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University of San Carlos

School of Law and Governance

LABOR STANDARDS
MIDTERM CASE DIGEST COMPILATION

Submitted by:
ALFECHE, WILFRED P.
EH405MC

Submitted to:
Atty. Jeerson M. Marquez
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TABLE OF CONTENTS

1) Applicable Laws 4

2) Basic Principles 4

3) Hiring of Employee 29

4) Wage and the Wage Rationalization Act 34

4.A) Violation of Wage Orders 34

5) Wage Enforcement and Recovery 45

6) Wage Protection Provisions and Prohibitions Regarding Wages 48

7) Payment of Wages 59

8) Conditions of Employment 60

9) Minimum Labor Standard Benefits 66

10) Other Special Benefits 81

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1. APPLICABLE LAWS

2. BASIC PRINCIPLES
Sonza vs. ABS-CBN
G.R. No. 138051; June 10, 2004

Facts:

Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") with the Mel and
Jay Management and Development Corporation ("MJMDC"). ABS-CBN was represented by its corporate ocers while
MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco ("TIANGCO"), as EVP
and Treasurer. Referred to in the Agreement as "AGENT," MJMDC agreed to provide SONZAs services exclusively to
ABS-CBN as talent for radio and television.

ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for the
second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.
SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in
Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay,
13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan ("ESOP").

Issue:

Whether Jay Sonza is an employee of ABS-CBN or an independent contractor.

Ruling:

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

Payment of Wages. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as
"SSS, Medicare, x x x and 13th month pay"20 which the law automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary
that they indicate more an independent contractual relationship rather than an employer-employee relationship.

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

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

Lazaro vs. Social Security Commission

G.R. No. 138254; July 30, 2004

Facts:

Private respondent Rosalina M. Laudato ("Laudato") filed a petition before the SSC for social security coverage and
remittance of unpaid monthly social security contributions against her three (3) employers. Among the respondents was
herein petitioner Angelito L. Lazaro ("Lazaro"), proprietor of Royal Star Marketing ("Royal Star"), which is engaged in the
business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales
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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 Laudato's social security contributions.

Issue:

Whether or not there exists an employee-employer relationship between Laudato and Royal Star Marketing.

Ruling:

SC ruled that there exists such relationship between the parties. It is an accepted doctrine that for the purposes of
coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of
the "control test," that is, whether the employer controls or has reserved the right to control the employee, not only as to
the result of the work done, but also as to the means and methods by which the same is accomplished.

Suce it to say, 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.

Phil. Global Comm. 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 rose when petitioner terminated his engagement.

In 1981, Dr. de Vera oered 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 fileda 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 dierence 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. The elements of an employer-
employee relationship are wanting in this case. The record are 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.

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. No. 164156; September 26, 2006

Facts:

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

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on dierent
dates. They were assigned at the news and public aairs, for various radio programs in the Cebu Broadcasting Station.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be eective during the period from December 11, 1996 to December 11, 1999. However, since
petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

In October 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of
Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages
against the petitioner before the NLRC. The Labor Arbiter rendered judgment in favor of the respondents, and declared
that they were regular employees of petitioner as such, they were awarded monetary benefits. NLRC armed the
decision of the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.

Issue:

Whether or not the respondents were considered regular employees of ABS-CBN.

Ruling:

SC ruled that Production Assistants (Pas) are regular workers. Thus, they are entitled to the benefits in the CBA between
ABS-CBN and its rank-and-file employees. It was held that where a person has rendered at least one year of service,
regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists, the reason being that a customary appointment is not indispensable
before one may be formally declared as having attained regular status.

The Court states that the primary standard, therefore, of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance
as sucient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity exists.

Additionally, respondents cannot be considered as project or program employees because no evidence was presented
to show that the duration and scope of the project were determined or specified at the time of their engagement. In the
case at bar, however, the employer-employee relationship between petitioner and respondents has been proven. 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. Respondents
did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship.
Respondents are highly dependent on the petitioner for continued work. 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. As regular employees, respondents are entitled to the
benefits granted to all other regular employees of petitioner under the CBA . Besides, only talent-artists were excluded
from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article
1702 of the New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living of the laborer.

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Francisco vs. NLRC

G.R. No. 170087; August 31, 2006

Facts:

Angelina Francisco was hired by Kasei Corporation during the 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 Liason Ocer to the City of Manila to secure permits for the operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and
perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei
Corporation reduced her salary to P2,500 per month which was until September. She asked for her salary but was
informed that she was no longer connected to the company. She did not anymore report to work since she was not paid
for her salary. She filed an action for constructive dismissal with the Labor Arbiter.

Issue:

Whether or not there was an employer-employee relationship.

Ruling:

SC held that there was such relationship. Francisco was constructively dismissed. To ascertain if such relationship
exists, the Court used two-tiered testcontrol test and economic reality test.

The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-
employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be used in
reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between
the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-
employee relationship.

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

The court observed the need to consider the existing economic conditions prevailing between the parties, in addition to
the standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining
the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of
the worker.

Thus, the determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employers
business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or
foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer
for his continued employment in that line of business. The proper standard of economic dependence is whether the
worker is dependent on the alleged employer for his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was
under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. It is therefore apparent
that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of
business.

There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and
engaged by the company for compensation, and is economically dependent upon respondent for her continued
employment in that line of business. Her main job function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and
engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, Respondent
Corporation had the power to control petitioner with the means and methods by which the work is to be accomplished.

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Nogales et. al. vs. Capitol Medical Center et. al.

G.R. No. 142625; December 19, 2006

Facts:

Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old, was under the exclusive
prenatal care of Dr. Oscar Estrada ("Dr. Estrada") beginning on her fourth month of pregnancy or as early as December
1975. Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Corazon and Rogelio
Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her
immediate admission to the Capitol Medical Center ("CMC"). t 6:13 a.m., Corazon started to experience convulsionsAt
6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, a 1.0 x 2.5
cm. piece of cervical tissue was allegedly torn.At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which
rapidly became profuse. Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post partum.

Issue:

Whether or not the Capitol Medical Center is solidarily liable.

Ruling:

SC held CMC solidarily liable together with Dr. Estrada. The doctrine of apparent authority was used to make CMC
vicariously liable even if Dr. Estrada is an independent contractor. Private hospitals, hire, fire and exercise real control
over their attending and visiting "consultant" sta. The basis for holding an employer solidarily responsible for the
negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for
his own acts but also for those of others based on the former's responsibility under a relationship of patria potestas.

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.

For a hospital to be liable under the doctrine of apparent authority, a plainti must show that: (1) the hospital, or its
agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be
negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of authority,
the plainti must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plainti acted in
reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. In the instant case,
CMC impliedly held out Dr. Estrada as a member of its medical sta. 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.

Coca-Cola Bottlers Phils. vs. Dr. Climaco

G.R. No. 146881; February 5, 2007

Facts:

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

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

The CA ruled that an employer-employee relationship existed.

Issue:

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

Ruling:

SC ruled that there is no such relationship between the parties. The Court, in determining the existence of an employer-
employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2)
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the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or the so-called
control test, considered to be the most important element.

The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no
employer-employee relationship exists between the parties. The Comprehensive Medical Plan, provided guidelines
merely to ensure that the end result was achieved, but did not control the means and methods by which respondent
performed his assigned tasks. In addition, the Court finds that the schedule of work and the requirement to be on call for
emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement.

Considering that there is no employer-employee relationship between the parties, the termination of the Retainership
Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of
respondent.

Calamba Medical Center vs. NLRC et. al.

G.R. No. 176484; November 25, 2008

Facts:

The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-spouses
Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) in March 1992 and August 1995,
respectively, as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts,
respondents were paid a monthly "retainer" of P4,800.00 each. It appears that resident physicians were also given a
percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in
addition to their fixed monthly retainer.

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

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

Dr. Trinidad issued to Dr. Lanzanas a memorandum asking her to explain within 24 hours why no disciplinary action
should be taken against him. Pending investigation, he was placed under a 30-day preventive suspension.

Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the said incident, any work
schedule after sending her husband Dr. Lanzanas the memorandum, nor inform her the reason therefor, albeit she was
later informed by the Human Resource Department (HRD) ocer that that was part of petitioner's cost-cutting measures.

Dr. Lanzanas filed a complaint for illegal suspension before the National Labor Relations Commission (NLRC)-Regional
Arbitration Board (RAB) IV. Dr. Merceditha subsequently filed a complaint for illegal dismissal.

Issues:

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

Whether or not the spouses-respondents were legally dismissed.

Ruling:

SC held that there exists such relationship. The spouses-respondents were illegally dismissed.

On the first issue. 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.

As priorly stated, private respondents maintained specific work-schedules, as determined by petitioner through its
medical director, which consisted of 24-hour shifts totaling forty-eight hours each week and which were strictly to be
observed under pain of administrative sanctions.

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

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On the second issue. Petitioner thus failed to observe the two requirements,before dismissal can be eected notice
and hearing which constitute essential elements of the statutory process; the first to apprise the employee of the
particular acts or omissions for which his dismissal is sought, and the second to inform the employee of the employer's
decision to dismiss him. Non-observance of these requirements runs afoul of the procedural mandate.

The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was the first and only time that he was
apprised of the reason for his dismissal. He was not aorded, however, even the slightest opportunity to explain his side.
His was a "termination upon receipt" situation. While he was priorly made to explain on his telephone conversation with
Miscala, he was not with respect to his supposed participation in the strike and failure to heed the return-to-work order.

As for the case of Dr. Merceditha, her dismissal was worse, it having been eected without any just or authorized cause
and without observance of due process. In fact, petitioner never proferred any valid cause for her dismissal except its
view that "her marriage to [Dr. Lanzanas] has given rise to the presumption that her sympath[y] [is] with her husband;
[and that when [Dr. Lanzanas] declared that he was going to boycott the scheduling of their workload by the medical
doctor, he was presumed to be speaking for himself [and] for his wife Merceditha."

Escasinas et. al. vs. Shangri-la

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-las Mactan
Island Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the NLRC a complaint for regularization, underpayment of wages, non-payment of
holiday pay, night shift dierential and 13th month pay dierential 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
whom it retained via Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code, as amended.
Respondent doctor for her part claimed that petitioners were already working for the previous retained physicians of
Shangri-la before she was retained by Shangri-la; and that she maintained petitioners services upon their request.

Issues:

Whether or not there was an employee-employer relationship between Shangri-La and the petitioners.

Whether or not Dr. Pepito is an independent contractor

Ruling:

SC ruled that there no such relationship. The petitioners are under the direct supervision of Dr. Pepito, an independent
contractor.

