitioners can demand of it over and above what has been specified in the
collective bargaining agreement.
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Evidence presented by petitioners cannot be used as precedents since they were not shown to be similar
in rank nor are the applicable retirement packages corresponding to their ranks alike.

CBA governs BTCIs retirement pay according to Ducay, a former employee and not company practice.

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185453 PAYMENT OF WAGES

Congson vs. NLRC (G.R. No. 114250 April 5, 1995)

Facts: Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondents were
hired as piece-rate employees uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty
(80) kilos per movement. They work for 7 days a week. Due to alleged scarcity of tuna, Congson notified
his proposal to reduce the rate-per-tuna movement. When they reported the following day, they found
out that they were already replaced with new set of workers. They wanted to have a dialogue with the
management, but they waited in vain. Thus, they filed a case before NLRC for underpayment of wages
(violation of the minimum wage law) and non-payment of overtime pay, 13th month pay, holiday pay,
rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law. He averred that
NLRC should have considered as forming a substantial part of private respondents' total wages the cash
value of the tuna liver and intestines private respondents were entitled to retrieve. He argued that the
combined value of the cash wage and monetary value of the tuna liver and intestines clearly exceeded
the minimum wage fixed by law.

Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

Issue: Whether or not the form of payment by Congson is valid pursuant to Article 102 of the Labor
Code.

Ruling: Petitioner's practice of paying the private respondents the minimum wage by means of legal
tender combined with tuna liver and intestines runs counter to the above cited provision of the Labor
Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties
in the employment agreement but even expressly requested by private respondents, does not shield
petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The
only instance when an employer is permitted to pay wages informs other than legal tender, that is, by
checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are
present.

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North Davao Mining vs. NLRC (G.R. No. 112546 March 13, 1996)

Facts: Due to financial losses, North Davao Mining Corporation laid off workers. Respondent Wilfredo
Guillema is one among several employees of North Davao who were separated by reason of the
companys closure on May 31, 1992. It appears that, during the life of the petitioner corporation, from
the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay
equivalent to thirty (30) days pay for every year of service. Moreover, inasmuch as the region where
North Davao operated was plagued by insurgency and other peace and order problems, the employees
had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 hours travel time by public transportation; this arrangement lasted from 1981
up to 1990.

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

Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours spent by complainants in
collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the
risks in commuting all the time in collecting complainants salaries, would justify the granting of back
wages equivalent to two (2) days in a month as prayed for. Corollary, we likewise hold respondents
liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay
days.

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Heirs of Sara Lee vs. Rey (G.R. No. 149013 August 31, 2006)

Facts: The Heir of Sara Lee is engaged in the direct selling of a variety of product lines for men and
women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty
items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and
contracts with dealers to sell the aforementioned merchandise. These dealers, known either as
Independent Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on
whether they sell individually or through their own group, would obtain at discounted rates the
merchandise from the petitioner on credit or then sell the same products to their own customers at fixed
prices also determined by the petitioner.

In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the
volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner
the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or
52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner.
To discourage late remittances, the petitioner imposes a Credit Administration Charge, or simply, a
penalty charge, on the value of the unremitted payment.

The dealers under this system earn income through a profit margin between the discounted purchase
price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On
top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales
generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner
has found the need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs
through the employment of Credit Administration Supervisors (CAS) for each branch. The primary
duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of
payments and outstanding accounts due to the petitioner from its independent dealers and various
customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided
with a computer equipped with control systems through which data is readily generated. Under this
organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations
Manager (BOM).

Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration
Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the
petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent
was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994,
respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM
of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent
was temporarily assigned to the Butuan City branch.

Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the
Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of
the petitioner who happens to be respondents sister-in-law, from the 52-day limit to an unauthorized
term of 60 days. The respondent made the instruction just before the computer data for the computation
of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported
this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia.
Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and
discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the
respondent, but there were several other IBMs whose credit terms had been similarly extended beyond
the periods allowed by company policy. BOM Villagracia then summoned the respondent and required
her to explain the unauthorized credit extensions.

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Issue: WON the respondent is entitled to 13th month pay.

Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and
is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in
refusing to award 14th and 15th month pay as well as the monthly salary increase of 10 percent per
year for two years based on her latest salary rate. The respondent must show that these benefits are
due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof
supporting the same. With respect to salary increases in particular, the respondent must likewise show
that she has a vested right to the same, such that her salary increases can be made a component in the
computation of back wages. What is evident is that salary increases are a mere expectancy. They are by
nature volatile and dependent on numerous variables, including the companys fiscal situation, the
employees future performance on the job, or the employees continued stay in a position. In short,
absent any proof, there is no vested right to salary increases.

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185454 CONDITIONS OF EMPLOYMENT

San Juan De Dios Hospital vs. NLRC (G.R. No. 126383 November 28, 1997)

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital
Employees Association, sent a letter requesting for the expeditious implementation and payment by
respondent, San Juan De Dios Hospital, of the '40-hours/5-day workweek' with compensable weekly
two (2) days off provided for by Policy Instruction No. 54 issued by the Secretary of Labor. Said policy
instruction purports to implement R.A. No. 5901, otherwise known as An Act Prescribing Forty Hours
a Week of Labor For Government and Private Hospitals or Clinic Personnel. Respondent hospital failed
to give a favorable response; thus, petitioners filed a complaint regarding their claims for statutory
benefits under the above-cited law and policy issuance. However, the Labor Arbiter and, subsequently,
NLRC dismissed the complaint. Hence, this petition ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901
and Article 83 of the Labor Code.

Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon completion
of 40-hour/5-day workweek, is valid based on existing labor laws.

Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the provision of
Article 83 of the Labor Code, as well as to R.A. No. 5901.

A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630
(later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten
the working hours of health personnel and not to dole out a two day off with pay. Petitioners' position
is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards which
implement Republic Act No. 5901. Section 15 of aforementioned implementing rules grants specific rate
of additional compensation for work performed on Sunday or for work performed in excess of forty
hours a week. Policy Instruction No. 54 unduly extended the statute.

Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week for health
personnel, and (2) where the exigencies of service require that health personnel work for six days or
forty-eight hours then such health personnel shall be entitled to an additional compensation of at least
thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports
then Secretary of Labor and petitioners assertion. The Secretary of Labor exceeded his authority by
including a two day off with pay in contravention of the clear mandate of the statute. Administrative
interpretation of the law is at best merely advisory, and the Court will not hesitate to strike down an
administrative interpretation that deviates from the provision of the statute.

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Sime Darby Pilipinas, Inc. vs. NLRC (G.R. No. 119205 April 15, 1998)

Facts: Prior to the present controversy, the factory employees of Sime Darby Pilipinas, Inc. enjoyed a
30minute paid on call lunch break in their daily work schedule of 7:45 am to 3:45 pm. The petitioner
company passed a memorandum dated Aug 12, 1992 advising all factory-based workers, except those
in the Warehouse and Quality Assurance Department, of a change in work schedule that discontinued
the 30-minute paid on call lunch break and set an uninterrupted 1-hour lunch break in lieu thereof.

Private respondents then filed a complaint for unfair labor practice, discrimination, and evasion of
liability with the Labor Arbiter who dismissed the complaint, ruling that the elimination of the 30-
minute lunch break was a valid exercise of management prerogative. Appeal was made to respondent
NLRC who reversed the decision of the Labor Arbiter, declaring that the new work schedule deprived
the employees of the benefits of a time-honored company practice and that such change also resulted in
an unjust diminution of employee benefits.

The OSG recommended the present petition to be granted, alleging that the new memorandum
containing the work schedule was not discriminatory not did it constitute unfair labor practice.

Issue: Whether or not the memorandum dated Aug 14, 1992 discontinuing the 30-minute paid on call
lunch break constituted unfair labor practice and diminution of benefits

Ruling: The Supreme Court sustained petitioner, holding that it is clearly a management prerogative to
fix the work schedules of company employees. Under the old schedule, the employees are compensated
during their 30-minute lunch break, but in essence it is still working time since the workers could be
called upon to work. Whereas in the new schedule, the employees are given a longer break of 1 hour,
though uncompensated, it is uninterrupted as workers on their break are no longer on call. The change
in schedule would improve company productivity as well as enhance the comfort of workers who could
enjoy an uninterrupted break.

The Supreme Court also reiterated the policy that while social justice and the protection of the working
class is ensured by the Constitution, the same fundamental law also protects the right of the
management to regulate all aspects of employment as well as to retain the prerogative of changing work
schedules according to the exigencies of the enterprise. So long as this prerogative is exercised in good
faith, the Court upholds such exercise.

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Phil. Airlines vs. NLRC (G.R. No. 132805 February 2, 1999)

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

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

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

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

Finding private respondents explanation unacceptable, the management charged private respondent
with abandonment of post while on duty.

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

Issue: WON being a full-time employee, private respondent is obliged to stay in the company premises
for not less than eight (8) hours.

Ruling: NO. Employees are not prohibited from going out of the premises as long as they return to their
post on time.

Articles 83 and 85 of the Labor Code read:

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

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

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

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

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

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

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

In cases of actual or impending emergencies or there is urgent work to be performed on machineries,

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

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

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

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred
that employees must take their meals within the company premises. Employees are not prohibited from
going out of the premises as long as they return to their posts on time. Private respondents act,
therefore, of going home to take his dinner does not constitute abandonment.

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Linton Commercial Co., Inc., vs. Hellera et al. (G.R. No. 163147 October 10, 2007)

Facts: On 17 December 1997, Linton issued a memorandum addressed to its employees informing them
of the company's decision to suspend its operations from December 18, 1997 to January 5, 1998 due to
the currency crisis that affected its business operations. Linton submitted an establishment termination
report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the
establishment covering the said period. The company's operation was to resume on January 6, 1998. On
January 7, 1997, Linton issued another memorandum informing them that effective January 12, 1998, it
would implement a new compressed workweek of three (3) days on a rotation basis. In other words,
each worker would be working on a rotation basis for three working days only instead for six days a
week. On the same day, Linton submitted an establishment termination report concerning the rotation
of its workers. Linton proceeded with the implementation of the new policy without waiting for its
approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction
of workdays.

Issue: WON there was an illegal reduction of work when Linton implemented a compressed workweek
by reducing from six to three the number of working days with the employees working on a rotation
basis.

Ruling: The compressed workweek arrangement was unjustified and illegal.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in
determining when an employer can validly reduce the regular number of working days. The said
bulletin states that a reduction of the number of regular working days is valid where the arrangement
is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when
there is a substantial slump in the demand for his goods or services or when there is lack of raw
materials. Although the bulletin stands more as a set of directory guidelines than a binding set of
implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic Arts
Inc., in determining the validity of reduction of working hours that the company was suffering from
losses.

Certainly, management has the prerogative to come up with measures to ensure profitability or loss
minimization. However, such privilege is not absolute. Management prerogative must be exercised in
good faith and with due regard to the rights of labor. As previously stated, financial losses must be
shown before a company can validly opt to reduce the work hours of its employees. However, to date,
no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify
the reduction of work hours. If the standards set in determining the justifiability of financial losses under
Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be
considered, petitioners would end up failing to meet the standards. On the one hand, Article 286 applies
only when there is a bona fide suspension of the employer's operation of a business or undertaking for
a period not exceeding six (6) months.

Records show that Linton continued its business operations during the effectivity of the compressed
workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be
justified, any claim of actual or potential business losses must satisfy the following standards: (1) the
losses incurred are substantial and not minimal; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and
(4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are
proven by sufficient and convincing evidence. Linton failed to comply with these standards.

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Bisig Manggagawa sa Tryco vs. NLRC (G.R. No. 151309 October 15, 2008)

Facts: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal
office is located in Caloocan City. Petitioners are its regular employees, occupying the positions of
helper, shipment helper and factory workers, assigned to the Production Department. They are
members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-
and-file employees.

Tryco and the petitioners signed a Memorandum of Agreement (MOA), providing for a compressed
workweek schedule to be implemented in the company effective May 20, 1996. As provided, 8:00 a.m.
to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime
pay shall be due and payable to the employee for work rendered during those hours. The MOA
specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00
p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is
adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to
overtime pay.