On the first issue. The resolution of the case hinges, in the main, on the correct interpretation of Art. 157 vis a vis Art. 280
and the provisions on permissible job contracting of the Labor Code, as amended. Under the foregoing provision,
Shangri-la, which employs more than 200 workers, is mandated to furnish its employees with the services of a full-
time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or
make available such medical and allied services to its employees, not necessarily to hire or employ a service provider.
The term full-time in Art. 157 cannot be construed as referring to the type of employment of the person engaged to
provide the services, for Article 157 must not be read alongside Art. 280[9] in order to vest employer-employee
relationship on the employer and the person so engaged. The phrase services of a full-time registered nurse should
thus be taken to refer to the kind of services that the nurse will render in the companys premises and to its employees,
not the manner of his engagement.

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

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

Tongkovs. The Manufacturers Life Insurance Co., Inc. November 7, 2008

G.R. No. 167622, November 07, 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.Tongkostarted 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 thatTongkos 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."
Tongkowas then terminated. Therefrom,Tongkofiled 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,Tongkofiled this petition.

Issues:

WONTongkowas an employee of Manulife

WONTongkowas illegally dismissed.

Ruling:

1) Yes. In the instant case, Manulife had the power of control overTongkothat would make him its employee. Several
factors contribute to this conclusion. In the Agreement dated July 1, 1977 executed betweenTongkoand 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 conduct such as the Agent Code of Conduct, Manulife Financial
Code of Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control
exercised by the company over Tongko. The fact that Tongko was obliged to obey and comply with the codes of
conduct was not disowned by respondents. Thus, with the company regulations and requirements alone, the fact that
Tongkowas an employee of Manulife may already be established. Certainly, these requirements controlled the means
and methods by whichTongkowas 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.

 Page 12

2) Yes. In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife argued that even
ifTongkois considered as its employee, his employment was validly terminated on the ground of gross and habitual
neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of Manulife. Manulife stated: In the
instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape up and altogether
disregarded the latter's advice resulting in his laggard performance clearly indicative of his willful disobedience of the
lawful orders of his superior. As private respondent has patently failed to perform a very fundamental duty, and that is
to yield obedience to all reasonable rules, orders and instructions of the Company, as well as gross failure to reach at
least minimum quota, the termination of his engagement from Manulife is highly warranted and therefore, there is no
illegal dismissal to speak of. It is readily evident from the above-quoted portions of Manulife's petition that it failed to
cite a single iota of evidence to support its claims. Manulife did not even point out which order or rule
thatTongkodisobeyed. More importantly, Manulife did not point out the specific acts thatTongkowas guilty of that
would constitute gross and habitual neglect of duty or disobedience. Manulife merely citedTongko's alleged "laggard
performance," without substantiating such claim, and equated the same to disobedience and neglect of duty.

Apropos thereto, Art. 277(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 whichTongko'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 thatTongkowas illegally dismissed. Moreover, as
to Manulife's failure to comply with the twin notice rule, it reasons thatTongkonot being its employee is not entitled to
such notices. Since we have ruled thatTongkois its employee, however, Manulife clearly failed to affordTongkosaid
notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

SEMBLANTE V. COURT OF APPEALS

GR No. 196426, August 15, 2011

Facts:

Petitioners assert that they were hired by respondents, as the ocial masiador and sentenciador, respectively, of the
cockpit sometime in 1993.

Amasiador 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 oversees the proper gang 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 masiador and sentenciador, Semblante receives PhP2,000 per week or a total of PhP8,000 per
month, while Pilar gets PhP3,500 a week or PhP14,000 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 eective that date. This prompted petitioners to file a complaint for
illegal dismissal against respondents.

Issue:

Whether or not there existed an employer-employee relationship between the petitioners and respondent.

Ruling:

Petitioners are NOT employees of respondents, since their relationship fails to pass muster the four-fold test of
employment We have repeatedly mentioned in countless decisions: (1) the selection and engagement of the employee;
 Page 13

(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, which is the
most important element.

As found by both the NLRC and the CA, respondents had no part in petitioners' selection and management; petitioners'
compensation was paid out of the arriba(which is a percentage deducted from 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. The rule on the posting of an appeal bond
cannot defeat the substantive rights of respondents to be free from an unwarranted burden of answering for an illegal
dismissal for which they were never responsible.

JOSE MEL BERNARTE V. PHILIPPINE BASKETBALL ASSOCIATION

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

Facts:
Petitioner Bernarte was invited to join the Philippine Basketball Association (PBA) as a referee. Consequently, he was
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. For instance, he was not made to sign a contract during the first conference of the All-
Filipino Cup which was from February 23, 2003 to June 2003. It was only during the second conference when he was
made to sign a one and a half month contract for the period July 1 to August 5, 2003.On January 15, 2004, Bernarte
received a letter from the Oce of the Commissioner advising him that his contract would not be renewed citing his
unsatisfactory performance on and o the court. It was a total shock for Bernarte who was awarded Referee of the year
in2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon. Respondents
aver, on the other hand, that Bernarte was not illegally dismissed because he was not an employee of the PBA. His
contract of retainer was simply not renewed. PBA had the prerogative of whether or not to renew his contract.

Issue:

Whether or not the repeated signing of a contract of retainer by a basketball referee is sucient to make him a
regular employee

Ruling:

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
employer's 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.

In the case at bar, the petitioner, a basketball referee of the PBA, is an independent contractor. There was no control over
the means and methods by which petitioner performs his work as a referee ociating a PBA basketball game. The
contractual stipulations in the retainer contracts do not pertain to, much less dictate, how and when petitioner will blow
the whistle and make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the
integrity of the professional basketball league.

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
105playing days a year, and they ociate games a tan 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 or
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. 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. Furthermore, the
applicable foreign case law declares that a referee is an independent contractor whose special skills and independent
judgment are required specifically for such position and cannot possibly be controlled by the hiring party.

 Page 14

LIRIO V. GENOVIA
GR No. 169757, November 23, 2011

Facts:

Respondent Wilmer D. Genovia was hired on Aug. 15, 2001 as studio manager by petitioner Cesar C. Lirio, owner of
Celkor Ad Sonicmix Recording Studio, to promote and sell the studios services to music enthusiasts and other
prospective clients. He received a monthly salary of P7,000.00 and additional commission of P100 per hour as recording
technician.

Respondent 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 everyday, but petitioner never kept a daily time record to avoid
paying the employees overtime pay.

In a complaint for illegal dismissal, petitioner invoked the defense that no employer-employee relationship exists
between him and respondent. Theirs is one of an informal partnership since they agreed to contribute money, property or
industry to a common fund with the intention of dividing the profits among themselves.

Issue:

Whether or not there existed an employer-employee relationship between the petitioners and respondent.

Ruling:

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,
which showed that respondent received a monthly salary of P7,000, with the corresponding deductions due to absences
incurred by respondent; and two copies of petty cash vouchers, 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. 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 sucient that the former has a right to wield the power.

On the other hand, petitioner failed to prove that his relationship with respondent was one of partnership. Such claim
was not supported by any written agreement.

CHARLIE JAO V. 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; 2 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 backwages, non-payment of
wages, damages and attorney's fees. 4

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
 Page 15

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 adavit in March 1996, 20 stating, among others, as follows:

1. 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 abovestated;

2. 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 adavit 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 adavit 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. A
finding on the existence of an employer-employee relationship will automatically warrant a finding of illegal dismissal,
considering that respondents did not state any valid grounds to dismiss petitioner.

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 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 aecting 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 adavits of some of the employees of BCC, the ID, and the signed checks, bills and receipts. Suce
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.

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 13111 month pay.

 Page 16

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 eective 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.

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 Coee 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 oered
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 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:

a) 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;

b) He could not choose the place of his performance;

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

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

 Page 17

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 aliated 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 disaliation 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 ocers and members of PSEA authorizing their local union to disaliate from its mother
federation. PSEA subsequently aliated 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 ocers of PSEA-PAFLU to continue occupying their positions as elected
ocers 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 ocers of PSEA-PAFLU as additional party respondents. PAFLU
averred that the local ocers 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 disaliation was an inter-union conflict
which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer aliated with PAFLU, Ayroso or PAFLU for
that matter had no personality to file the instant complaint.

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

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 ocers 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 aliated
but, instead, to the will of their members. The sole essence of aliation is to increase, by collective action, the common
bargaining power of local unions for the eective 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 aliation upon the terms laid down in the agreement which brought such aliation into existence.

There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to
disaliate 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 disaliation.
Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of
 Page 18

92.5% of the total union membership supported the claim of disaliation and had in fact disauthorized 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 aliating
with NCW and entering into a collective bargaining agreement in behalf of its members.

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

Tesoro et al., vs. Metro Manila Retreaders Inc., et al.,

GR No. 171482, March 12, 2014

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 oered 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 dierent 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) 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 dierent prices, renders
dierent 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.

 Page 19

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.

ROYALE HOMES MARKETING CORPORATIONvs. FIDEL P. 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, the last of which covered the period January 1 to
December 31, 2003.

Alcantara filed a Complaint for Illegal Dismissalagainst Royale. Alcantara alleged that he is a regular employee of Royale
Homes since he is performing tasks that are necessary and desirable to its business and that the acts of the executive
ocers of Royale Homes amounted to his dismissal from work without any valid or just cause and in gross disregard of
the proper procedure for dismissing employees.

Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the appointment
paper of Alcantara is clear that it engaged his services as an independent sales contractor for a fixed term of one year
only. He never received any salary, 13th month pay, overtime pay or holiday pay from Royale Homes as he was paid
purely on commission basis. In addition, Royale Homes had no control on how Alcantara would accomplish his tasks
and responsibilities as he was free to solicit sales at any time and by any manner which he may deem appropriate and
necessary. According to Royale Homes, Alcantara decided to leave the company after his wife, who was once
connected with it as a sales agent, had formed a brokerage company that directly competed with its business, and even
recruited some of its sales agents. Two months after he relinquished his post, however, Alcantara appeared in Royale
Homes and submitted a letter claiming that he was illegally dismissed.

The Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale Homes and that the pre-
termination of his contract was against the law. The 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 his employment contract. The CA
promulgated its Decision granting Alcantaras Petition and reversing the NLRCs Decision. Applying the four-fold and
economic reality tests, it held that Alcantara is an employee of Royale Homes.

Issue:

Whether or not Alcantara was an independent contractor or an employee of Royale Homes.

Ruling:

The primary evidence of the nature of the parties relationship in this case is the written contract that they signed and
executed in pursuance of their mutual agreement. 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.

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
employers power to control the employee with respect to the means and methods by which the work is to be
accomplished.

However, 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
 Page 20

employer-employee relationship. In Insular Life Assurance Co., Ltd. v. National Labor Relations Commission it was
pronounced that:

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

Notably, Alcantara was not required to observe definite working hours.Except for soliciting sales, Royale Homes did not
assign other tasks to him. He had full control over the means and methods of accomplishing his tasks as he can "solicit
sales at any time and by any manner which [he may] deem appropriate and necessary." He performed his tasks on his
own account free from the control and direction of Royale Homes in all matters connected therewith, except as to the
results thereof. This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere
independent contractor.

FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU

G.R. NO. 204944-45 DECEMBER 3, 2014

Facts:

Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a news correspondent/producer tasked
to report Philippine news to Fuji through its Manila Bureau field oce. The employment contract was initially for one year,
but was successively renewed on a yearly basis with salary adjustments upon every renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the Chief of News
Agency of Fuji, Yoshiki Aoki, informed the former that the company had a problem with renewing her contract
considering her condition. Arlene insisted she was still fit to work as certified by her attending physician.

After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In consideration
thereof, Arlene acknowledged the receipt of the total amount of her salary from March-May 2009, year-end bonus, mid-
year bonus and separation pay. However, Arlene executed the non-renewal contract under protest.

Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC, alleging that she was forced to
sign the non-renewal contract after Fuji came to know of her illness. She also alleged that Fuji withheld her salaries and
other benefits when she refused to sign, and that she was left with no other recourse but to sign the non-renewal
contract to get her salaries.

Issues:

1) Was Arlene an independent contractor?

2) Was Arlene a regular employee?

3) Was Arlene illegally dismissed?

4) Did the Court of Appeals correctly awarded reinstatement, damages and attorneys fees?

Ruling:

1) Arlene was not an independent contractor.

Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired because of her skills. Her
salary was higher than the normal rate. She had the power to bargain with her employer. Her contract was for a fixed
term. It also stated that Arlene was not forced to sign the non-renewal agreement, considering that she sent an email
with another version of her non-renewal agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and supervision over her work; (2) that she
based her work on instructions from Fuji; (3) that the successive renewal of her contracts for four years indicated that her
work was necessary and desirable; (4) that the payment of separation pay indicated that she was a regular employee; (5)
that the Sonza case is not applicable because she was a plain reporter for Fuji; (6) that her illness was not a ground for
her dismissal; (7) that she signed the non-renewal agreement because she was not in a position to reject the same.

The level of protection to labor should vary from case to caese. When a prospective employee, on account of special
skills or market forces, is in a position to make demands upon the prospective employer, such prospective employee
needs less protection than the ordinary worker.

 Page 21

The level of protection to labor must be determined on the basis of the nature of the work, qualifications of the
employee, and other relevant circumstances such as but not limited to educational attainment and other special
qualifications.

Fujis argument that Arlene was an independent contractor under a fixed-term contract is contradictory. Employees
under fixed-term contracts cannot be independent contractors because in fixed-term contracts, an employer-employee
relationship exists. The test in this kind of contract is not the necessity and desirability of the employees activities, but
the day certain agreed upon by the parties for the commencement and termination of the employment relationship.For
regular employees, the necessity and desirability of their work in the usual course of the employers business are the
determining factors. On the other hand, independent contractors do not have employer-employee relationships with their
principals.

To determine the status of employment, the existence of employer-employee relationship must first be settled with the
use of the four-fold test, especially the qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired result without dictating the means
or methods to be employed creates no employer-employee relationship; whereas those that control or fix the
methodology and bind or restrict the party hired to the use of such means creates the relationship.

In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence that she was hired for her unique
skills that would distinguish her from ordinary employees. Her monthly salary appeared to be a substantial sum. Fuji had
the power to dismiss Arlene, as provided for in her employment contract. The contract also indicated that Fuji had
control over her work as she was rquired to report for 8 hours from Monday to Friday. Fuji gave her instructions on what
to report and even her mode of transportation in carrying out her functions was controlled.

Therefore, Arlene could not be an independent contractor.

2) Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable
connection between the particular activity performed by the employee in relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual
business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its
relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from
a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade.

However, there may be a situation where an employees work is necessary but is not always desirable in the usual course
of business of the employer. In this situation, there is no regular employment.

Fujis Manila Bureau Oce is a small unit213and has a few employees. Arlene had to do all activities related to news
gathering.

A news producer plans and supervises newscast [and] works with reporters in the field planning and gathering
information, including monitoring and getting news stories, rporting interviewing subjects in front of a video camera,
submission of news and current events reports pertaining to the Philippines, and traveling to the regional oce in
Thailand.She also had to report for work in Fujis oce in Manila from Mondays to Fridays, eight per day. She had no
equipment and had to use the facilities of Fuji to accomplish her tasks.

The successive renewals of her contract indicated the necessity and desirability of her work in the usual course of Fujis
business. Because of this, Arlene had become a regular employee with the right to security of tenure.

Arlenes contract indicating a fixed term did not automatically mean that she could never be a regular employee. 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.

3) Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor Code and could be
dismissed only for just or authorized causaes and after observance of due process.

 Page 22

The expiration of the contract does not negate the finding of illegal dismissal. The manner by which Fuji informed Arlene
of non-renewal through email a month after she informed Fuji of her illness is tantamount to constructive dismissal.
Further, Arlene was asked to sign a letter of resignation prepared by Fuji. The existence of a fixed-term contract should
not mean that there can be no illegal dismissal. Due process must still be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book VI, Rule 1, Section 8 of
the Omnibus Rules Implementing the Labor Code require two requirements to be complied with: (1) the employees
disease cannot be cured within six months and his continued employment is prohibited by law or prejudicial to his health
as well as to the health of his co-employees; and (2) certification issued by a competent public health authority that even
with proper medical treatment, the disease cannot be cured within six months. The burden of proving compliance with
these requisites is on the employer. Non-compliance leads to illegal dismissal.

Arlene was not accorded due process. After informing her employer of her lung cancer, she was not given the chance to
present medical certificates. Fuji immediately concluded that Arlene could no longer perform her duties because of
chemotherapy. Neither did it suggest for her to take a leave. It did not present any certificate from a competent public
health authority.

Therefore, Arlene was illegally dismissed.

4) The Court of Appeals correctly awarded reinstatement, damages and attorneys fees.

The Court of Appeals awarded moral and exemplary damages and attorneys fees. It also ordered reinstatement, as the
grounds when separation pay was awarded in lieu of reinstatement were not proven.

The Labor Code provides in Article 279 that illegally dismissed employees are entitled to reinstatement, backwages
including allowances, and all other benefits.

Separation pay in lieu of reinstatement is allowed only (1) when the employer has ceased operations; (2) when the
employees position is no longer available; (3) strained relations; and (4) a substantial period has lapsed from date of filing
to date of finality.

The doctrine of strained relations should be strictly applied to avoid deprivation of the right to reinstatement. In the case
at bar, no evidence was presented by Fuji to prove that reinstatement was no longer feasible. Fuji did not allege that it
ceased operations or that Arlenes position was no longer feasible. Nothing showed that the reinstatement would cause
an atmosphere of antagonism in the workplace.

Moral damages are awarded when the dismissal is attended by bad faith or fraud or constitutes an act oppressive to
labor, or is done in a manner contrary to good morals, good customs or public policy. On the other hand, exemplary
damages may be awarded when the dismissal was eected in a wanton, oppressive or malevolent manner.

After Arlene had informed Fuji of her cancer, she was informed that there would be problems in renewing her contract on
account of her condition. This information caused Arlene mental anguish, serious anxiety, and wounded feelings. The
manner of her dismissal was eected in an oppressive approach with her salary and other benefits being withheld until
May 5, 2009, when she had no other choice but to sign the non-renewal contract.

With regard to the award of attorneys fees, Article 111 of the Labor Code states that [i]n cases of unlawful withholding
of wages, the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages
recovered. In actions for recovery of wages or where an employee was forced to litigate and, thus, incur expenses to
protect his rights and interest, the award of attorneys fees is legally and morally justifiablen. Due to her illegal dismissal,
Arlene was forced to litigate.

Therefore, the awards for reinstatement, damages and attorneys fees were proper.

CABAOBAS, et al. vs. PEPSI-COLA PRODUCTS, PHILIPPINES, INC.

G.R. No. 176908, March 25, 2015

Facts:
Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in the manufacturing,
bottling and distribution of soft drink products, which operates plants all over the country, one of which is the Tanauan
 Page 23

Plant in Tanauan, Leyte.In 1999, PCPPIs Tanauan Plant allegedly incurred business losses in the total amount of Twenty-
Nine Mill

ion One Hundred Sixty-Seven Thousand and Three Hundred Ninety (P29, 167, 390.00) Pesos. To avert further losses,
PCPPI implemented a company-wide retrenchment program (Corporate-wide Rightsizing Program or CRP) from 1999 to
2000, and retrenched forty-seven (47) employees of its Tanauan Plant on July 31, 1999.

On January 15, 2000, petitioners, who are permanent and regular employees of the Tanauan Plant, received their
respective letters, informing them of the cessation of their employment on February 15, 2000, pursuant to PCPPI's CRP.
Petitioners then filed their respective complaints for illegal dismissal before the National Labor Relations Commission
Regional Arbitration Branch No. VIII in Tacloban City.

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

PCPPI countered that petitioners were dismissed pursuant to its CRP to save the company from total bankruptcy and
collapse; thus, it sent notices of termination to them and to the Department of Labor and Employment.

Labor Arbiter Vito C. Bose rendered a Decisionfinding the dismissal of petitioners as illegal. PCPPI appealed from the
Decision of the Labor Arbiter to the Fourth Division of the NLRC of Tacloban City. The NLRC dismissed the complaints
for illegal dismissal, and declared the retrenchment program is a valid exercise of management prerogatives. Petitioners
filed a petition forcertiorariwith the CA. The appellate court armed the decision of the NLRC. Aggrieved, petitioners
come before the Court in this petition for review oncertiorari.

Issue:

Whether or not petitioners dismissal pursuant to respondents retrenchment program is legal?

Ruling:

Yes, as all the requisites for a valid retrenchment are present, the Court finds Pepsis rightsizing program and the
consequent dismissal of petitioners in accord with law.

Essentially, the prerogative of an employer to retrench its employees must be exercised only as a last resort, considering
that it will lead to the loss of the employees' livelihood. It is justified only when all other less drastic means have been
tried and found insucient or inadequate. Corollary thereto, the employer must prove the requirements for a valid
retrenchment by clear and convincing evidence; otherwise, said ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning losses or reverses in their business ventures in order to ease out
employees. These requirements are:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not
merelyde minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at
least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half
() month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees right to security of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, eciency, seniority, physical fitness, age, and financial hardship for
certain workers.

The issues, subject matters and causes of action between the parties in Pepsi-Cola Products Philippines, Inc. v. Molon
and the present case are identical, namely, the validity of PCPPI's retrenchment program, and the legality of its
employees' termination. This impels the Court to accord a similar disposition and uphold the legality of same program.
 Page 24

Moreover, in due regard of the abovementioned requisites, the Court observes that Pepsi had validly implemented its
retrenchment program:

Pepsi complied with the requirements of substantial loss (PEPSI-COLAs financial statements are substantial
evidence which carry great credibility and reliability viewed in light of the financial crisis that hit the country
which saw multinational corporations closing shops and walking away, or adapting [sic] their own corporate
rightsizing program).