On a letter dated March 26, 1997, the Bureau of Animal Industry of the Department of Agriculture
reminded Tryco that its production should be conducted in San Rafael, Bulacan, not in Caloocan City.

Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner Aya-ay to
report to the companys plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated
the order on April 18, 1997. Subsequently, through a Memorandum dated May 9, 1997, Tryco also
directed the other petitioners Egera, Lario and Barte to report to the companys plant site in Bulacan.

BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair
labor practice. In protest, BMT declared a strike on May 26, 1997.

In August 1997, petitioners filed their separate complaints for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its
President, Wilfredo C. Rivera. Petitioners alleged that the company acted in bad faith during the CBA
negotiations because it sent representatives without authority to bind the company, and this was the
reason why the negotiations failed. Also, the management transferred petitioners from Caloocan to San
Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from
May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4.

Issue: Whether or not the company committed Unfair Labor Practices

Ruling: NO. Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They
maintain that the letter of the Bureau of Animal Industry is not credible because it is not authenticated;
it is only a ploy, solicited by respondents to give them an excuse to effect a massive transfer of
employees. There is no proof to support this claim. Absent any evidence, the allegation is not only highly
irresponsible but is grossly unfair to the government agency concerned.

Also, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless of whether
it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent
right to control and manage its enterprise effectively.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not
involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may
 Cyrus Vincent Tronco
LABOR STANDARDS

not complain that it amounts to a constructive dismissal. In this case, the transfer orders do not entail a
demotion in rank or diminution of salaries, benefits, and other privileges of the petitioners. Petitioners,
therefore, anchor their objection solely on the ground that it would cause them great inconvenience
since they are all residents of Metro Manila and they would incur additional expenses to travel daily
from Manila to Bulacan. Such contention is untenable because the Court has previously declared that
mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. The distance
from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living
accommodations in the area and prevent them from commuting to Metro Manila daily to be with their
families.

Finally, MOA is enforceable and binding against the petitioners. Where it is shown that the person
making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid
and binding undertaking. In addition, D.O. No. 21 sanctions the waiver of overtime pay in consideration
of the benefits that the employees will derive from the adoption of a compressed workweek scheme.
Moreover, the adoption of a compressed workweek scheme in the company will help temper any
inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the
MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest
of the employees in the implementation of a compressed workweek scheme

Considering that the MOA clearly states that the employee waives the payment of overtime pay in
exchange of a five-day workweek, there is no room for interpretation and its terms should be
implemented as they are written.

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DASCO vs. PHILTRANCO SERVICE ENTERPRISES, INC.

(GR No. 211141 June 29, 2016)

FACTS:

This case stemmed from a complaint for regularization, underpayment of wages, non-payment of
service incentive leave (SIL) pay, and attorney's fees, filed by the petitioners against Philtranco Service
Enterprises, Inc., (PSEI), a domestic corporation engaged in providing public utility transportation, and
its Manager, Centurion Solano (respondents).

Petitioners were hired by respondents as bus drivers and/or conductors. On July 4, 2011, petitioners
filed a case against respondents alleging that:

They are already qualified for regular employment status since theyve been working for the
respondents for several years.

They were only paid P404.00 per round trip which lasts from 2-5 days without overtime pay and below
minimum wage

They cannot be considered as field personnel because respondents control their working hours.

They have not been given their yearly SIL since they were hired.

In response, respondents asserted that:

Petitioners were paid P0.49 per kilometer run, or minimum wage, whichever is higher.

Petitioners are seasonal employees since their contract are for a fixed period and their employment was
dependent on the demand for buses.

Petitioners are not entitled to overtime pay and SIL because they are field personnel whose time outside
the company premises cannot be determined with reasonable certainty and are left alone in the field
unsupervised.

LA rendered judgement in favor of respondents but declared petitioners as regular employees. NLRC
modified LAs decision, held that petitioners are not field personnel considering that they ply specific
routes with fixed time schedules determined by respondents thus entitled to minimum wage, SIL, and
overtime pay. Petitioners appealed to the CA which reversed NLRCs decision and reinstated LAs
decision. Hence, present petition for review on certiorari.

ISSUE: WON the petitioners as bus drivers and/or conductors are field personnel, and thus entitled to
overtime pay and SIL pay.

RULING:

The determination of whether bus drivers and/or conductors are considered as field personnel was
already threshed out in the case of Auto Bus Transport Systems, Inc. v. Bautista, where the Court
explained that:||| 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. . .

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At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned
with the location where the employee regularly performs his duties but also with the fact that the
employee's performance is unsupervised by the employer. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employer constantly supervises the employees time and performance. |||

Guided by the foregoing norms, the NLRC properly concluded that the petitioners are not field
personnel but regular employees who perform tasks usually necessary and desirable to the respondents'
business. Evidently, the petitioners are not field personnel as defined above as correctly observed by the
NLRC:

[I]t is undisputed that [the petitioners] as bus drivers/conductors ply specific routes of [PSEI], . . .
averaging 2 to 5 days per round trip. They follow fixed time schedules of travel and follow the
designated route of [PSEI]. Thus, in carrying out their functions as bus drivers/conductors, they are not
at liberty to deviate from the fixed time schedules for departure or arrival or change the routes other
than those specifically designated for [PSEI], in accordance with the franchise granted to the [PSEI] as a
public utility provider. In other words, [the petitioners] are clearly under the strict supervision and
control of [PSEI] in the performance of their functions otherwise the latter will not be able to carry out
its business as public utility service provider in accordance with its franchise.

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HSY Marketing Ltd., Co., vs. Virgilio O. Villastique (G.R. No. 219569 August 17,
2016)

FACTS:

On January 3, 2003, petitioner hired respondent as an elf driver for Fabulous Jeans, Shirt, & General
Merchandise (Fabulous Jeans), tasked to deliver ready-to-wear items and/or general merchandise for a
daily compensation of P370.00. On January 10, 2011, respondent figured in an accident when the service
vehicle (a 2010- model Mitsubishi Strada pick up) he was driving in Iligan City bumped a pedestrian,
Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the hospitalization and medical expenses of
Dorataryo in the amount of P64,157.15, which respondent was asked to reimburse, but to no avail. On
February 24, 2011, respondent was allegedly required to sign a resignation letter, which he refused to
do. A couple of days later, he tried to collect his salary for that week but was told that it was withheld
because of his refusal to resign. Convinced that he was already terminated on February 26, 2011, he lost
no time in ling a complaint for illegal dismissal with money claims against petitioner, Fabulous Jeans,
and its owner, Alexander G. Arqueza (Arqueza; collectively, petitioner, et al.) before the NLRC,
docketed as RAB-X- 04-00179-2011.

Petitioner alleged that since respondent was the one who refused to report for work, he should be
considered as having voluntarily severed his own employment. Thus, his money claims cannot prosper
as he was not terminated. The Labor Arbiter (LA), as affirmed by NLRC and CA affirmed the decision
of NLRC that neither was there a notice of termination issued to him, nor was he prevented from
showing up in petitioner's place of business. There was likewise no evidence submitted by petitioner
that respondent had indeed voluntarily resigned. Thus, the LA ruled that the employer- employee
relationship between the parties should be maintained. Also, the LA awarded respondent the amount
of P16,418.75 as service incentive leave pay, pointing out that respondent was a field driver who
regularly performed work outside petitioner's place of business and whose hours of work could not be
ascertained with reasonable certainty; and that petitioner had failed to present the payroll or pay slips
to prove that respondent was paid such benefit.

ISSUE(S):

Whether or not respondents were respondent were dismissed.

Whether or not respondent is entitled for service incentive leave pay.

RULING(S):

NO. The Court likewise upholds the unanimous conclusion of the lower tribunals that respondent had
not been dismissed at all. Other than the latter's unsubstantiated allegation of having been verbally
terminated from his work, no substantial evidence was presented to show that he was indeed dismissed
or was prevented from returning to his work. In ne, petitioner is ordered to reinstate respondent to his
former position without the payment of back wages. If respondent voluntarily chooses not to return to
work, he must then be considered as having resigned from employment. This is without prejudice,
however, to the willingness of both parties to continue with their former contract of employment or
enter into a new one whenever they so desire.

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YES. The Court has already held that company drivers who are under the control and supervision of
management officers like respondent herein are regular employees entitled to benefits including
service incentive leave pay. Petitioner, as the employer of respondent, and having complete control over
the records of the company, could have easily rebutted the said monetary claim against it by presenting
the vouchers or payrolls showing payment of the same. However, since petitioner opted not to lift a
finger in providing the required documentary evidence, the ineluctable conclusion that may be derived
therefrom is that it never paid said benefit and must, perforce, be ordered to settle its obligation to
respondent.

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A. Nate Casket Maker vs. Elias V. Arango (G.R. No. 192282 October 5, 2016)

FACTS:

Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They
employed respondents on various dates as carpenters, mascilladors and painters in their casket-making
business from 1998 until their alleged termination in March 2007. Respondents who are considered as
pakyaw workers are "stay- in" workers with free board and lodging, but they would "always" drink,
quarrel with each other on petty things such that they could not accomplish the job orders on time.
Hence, petitioners would then be compelled to "contract out" to other workers for the job to be finished.

Respondents alleged that they worked from Monday to Saturday, from 7:00 a.m. to 10:00 p.m., with no
overtime pay and any monetary benefits despite having claimed for such. They were also made to sign
a Contract of Employment on March 15, 2009 with the following terms and conditions: (1) they shall be
working on contractual basis for a period of five months; (2) renewal of employment contract after such
period shall be on a case-to-case basis or subject to respondents' efficiency and performance; (3)
petitioners shall reserve the right to terminate their employment should their performance fall below
expectations or if the conditions under which they were employed no longer exist; (4) their wages shall
be on a piece-rate basis; (5) in the performance of their tasks, they shall be obliged to strictly follow their
work schedules; (6) they shall not be eligible to avail of sick leave or vacation leave, nor receive 13th
month pay and/or bonuses, or any other benefits given to a regular employee.

On February 8, 2007, respondents led a Complaint for illegal dismissal and non- payment of separation
pay against petitioners. On March 15, 2007, they amended the complaint to include claims for
underpayment of wages, non-payment of overtime pay, holiday pay, 5-day service incentive leave pay
and 13th month pay.

The Labor Arbiter (LA) ruled that petitioners did not terminate the services of respondents and believed
in the denial of petitioners that respondents were called to their office on March 15, 2007 since
respondents already initiated the present case on February 8, 2007. On the issue of underpayment, the
LA held that respondents were earning more than the minimum wage per day; and as pakyaw workers,
though they are deemed regular workers, they are not entitled to overtime pay, holiday pay, service
incentive leave pay and 13th month pay citing the case of field personnel and those paid on purely
commission basis. The NLRC affirmed the decision of LA and a motion for reconsideration was filed by
respondents but the same was denied. On the other hand, CA reversed and set aside the decision of
NLRC, declaring petitioners to have been illegally dismissed and ordering private respondents to pay
them back wages, separation pay and other monetary benefits as required by law.

ISSUE(S):

Whether or not Petitioners erroneously dismissed the employee without due process.

Whether or not Respondents are entitled to overtime pay, holiday pay, service incentive leave pay and
13th month pay.

RULING(S):

YES. There was the absence of proof to show that petitioners conducted an investigation on the alleged
drinking and petty quarrelling of respondents nor did the petitioners provide respondents with an
opportunity to explain their side with respect to charges against them. Petitioners indeed terminated

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respondents' employment. The positive assertion of respondents that petitioners dismissed them is
more convincing than the mere denial of petitioners. In termination cases, the burden of proving just
and valid cause for dismissing an employee from his employment rests upon the employer, and the
latter's failure to do so would result in a finding that the dismissal is unjustified. Petitioners failed to
discharge this burden. Under Article 279 of the Labor Code as aforestated, an employee unjustly
dismissed from work is entitled to reinstatement and back wages, among others or a separation pay
may avail if reinstatement is no longer practical or in the best interest of the parties.

Yes. An Employer-Employee relationship exists. There is no dispute that the tasks performed by
respondents as carpenters, painters, and mascilladors were necessary and desirable in the usual
business of petitioners who are engaged in the manufacture and selling of caskets. In addition, the
power of control of petitioners over respondents is clearly present in this case. Hence, pakyaw workers
are considered regular employees for as long as their employers exercise control over them. Thus, while
respondents' mode of compensation was on a per-piece basis, the status and nature of their employment
was that of regular employees. In the case of David v. Macasio, the court held that workers engaged on
pakyaw or "task basis" are entitled to holiday and service incentive leave pay (SIL) provided they are
not field personnel. With respect to the payment of 13th month pay; however, we find that respondents
are not entitled to such benefit because Section 3 of the Rules and Regulations Implementing P.D. No.
851 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e),
"employers of those who are paid on . . . task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance thereof" are
exempted.

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185455 MINIMUM LABOR STANDARD BENEFITS

San Miguel Corp., vs. CA (G.R. No. 146775 January 30, 2002)

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

SMC appealed to the DOLE main office in Manila. However, the appeal was dismissed for lack of merit
and the order of Director Macaraya was affirmed. SMC went to SC for relief via a petition for certiorari,
which the Court referred to the Court of Appeals. The appellate court modified the order with regards
the payment of Muslim holiday pay from 200% to 150% of the employee's basic salary. Its motion for
reconsideration having been denied for lack of merit, SMC filed a petition for certiorari before the SC

Issues:

Whether or not public respondents seriously erred and committed grave abuse of discretion when they
granted Muslim Holiday Pay to non-Muslim employees of SMC.

Whether or not SMC was not accorded with due process of law in the issuance of the compliance order.

Whether or not regional director Macaraya, undersecretary Trajano and undersecretary Espanol have
jurisdiction in issuing the assailed compliance orders.

Ruling: The court ruled the issues in negative.

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

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

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

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

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

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

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

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Dhl-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed
in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan,
Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be
created; (2) Upon proclamation by the President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides:

Art. 94. Right to holiday pay. -

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

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

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the provisions of this
Code shall be applicable only to Muslims." However, there should be no distinction between Muslims
and non-Muslims as regards payment of benefits for Muslim holidays. Wages and other emoluments
granted by law to the working man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion. In addition, the 1999 Handbook on Workers
Statutory Benefits, categorically stated: Considering that all private corporations, offices, agencies, and
entities or establishments operating within the designated Muslim provinces and cities are required to
observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not report
for work on the days designated by law as Muslim holidays.

On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article 128,
Section B of the Labor Code, as amended by Republic Act No. 7730, provides: Article 128. Visitorial and
enforcement power. -

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

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

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Anent the allegation that petitioner was not accorded due process, the court finds that SMC was
furnished a copy of the inspection order and it was received by and explained to its Personnel Officer.
Further, a series of summary hearings were conducted by DOLE on 19 November 1992, 28 May 1993
and 4 and 5 October 1993. Thus, SMC could not claim that it was not given an opportunity to defend
itself.

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Tan vs. Lagrama (G.R. No. 151228 August 15, 2002)

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager
of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter,
making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown
Theaters for more than 10 years, from September 1, 1988 to October 17, 1998.

On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na
naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama
asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka
pa. Guikan karon, wala nay drawing Gawas." ("Don't say anything further. I don't want you to draw
anymore. From now on, no more drawing. Get out.")

Lagrama denied the charge against him. He claimed that he was not the only one who entered the
drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal.
However, every time he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but
to leave the premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC)
in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment
of 13th month pay, service incentive leave pay, salary differential, and damages.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to
file their position papers. It declared that the dismissal illegal and order the payment of monetary
benefits. Tan appealed to the NLRC and reversing the decision of the Labor Arbiter.

Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits
provided by law.

Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the
Labor Code provide that no worker shall be dismissed except for a just or authorized cause provided
by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that
is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in
the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause,
while illegality in the manner of dismissal is dismissal without due process.

In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as
the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a
work place other than the one designated for the purpose by the employer constitutes violation of
reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code
for purposes of terminating employment, but the same must be shown by evidence. Here there is no
evidence that Lagrama did urinate in a place other than a rest room in the premises of his work.

Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found
that the relationship between the employer and employee has been so strained that the latter's
reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the
grant of separation pay in lieu of reinstatement is appropriate.

This is of course in addition to the payment of bac wages which, in accordance with the ruling in
Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up to the time of the
finality of this decision, without any deduction or qualification.

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The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1)
those whose time and performance is supervised by the employer, and (2) those whose time and
performance is unsupervised by the employer. The first involves an element of control and supervision
over the manner the work is to be performed, while the second does not. If a piece worker is supervised,
there is an employer-employee relationship, as in this case. However, such an employee is not entitled
to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche
International v. NLRC, 34 he is paid a fixed amount for work done, regardless of the time he spent in
accomplishing such work.

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Lambo vs. NLRC (G.R. No. 111042 October 26, 1999)

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

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive
leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found
private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims.
On appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of
abandonment of work and accordingly dismissed their claims except that for 13th month pay.

Petitioners allege that private respondents dismissed them as they were about to file a petition with the
Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security
System (SSS) coverage, sick leave, and vacation leave. They deny that they abandoned their work.

Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law.

Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that
petitioners were employees of private respondents although they were paid not on the basis of time
spent on the job but according to the quantity and the quality of work produced by them. There are two
categories of employees paid by results: (1) those whose time and performance are supervised by the
employer. (Here, there is an element of control and supervision over the manner as to how the work is
to be performed. A piece-rate worker belongs to this category especially if he performs his work in the
company premises.); and (2) those whose time and performance are unsupervised. (Here, the
employers control is over the result of the work. Workers on pakyao and takay basis belong to this group.)
Both classes of workers are paid per unit accomplished.

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

In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners
worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.
The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees
of private respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration
or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task,
piece, or commission basis. Payment by the piece is just a method of compensation and does not define
the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the
employer-employee relationship.

As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter
applied the rule in the Mercury Drug case, according to which the recovery of back wages should be
limited to three years without qualifications or deductions. Any award in excess of three years is null

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and void as to the excess. The Labor Arbiter correctly ordered private respondents to give separation
pay.

Considerable time has elapsed since petitioners dismissal, so that reinstatement would now be
impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should
be awarded to petitioners at the rate of one-month salary for every year of service, with a fraction of at
least six (6) months of service being considered as one (1) year. The awards for overtime pay, holiday
pay and 13th month pay are in accordance with our finding that petitioners are regular employees,
although paid on a piece-rate basis.

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R&E Transport vs. Latag (G.R. No. 155214 February 13, 2004)

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. However, he was
transferred to the petitioner R & E Transport, Inc. upon cessation of La Mallorcas business operations.
In January 1995, he got sick and was forced to apply for partial disability with the SSS, which was then
granted. Upon recovery, he reported back to work in September 1998 but was no longer allowed on
account of his old age. Latag asked the petitioner, through its administrative officer for his retirement
pay pursuant to Republic Act 7641 but he was ignored. Latag filed a case for payment of his retirement
pay before the NLRC.

Upon Pedro Latags death on April 30, 1999, he was substituted by his wife, the respondent Avelina
Latag. Labor Arbiter rendered a decision in favor of Latag. Petitioner filed the quitclaim and motion to
dismiss where the Labor Arbiter issued an order for Writ of Execution. Petitioners interposed an appeal
before NLRC. Appeal was dismissed for failure to post a cash or surety bond, as mandated by law.

Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of
quitclaim.

Ruling: The Supreme Court ruled that the respondent is entitled to retirement benefits despite of the
waiver of quitclaims.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled
that the document was invalid and could not bar her from demanding the benefits legally due her
husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that
frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain
these away.

Undisputedly, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article
287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. 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 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-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.

The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is
not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be
computed on the sole basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
"boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing
their benefits should be the average daily income. In this case, the CA found that Pedro was earning an
average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x
15 days x 14 years of service equals P105,000. Hence, it is clear that the late Pedro M. Latag is entitled to
retirement benefits.

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Asian Transmission vs. CA (G.R. No. 144664 March 15, 2004)

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

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

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

The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union (BATLU), and held that
Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of
which is determined by a legal formula which is not changed by the fact that there are two holidays
falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was
Maundy Thursday.

In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator.

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

Ruling: The Court dismissed the petition and ruled that petitioners should pay its employees 200% and
not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular
holidays, namely, Araw ng Kagitingan and Maundy Thursday.

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall
afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of
the workers on account of work interruptions. In other words, although the worker is forced to take a
rest, he earns what he should earn, that is, his holiday pay."

The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis.
Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable
under the law.

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Autobus Transport System vs. Bautista (G.R. No. 156364 May 16, 2005)

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.,
since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio,
Tuguegarao via Manila, and Manila-Tabuk via Baguio. Respondent was paid on commission basis,
seven percent (7%) of the total gross income per travel, on a twice a month basis.

On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus
he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly
stopped at a sharp curve without giving any warning. Respondent averred that the accident happened
because the management compelled him to go back to Roxas, Isabela, although he had not slept for
almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.

Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite
respondent's pleas for reconsideration, the same was ignored by management. After a month,
management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a
Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service
incentive leave pay against Autobus.

On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor
Arbiter decided that the complaint be dismissed where the respondent must pay to the complainant

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

Ruling: The respondent is entitled to service incentive leave.

The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code
vis-a-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code
which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at
least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all
employees except: (d) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or those
who are paid in a fixed amount for performing work irrespective of the time consumed in the

performance thereof;

A careful examination of said provisions of law will result in the conclusion that the Implementing Rules
and Regulations of the Labor Code have delimited the grant of service incentive leave to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel."

The phrase "other employees whose performance is unsupervised by the employer" must not be
understood as a separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel
under the Labor Code as those "whose actual hours of work in the field cannot be determined with
reasonable certainty."
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The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on jus dem
generis that the general and unlimited terms are restrained and limited by the particular terms that they
follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the
classification of field personnel.

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 field personnel?

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

At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned
with the location where the employee regularly performs his duties but also with the fact that the
employee's performance is unsupervised by the employer. As discussed above, field personnel are those
who regularly perform their duties away from the principal place of business of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to
conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employer constantly supervises the employees time and
performance. Respondent is not a field personnel but a regular employee who performs tasks usually
necessary and desirable to the usual trade of petitioner's business. Accordingly, respondent is entitled
to the grant of service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments,
subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations
provides that "every employee who has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay."

Service incentive leave is a right which accrues to every employee who has served "within 12 months,
whether continuous or broken reckoned from the date the employee started working, including
authorized absences, and paid regular holidays unless the working days in the establishment as a matter
of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case
said period shall be considered as one year." It is also "commutable to its money equivalent if not used
or exhausted at the end of the year." In other words, an employee who has served for one year is entitled
to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years,
as the solicitor general recommends, is to unduly restrict such right.

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San Miguel Corp., vs. Del Rosario (G.R. No. 168194 Dec. 13, 2005)

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

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

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

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

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

Neither will petitioners belated claim that respondent became a probationary employee starting
October 1, 2000 work against respondent. As earlier stated, the payroll authorities indicating that
respondents probationary status became effective as of such date are of scant evidentiary value since it
does not show the conformity of respondent. At any rate, in the interpretation of employment contracts,
whether oral or written, all doubts must be resolved in favor of labor.

Hence, the contract of employment in the instant case, which appears to be an oral agreement since no
written form was presented by petitioner, should be construed as one vesting respondent with a regular
status and security of tenure.

Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position
or positions may be the outcome of a number of factors, such as over hiring of workers, decreased
volume of business, or dropping of a particular product line or service activity previously manufactured
or undertaken by the enterprise.

The determination that the employees services are no longer necessary or sustainable and, therefore,
properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of

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this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there
is no violation of law and no showing that an arbitrary or malicious act prompted it. In other words, it
is not enough for a company to merely declare that it has become overmanned. It must produce
adequate proof of such redundancy to justify the dismissal of the affected employees.

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

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

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

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

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

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

It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its sales
unit was the employment status of the employee. However, in the implementation thereof, petitioner
erroneously classified respondent as a probationary employee, resulting in the dismissal of the latter.
Verily, the absence of criteria and the erroneous implementation of the criterion selected, both render
invalid the redundancy because both have the ultimate effect of illegally dismissing an employee.

Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also
to payment of full back wages, computed from the time her compensation was actually withheld from
her on March 13, 2001, up to her actual reinstatement. As a regular employee of petitioner from the date
of her employment on April 17, 2000, she is likewise entitled to other benefits, i.e., service incentive leave
pay and 13th month pay computed from such date also up to her actual reinstatement.

Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly
paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor
Code, employees who are uniformly paid by the month, irrespective of the number of working days
therein, shall be presumed to be paid for all the days in the month whether worked or not.
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Anent attorneys fees, in actions for recovery of wages or where an employee was forced to litigate and
thus incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary
award by way of attorneys fees is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII,
Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of
attorneys fees is proper and there need not be any showing that the employer acted maliciously or in
bad faith when it withheld the wages. There need only be a showing that the lawful wages were not
paid accordingly, as in the instant controversy.

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Penaranda vs. Baganga Plywood Corp. (G.R. No. 159577 May 3, 2006)

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

After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers
and submit supporting documents.

Pearanda alleges that he was employed by respondent Baganga on March 15, 1999 with a monthly
salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on
December 19, 2000. he alleges that his services were terminated without the benefit of due process and
valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay
for working during holidays/rest days, night shift differentials and finally claimed for payment of
damages and attorney's fees having been forced to litigate the present complaint.

Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and is
represented herein by its General Manager HUDSON CHUA, the individual respondent. Respondents
allege that complainant's separation from service was done pursuant to Art. 283 of the Labor Code. The
respondent BPC was on temporary closure due to repair and general maintenance and it applied for
clearance with the Department of Labor and Employment, Regional Office No. XI, to shut down and to
dismiss employees. And due to the insistence of herein complainant he was paid his separation benefits.

Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed to reapply.

The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature
because BPC still employed him. Petitioners money claims for illegal dismissal was also weakened by
his quitclaim and admission during the clarificatory conference that he accepted separation benefits,
sick and vacation leave conversions and thirteenth month pay.

Issue: Whether or not Pearanda is a regular, common employee entitled to monetary benefits under
Art. 82 of the Labor Code and is entitled to the payment of overtime pay and other monetary benefits.

Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.

The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and member of the managerial staff are not entitled to
the provisions of law on labor standards.

The Implementing Rules of the Labor Code define members of a managerial staff as those with the
following duties and responsibilities:

The primary duty consists of the performance of work directly related to management policies of the
employer;

Customarily and regularly exercise discretion and independent judgment;

(i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of
the management of the establishment in which he is employed or subdivision thereof; or (ii) execute
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under general supervision work along specialized or technical lines requiring special training,
experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and

who do not devote more than 20 percent of their hours worked in a workweek to activities which are
not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3)
above."

The petitioners work involves:

To supply the required and continuous steam to all consuming units at minimum cost.

To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories.

To evaluate performance of machinery and manpower.

To follow-up supply of waste and other materials for fuel.

To train new employees for effective and safety white working.

Recommend parts and suppliers purchases.

To recommend personnel actions such as: promotion, or disciplinary action.

To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.

Implement Chemical Dosing.

Perform other task as required by the superior from time to time." 34

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

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

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he
was the foreman responsible for the operation of the boiler. The term foreman implies that he was the
representative of management over the workers and the operation of the department. Petitioner's
evidence also showed that he was the supervisor of the steam plant. His classification as supervisors is
further evident from the manner his salary was paid. He belonged to the 10% of respondent's 354
employees who were paid on a monthly basis; the others were paid only on a daily basis.

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Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, (G.R. No.
1577745 October 19, 2007)

citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420,
June 10, 2004

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union
ALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and
file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent,
through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday
pay for all employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper,
insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment was
presumed since the formula used in determining the daily rate of pay of the covered employees is Basic
Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus
with said formula, the employees are already paid their regular and special days, the days when no
work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.

Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.

Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary
Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions
that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of
respondent in its Position Paper that the employees were paid all the days of the month even if not
worked. In light of such admission, petitioner's submission of its 360 divisors in the computation of
employees' salaries gains significance.

This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43
Producers Bank of the Philippines v. National Labor Relations Commission. In this case, Wellington
fixed the monthly salary to provide for compensation for every working day of the year including the
holidays specified by law and excluding only Sundays. In fixing the salary, Wellington used what it
called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a
year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus
fixed actually covered payment for 314 days of the year, including regular and special holidays, as well
as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or
typhoon or other natural calamity, or cause not attributable to the employees.

It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use
of a divisor that was less than 365 days cannot make the employer automatically liable for
underpayment of holiday pay. In said case, the employees were required to work only from Monday to
Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days,
less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the
employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day
divisor used by the employer was clearly above the minimum of 287 days.

In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above
the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the
Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting
respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner

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because it was being made to pay twice for its employees' holiday pay when payment thereof had
already been included in the computation of their monthly salaries.

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Bahia Shipping Services vs. Chua (G.R. No. 162195 April 8, 2008)

citing Cagampan vs. NLRC, 195 SCRA 533 [1998]

Facts: Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping Services, Inc., herein
petitioner, as a restaurant waiter on board the M/S Black Watch, a luxury cruise ship liner. His
employment is pursuant to a Philippine Overseas Employment Administration (POEA) approved
employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July
17, 1997.

On October 18, 1996, respondent, on board the cruise ship, left Manila for Heathrow, England. About
four months into his employment, or on February 15, 1997, responded reported to work an hour and a
half (1 ) late. Due to the incident, respondent was issued a warning-termination form by the master of
the cruise ship, Thor Fleten on February 17, 1997, who likewise conducted an inquisitorial hearing to
investigate the incident on March 8, 1997.

Thereafter, on March 9, 1997, respondent was dismissed from service on the strength of an unsigned
and undated notice of dismissal. Attached to the dismissal notice is the alleged minutes or records of
the investigation and hearing.

On March 24, 1997, respondent filed a complaint for illegal dismissal and other monetary claims. He
claims that he was underpaid in the amount of US$110.00 per month for a period of five (5) months,
since he was only paid US$300.00 per month, instead of US$410.00 per month, which was stipulated in
his contract. Aside from underpayment, he alleged that US$20.00 per month was also deducted from
his salary by petitioner for union dues.

Issue: In the computation of the award, should the guaranteed overtime pay per month be included
as part of his salary?

Ruling: There is no factual or legal basis in the inclusion of his "guaranteed overtime" pay into his
monthly salary computation for the entire unexpired period of his contract.

The Court ruled in Cagampan v. National Labor Relations Commission, that although an overseas
employment contract may guarantee the right to overtime pay, entitlement to such benefit must first be
established, otherwise the same cannot be allowed.

Petitioners contention that there is no factual or legal basis for the inclusion of said amount since
respondents repatriation is well-taken.

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PNCC Skyway Traffic Management and Security Division Workers Organization

(G.R. No. 171231 February 17, 2010)

Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and
Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and
operating under and by virtue of the laws of the Philippines. On November 15, 2002, petitioner and
respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms and
conditions of their agreement which included vacation leave and expenses for security license
provisions.

A memorandum was passed by the respondents scheduling the leaves of the laborers. Petitioner
objected to the implementation of this memorandum and contended that their union members have the
preference in scheduling their vacation leave. On the other hand, respondent argued that Article VIII,
Section 1 (b) gives the management the final say regarding the vacation leave schedule of its employees.
Respondent may take into consideration the employees' preferred schedule, but the same is not
controlling.

Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its employees.

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

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b)
of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the
employer. The preference requested by the employees is not controlling because respondent retains its
power and prerogative to consider or to ignore said request. Thus, if the terms of a CBA are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall
prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being
the law between the parties.

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Radio Mindanao Network, Inc. vs. Ybarola (G.R. No. 198662 September 12, 2012)

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by RMN. They eventually became account managers, soliciting
advertisements, and servicing various clients of RMN.

The respondents services were terminated as a result of RMNs reorganization/restructuring; they were
given their separation pay P 631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December
2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money
claims, including attorneys fees. They indicated that their monthly salary rates were P 60,000.00 for
Ybarola and P 40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of
the full benefits due them; while they admitted that they signed release documents, they did so due to
dire necessity.

The petitioners denied liability, contending that the amounts the respondents received represented a
fair and reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which
they executed freely and voluntarily. They belied the respondents claimed salary rates, alleging that
they each received a monthly salary of P 9,177.00, as shown by the payrolls.

The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment
of additional separation pay to the respondents P 490,066.00 for Ybarola and P 429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside
the labor arbiters decision and dismissed the complaint for lack of merit. It ruled that the withholding
tax certificate cannot be the basis of the computation of the respondents separation pay as the tax
document included the respondents cost-of-living allowance and commissions; as a general rule,
commissions cannot be included in the base figure for the computation of the separation pay because
they have to be earned by actual market transactions attributable to the respondents From the NLRC,
the respondents sought relief from the CA through a petition for certiorari under Rule 65 of the Rules
of Court.

The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor arbiters
separation pay award, rejecting the NLRCs ruling that the respondents commissions are not included
in the computation of their separation pay. It pointed out that in the present case, the respondents
earned their commissions through actual market transactions attributable to them; these commissions,
therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for
being against public policy, citing two reasons: (1) the terms of the settlement are unconscionable; the
separation pay the respondents received was deficient by at least P 400,000.00 for each of them; and (2)
the absence of voluntariness when the respondents signed the document, it was their dire circumstances
and inability to support their families that finally drove them to accept the amount the petitioners
offered. Significantly, they dallied and it took them three months to sign the release/quitclaim affidavits.

Issue: Whether or not the release/quitclaim affidavits are invalid for being against public policy.

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Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being
against public policy for two reasons: (1) the terms of the settlement are unconscionable; the separation
pay for termination due to reorganization/restructuring was deficient by Php400,000.00 for each
employee; they were given only half of the amount they were legally entitled to; and (2) the absence of
voluntariness when the employees signed the document, it was their dire circumstances and inability
to support their families that finally drove them to accept the amount offered. Without jobs and with
families to support, they dallied in executing the quitclaim instrument, but were eventually forced to
sign given their circumstances. To be sure, a settlement under these terms is not and cannot be a
reasonable one, given especially the respondents length of service 25 years for Ybarola and 19 years
for Rivera. Radio

Mindanao Network, Inc., and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September
12, 2012.

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Robina Farms Cebu vs. Villa (GR No. 175869 April 18, 2016)

Facts: Employer Robina Farms is appealing the decision of the NLRC making it liable for illegal
dismissal of Elizabeth Villa. Respondent Villa brought an action against petitioner Robina Farms for
illegal suspension, illegal dismissal, nonpayment of overtime benefits and nonpayment of service
incentive leave.

Respondent was a sales clerk with the company since August 1981. In the later part of 2001, petitioner
enticed her to avail of the companys special retirement program. On March 2, 2002, she received a
memorandum from Lily Ngochua requiring her to explain her failure to issue invoices for unhatched
eggs for the months of January and February of that year. She explained that the delivery receipts were
delayed and overlooked; despite her explanation she was suspended for 10 days of March 8, 2002 to
March 19, 2002.

When she returned, she was advised to cease working because her application for retirement had been
approved; and then subsequently disapproved; and she was then advised to tender her resignation with
a request for financial assistance. She manifested her intention to return to work, but petitioner company
had replaced her with another employee, confiscated her gate pass and prevented her from entering the
premises ever again.

The petitioner asserts that she violated the company rule on timely issuance of the invoices. She was
suspended because the delay resulted in a delay of payment by the buyers, which depended on the
receipt of the invoices. Her application for retirement was denied because management did not
approve the benefits equivalent to 86% of her salary rate she applied for, but only 1/2 month for every
year of service. Hence the original action.

Issue: Whether Villa was (1) illegally dismissed, (2) entitled to overtime, and (3) entitled to service
incentive leave.

Ruling:

Illegal Dismissal: YES

The advice of Ngochua and De Guzman for Villa to resign and instead to request for financial assistance
was a strong and unequivocal indication of the petitioners desire to sever the employer-employee
relationship.

The desire of Villa to retire does not evidence of her intention to sever the relationship as it was enticed
to her as a promo. In that she believed she receive a greater benefit from petitioner companys offer.
Hence, her consent cannot be deemed to have been knowingly and freely given.