Pepsi complied with the requirements of due notice to both the DOLE and the workers to be retrenched at least
one (1) month prior to the date of retrenchment.

Respondents had already been paid the requisite separation pay as evidenced by the September 1999
quitclaims signed by them.

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

Pepsis management exerted conscious eorts to incorporate employee participation during the implementation
of its retrenchment program. Records indicate that Pepsi had initiated sit-downs with its employees to review
the criteria on which the selection of who to be retrenched would be based.

On the final requirement of fair and reasonable criteria for determining who would or would not be dismissed,
records indicate that Pepsi did proceed to implement its rightsizing program based on fair and reasonable
criteria recommended by the company supervisors.

Verily, the foregoing incidents clearly negate the claim that the retrenchment was undertaken by Pepsi in bad faith.

Begino et al., vs. ABS-CBN Corp.

GR No. 199166, April 20, 2015

Facts:

Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of Petitioners as cameramen, editors or
reporters for TV Broadcasting. Petitioners signed regularly renewed Talent Contracts (3 months - 1 year) and Project
Assignment Forms which detailed the duration, budget and daily technical requirements of a particular project.
Petitioners were tasked with coverage of news items for subsequent daily airings in Respondents TV Patrol Bicol
Program.

The Talent Contract has an exclusivity clause and provides that nothing therein shall be deemed or construed to
establish an employer-employee relationship between the parties.

Petitioners filed against Respondents a complaint for regularization before the NLRC's Arbitration branch.

In support of their complaint, Petitioners claimed that they worked under the direct control of Respondent Villafuerte -
they were mandated to wear company IDs, they were provided the necessary equipment, they were informed about the
news to be covered the following day, and they were bound by the companys policy on attendance and punctuality.

Respondents countered that, pursuant to their Talent Contracts and Project Assignment Forms, Petitioners were hired as
talents to act as reporters, editors and/or cameramen. Respondents further claimed they never imposed control as to
how Petitioners discharged their duties. At most, they were briefed regarding the general requirements of the project to
be executed.

While the case was pending, Petitioners contracts were terminated, prompting the latter to file a second complaint for
illegal dismissal.

The Arbitration Branch ruled that Petitioners were regular employees, and ordered Respondents to reinstate the
Petitioners.

The NLRC armed the ruling, but the CA overturned the decision.

 Page 25

Issue:

W/N Petitioners are regular employees of Respondents.

Ruling:

Yes. Of the criteria to determine whether there is an employer-employee relationship, the so-called "control test" is
generally regarded as the most crucial and determinative indicator of the said relationship.

Under this test, an employer-employee relationship is said to exist where the person for whom the services are
performed reserves the right to control not only the end result but also the manner and means utilized to achieve the
same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and
condition embodied therein, petitioners are regular employees of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the control and supervision of
Respondents which provided them with the equipment essential for the discharge of their functions. The exclusivity
clause and prohibitions in their Talent Contract were likewise indicative of Respondents' control over them, however
obliquely worded.

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

Social Security System vs. Ubana

GR No. 200114, Aug 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 eective 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
employe-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 plainti 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/plainti 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:

1. Unfair labor practices;

 Page 26

2. Termination disputes;

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

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

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

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

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, eort 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 CA AFFIRMED. The case is ordered remanded with dispatch to the Regional Trial Court of Daet, Camarines
Norte, Branch 39, for continuation of proceeding.

Century Properties Inc. vs. Babiano, et al.

GR No. 220978, July 5, 2016

Facts:

On October 2, 2002, Babiano was hired by CPI as Director of Sales, and was eventuallyappointed as Vice President for
Sales eective September 1, 2007. As CPFs Vice President for Sales, Babiano had the following benefits: (a) monthly
salary of P70,000.00; (b) allowance of P50,000.00; and (c) 0.5% override commission for completed sales. His
employment contractalso contained a "Confidentiality of Documents and Non-Compete Clause"which, barred him from
disclosing confidential information, and from working in any business enterprise that is in direct competition with CPI
"while [he is] employed and for a period of one year from date of resignation or termination from [CPI]." Should Babiano
breach any of the terms thereof, his "forms of compensation, including commissions and incentives will be forfeited.

During the same period, Concepcion was initially hired as Sales Agent by CPI and was eventuallypromoted as Project
Director on September 1, 2007.As such, she signed an employment agreement, denominated as "Contract of Agency
for Project Director" which provided, that she would directly report to Babiano, and receive, a monthly subsidy of
P60,000.00, 0.5% commission, and cash incentives.On March 31, 2008, Concepcion executed a similar contractanew
with CPI in which she would receive a monthly subsidy of P50,000.00, 0.5% commission, and cash incentives as per
company policy. Notably, it was stipulated in both contracts that no employer-employee relationship exists between
Concepcion and CPI.

After receiving reports that Babiano provided a competitor with information regarding CPFs marketing strategies, spread
false information regarding CPI and its projects, recruited CPI's personnel to join the competitor, CPI sent Babiano a
Notice to Explainon February 23, 2009 directing him to explain why he should not be charged with disloyalty, conflict of
interest, and breach of trust and confidence for his actuations.

On February 25, 2009, Babiano tenderedhis resignation and revealed that he had been accepted as Vice President of
First Global BYO Development Corporation (First Global), a competitor of CPI.On March 3, 2009, Babiano was served a
Notice of Terminationfor: (a) incurring AWOL; (b) violating the "Confidentiality of Documents and Non-Compete Clause"
when he joined a competitor enterprise while still working for CPI and provided such competitor enterprise information
regarding CPFs marketing strategies; and (c) recruiting CPI personnel to join a competitor.

On the other hand, Concepcion resigned as CPFs Project Director through a letter dated February 23, 2009, eective
immediately.

 Page 27

On August 8, 2011, respondents filed a complaint for non-payment of commissions and damages against CPI and
Antonio before the NLRC, docketed as NLRC Case No. NCR-08-12029-11, claiming that their repeated demands for the
payment and release of their commissions remained unheeded.

For its part, CPI maintained that Babiano is merely its agent tasked with selling its projects. Nonetheless, he was
aorded due process in the termination of his employment which was based on just causes. It also claimed to have
validly withheld Babiano's commissions, considering that they were deemed forfeited for violating the "Confidentiality of
Documents and Non-Compete Clause."[27] On Concepcion's money claims, CPI asserted that the NLRC had no
jurisdiction to hear the same because there was no employer-employee relations between them, and thus, she should
have litigated the same in an ordinary civil action.

Issue:

Whether or not the CA erred in denying CPI's petition, thereby holding it liable for the unpaid commissions of
respondents, Whether or not Concepcion is an employee of CPI

Ruling:

The CA erred in limiting the "Confidentiality of Documents and Non-Compete Clause" only to acts done after the
cessation of the employer-employee relationship or to the "post-employment" relations of the parties. As clearly
stipulated, the parties wanted to apply said clause during the pendency of Babiano's employment, and CPI correctly
invoked the same before the labor tribunals to resist the former's claim for unpaid commissions on account of his breach
of the said clause while the employer-employee relationship between them still subsisted. Hence, there is now a need to
determine whether or not Babiano breached said clause while employed by CPI, which would then resolve the issue of
his entitlement to his unpaid commissions.

The Court finds that Concepcion was an employee of CPI considering that: (a) CPI continuously hired and promoted
Concepcion from October 2002 until her resignation on February 23, 2009, thus, showing that CPI exercised the power
of selection and engagement over her person and that she performed functions that were necessary and desirable to the
business of CPI; (b) the monthly "subsidy" and cash incentives that Concepcion was receiving from CPI are actually
remuneration in the concept of wages as it was regularly given to her on a monthly basis without any qualification, save
for the "complete submission of documents on what is a sale policy"; (c) CPI had the power to discipline or even dismiss
Concepcion as her engagement contract with CPI expressly conferred upon the latter "the right to discontinue [her]
service anytime during the period of engagement should [she] fail to meet the performance standards," among others,
and that CPI actually exercised such power to dismiss when it accepted and approved Concepcion's resignation letter;
and most importantly, (d) as aptly pointed out by the CA, CPI possessed the power of control over Concepcion because
in the performance of her duties as Project Director - particularly in the conduct of recruitment activities, training
sessions, and skills development of Sales Directors - she did not exercise independent discretion thereon, but was still
subject to the direct supervision of CPI, acting through Babiano.

In the present case, the CA aptly pointed out that the NLRC failed to account for all the unpaid commissions due to
Concepcion for the period of August 9, 2008 to August 8, 2011.Indeed, Concepcion's right to her earned commissions
is a substantive right which cannot be impaired by an erroneous computation of what she really is entitled to. Hence,
following the dictates of equity and in order to arrive at a complete and just resolution of the case, and avoid a piecemeal
dispensation of justice over the same, the CA correctly recomputed Concepcion's unpaid commissions, notwithstanding
her failure to seek a review of the NLRC's computation of the same.

In sum, the Court thus holds that the commissions of Babiano were properly forfeited for violating the "Confidentiality of
Documents and Non-Compete Clause." On the other hand, CPI remains liable for the unpaid commissions of
Concepcion in the sum of P591,953.05.
 Page 28

Lu vs. Enopia
GR No. 197899, March 6, 2017

Facts:

Petitioners (now herein respondents) were hired from January 20, 1994 to March 20, 1996 as crew members of the shing
mother boat F/B MG-28 owned by respondent Joaquin "Jake" Lu (herein petitioner Lu) who is the sole proprietor of
Mommy Gina Tuna Resources [MGTR] based in General Santos City. Petitioners and Lu had an income-sharing
arrangement wherein 55% goes to Lu, 45% to the crew members, with an additional 4% as "backing incentive. They
also equally share the expenses for the maintenance and repair of the mother boat, and for the purchase of nets, ropes
and payaos.

Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between them, but petitioners
refused to sign the same as they opposed the one-year term provided in the agreement. According to petitioners, during
their dialogue on August 18, 1997, Lu terminated their services right there and then because of their refusal to sign the
agreement. On the other hand, Lu alleged that the master sherman (piado) Ruben Salili informed him that petitioners still
refused to sign the agreement and have decided to return the vessel F/B MG-28.

On August 25, 1997, petitioners led their complaint for illegal dismissal, monetary claims and damages. Despite serious
eorts made by Labor Arbiter (LA) Arturo P. Aponesto, the case was not amicably settled, except for the following
matters: (1) Balansi 8 and 9; (2) 10% piado share; (3) sud-anon refund; and (4) refund of payment of motorcycle in the
amount of P15,000.00. LA Aponesto further inhibited himself from the case out of "delicadeza," and the case was raed
to LA Amado M. Solamo.

In their Position Paper, petitioners alleged that their refusal to sign the Joint Venture Fishing Agreement is not a just
cause for their termination. Petitioners also asked for a refund of the amount of P8,700,407.70 that was taken out of their
50% income share for the repair and maintenance of boat as well as the purchase of shing materials, as Lu should not
benet from such deduction.