Overtime Pay: NO

Entitlement to overtime pay must be established by proof that overtime work was actually performed.
The burden of proving rests on the employee. Daily Time Records (DTR) does not substantially prove
actual performance beyond eight (8) hours. There must be prior authorization , without which
invalidates the claim to the benefit

Section 4 (c) Omnibus Rules Implementing the Labor Code; If the work performed was necessary, or if
benefitted the employer, or the employee could not abandon his work at the end of normal working

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hours because he had no replacement, all the time spent for such work shall be considered as hours
worked, if work was with the knowledge of the employer or his immediate supervisor.

Service Incentive Leave: YES

Grant of vacation or sick leave with pay of at least five days could be credited as compliance with the
duty to pay service incentive leave. However, the employer must still prove it fully paid the accrued
service incentive leave pay.

Evidence of the pay should have been presented at before the decision of the Labor Arbiter, not after it
of during appeal. Such practice is not tolerated. Costs against the petitioner.

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De La Salle Araneta University v. Juanito Bernardo (G.R. No. 190809 February 13,
2017)

Part-time employees with fixed-term employment are entitled to retirement benefits.

Employment extended beyond the compulsory retirement age: cause of action for retirement benefits
accrue only upon the termination of the extended employment.

FACTS:

On February 26, 2004, Bernardo filed a complaint against DLS-AU and its owner/manager, Dr. Oscar
Bautista (Dr. Bautista), for the payment of retirement benefits.

Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU (formerly
known as the Araneta University Foundation) on June 1, 1974 for an hourly rate of P20.00.

Bernardo taught for two semesters and the summer for the school year 1974-1975.

Bernardo then took a leave of absence from June 1, 1975 to October 31, 1977 when the Philippine
Government assigned him to work in Papua New Guinea.

When Bernardo came back in 1977, he resumed teaching at DLS-AU until October 12, 2003, the end of
the first semester for school year 2003-2004.

Bernardo's teaching contract was renewed at the start of every semester and summer. However, on
November 8, 2003, DLS-AU informed Bernardo through a telephone call that he could not teach at the
school anymore as the school was implementing the retirement age limit for its faculty members. As he
was already 75 years old, Bernardo had no choice but to retire. At the time of his retirement, Bernardo
was being paid P246.50 per hour.

Bernardo immediately sought advice from DOLE regarding his entitlement to retirement benefits after
27 years of employment. In letters dated January 20, 200 and February 3, 2004, the DOLE opined that
Bernardo was entitled to receive benefits under Republic Act No. 7641, otherwise known as the "New
Retirement Law," and its Implementing Rules and Regulations.

Yet, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo was not entitled to any kind
of separation pay or benefits. Dr. Bautista explained to Bernardo that as mandated by the DLS-AU's
policy and CBA, only full-time permanent faculty of DLS-AU for at least five years immediately
preceding the termination of their employment could avail themselves of the post- employment
benefits. As part-time faculty member, Bernardo did not acquire permanent employment under the
Manual of Regulations for Private Schools, in relation to the Labor Code, regardless of his length of
service.

Aggrieved by the repeated denials of his claim for retirement benefits, Bernardo filed before the NLRC
a complaint for non-payment of retirement benefits and damages against DLS-AU and Dr. Bautista.

DLS-AU and Dr. Bautista countered that Bernardo was hired as a part-time lecturer at the Graduate
School of DLS-AU to teach for the first semester of school year 2003-2004. As stated in the Contract for
Part-Time Faculty Member Semestral, Bernardo bound himself to teach "for the period of one semester
beginning June 9, 2003 to October 12, 2003." The contract also provided that "this Contract shall

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automatically expire unless expressly renewed in writing." Prior contracts entered into between
Bernardo and DLS-AU essentially contained the same provisions. On November 8, 2003, DLS-AU
informed Bernardo that his contract would no longer be renewed. DLS-AU and Dr. Bautista were
surprised when they received a letter from Bernardo on February 18, 2004 claiming retirement benefits
and Summons dated February 26, 2004 from the NLRC in relation to Bernardo's complaint.

DLS-AU and Dr. Bautista maintained that Bernardo, as a part-time employee, was not entitled to
retirement benefits. The contract between DLS-AU and Bernardo was for a fixed term, i.e., one semester.
That DLS-AU no longer renewed Bernardo's contract did not necessarily mean that Bernardo should be
deemed retired from service.

DLS-AU and Dr. Bautista also contended that Bernardo, as a part-time employee, was not entitled to
retirement benefits pursuant to any retirement plan, CBA, or employment contract. Neither was DLS-
AU mandated by law to pay Bernardo retirement benefits.

On December 13, 2004, the Labor Arbiter rendered its Decision dismissing Bernardo's complaint on the
ground of prescription, thus:

The age of 65 is declared as the compulsory retirement age under Article 287 of the Labor Code, as
amended. When the compulsory retirement age is reached by an employee or official, he is thereby
effectively separated from the service. As mentioned earlier, Bernardo is already 75 years old, and is
way past the compulsory retirement age. If he were indeed entitled to receive his retirement
pay/benefits, he should have claimed the same 10 years ago upon reaching the age of 65.

The Labor Arbiter also stressed that since this is a claim arising from employer-employee relationship,
it should have been filed within 3 years from the time the cause of action accrued (within 3 years from
the time he reached 65 years old), pursuant to Art. 291 of the Labor Code.

The NLRC, in its Decision dated June 30, 2008, reversed the Labor Arbiter's ruling, and found that
Bernardo timely filed his complaint for retirement benefits. The NLRC pointed out that DLS-AU and
Dr. Bautista, knowing fully well that Bernardo already reached the compulsory age of retirement of 65
years old, still extended Bernardo's employment. Thus, Bernardo's cause of action for payment of his
retirement benefits accrued only on November 8, 2003, when he was informed by DLS-AU that his
contract would no longer be renewed and he was deemed separated from employment. The principle
of estoppel was also applicable against DLS-AU and Dr. Bautista who could not validly claim
prescription when they were the ones who permitted Bernardo to work beyond retirement age.

As to Bernardo's entitlement to retirement benefits, the NLRC held that part-time employees are not
among those excluded from enjoying retirement benefits under Republic Act No. 7641.

NLRC denied the Motion for Reconsideration of DLS-AU and Dr. Bautista for lack of merit.

The Court of Appeals promulgated its Decision on June 29, 2009, affirming in toto the NLRC judgment.

The CA. denied MR by DLS-AU

Hence, DLS-AU lodged the present petition before the SC.

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ISSUE:

Whether part-time employees are excluded from the coverage of those entitled to retirement benefits
under RA 7641.

Whether the claim for retirement benefits filed beyond the period provided for under Art. 291 of the
Labor Code has prescribed.

RULING:

Bernardo is not questioning the termination of his employment, but only asserting his right to retirement
benefits.

Bernardo's employment with DLS-AU had always been for a fixed-term, i.e., for a semester or summer.
Absent allegation and proof to the contrary, Bernardo entered into such contracts of employment with
DLS-AU knowingly and voluntarily. Hence, Bernardo's contracts of employment with DLS-AU for a
fixed term were valid, legal, and binding.

Nonetheless, that Bernardo was a part-time employee and his employment was for a fixed period are
immaterial in this case. Bernardo is not alleging illegal dismissal nor claiming separation pay. Bernardo
is asserting his right to retirement benefits given the termination of his employment with DLS-AU when
he was already 75 years old.

As a part-time employee with fixed-term employment, Bernardo is entitled to retirement benefits.

Republic Act No. 7641 is a curative social legislation. It precisely intends to give the minimum retirement
benefits to employees not entitled to the same under collective bargaining and other agreements. It also
applies to establishments with existing collective bargaining or other agreements or voluntary
retirement plans whose benefits are less than those prescribed in said law.

RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of their
position, designation, or status and irrespective of the method by which their wages are paid. They shall
include part-time employees, employees of service and other job contractors and domestic helpers or
persons in the personal service of another.

The only exemptions specifically identified by Republic Act No. 7641 and its Implementing Rules are:
(1) employees of the National Government and its political subdivisions, including government-owned
and/or controlled corporations, if they are covered by the Civil Service Law and its regulations; and (2)
employees of retail, service and agricultural establishments or operations regularly employing not more
than 10 employees.

Based on Republic Act No. 7641 and its Implementing Rules, Bernardo, as a part-time employee of
DLSAU, is entitled to retirement benefits.

Bernardo's employment was extended beyond the compulsory retirement age and the cause of action
for his retirement benefits accrued only upon the termination of his extended employment with DLS-
AU.

The cause of action for Bernardo's retirement benefits only accrued after the refusal of DLS-AU to pay
him the same, clearly expressed in Dr. Bautista's letter dated February 12, 2004. Hence, Bernardo's

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complaint, filed with the NLRC on February 26, 2004, was filed within the three-year prescriptive period
provided under Article 291 of the Labor Code.

Even granting arguendo that Bernardo's cause of action already accrued when he reached 65 years old,
the doctrine of equitable estoppel must be applied in this case. DLS-AU, in this case, not only kept its
silence that Bernardo had already reached the compulsory retirement age of 65 years old, but even
continuously offered him contracts of employment for the next 10 years. It should not be allowed to
escape its obligation to pay Bernardo's retirement benefits by putting entirely the blame for the deferred
claim on Bernardo's shoulders.

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185456 OTHER SPECIAL BENEFITS

185457 Reyes vs. NLRC et al. (GR No. 160233 August 8, 2007)

citing Boie Takeda Chemicals vs. Dela Serna

FACTS: Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City
on August 12, 1977. He was eventually appointed as unit manager of Sales Department-South Mindanao
District, a position he held until his retirement on November 30, 1997. Thereafter, he received a letter
regarding the computation of his separation pay. Insisting that his retirement benefits and 13th month
pay must be based on the average monthly salary of P42,766.19, which consists of P10,919.22 basic salary
and P31,846.97 average monthly commission, petitioner refused to accept the check issued by private
respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of
the NLRC for retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial
assistance, service incentive leave pay, damages and attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine
Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that commissions
earned by salesmen form part of their basic salary. Private respondent counters that petitioner knew
that the overriding commission is not included in the basic salary because it had not been considered as
such for a long time in the computation of the 13th month pay, leave commissions, absences, and
tardiness.

ISSUE: Whether or not the average monthly sales commission of thirty-one thousand eight hundred
forty-six and 97/100 (Php31,846.97) should be included in the computation of his retirement benefits
and 13th month pay.

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

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

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

In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or
conditions for its payment, which indubitably are factual in nature for they will require a re-examination
and calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computation of his
retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as

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amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides:
Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract In the absence of a
retirement plan or agreement providing for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which
is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole
year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean
fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than
five (5) days of service incentive leaves.

Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing
his retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the
form of profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when
these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing
statements, they are properly excluded in computing retirement pay. However, sales commissions
which are effectively an integral portion of the basic salary structure of an employee, shall be included
in determining the retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding
to his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding
commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions' in the
same sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not
salesmen; they do not effect any sale of article at all. Therefore, any commission which they receive is
certainly not the basic salary which measures the standard or amount of work of complainant as Unit
Manager. Accordingly, the additional payments made to petitioner were not in fact sales commissions
but rather partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine
in Boie Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions
are additional pay that does not form part of the basic salary, applies to the present case. Aside from the
fact that as unit manager petitioner did not enter into actual sale transactions, but merely supervised
the salesmen under his control, he did not regularly receive the disputed commissions. Only when the
salesmen were able to collect from the sale transactions can petitioner receive the commissions.
Conversely, if no collections were made by the salesmen, then petitioner would receive no commissions
at all. In fine, the commissions which petitioner received were not part of his salary structure but were
profit-sharing payments and had no clear, direct, or necessary relation to the amount of work he actually
performed. The collection made by the salesmen from the sale transactions was the profit of private
respondent from which petitioner had a share in the form of a commission. Hence, petition is denied.

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185458 Acro Metal Products Co., Inc., et. Al., vs Samahan ng mga Manggagawa
sa Acro

185459 Metal-NAFLU (G.R. No. 170734 May 14, 2008)

FACTS: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is
the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the
13th month pay, bonus, and leave encashment of three union members in amounts proportional to the
service they actually rendered in a year, which is less than a full twelve (12) months. Respondent
protested the prorated scheme, claiming that on several occasions petitioner did not prorate the
payment of the same benefits to seven (7) employees who had not served for the full 12 months.
According to respondent, the prorated payment violates the rule against diminution of benefits under
Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and
Mediation Board (NCMB).