On the other hand, Lu denied having dismissed petitioners, claiming that their relationship was one of joint venture where
he provided the vessel and other shing paraphernalia, while petitioners, as industrial partners, provided labor by shing in
the high seas. Lu alleged that there was no employer employee relationship as its elements were not present, viz.: it was
the piado who hired petitioners; they were not paid wages but shares in the catch, which they themselves determine;
they were not subject to his discipline; and respondent had no control over the day-to-day shing operations, although
they stayed in contact through respondent's radio operator or checker. Lu also claimed that petitioners should not be
reimbursed for their share in the expenses since it was their joint venture that shouldered these expenses.

On June 30, 2998, the Labor Arbiter (LA) rendered a Decision dismissing the case for lack of merit finding that there was
no employer-employee relationship existing between petitioner and the respondents but a joint venture. The respondents
thus appeals to the National labor Relations Commission (NLRC), but the same armed the decision of the LA,
consequently the respondents appeals to the Court of Appeals. In their decision the court reversed the decision of the
NLRC, Hence the instant case.

Issues:

Whether or not an employer-employee relationship existed between petitioner and respondents.

Ruling:

Yes. In determining the existence of an employer-employee relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) the power to control the worker's conduct; (3) the payment of wages by
whatever means; and (4) the power of dismissal.

In this case, petitioner contends that it was the piado who hired respondents, however, it was shown by the latter's
evidence that the employer stated in their Social Security System (SSS) online inquiry system printouts was MGTR,
which is owned by petitioner. We have gone over these printouts and found that the date of the SSS remitted
contributions coincided with the date of respondents' employment with petitioner. Petitioner failed to rebut such
evidence. Thus, the fact that petitioner had registered the respondents with SSS is proof that they were indeed his
employees. The coverage of the Social Security Law is predicated on the existence of an employer-employee
relationship.

 Page 29

Moreover, the records show that the 4% backing incentive fee which was divided among the shermen engaged in the
shing operations approved by petitioner was paid to respondents after deducting the latter's respective vale or cash
advance. Notably, even the piado's name was written in the backing incentive fee sheet with the corresponding vale
which was deducted from his incentive fee. If indeed a joint venture was agreed upon between petitioner and
respondents, why would these shermen obtain vale or cash advance from petitioner and not from the piado who
allegedly hired and had control over them.

It was established that petitioner exercised control over respondents. It should be remembered that the control test
merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that the
employer actually supervises the performance of duties by the employee. It is enough that the former has a right to wield
the power.

Petitioner admitted in his pleadings that he had contact with respondents at sea via the former's radio operator and their
checker. He claimed that the use of the radio was only for the purpose of receiving requisitions for the needs of the
shermen in the high seas and to receive reports of sh catch so that they can then send service boats to haul the same.
However, such communication would establish that he was constantly monitoring or checking the progress of
respondents' shing operations throughout the duration thereof, which showed their control and supervision over
respondents' activities.

The payment of respondents' wages based on the percentage share of the sh catch would not be sucient to negate the
employer-employee relationship existing between them.

Petitioner wielded the power of dismissal over respondents when he dismissed them after they refused to sign the joint
fishing venture agreement.

The primary standard for determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer

Considering that respondents were petitioner's regular employees, the latter's act of asking them to sign the joint shing
venture agreement which provides that the venture shall be for a period of one year from the date of the agreement,
subject to renewal upon mutual agreement of the parties, and may be pre-terminated by any of the parties before the
expiration of the one-year period, is violative of the former's security of tenure. And respondents' termination based on
their refusal to sign the same, not being shown to be one of those just causes for termination under Article 282 is,
therefore, illegal.

Respondents who were unjustly dismissed from work are entitled to reinstatement and backwages, among others.
However, We agree with the CA that since most (if not all) of the respondents are already employed in dierent deep-sea
shing companies, and considering the strained relations between MGTR and the respondents, reinstatement is no longer
viable. Thus, the CA correctly ordered the payment to each respondent his separation pay equivalent to one month for
every year of service reckoned from the time he was hired as shermen-crew member of F/B MG- 28 by MGTR until the
finality of this judgment.

3. HIRING OF EMPLOYEES
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 s representation, that she was single eventhough 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.

 Page 30

Private respondent was dismissed from the company eective 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,
aorded 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:

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 eects 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.

Duncan Asso. Of Detailman-PTGWO vs. Glaxo

G.R. No. 162994; September 17, 2004

Facts:

Petitioner Pedro A. Tecson was hired by respondent Glaxo Wellcome Philippines, Inc.) as medical representative on
October 1995, after Tecson had undergone training and orientation. Tecson signed a contract of employment which
stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any
existing or future relationship by consanguinity or anity with co-employees or employees of competing drug companies
and should management find that such relationship poses a possible conflict of interest, to resign from the company.

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 anity 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
 Page 31

to another department in a non-counterchecking position or preparation for employment outside the company after six
months.

Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a
competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. Despite of warnings, Tecson married Bettsy. The
superiors of Tecson reminded him of the company policy and suggested that either him or Bettsy shall resign from their
respective companies. Tecson requested more time to resolve the issue. In November of 1999, Glaxo transferred Tecson
to Mindanao area involving the provinces of Butuan, Surigao and Agusan del Sur. Tecson did not agree to the
reassignment and referred this matter to the grievance committee. It was resolved and was submitted to voluntary
arbitration.

The NCMB rendered decision that Glaxos policy was a valid one. Aggrieved, Tecson filed a petition to the CA where CA
held that Glaxos policy prohibiting its employees from having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives. Hence, this petition.

Issue:

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

Ruling:

SC ruled that the prohibition is valid. It is an exercise of the companys management prerogative. There is no error to the
Court of Appeals when it ruled that Glaxos policy prohibiting an employee from having a relationship with an employee
of a competitor company is a valid exercise of management prerogative. 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 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. Indeed, while our laws endeavor to give life to the
constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be
decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play.

Star Paper Corp. v. Simbol

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

Facts:

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

Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular
employees of the company. Simbol was employed by the company on October 1993 and met Alma Dayrit, also an
employee of the company, whom he married on June 1998. Prior to the marriage, Ongsitco advised the couple that
should they decide to get married, one of them should resign pursuant to a company policy. Simbol resigned on June
20, 1998 pursuant to the company policy.

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

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

 Page 32

he respondents signed a Release and Confirmation Agreement and stated therein that they have no money and
T
property accountabilities in the company. Respondents oer a dierent version of their dismissal. Respondents later
filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorneys fees. They averred that
the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code.

abor Arbiter dismissed the complaint and states that the company policy was decreed pursuant to what the
L
respondent corporation perceived as management prerogative. On appeal to the NLRC, the Commission armed the
decision of the Labor Arbiter. In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision.

Issue:

Whether or not the said policy is a valid exercise of the companys management prerogative.

Ruling:

SC ruled that it not a valid exercise of its management prerogative. There is no reasonable business necessity of the
policy. The case at bar involves 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.

With more women entering the workforce, employers are also enacting employment policies specifically prohibiting
spouses from working for the same company. We note that two types of employment policies involve spouses: policies
banning only spouses from working in the same company (no-spouse employment policies), and those banning all
immediate family members, including spouses, from working in the same company (anti-nepotism employment policies).

It utilizes two theories of employment discrimination: the disparate treatment and the disparate impact. Under the
disparate treatment analysis, the plainti must prove that an employment policy is discriminatory on its face. No-spouse
employment policies requiring an employee of a particular sex to either quit, transfer, or be fired are facially
discriminatory. On the other hand, to establish disparate impact, the complainants must prove that a facially neutral
policy has a disproportionate eect on a particular class.

he courts that have broadly construed the term marital status rule that it encompassed the identity, occupation and
T
employment of one's spouse. They hold that the absence of such a bona fide occupational qualification invalidates a rule
denying employment to one spouse due to the current employment of the other spouse in the same oce. Thus, they
rule that unless the employer can prove that the reasonable demands of the business require a distinction based on
marital status and there is no better available or acceptable policy which would better accomplish the business purpose,
an employer may not discriminate against an employee based on the identity of the employees spouse. This is known as
the bona fide occupational qualification exception.

e note that since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, the
W
exception is interpreted strictly and narrowly by these state courts. There must be a compelling business necessity for
which no alternative exists other than the discriminatory practice. To justify a bona fide occupational qualification, the
employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of
the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.

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

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.

 Page 33

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
foe 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 suering 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 armed NLRC. Thus, this petition.

Issue:

Whether or not the dismissal was legal on account of absences made due to Velascos pregnancy.

Ruling:

SC ruled that the termination was illegal. The termination was illegal since it comes within the purview of the prohibited
acts provided in Article 137 of the Labor Code. Based on Art. 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.

Yrasuegui vs. Philippine Airlines

G.R. No. ; October 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 Armando G. Yrasuegui wasa former international flight steward of Philippine Airlines, Inc. (PAL). He stands
five feet and eight inches (58) with a large body frame. The proper weight for a man of his height and body structure is
from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual
of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an extended vacation leave
from December 29, 1984 to March 4, 1985 to address his weight concerns. Apparently, petitioner failed to meet the
companys weight standards, promptinganotherleavewithout pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work. But petitioners weight problem recurred. He
again went on leave without pay from October 17, 1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he was
removed from flight duty eective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his ideal
weight and report for weight checks on several dates. He was alsotold that he may avail of the services of the
company physician should he wish to do so. He was advised that his case will be evaluated on July 3, 1989.

On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead of losing, weight.
He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his o-duty status was retained.

Despite eorts, he remained to be overweight based on the companys weight standards. He was served Notice of
Administrative Charge for violation of company standards on weight requirements. He did not deny his being overweight.
What he claimed, instead, is that his violation, if any, had already been condoned by PAL since no action has been
taken by the company regarding his case since 1988. He also claimed that PAL discriminated against him because
the company has not been fair in treating the cabin crew members who are similarly situated.

 Page 34

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 eective immediately.

His motion for reconsideration having been denied, petitioner filed a complaint for illegal dismissal against PAL.

Issue:

Whether or not the dismissal of Yrasuegui was a valid exercise of management prerogative.

Ruling:

SC ruled that the dismissal of Yrasuegui was a valid exercise of management prerogative. The weight standard is
considered a continuing qualification for an employees position.

The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code. A reading of the weight
standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in
order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his ideal
weight as prescribed by the weight standards. The dismissal of the employee would thus fall under Article 282(e) of the
Labor Code. As explained by the CA:

x x x [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. In this sense, the failure to maintain these standards does not fall under
Article 282(a) whose express terms require the element of willfulness in order to be a ground for
dismissal. The failure to meet the employers qualifying standards is in fact a ground that does not
squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) the other
causes analogous to the foregoing.

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 pursuant to pars. (a) to (d) of Article 282; the employee
can be dismissed simply because he no longer qualifies for his job irrespective of whether or not the
failure to qualify was willful or intentional. x x x

After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal. Separation pay,
however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so because
his dismissal is not for serious misconduct. Neither is it reflective of his moral character.

4. WAGE & THE WAGE RATIONALIZATION ACT

4A. VIOLATION OF WAGE ORDER

S.I.P FOOD HOUSE ET. AL VS. BATOLINA
GR NO. 192473 OCT. 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 newGSISBuilding, but
had no capability and expertise in this area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP),
owned by the spouses Alejandro and Esther Pablo, as concessionaire.The respondents Restituto Batolina and nine (9)
others (the respondents) worked as waiters and waitresses in the canteen.

In February 2004, GMPC terminated SIPs contract as GMPC concessionaire, because of GMPCs decision to take
direct investment in and management of the GMPC canteen; SIPs continued refusal to heed GMPCs directives for
service improvement; and the alleged interference of the Pablos two sons with the operation of the canteen. 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.

 Page 35

The employer of the respondents claimed that it was merely a labor-only contractor of GMPC. Hence, it could not be
liable.

Issue:

WON there exist an employer-employee relationship

Ruling:

We arm the CA ruling that SIP was the respondents employer.The NLRC decision, which the CA armed, states:

Respondents have been the concessionaire of GMPC canteen for nine (9) years. During this period,
complainants were employed at the said canteen.OnFebruary 29, 2004, respondents concession with GMPC
was terminated.When respondents were prevented from entering the premises as a result of the termination of
their concession, they sent a protest letter datedApril 14, 2004to GMPC thru their counsel.Pertinent portion of
the letter:

We write this letter in behalf of our client Mr. & Mrs. Alejandro C. Pablo, the
concessionaires who used to occupy and/or rent the area for a cafeteria/canteen at
the 2ndFloor of theGSISBuildingfor the past several years.

Last March 12, 2004, without any court writ or order, and with the aid of
your armed agents, you physically barredour clients & their employees/helpersfrom
entering the said premises and from performing their usual duties of serving the food
requirements of GSIS personnel and others.

Clearly, no less than respondents, thru their counsel, admitted that complainants herein were their employees.

That complainants were employees of respondents is further bolstered by the fact that respondents do not deny
that they were the ones who paid complainants salary. When complainants charged them of underpayment,
respondents even interposed the defense of file (sic) board and lodging given to complainants.

The CA ruled out SIPs claim that it was a labor-only contractor or a mere agent of GMPC. We agreewith 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 thussee no reason to disturb the CAs findings.

SLL INTERNATIONAL CABLE SPECIALIST VS. NLRC

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

Facts:

Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and Danilo Caete
(Caete for brevity), and Edgardo Zuiga (Zuiga for brevity) respectively, were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were
only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings
that needed extra workers to expedite completion of work. After their training, Zuiga, Caete and Lopez were
engaged as project employees by the petitioners in their Islacom project in Bohol. 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 by the Regional Wage Board (RWB) and in October of the same year, the
latter was increased to P155.00. Sometime in March 1998, Zuiga and Caete were engaged again by Lagon as
project employees for its PLDT Antipolo, Rizal project, which ended sometime in (sic) the late September 1998. As a
consequence, Zuiga and Caete's employment was terminated. For this project, Zuiga and Caete received
only the wage of P145.00 daily. The minimum prescribed wage for Rizal at that time was P160.00.

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

 Page 36

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 anymore time nor allowed to stay in the quarters. This
prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed
a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service
incentive leave pay as well as damages and attorney's fees.

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

Lastly, petitioners alleged that since the workplaces of private respondents were all in Manila, the complaint should be
filed there. Thus, petitioners prayed for the dismissal of the complaint for lack of jurisdiction and utter lack of merit.

LA ruled that the respondents were regular employees and were underpaid. However, the LA found that petitioners were
not liable for illegal dismissal. The LA viewed private respondents' act of going home as an act of indierence when
petitioners decided to prohibit overtime work. These decisions of the LA were armed by the NLRC, and subsequently
by the CA, on appeal. Hence, this petition.

Issue:

WON respondents were underpaid

WON the allowances should be added to their basic pay

Ruling:

The petition is bereft of merit. As a general rule, on payment of wages, a party who alleges payment as a defense has the
burden of proving it. xxx

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

"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages. "Facilities," on the other hand, are items of expense necessary
for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part
of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer
would spend and pay for them just the same.

While 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.

 Page 37

RICARDO E. VERGARA, JR. v. COCA-COLA BOTTLERS PHILIPPINES, INC

G.R. No. 176985, April 1, 2013

Facts:

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 Pis City, Metro Manila. As stipulated in
respondents existing Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of RSMs,
DSSs, and SSSs shall be considered in the computation of retirement benefits.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to the amount of
PhP496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers within his
jurisdiction, petitioner filed a complaint before the NLRC 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
Attorneys Fees. Subsequently, they filed their respective Position Paper and Reply thereto dealing on the two remaining
issues of SMI entitlement and illegal deduction.

The LA rendered a Decision in favor of petitioner, directing respondent to reimburse the amount illegally deducted from
petitioners retirement package and to integrate therein his SMI privilege. Upon appeal of respondent, however, the NLRC
modified the award and deleted the payment of SMI.

Petitioner then moved to partially execute the reimbursement of illegal deduction, which the LA granted despite
respondents opposition. Later, without prejudice to the pendency of petitioners petition for certiorari before the CA, the
parties executed a Compromise Agreementon October 4, 2006, whereby petitioner acknowledged full payment by
respondent of the amount of PhP496,016.67 covering the amount illegally deducted.

The CA dismissed petitioners case on January 9, 2007 and denied his motion for reconsideration thereafter. Hence, this
present petition to resolve the singular issue of whether the SMI should be included in the computation of petitioners
retirement benefits on the ground of consistent company practice. Petitioner insistently avers that many DSSs who
retired without achieving the sales and collection targets were given the average SMI in their retirement package.

Issue:

Whether or not petitioner is entitled to the payment of SMI

Ruling:

No. CA decision armed. Labor Law- 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.

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

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the
benefit 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 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, the SC finds no substantial evidence to prove that the grant of SMI to all retired
DSSs regardless of whether or not they qualify to the same had ripened into company practice. Despite more than
sucient opportunity given him while his case was pending before the NLRC, the CA, and even to this Court, petitioner
utterly failed to adduce proof to establish his allegation that SMI has been consistently, deliberately and voluntarily
granted to all retired DSSs without any qualification or conditions whatsoever.

 Page 38

Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant
G.R. 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 ecient 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.

Ruling:

Yes. 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-o 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.

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 eciently. 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.

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 eciency. 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.

 Page 39

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.

The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor et al.
GR 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 dierent 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 9. Upon application with and as determined by the Board, based on documentation and other requirements in
accordance with applicable rules and regulations issued by the Commission, the following may be exempt from the
applicability of this Order:

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

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

 Page 40

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.

Issue:

Whether or not the RTWPB-NCR had the authority to provide additional exemptions from the minimum wage
adjustments embodied in Wage Order No. NCR-07.

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.

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 RTWPBNCR 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 informations 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.

David/Yiels Hog Dealer vs. Macasio

GR No. 195466, July 2, 2014

Facts:

Macasio filed before the Labor Arbiter a complaint against petitioner Ariel L. David, doing business under the name and
style Yiels Hog Dealer, for nonpayment of overtime pay, holiday pay, and 13th month pay. He also claimed payment
for moral and exemplary damages and attorneys fees; and for payment of service incentive leave (SIL). Macasio
alleged before the Labor Arbiter that he had been working as a butcher for David since January 6, 1995.

Macasio claimed that David exercised eective 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.

 Page 41

Macasio added that David owned the hogs delivered for chopping, as well as the work tools and implements; David
also rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and delivery
drivers. 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. 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.

Macasio disputed Davids allegations. He argued that, first, David did not start his business only in 2005. He pointed to
the Certificate of Employment that David issued in his favor which placed the date of his

employment, albeit erroneously, in January 2000.

Second, he reported for work every day which the payroll or time record could have easily proved had David submitted
them in evidence. David claimed that he issued the Certificate of Employment, upon Macasios request, only for
overseas employment purposes. The Labor Arbiter dismissed Macasios complaint for lack of merit. The Labor Arbiter
gave credence to Davids claim that he engaged Macasio on pakyaw or task basis. The LA concluded that since
Macasio was engaged on pakyaw or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay.

The NLRC armed the Labor arbiters ruling. The CA partly granted Macasios certiorari petition and reversed the
NLRCs ruling for having been rendered with grave abuse of discretion. While the CA agreed with the LA and the
NLRC that Macasio was a task basis employee, it nevertheless found Macasio entitled to his monetary claims. The CA
explained that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay
only if he is likewise a field personnel. As defined by the Labor Code, a field personnel is one who performs the
work away from the oce or place of work, and whose regular work hours cannot be determined with reasonable
certainty. In Macasios case, the elements that characterize a field personnel are evidently lacking as he had been
working as a butcher at Davids Yiels Hog Dealer business in Sta. Mesa, Manila under Davids supervision and
control, and for a fixed working schedule that starts at 10:00 p.m. Accordingly, the CA awarded Macasios claim for
holiday, SIL and 13th month pay for three years, with 10% attorneys fees on the total monetary award. Hence, David
filed the present petition.

Issue:

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

Ruling:

David confuses engagement on pakyaw or task basis with the lack of employment relationship. Impliedly, David
asserts that their pakyawan or task basis arrangement negates the existence of employment relationship. The
Supreme Court reject this assertion of the petitioner. Engagement on pakyaw or task basis does not characterize the
relationship that may exist between the parties, i.e., whether one of employment or independent contractorship.

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

(1) the selection and engagement of the employee;

(2) the payment of wages;

(3) the power of dismissal; and

(4) the power to control the employees conduct.

These elements or indicators comprise the so-called four-fold test of employment relationship. Macasios
relationship with David satisfies this test. 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. The payment of an
employee on task or pakyaw basis alone is insucient to exclude one from the coverage of Service Incentive Leave
(SIL) and holiday pay. In determining whether workers engaged on pakyaw or task basis is entitled to holiday and
Service Incentive Leave (SIL) pay, the presence (or absence) of employer supervision as regards the workers time and
performance is the key.