ISSUE: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of
actual service rendered constitutes voluntary employer practice and, consequently, whether or not the
prorated payment of the said benefits constitutes diminution of benefits under Article 100 of the Labor
Code.

RULING: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued, or eliminated by the employer. The principle of non-diminution of benefits is founded on
the Constitutional mandate to "protect the rights of workers and promote their welfare and to afford
labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that
all doubts in the implementation and interpretation of this Code, including its implementing rules and
regulations shall be rendered in favor of labor.

Jurisprudence is replete with cases which recognize the right of employees to benefits which were
voluntarily given by the employer and which ripened into company practice. Thus, in Davao Fruits
Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included
in the computation of the 13th month pay those items that were expressly excluded by the law, we held
that the act which was favorable to the employees though not conforming to law had thus ripened into
a practice and could not be withdrawn, reduced, diminished, discontinued, or eliminated. In Sevilla
Trading Company v. Semana, we ruled that the employers act of including non-basic benefits in the
computation of the 13th month pay was a voluntary act and had ripened into a company practice which
cannot be peremptorily withdrawn.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily,
and consistently granting full benefits to its employees regardless of the length of service rendered.
True, there were only a total of seven employees who benefited from such a practice, but it was an
established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum
number of years within which a company practice must be exercised in order to constitute voluntary
company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner
cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported
only by an affidavit of its manufacturing group head. Hence, petition was denied.

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185460 Universal Robina Sugar Milling Corp. vs Caballeda (GR No. 156644 July
28, 2008)

FACTS: Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic corporation
engaged in the sugar milling business and petitioner Renato Cabati is URSUMCO's manager.
Respondent Agripino Caballeda (Agripino) worked as welder for URSUMCO from March 1989 until
June 23, 1997 with a salary of P124.00 per day, while respondent Alejandro Cadalin (Alejandro) worked
for URSUMCO as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandum establishing
the company policy on Compulsory Retirement (Memorandum) of its employees. The memorandum
provides that all employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall
be considered retired on May 31, 1991.

On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate labor
organization and the recognized sole and exclusive bargaining representative of all the monthly and
daily paid employees of URSUMCO, of which Alejandro was a member, entered into a Collective
Bargaining Agreement (CBA). Article XV of the said CBA particularly provided that the retirement
benefits of the members of the collective bargaining unit shall be in accordance with law.

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced to retire by
URSUMCO. Agripino averred that URSUMCO illegally dismissed him from employment on June 24,
1997 when he was forced to retire upon reaching the age of sixty (60) years old. Upon the termination
of his employment, he accepted his separation pay and applied for retirement benefits with the Social
Security System (SSS). Earlier, on April 15, 1997, Alejandro turned 60 years old. On May 28, 1997, he
filed his application for retirement with URSUMCO, attaching his birth and baptismal certificates. On
July 23, 1997, he accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.

Thereafter, on August 6, 1997, Agripino filed a Complaint for illegal dismissal, damages, and attorneys
fees before the Labor Arbiter (LA) of Dumaguete City. He alleged that his compulsory retirement was
in violation of the provisions of Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.

On August 26, 1997, Alejandro likewise filed a Complaint for illegal dismissal, underpayment of
retirement benefits, damages, and attorneys fees before the LA, alleging that he was given only 15 days
per year of service by way of retirement benefits and further assails that his compulsory retirement was
discriminatory considering that there were other workers over sixty (60) years of age who were allowed
to continuously report for work.

ISSUES: Whether respondents were illegally terminated on account of compulsory retirement or the
same voluntarily retired.

RULING: SC ruled in favor of the respondents. Retirement is the result of a bilateral act of the parties,
a voluntary agreement between the employer and the employee whereby the latter, after reaching a
certain age, agrees to sever his or her employment with the former. The age of retirement is primarily
determined by the existing agreement between the employer and the employees. However, in the
absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code
as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum
age for optional retirement is 60 years.

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In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory
retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement
benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the
Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes
place at age 65, while the second is primarily determined by the collective bargaining agreement or
other employment contract or employer's retirement plan. In the absence of any provision on optional
retirement in a collective bargaining agreement, other employment contract, or employer's retirement
plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65
years, provided he has served at least five years in the establishment concerned. That prerogative is
exclusively lodged in the employee.

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy.
Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his
application for retirement, submitted all the documentary requirements, accepted the retirement
benefits, and executed a quitclaim in favor of URSUMCO. Respondents claim otherwise, contending
that they were merely forced to comply as they were no longer given any work assignment and
considering that the severance of their employment with URSUMCO is a condition precedent for them
to receive their retirement benefits.

Generally, the law looks with disfavor on quitclaims and releases by employees who have been
inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities and frustrate just claims of employees. They are frowned upon as contrary to public
policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the
acceptance of benefits therefrom does not amount to estoppels.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is
clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the
differential on his retirement benefits. On the other hand, Agripino was actually and totally deprived of
his retirement benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that the quitclaim was
voluntarily entered into. In previous cases, we have considered, among others, the educational
attainment of the employees concerned in upholding the validity of the quitclaims which they have
executed in favor of their employers.

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185461 Cercado vs. Uniprom, Inc. (GR No. 199338 January 21, 2013)

FACTS: Petitioner Lourdes Cerdaco was an employee of UNIPROM Inc. for 22 years since December
15, 1978. When respondent came up with a retirement plan, sometime in 1980 and then amended in
2001, which provides that any employee with a minimum of 20 years of service, regardless of age, may
be retired at the option of the employer. In December 2000, UNIPROM implemented a company-wide
retirement program, including herein petitioner. She was offered an early retirement package
amounting to P171, 982.90 but Cercado rejected the offer. UNIPROM exercised its option under the
retirement plan and decided to retire petitioner effective February 15, 2001 so she was no longer given
any work assignment after the said date. This prompted the petitioner to file a complaint for illegal
dismissal before the Labor Arbiter, alleging that UNIPROM did not have a bona fide retirement plan,
and even if there was, she didnt consent thereto. Respondent averred that Cercado was automatically
covered by the retirement plan when she agreed to the companys rules and regulations, and that her
retirement was an exercise of management prerogative.

ISSUES: Whether or not UNIPROM has a bona fide retirement plan Whether or not petitioner was
validly retired pursuant thereto

RULING: Petition is meritorious. Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the latter, after reaching a certain age,
agrees to sever his or her employment with the former.

Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as amended by R.A 7641,
pegs the age for compulsory retirement at 65 years old, while the minimum age for optional retirement
is set at 60 years. However, an employer is free to impose a retirement age earlier than the foregoing
mandates. This has been upheld in numerous cases as a valid exercise of management prerogative.

In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for
22 years, pursuant to the companys retirement plan, which provides that employees who have
rendered at least 20 years of service can be retired at the option of the company. Respondents retirement
plan can be expediently stamped with validity and justified under the all-encompassing phrase
management prerogative.

Petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that a retirement plan
giving the employer the option to retire its employees below the ages provided by law must be assented
to and accepted by the latter, otherwise its adhesive imposition will amount to a deprivation of property
without due process. In decided cases, the retirement plans were either embodied in the CBA, or
established after consultations and negotiations with the employees bargaining representative. The
consent of the employees to be retired even before the statutory retirement age of 65 years was thus
clear and unequivocal. Acceptance by the employees of an early retirement age must be explicit,
voluntary, free, and uncompelled.

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185462 Radio Mindanao Network Inc., et al., vs Ybarola, Jr. Et al. (GR No.
198662 September 12, 2012)

FACTS: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by Radio Mindanao Network (RMN). They eventually became account
managers, soliciting advertisements, and servicing various clients of RMN.

On September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

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

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

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

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding the
"proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and
Ybarola and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than two years of service with the
company; he was not shortchanged and no essential unfairness took place. In this case, as the CA noted,
the separation pay the respondents each received was deficient by at least P400,000.00; thus, they were
given only half of the amount they were legally entitled to. To be sure, a settlement under these terms
is not and cannot be a reasonable one, given especially the respondents' length of service 25 years for
Ybarola and 19 years for Rivera. The CA was correct when it opined that the respondents were in dire
straits when they executed the release/quitclaim affidavits. Without jobs and with families to support,
they dallied in executing the quitclaim instrument, but were eventually forced to sign given their
circumstances.

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185463 Padillo vs Rural Bank of Nabunturan Inc. (G.R. No. 199338 January 21,
2013)

FACTS: Petitioner, the late Eleazar Padillo (Padillo), was an employee of respondent Rural Bank of
Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems in 2003, the Bank took out
retirement/insurance plans with Philippine American Life and General Insurance Company (Philam
Life) for all its employees in anticipation of its possible closure and the concomitant severance of its
personnel. Respondent Mark Oropeza is the president and major stockholder of the bank.

Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to effectively
pursue his work. He wrote a letter addressed to Oropeza expressing his intention to avail of an early
retirement package. Despite several follow-ups, his request remained unheeded. Not having received
his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid
retirement benefits.

The Labor Arbiter dismissed Padillos complaint on the ground that the latter did not qualify to receive
any benefits under Article 300 of the Labor Code as he was only fifty-five (55) years old when he
resigned, while the law specifically provides for an optional retirement age of sixty (60) and compulsory
retirement age of sixty-five (65).

Padillo elevated the matter to the NLRC. The NLRC reversed the Labor Arbiters ruling. Aggrieved,
Oropeza and the Bank filed a petition for certiorari with the CA. The CA reversed the NLRCs ruling
but with modification. It directed the respondents to pay Padillo the amount of P50,000.00 as financial
assistance exclusive of the P100,000.00 Philam Life Plan benefit.

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to his death) filed the
instant petition before the Supreme Court.

ISSUE: W/N Padillo is entitled to claim for separation and retirement benefits under the Labor Code?

RULING: The petition is partly meritorious.

LABOR LAW: disease as ground for termination; retirement benefits

At the outset, it must be maintained that the Labor Code provision on termination on the ground of
disease under Article 297 does not apply in this case, considering that it was Padillo and not the Bank
who severed the employment relations. A plain reading of the Article 297 of the Labor Code clearly
presupposes that it is the employer who terminates the services of the employee found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to his health
as well as to the health of his co-employees. It does not contemplate a situation where it is the employee
who severs his or her employment ties.

What remains applicable, however, is the Labor Code provision on retirement. In the absence of any
applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve
at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2)
month salary for every year of service, with a fraction of at least six (6) months being considered as one
whole year. Notably, these age and tenure requirements are cumulative and non- compliance with one
negates the employees entitlement to the retirement benefits under Article 300 of the Labor Code
altogether.

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In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any
other equivalent contract between the parties which set out the terms and condition for the retirement
of employees, with the sole exception of the Philam Life Plan which premiums had already been paid
by the Bank.

Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served
for twenty-nine (29) years he, however, fell short with respect to the sixty (60) year age requirement
given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the
proceeds due under the Philam Life Plan, petitioners claim for retirement benefits must be denied.

Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an
increased amount. With a veritable understanding that the award of financial assistance is usually the
final refuge of the laborer, considering as well the supervening length of time which had sadly overtaken
the point of Padillos death an employee who had devoted twenty-nine (29) years of dedicated service
to the Bank the Court, in light of the dictates of social justice, holds that the CAs financial assistance
award should be increased from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit
receivable by the petitioners under the Philam Life Plan which remains undisputed.

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185464 Grace Christian High School vs Lavandera (G.R. No. 177845 August 20,
2014)

FACTS: Petitioner Grace Christian High School is an educational institution offering preparatory,
kindergarten and secondary courses at the Grace Village in Quezon City. Private respondent Grace
Village Association, Inc., is an organization of lot and/or building owners, lessees, and residents at
Grace Village, while private respondents Alejandro G. Beltran and Ernesto L. Go were its president and
chairman of the committee on election. It appears that a committee of the board of directors prepared a
draft of an amendment to the by-laws which says that Grace Christian High school will have a
permanent director of the association. This draft was never presented to the general membership for
approval. Nevertheless, the petitioner was given a permanent seat in the board of directors of the
association. The association committee on election informed that the petitioners permanent seat in
board is invalid because the majority of its members never approved it. Hence, they will have an
election. The petitioner school requested the cancellation of the election, the association denied. So, the
petitioner school instituted an action to the Home Insurance Guaranty Corporation but their action was
denied. The board adopted a resolution declaring the 1975 provision null and void for lack of approval
by members of the association and the 1968 by-laws to be effective. The petitioner school appealed to
the CA but CA ruled that the amended by laws in 1975 is null and void.