 Page 42

The Supreme Court agree with the CA that Macasio does not fall under the definition of field personnel. The CAs
finding in this regard is supported by the established facts of this case: first, Macasio regularly performed his duties at
Davids principal place of business; second, his actual hours of work could be determined with reasonable certainty;
and third, David supervised his time and performance of duties. Since Macasio cannot be considered a field
personnel, then he is not exempted from the grant of holiday, SIL pay even as he was engaged on pakyaw or task
basis. With respect to the payment of 13th month pay however, the Supreme Court find that the CA legally erred in
finding that the NLRC gravely abused its discretion in denying this benefit to Macasio. The governing law on 13th
month pay is PD 8 5 1. 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. 851 enumerates the exemptions from the coverage of 13th month pay benefits. Under said law,
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.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations
Implementing PD 851 exempts employees paid on task basis without any reference to field personnel. This could
only mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the exemption
from its coverage with the requirement that the task worker be a field personnel at the same time

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

GR No. 204651, August 6, 2014

Facts:

This is a petition for review on certiorari to challenge the CA rulings and the NLRC resolution who reversed the LAs
decision to favor the herein respondents. Respondents Alexander Parian, Jay C. Erinco, Alexander Canlas, Bernard
Tenedero and Jerry Sabulao were all laborers working for petitioner Our Haus Realty Development Corporation, a
company engaged in the construction business.

On May 2010, the petitioner company experienced financial distress and had to suspend some of its construction
projects to alleviate its condition. The respondents were among those who were aected who were asked to take
vacation leaves.

Eventually, these laborers were asked to report back to work but instead of doing so, they filed with the LA a complaint
for underpayment of their daily wages claiming that except for Tenedero, their wages were below the minimum rates
prescribed in the following wage orders from 2007 to 2010. They also claimed that Our Haus failed to pay them their
holiday, Service Incentive Leave (SIL), 13th month and overtime pays.

The LA ruled in favor of Our Haus who claimed that the respondents wages complied with the laws minimum
requirement because aside from paying the monetary amount of the respondents wages, Our Haus also subsidized
their meals (3 times a day), and gave them free lodging near the construction project they were assigned to. In
determining the total amount of the respondents daily wages, the value of these benefits should be considered, in line
with Article 97(f) of the Labor Code. LA did not give merit on the laborers contention that that the value of their meals
should not be considered in determining their wages total amount since the requirements set under Section 413 of
DOLE Memorandum Circular No. 215 were not complied with. Besides, Our Haus failed to present any proof that they
agreed in writing to the inclusion of their meals value in their wages.

The laborers appealed LAs decision to NLRC who reversed it in favor of them. It ruled that that the laborers did not
authorize Our Haus in writing to charge the values of their board and lodging to their wages. Thus, the same cannot be
credited and further ruled that they are entitled to their respective proportionate 13th month payments for the year 2010
and SIL payments for at least three years, immediately preceding May 31, 2010, the date when the respondents left Our
Haus. However, it maintains LAs decision that they are not entitled to overtime pay since the exact dates and times
when they rendered overtime work had not been proven.

Our Haus moved for the reconsideration of the NLRCs decision and submitted new evidence (the five kasunduans) to
show that the respondents authorized Our Haus in writing to charge the values of their meals and lodging to their
wages. However, NLRC denied this motion, thus, Our Haus filed a Rule 65 petition with the CA propounding a new
theory that there is a distinction between deduction and charging; that a written authorization is only necessary if the
facilitys value will be deducted and will not be needed if it will merely be charged or included in the computation of
wages. The CA dismissed Our Haus certiorari petition and armed the NLRC rulings in toto finding that there is no
distinction between deduction and charging and that the legal requirements before any deduction or charging can be
made, apply to both. Our Haus filed a motion for reconsideration but the CA denied its motion, prompting it to file the
present petition for review on certiorari under Rule 45.

 Page 43

Issue:

Whether or not the NLRC committed grave abuse of discretion in its decision favoring the herein respondents.

Ruling:

The Court ruled that there is no substantial distinction between deducting and charging a facilitys value from the
employees wage; the legal requirements for creditability apply to both. Herein petitioners argument is a vain attempt to
circumvent the minimum wage law by trying to create a distinction where none exists because in reality, deduction and
charging both operate to lessen the actual take-home pay of an employee. Thus, the Court held that NLRC did not
commit grave abuse of discretion in its rulings. It DENIED this petition and AFFIRMED CAs decision.

MILAN v. NLRC
G.R. No. 202961, February 04, 2015

Facts:

Milan et.al are Solid Mills, Inc.s (Solid Mills) employees. They are represented by the National Federation of Labor Unions
(NAFLU), their collective bargaining agent.

As Solid Mills employees, Milan et.al. and their families were allowed to occupy SMI Village, a property owned by Solid
Mills. According to Solid Mills, this was [o]ut of liberality and for the convenience of its employees . . . [and] on the
condition that the employees would vacate the premises anytime the Company deems fit.

In September 2003, Milan et.al were informed that eective October 10, 2003, Solid Mills would cease its operations due
to serious business losses. NAFLU recognized Solid Mills closure due to serious business losses in the memorandum of
agreement dated September 1, 2003. The memorandum of agreement provided for Solid Mills grant of separation pay
less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay to the employees. The
agreement was entered into with full knowledge by the parties of their rights under the law and they bound themselves
not to conduct any concerted action of whatsoever kind, otherwise the grant of financial assistance as discussed above
will be withheld.

Solid Mills filed its Department of Labor and Employment termination report on September 2, 2003. Later, Solid Mills,
through Alfredo Jingco, sent to Milan et.al individual notices to vacate SMI Village. Milan et.al. were no longer allowed to
report for work by October 10, 2003. They were required to sign a memorandum of agreement with release and quitclaim
before their vacation and sick leave benefits, 13th month pay, and separation pay would be released. Employees who
signed the memorandum of agreement were considered to have agreed to vacate SMI Village, and to the demolition of
the constructed houses inside as condition for the release of their termination benefits and separation pay. Milan et.al.
refused to sign the documents and demanded to be paid their benefits and separation pay.

Hence, they filed complaints before the Labor Arbiter for alleged non-payment of separation pay, accrued sick and
vacation leaves, and 13th month pay. They argued that their accrued benefits and separation pay should not be withheld
because their payment is based on company policy and practice. Moreover, the 13th month pay is based on law,
specifically, Presidential Decree No. 851. Their possession of Solid Mills property is not an accountability that is subject
to clearance procedures. They had already turned over to Solid Mills their uniforms and equipment when Solid Mills
ceased operations.

On the other hand, Solid Mills argued that Milan et.al.s complaint was premature because they had not vacated its
property.

The Labor Arbiter ruled in favor of Milan et.al. According to the Labor Arbiter, Solid Mills illegally withheld petitioners
benefits and separation pay. The memorandum of agreement dated September 1, 2003 stated no condition to the eect
that petitioners must vacate Solid Mills property before their benefits could be given to them. Milan et.al.s possession
should not be construed as theiraccountabilities that must be cleared first before the release of benefits. er. Silodd
Mills appealed to the National Labor Relations Commission. The National Labor Relations Commission armed part of
the decision but reversed and set aside another part and decided that Milan et.al.s monetary claims in the form of
separation pay, accrued 13th month pay for 2003, accrued vacation and sick leave pays are held in abeyance pending
compliance of their accountabilities to respondent company by turning over the subject lots they respectively occupy at
SMI Village Sucat Muntinlupa City, Metro Manila to Solid Mills. Linga and four other were already paid their respective
separation pays and benefits. Meanwhile, Teodora Mahilom already retired long before Solid Mills closure. She was
already given her retirement benefits.

 Page 44

The National Labor Relations Commission ruled that because of petitioners failure to vacate Solid Mills property, Solid
Mills was justified in withholding their benefits and separation pay.35 Solid Mills granted the petitioners the privilege to
occupy its property on account of petitioners employment.36 It had the prerogative to terminate such privilege.37 The
termination of Solid Mills and petitioners employer-employee relationship made it incumbent upon petitioners to turn
over the property to Solid Mills.

The Court of Appeals ruled that Solid Mills act of allowing its employees to make temporary dwellings in its property
was a liberality on its part. It may be revoked any time at its discretion.

Issue:

Whether or not an employer is allowed to withhold terminal pay and benefits pending the employees return of its
properties

Ruling:

Yes. The fact that majority of NAFLUs members were not occupants of respondent Solid Mills property is evidence that
possession of the property was not contemplated in the agreement. Accountabilities should be interpreted to refer only
to accountabilities that were incurred by petitioners while they were performing their duties as employees at the worksite.
Moreover, applicable laws, company practice, or policies do not provide that 13th month pay, and sick and vacation
leave pay benefits, may be withheld pending satisfaction of liabilities by the employee.

Requiring clearance before the release of last payments to the employee is a standard procedure among employers,
whether public or private. Clearance procedures are instituted to ensure that the properties, real or personal, belonging
to the employer but are in the possession of the separated employee, are returned to the employer before the
employees departure.

As a general rule, employers are prohibited from withholding wages from employees (Art. 116, Labor Code). The Labor
Code also prohibits the elimination or diminution of benefits (Art. 100, Labor Code).

However, our law supports the employers institution of clearance procedures before the release of wages. As an
exception to the general rule that wages may not be withheld and benefits may not be diminished, the Labor Code
provides: 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;

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

In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

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. Accountabilities of employees are personal. They need not be
uniform among all employees in order to be included in accountabilities incurred by virtue of an employer-employee
relationship. Milan et.al. do not categorically deny 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, National Labor Relations Commission, and the
Court of Appeals is that Solid Mills allowed the use of its property for the benefit of Milan et.al. as its employees. Milan
et.al were merely allowed to possess and use it out of Solid Mills liberality. The employer may, therefore, demand the
property at will.

Toyota Pasig Inc vs. De Peralta

GR No. 213488, Nov 7, 2016

Facts:

Respondent alleged that petitioner - a corporation engaged in the business of car dealership, including service and sales
of parts and accessories of Toyota motor vehiclesinitially hired her as a cashier in March 1997.Eventually in 2004, 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, including "Best Insurance Sales Executive" for the years 2007 and
2011.However, things turned sour when her husband, Romulo "Romper" De Peralta, also petitioner's employee and the
President of the Toyota Shaw-Pasig Workers Union - Automotive Industry Workers Alliance (TSPWU-AIWA), organized a
 Page 45

collective bargaining unit through a certification election.According to respondent, petitioner suddenly dismissed from
service the ocials/directors of TSPWU-AIWA, including her husband.Thereafter, petitioner allegedly started harassing
respondent for her husband's active involvement in TSPWU-AIWA, which resulted to the issuance of a Notice to Explain
dated January 3, 2012 accusing her of "having committed various acts" relative to the processing of insurance of three
(3) units as "outside transactions" and claiming commissions therefor, instead of considering the said transactions as
"new business accounts" under the dealership's marketing department. Accordingly, she was preventively suspended
because of such charge. On February 3, 2012, respondent 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.

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:

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 eort
in performing her duties as an ISE. Clearly, such claims fall within the ambit of the general term "commissions" which in
turn, 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.

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.