ISSUE: W/N Grace Christian High school can have permanent seat in board as director?

RULING: No. The former and present corporation law leave no room for doubt as to their meaning: the
board of directors of corporations must be elected from among the stockholders or members. There may
be corporations in which there are unelected members in the board but it is clear that in the examples
cited by petitioner the unelected members sit as ex officio members, i.e., by virtue of and for as long as
they hold a particular office. Nor can petitioner claim a vested right to sit in the board on the basis of
practice. Practice, no matter how long continued, cannot give rise to any vested right if it is contrary
to law. Even less tenable is petitioners claim that its right is coterminous with the existence of the
association.

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185465 Goodyear Philippines Inc., and Remegio M. Ramos vs. Marina L. Angus
(G.R. No. 185466, November 12, 2014)

Principle: In the absence of an express or implied prohibition against it, collection of both retirement
benefits and separation pay upon severance from employment is allowed.

FACTS:

Angus was employed by Goodyear on November 16, 1966 and occupied the position of Secretary to the
Manager of Quality and Technology.

Consequently, on September 19, 2001, Angus received from Ramos, the Human Resources Director of
Goodyear, a letter informing her of her termination due to her position being abolished for being
redundant or no longer necessary and also telling her that management has decided to grant her early
retirement benefit at 47 days per year.

Upon receipt, Angus responded through a letter suggesting that she be given a premium of additional
3 days for every year of service which is only 6.3% or a total of 50 days.

In response to Angus' protest, Ramos wrote her a letter dated November 29, 2001 explaining that the
company has already offered her the most favorable separation benefits due to redundancy.

In reply, Angus reiterated her claim for both separation pay and early retirement benefits. She also
demanded that she be given a copy of the Notice of Redundancy filed with the DOLE and a copy of the
specific provisions in the Retirement Plan, CBA and Employment Contract which could justify the
prohibition against the grant of both to a separated employee as asserted by petitioners. However,
Ramos merely reminded Angus to claim her checks and brushed aside her demands.

Angus finally accepted a check in the amount of P1,958,927.89 purportedly inclusive of all termination
benefits computed at 47 days' pay per year of service. She likewise executed a Release and Quitclaim in
favor of Goodyear.

Angus then filed with the Labor Arbiter a complaint for illegal dismissal with claims for separation pay,
damages and attorney's fees against petitioners.

Labor Arbiter upheld the validity of Angus' termination from employment. It likewise declared that the
amount she received from the company was actually payment of separation pay due to redundancy.
Anent her claim for both separation pay and retirement benefits, the Labor Arbiter held that the grant
of both is not allowed under the Retirement Plan/CBA.

The NLRC affirmed the ruling of the Labor Arbiter.

CA rendered a Decision partially granting Angus' Petition. While it found her dismissal valid in both
substance and procedural aspects, it declared Angus entitled to separation pay in addition to the
retirement pay she already received.

ISSUE: Whether or not the Court of Appeals erred in declaring that the respondent is entitled to
separation pay in addition to the retirement pay she already received.

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RULING:

YES. The Court ruled that an employee's right to receive separation pay in addition to retirement
benefits depends upon the provisions of the company's Retirement Plan and/or CBA.

Here, petitioners allege that there is a provision in the last CBA against the recovery of both retirement
benefits and separation pay. To support their claim, petitioners submitted a copy of what appears to be
a portion of the company CBA.

The same, however, can hardly be considered as substantial evidence because it does not appear to be
an integral part of Goodyear's CBA. Even assuming that it is, it would still not suffice as there is no
showing if the CBA under which the said provision is found was the one in force at the time material to
this case.

On the other hand, Angus presented the parties' 2001-2004 CBA and upon examination of the same, the
Court agrees with her that it does not contain any restriction on the availment of benefits under the
company's Retirement Plan and of separation pay.

Moreover, the Court agrees with the CA that the amount Angus received from petitioners represented
only her retirement pay and not separation pay.

In fact, petitioners were even explicit in stating in the said letter that the amount she was to receive
would come from the company's Pension Fund, which, as correctly asserted by Angus, was created to
cover retirement bene t payment of employees.

Retirement benefits and separation pay are not mutually exclusive. Retirement benefits are a form of
reward for an employee's loyalty and service to an employer and are earned under existing laws, CBAs,
employment contracts and company policies.

On the other hand, separation pay is that amount which an employee receives at the time of his
severance from employment recoverable in instances enumerated under Articles 283 and 284 of the
Labor Code or in illegal dismissal cases when reinstatement is not feasible.

In the case at bar, Article 283 clearly entitles Angus to separation pay apart from the retirement benefits
she received from petitioners.

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185466 Banco De Oro Unibank vs Sagaysay (G.R. No. 214961 September 16,
2015)

FACTS: On May 16, 2006, respondent Guillermo Sagaysay (Sagaysay) was hired by petitioner Banco De
Oro Unibank, Inc., (BDO) as Senior Accounting Assistant in its San Jose, Nueva Ecija, branch as a result
of a merger with United Overseas Bank (UOB), with BDO as the surviving bank. Sagaysay was
previously employed in UOB from 2004 to 2006 or for two (2) years. Prior thereto, he worked for
Metropolitan Bank and Trust Co. (Metrobank) from 1976 to 2004 for a period of twenty-eight (28) years.

In a letter, 6 dated January 8, 2010, BDO informed Sagaysay that, pursuant to the retirement policy of
the bank which mandated its retirement age to be sixty (60), he would be formally retired effective
September 1, 2010, a few days after his 60th birthday. The normal or compulsory retirement age of the
bank was based on its retirement plan 7 which was implemented on July 1, 1994, Section 1, Article V.

In an e-mail, 9 dated July 27, 2010, Sagaysay wrote that, although the time had come that the BDO
Retirement Program would be implemented to those reaching the age of sixty (60), he requested that his
services be extended because he had an outstanding loan and his children were still in college. He
assured BDO that he was healthy and could still perform his duties in the branch. BDO denied

Sagaysay' s request.

In another e-mail, dated August 19, 2010, Sagaysay appealed to BDO to extend his service for 8.5 months
or up to May 16, 2011 so that he could render at least five (5) years of employment which would entitle
him to 50% of his basic pay for every year of service upon his retirement. BDO denied Sagaysay's appeal
and retired him on September 1, 2010. As of his last day of work, he was earning a monthly salary of

P28,048.00.

Sagaysay then signed the Release, Waiver, and Quitclaim (quitclaim), dated October 22, 2010, for and in
consideration of P98,376.14. The quitclaim stated, among others, that in consideration of the foregoing
payment, Sagaysay released and discharged the bank, its affiliates and its subsidiaries from any action,
suit, claim or demand in connection with his employment.

On January 10, 2011, Sagaysay led a complaint 12 for illegal dismissal with prayer for reinstatement and
payment of back wages, moral damages, exemplary damages, and attorney's fee against BDO before the
Labor Arbiter (LA). He claimed that despite his appeal, BDO compulsory retired him on September 1,
2010. As a result, he and his family suffered damages in the amount of P2,225,403.00 which he would
have received if he was made to retire at the age of sixty-five (65).

LA: Ruled that Sagaysay was illegally dismissed because he was forced to avail of an optional retirement
at the age of sixty (60) which was contrary to the provisions of Article 287 of the Labor Code. he was
terminated on the basis of a provision in a retirement plan to which he did not freely assent. BDO took
advantage of his predicament and made him sign a quitclaim in exchange for a small consideration.

NLRC: Reversed and set aside the ruling of the LA. BDO's retirement plan, which mandated a normal
or compulsory retirement date at the age of sixty (60), was effective as early as June 1, 1994. The plan
was renamed Banco de Oro Multiemployer Retirement Plan on July 1, 2004, but the compulsory
retirement age of sixty (60) was preserved. When Sagaysay was employed on May 16, 2006, the
retirement plan was already in full force and effect. Thus, the NLRC concluded that when he accepted
his employment with BDO, he assented to the provisions of the retirement plan.

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CA: Reversed the NLRC ruling. Ruled that a retirement plan with no voluntary acquiescence on the part
of the employee was ineffective.

ISSUE: YES. W/N a retirement plan adopted before the employment of an employee is deemed binding
on the latter.

RULING: Sagaysay was sufficiently informed of the retirement plan and had consented to the retirement
plan of BDO before his compulsory retirement because the retirement plan was established 12 years
before Sagaysay was employed and no employee had earnestly questioned the retirement plan.

By accepting the employment offer of BDO, Sagaysay was deemed to have assented to all existing rules,
regulations, and policy of the bank, including the retirement plan.

BDO issued a memorandum regarding the implementation of its retirement program, reiterating that
the normal retirement date was the first of the month following the employees sixtieth birthday
addressed to all employees and officers. By this time Sagaysay was already an employee and he did not
deny being informed of such memorandum.

For four years, from the time he was employed until his retirement, yet he did not express his dissent.

Sagaysay earlier acknowledged the retirement program of BDO and even requested for an extension of
service. Moreover, he signed a quitclaim for and in consideration of P98,376.14 which discharged the
bank, its affiliates and its subsidiaries from any action, suit, claim or demand in connection with his
employment. When it is shown that the person executing the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim was credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. Court is of the view
that the quitclaim was validly executed.

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185467 Maureen P. Perez vs. Comparts Industries, Inc. (G.R. No. 197557 October
5, 2016)

FACTS:

Perez started her employment with CII on 16 July 1988 and became a regular employee thereof on 01
September 1988. After years of working and after several promotions, she was eventually appointed as
Marketing Manager. She held this position from 1998 up to 10 January 2009, the date when she resigned
from her work.

CII has a retirement program for its managerial employees or officers, wherein optional or early
retirement and optional retirement benefits are included. Prior to her resignation, Perez manifested he
intention to avail of the optional retirement program since she was already qualified to retire under it.
Her application was denied including all her subsequent applications for optional retirement.

Respondent justified its denial of petitioners application because under the retirement plan, it has the
option to grant or deny her application considering that it is experiencing financial crisis. Petitioner
argues that she is entitled to payment of optional/early retirement benefits based on company practice
since she had already completed the minimum number of years to avail of the optional retirement, she
has acquired a vested right to her optional retirement benefits.

ISSUE/S:

Whether or not Perez is entitled to payment of optional/early retirement program.

Whether or not payment of optional/early retirement benefits is based on company practice.

RULING:

At the outset, we note Perez intended to end her employment. Termination of employment by the
employee, does not entitle the employee to separation pay. Separation pay is the amount which an
employee receives at the time of his severance from employment, designed to provide the employee
with the wherewithal during the period that he is looking for another employment and is recoverable
only in instances enumerated under Articles 283 and 284 of the Labor Code or illegal dismissal cases
wherein reinstatement is not feasible. Besides, the Retirement Plan provides that it is not enough that
an employee of CII who wants to optionally retire meets the conditions for optional retirement. CII has
to give its consent for the optional retirement to operate. Clearly, the company has the exclusive
prerogative whether to approve the optional/early retirement plan because consent of the company
cannot be disregarded.

The isolated and random payments to managerial employees of either optional retirement benefits
under the CBA or separation pay due to retrenchment cannot be deemed as company practice that
would render the withholding of the benefit to Perez as diminution of benefits. To be considered a
company practice, the giving of benefits should have been done over a long period of time and must be
shown to have been consistent and deliberate. From the evidence of Perez, there is no element of
consistency or pattern in the employees granted optional retirement benefits by CII in the years prior to
the effectivity of the Retirement Plan. In addition, CII did not voluntarily grant the benefits to other
managerial/middle management employees.

Petition is denied.

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185468 Editha M. Catotocan vs. Lourdes School of Quezon City, Inc. (G.R. No.
213486 April 26, 2017)

FACTS:

In 1971, Editha Catotocan (Catotocan) started her employment in Lourdes School of Quezon City
(LSQC) as music teacher with a monthly salary of Thirty Thousand and Eighty-One Philippine Pesos
(Php30,081.00). By the school year 2005- 2006, she had already served for thirty-five (35) years.

LSQC has a retirement plan providing for retirement at sixty (60) years old, or separation pay depending
on the number of years of service.

On November 25, 2003, LSQC issued Administrative Order No. 2003-004 for all employees which is an
addendum on its retirement policy.

Catotocan and seven (7) other co-employees wrote to the Provincial Minister, Provincial Council on
Education of LSQC and appealed for the deferment of the implementation of the November 25, 2003
Addendum to the retirement plan, particularly the provision that normal retirement will commence
after completing "30 years of service" to the school. They, likewise, requested the priest of the Capuchin
Order who were running the school to allow them to retire when they have reached 60 years of age
instead so that they can "fully enjoy the fruits" of their labor.

In a Reply, LSQC informed them that the contested retirement age was the same as provided in the
retirement plans of other schools.

Catotocan, among other employees, wrote once more to the Provincial Minister and informed him that
they have conducted a survey among other private schools' retirement plans and the retirement age is
sixty years old regardless of the length of service. They believed that they do not deserve to be retired
and be rehired when they are, in fact, very much capable of doing their duties and responsibilities.

Fr. Troadio de los Santos informed them that since there is a pending case before the Arbitration Branch
of the NLRC entitled "Tiongson v. Lourdes School, Quezon City, et al.", it would be best if they just wait
for the final determination of the case by the appropriate tribunal.

Catotocan and her co-employees sought the intervention of the Department of Labor and Employment
National Capital Region (DOLE-NCR). A meeting between Catotocan and the teachers and the school
rector and treasurer ensued. During the said meeting, one of the complainants asked Atty. Villaflor if
the school can compel them to retire and Atty. Villaflor advised that doing so will be tantamount to
constructive dismissal. The meeting was re-scheduled to January 7, 2005, but the school officials no
longer attended.

However, LSQC Rector Fr. Cesar Acuin notified Catotocan that she will be retired by the end of the
school year for having served at least thirty (30) years.

Catotocan's retirement, effective June 2006, was communicated to her on January 27, 2006. In the same
letter, Catotocan was told that if she desires, she may signify in writing her intent to continue serving
the school on a contractual basis. She responded by submitting a "Letter of Intent" on February 14, 2006.

On May 11, 2006, LSQC appointed Catotocan as a Grade School Guidance Counselor for the school year

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2006-2007 under a contractual status effective June 1, 2006 until March 31, 2007. In 2006 and 2008,
Catotocan re-applied and was again appointed. However, in 2009, LSQC no longer considered her
application for the position.

Before the Labor Arbiter, Catotocan filed a complaint for illegal dismissal and monetary claims such as
claim for step increment, moral and exemplary damages, and attorney's fees. The Labor Arbiter
dismissed Catotocan's complaint for lack of merit. The Labor Arbiter pointed out that, although there
were exchanges of communications between her and respondents regarding her earlier opposition to
the school's retirement policy, her subsequent actions, however, such as opening her own individual
savings account where the retirement benefits were deposited and credited thereto, her subsequent
withdrawals therefrom, her application for contractual employment after her retirement, constituted
implied consent to the assailed addendum in LSQC's retirement policy and, in effect, abandoned her
objection thereto.

On appeal, the NLRC affirmed the Labor Arbiter's decision. The NLRC held that Catotocan performed
all the acts that a retired employee would do after retirement under the new school policy. These were
voluntary acts and she cannot be considered to have been forced to retire or to have been illegally
dismissed.

Catotocan moved for reconsideration, but the same was denied. Dissatisfied, Catotocan filed a petition
for certiorari before the Court of Appeals. The Court of Appeals dismissed the petition for lack of merit.

ISSUE:

Whether or not Catotocan was illegally dismissed.

HELD:

We deny the petition.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment
with the former.

Article 287 of the Labor Code is the primary provision which governs the age of retirement. Under this
provision, the existing agreement or employment contract primarily determine the retirement age. Only
in the absence of such an agreement shall the retirement age be fixed by law, which provides for a
compulsory retirement age at 65 years, while the minimum age for optional retirement is set at 60 years.

Jurisprudence is replete with cases discussing the employer's prerogative to lower the compulsory
retirement age subject to the consent of its employees. Thus, retirement plans, as in LSQC's retirement
plan, allowing employers to retire employees who have not yet reached the compulsory retirement age
of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express
language, the Labor Code permits employers, and employees to fix the applicable retirement age at 60
years or below, provided that the employees' retirement benefits under any CBA and other agreements
shall not be less than those provided therein.

Indeed, acceptance by the employees of an early retirement age option must be explicit, voluntary, free,
and uncompelled. While an employer may unilaterally retire an employee earlier than the legally
permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually

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instituted early retirement plan. In other words, only the implementation and execution of the option
may be unilateral, but not the adoption and institution of the retirement plan containing such option.

However, we already had the occasion to strike down the added requirement that an employer must
first consult its employee prior to retiring him, as this requirement unduly constricts the exercise by
management of its option to retire the said employee. Due process only requires that notice of the
employer's decision to retire an employee be given to the employee.

Here, the CA and the NLRC did not gravely abuse its discretion in finding that LSQC did not illegally
dismiss Catotocan from service. While it may be true that Catotocan was initially opposed to the idea of
her retirement at an age below 60 years, it must be stressed that Catotocan's subsequent actions after
her "retirement" are actually tantamount to her consent. We also did not find an iota of evidence
showing that LSQC exerted undue influence against Catotocan to acquire her consent on the school's
retirement policy.

While it is true that the acceptance of retirement pay and her eventual appointment as Guidance
Counselor did not amount to a waiver to contest her alleged forced retirement or illegal dismissal, the
voluntary nature of her acts from June 2006 up to June 2009 clearly belies her claim of illegal dismissal.
Obviously, appellant filed this complaint claiming illegal dismissal after she had benefited from the
proceeds of her retirement in June 2006, and received salaries as Guidance Counselor of the appellee
school for the subsequent three (3) years which ended in 2009. By her actuations, she is already estopped
from questioning the legality of the new retirement policy.

Indeed, the most telling detail indicative of Catotocan's voluntary assent to LSQC's retirement policy
was her correspondence with the latter following her "retirement." Catotocan availed of the privilege of
being re-hired after retirement by virtue of the "Contractual Employment of Retired Employees"
provision of LSQC's retirement policy. It must be emphasized that the re-hiring was exclusive only for
those employees who has n availed of the retirement benefits. Thus, since Catotocan has availed of this
contractual employment which is exclusively offered, she can no longer dispute that she has indeed
legitimately retired from employment, and was not illegally dismissed.

Although the Court has, more often than not, been inclined towards the plight of the workers and has
upheld their cause in their conflicts with the employers, such inclination has not blinded it to the rule
that justice is in every case for the deserving, to be dispensed in the light of the established facts and
applicable law and doctrine.

WHEREFORE, premises considered, the Decision dated October 29, 2013 and the Resolution dated July
15, 2014 of the Court of Appeals in CA-G.R. SP No. 120117 are hereby AFFIRMED.

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185469 Philippine Airlines, Inc. vs. Arjan T. Hassaram (G.R. No. 217730 June 5,
2017)

FACTS:

Hassaram filed a complaint against PAL for illegal dismissal and the payment of retirement benefits,
damages, and attorney's fees. He claimed that he had applied for retirement from PAL in August 2000
after rendering 24 years of service as a pilot, but that his application was denied. Instead, PAL informed
him that he had lost his employment in the company as of 9 June 1998, in view of his failure to comply
with the Return to Work Order issued by the Secretary of Labor against members of the Airline Pilots
Association of the Philippines (ALPAP) on 7 June 1998.

Hassaram argued that he was not covered by the Secretary's Return to Work Order; hence, PAL had no
valid ground for his dismissal. He asserted that on 9 June 1998, he was already on his way to Taipei to
report for work at Eva Air, pursuant to a four-year contract approved by PAL itself. Petitioner further
claimed that his arrangement with PAL allowed him to go on leave without pay while working for Eva
Air, with the right to accrue seniority and retire from PAL during the period of his leave.

PAL contended that (a) the LA had no jurisdiction over the case, which was a mere off-shoot of ALPAP's
strike, a matter over which the Secretary of Labor had already assumed jurisdiction; (b) the Complaint
should be considered barred by res judicata, forum shopping, and prescription; (c) the case should be
suspended while PAL was under receivership; and (d) if at all, Hassaram was entitled only to retirement
benefits of P5,000 for every year of service pursuant to the Collective Bargaining Agreement (CBA)
between PAL and ALPAP.

ISSUES: 1. Whether the amount received by Hassaram under the Plan should be deemed part of his
retirement pay

2. Whether Hassaram is entitled to receive retirement benefits under Article 287 of the Labor Code

RULING: We GRANT the Petition.

The amount received by Hassaram under the PAL Pilots' Retirement Benefit Plan must be considered
part of his retirement pay.

It is clear from the provisions of the Plan that it is the company that contributes to a "retirement fund"
for the account of the pilots. These contributions comprise the benefits received by the latter upon
retirement, separation from service, or disability. The PAL Pilots' Retirement Benefit Plan is a retirement
fund raised from contributions exclusively from PAL of amounts equivalent to 20% of each pilot's gross
monthly pay

The Court included the amount received from the Plan in the computation of the retirement pay of the
pilot involved in that case.

The same rule was later applied to Elegir v. Philippine Airlines, Inc.:

Consistent with the purpose of the law, the CA correctly ruled for the computation of the petitioner's
retirement benefits based on the two (2) PAL retirement plans because it is under the same that he will
reap the most benefits. Under the PAL-ALPAP Retirement Plan, the petitioner, who qualified for late

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retirement after rendering more than twenty (20) years of service as a pilot, is entitled to a lump sum
payment of P125,000.00 for his twenty-five (25) years of service to PAL.

xxx.

xxx

Apart from the abovementioned benefit, the petitioner is also entitled to the equity of the retirement
fund under PAL Pilots' Retirement Benefit Plan, which pertains to the retirement fund raised from
contributions exclusively from PAL of amounts equivalent to 20% of each pilot's gross monthly pay.

Considering that the very same retirement plan is involved in this petition, we adopt the
pronouncements in the above cases. We therefore rule that the amount of P4,456,817.75 received by
Hassaram from the PAL Plan formed part of his retirement pay. HEITAD

Hassaram's retirement pay should be computed on the basis of the retirement plans provided by PAL.
Interpreting the language of Article 287 of the Labor Code, it can be clearly inferred from the language
of the foregoing provision that it is applicable only to a situation where (1) there is no CBA or other
applicable employment contract providing for retirement benefits for an employee, or (2) there is a CBA
or other applicable employment contract providing for retirement benefits for an employee, but it is
below the requirement set by law.

It is clear from the records that Hassaram is a member of ALPAP and as such, is entitled to benefits from
both the retirement plans under the CBA and the Plan. The CBA expired only on 31 December 2000,
while Hassaram had applied for retirement earlier, on 31 August 2000. The provisions of the CBA are
therefore applicable as they would allow Hassaram to claim the following benefits under two separate
plans provided under the CBA: (a) the amount of P5,000 for every year of service under the PAL-ALPAP
Retirement Plan; and (b) an equity equivalent to 240% of his gross monthly salary for every year of
employment pursuant to the Plan.

In contrast, Article 287 would entitle a retiring pilot to the equivalent of only 22.5 days of his monthly
salary for every year of service. To stress, one-half (1/2) month salary means 22.5 days: 15 days plus 2.5
days representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for service
incentive leave. The Court thus considered this scheme as inferior to the retirement plans granted by
PAL to the latter's pilots.

Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5
days worth of salary for every year of service provided under Article 287 of the Labor Code cannot
match the 240% of salary or almost two and a half worth of monthly salary per year of service provided
under the PAL Pilots' Retirement Benefit Plan, which will be further added to the P125,000.00 to which
the petitioner is entitled under the PAL-ALPAP Retirement Plan.

We therefore declare that Hassaram's retirement benefits must be computed based on the retirement
plans of PAL, and not on Article 287 of the Labor Code. He is now entitled to claim only his remaining
benefits under the CBA, i.e., the amount of P120,000 (24 years x P5,000) for his 24 years of service to the
company.

-End-

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