5. VIOLATION OF WAGE ORDERS

Tiger Construction and Development Corp vs. Abay et al.
GR No. 164141, Feb. 26, 2010

Facts:

On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional Oce of
the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE ocials 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 Oce [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.
 Page 46

Pursuant to such authority, DOLE ocials 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 oce after July 25, 2002 were null
and void for want of jurisdiction.

aving the case in her oce 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 eects 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 oce 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.

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.

Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al.

GR No. 179652, March 6, 2012 Resolution on the main Decision of May 8, 2009

Facts:

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

Issue:

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

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
 Page 47

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.

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 armative 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 eect 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.

Superior Packaging Corp., vs. Balagsay et al.

G.R. No. 178909, October 10, 2012

Facts:

Petitioner engaged services of Lancer Stang 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 Stang 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.

 Page 48

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 Stang for respondents unpaid
money claims;

Ruling:

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.

InPeople'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 armed by the Secretary of DOLE and the CA is beyond the ambit of a
petition for review oncertiorari.

Second Issue:

At the time of the respondents' employment in 1998, the applicable regulation was DOLE Department Order No. 10,
Series of 1997. (Labor-only contractingis 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 oces, 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.

6. WAGE ENFORCEMENT AND RECOVERY & 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

 Page 49

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 oered 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 oer 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 backwages; 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-o
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.

In this case, the withholding of respondents salary does not fall under any of the circumstances provided under Article
113. Neither was it established with certainty that respondent did not work from November 16 to November 30, 2005.
Hence, the Court agrees with the LA and the CA that the unlawful withholding of respondents salary amounts to
constructive dismissal.

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.

 Page 50

Issues:

1. 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 eecting deductions from the employees' salaries.

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.

2) 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 Adavit, 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.

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
oered 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 oer 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 eectively and generate
business for his employer, the service vehicle was an absolute necessity, or else Mekeni's business would suer
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
 Page 51

itself by charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and eective
promotion of its business. It may not, under the claim that petitioner's payments constitute rents for the use of the
company vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not carry such a
condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan arrangement
benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using the vehicle was merely
incidental.

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

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

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp. Union

GR No. 191714, Feb 26, 2014

Facts:

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

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

Respondents contended that the aected 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 ocers 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 ocer 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 oce and workers to Cabangan, Zambales.

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

 Page 52

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, 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 ocer 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 aairs of its employees in selecting their
exclusive bargaining representative.

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

GR No. 181806, March 12, 2014

Facts:

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized and existing
under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and Sta 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 sta employees of petitioner.

In December 2003, the parties signed a 5-year CBA eective 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 eected 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.

 Page 53

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 adavits 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 armed 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 dierent from the CBA Retirement Plan.
Respondent further avers that it has always been a practice of petitioner to give two retirement benefits and that this
practice was established by substantial evidence as found by both the Voluntary Arbitrator and the CA.

Issue:

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

Ruling:

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

Bluer Than Blue Joint Ventures Co., vs. Esteban

GR No. 192582, April 7, 2014
[citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo]

Facts:

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

Issue:

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

Ruling:

No, it cannot be deducted in this case. Article 113 of the Labor Code provides that no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides:

 Page 54

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

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

The petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations
issued by the Secretary of Labor. Further, the posting of cash bonds should be proven as a recognized practice in the
jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by the Secretary of
Labor through the issuance of appropriate rules and regulations that the policy the former seeks to implement is
necessary or desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that without
proofs that requiring deposits and eecting deductions are recognized practices, or without securing the Secretary of
Labor's determination of the necessity or desirability of the same, the imposition of new policies relative to deductions
and deposits can be made subject to abuse by the employers. This is not what the law intends.

Netlink Computer Inc. vs. Delmo

GR No. 160827, June 18, 2014

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 was 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.

Issue:

Whether or not the payment of commission by U.S Dollar as a company practice/policy is protected by the non-
diminution 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
non-diminution 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.

 Page 55

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 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.

PLDT vs. Estranero

GR 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 oered the aected 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 oered separation or redundancy package of 200% of their
basic monthly salary for every year of service. Among those gravely aected by the MRP was the Fleet Management
Division where the respondent was assigned. Attracted by the separation pay oered 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 oered 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 dierent 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 oered 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 oce lacks jurisdiction to pass upon the issue of
PLDT's act in deducting the total outstanding loans which the respondent obtained from dierent 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 armed.

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 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 such
deductions are authorized by law, 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
 Page 56

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 oset the
outstanding loans of the respondent against the latter's monetary benefits. The records expressly revealed that the
respondent has obtained various loans from dierent entities and not with PLDT. Accordingly, set-o 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-o because the respondent's creditor is not PLDT.

The Court further agrees with the labor tribunals that the petitioners cannot oset 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 oset 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 dierent entities. The respondent's entitlement to his redundancy pay
is mandated by law which the petitioners cannot unjustly deny.

Milan et al vs. NLRC

GR No. 202961, Feb. 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 the benefits of Petitioners may be validly and legally withheld by Solid Mills Inc.

Held:

Petition DENIED; Solid Mills may validly and legally withhold the benefits. TheCivil Codeprovides 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."

 Page 57

"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.

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."

Galang et al., vs. Boie Takeda Chemicals Inc. et al.

GR No. 183934, July 20, 2016

Facts;

Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired petitioners Ernesto Galang and Ma. Olga
Jasmin Chan in August 28, 1975 and July 20, 1983, respectively. Through the years, petitioners rose from the ranks and
were promoted to Regional Sales Managers in 2000. Petitioners held these positions until their separation from BTCI on
May 1, 2004.

As Regional Sales Managers, they belong to the sales department of BTCI. They primarily managed regional sales
budget and target, and were responsible for market share and company growth within their respective regions. Within
the organizational hierarchy, they reported to the National Sales Director. In 2002, when the National Sales Director
position became vacant (after the retirement of Melchor Barretto), petitioners assumed and shared (with the general
manager) the functions and responsibilities of this higher position, and reported directly to the General Manager.

Later, however, petitioners were informed that BTCI promoted Villanueva as National Sales Director eective May 1,
2004. Such promotion of Villanueva cased ill-feelings on petitioners part. They believed that Villanueva did not apply for
the position; has only three years of experience in sales; and was reportedly responsible for losses in the marketing
department.

After Villanueva's promotion, petitioners claimed that Nomura threatened to dismiss them from oce if they failed to
perform well under the newly appointed National Sales Director. This prompted petitioners to inquire if they could avail of

early retirement package due to health reasons. Specifically, they requested Nomura if they could avail of the early
retirement package of 150% plus 120% of monthly salary for every year of service tax free, and full ownership of service
vehicle tax free. They claimed that this is the same retirement package given to previous retirees namely, former Regional
Sales Director Jose Sarmiento, Jr. (Sarmiento), and former National Sales Director Melchor Barretto. Nomura, however,
insisted that such retirement package does not exist 20 and Sarmiento's case was exceptional since he was just a few
years shy from the normal retirement age.

On April 28, 2004, petitioners intimated their intention to retire in a joint written letter of resignation dated April 28, 2002
(sic) to Nomura, eective on April 30, 2004. Thereafter, petitioners received their retirement package and other monetary
pay from BTCI.

Upon petitioners' retirement, the positions of Regional Sales Manager were abolished, and a new position of Operations
Manager was created. On October 20, 2004, petitioners led the complaint for constructive dismissal and money claims
before the NLRC Regional Arbitration Branch.

In a Decision dated May 16, 2005 (LA Decision), the Labor Arbiter ruled that petitioners were constructively dismissed.
The Labor Arbiter explained that petitioners were forced to retire because Villanueva's appointment constituted an abuse
of exercise of management prerogative; and that subsequent events, such as the abolition of the positions of Regional
Sales Managers and the creation of the position of the Operations Manager show that petitioners' easing out from
service were orchestrated. It also found that petitioners were discriminated as to their retirement package. The NLRC on
March 7, 2006 reversed the decision of the LA. Petitioners filed a motion to declare such decision Null and Void
purporting that prior the receipt of such decision they received an earlier resolution from the NLRC which armed the
decision of the Labor Arbiter. On October 25, 2006 the NLRC issued another resolution clarifying that their decision,
 Page 58

received by the petitioners on February of same year should not be given any weight since it was merely a draft decision.
The NLRC also denied the motion for reconsideration filed by the petitioners by reason of such resolution. Consequently
the Petitioners filed a petition for certiorari under rule 65 with the CA, but the same was also denied said court. Hence
the instant case.

Issue:

1) Whether petitioners were constructively dismissed from service;

2) Whether petitioners are entitled to a higher retirement package.

Ruling:

1) No. Petitioners voluntarily retired from the service, thus were not constructively dismissed. Constructive dismissal has
often been denied as a "dismissal in disguise" or an act amounting to dismissal but made to appear as if it were not." It
exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely,
as an oer involving a demotion in rank and a diminution in pay. In some cases, while no demotion in rank or diminution
in pay may be attendant, constructive dismissal may still exist when continued employment has become so unbearable
because of acts of clear discrimination, insensibility or disdain by the employer, that the employee has no choice but to
resign. Under these two definitions, what is essentially lacking is the voluntariness in the employee's separation from
employment.

In this case, petitioners were neither demoted nor did they receive a diminution in pay and benefits. Petitioners also
failed to show that employment is rendered impossible, unreasonable or unlikely.

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

The reluctance to interfere with management's prerogative in determining who to promote all the more applies when we
consider that the position of National Sales Director is a managerial position. Managerial positions are oces which can
only be held by persons who have the trust of the corporation and its ocers. The promotion of employees to
managerial or executive positions rests upon the discretion of management. Thus, we have repeatedly reminded that the
Labor Arbiters, the dierent Divisions of the NLRC, and even courts, are not vested with managerial authority. The
employer's 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. 60 In this case, there is none.

The other acts of discrimination complained of by petitioners refer to post-employment matters, or those that transpired
after their retirement. These include payment of alleged "lesser" retirement package, and the abolition of the positions of
Regional Sales Manager. These events transpired only after they voluntary availed of the early retirement. We stress,
however, that the circumstances contemplated in constructive dismissal cases are clear acts of discrimination,
insensibility or disdain which necessarily precedes the apparent "voluntary" separation from work. If they happened after
the fact of separation, it could not be said to have contributed to employee's decision to involuntary resign, or in this
case, retire.

Furthermore, It is true that in constructive dismissal cases, the employer is charged with the burden of proving that its
conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business
necessity. However, it is likewise true that in constructive dismissal cases, the employee has the burden to prove first the
fact of dismissal by substantial evidence. Only then when the dismissal is established that the burden shifts to the
employer to prove that the dismissal was for just and/or authorized cause. The logic is simple if there is no dismissal,
there can be no question as to its legality or illegality.

2) 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. Based on both parties' evidence, petitioners are not covered by any
agreement. There is also no dispute that petitioners received more than what is mandated by Article 287 of the Labor
Code. Petitioners, however, claim that they should have received a larger pay because BTCI has given more than what
they received to previous retirees. In essence, they claim that they were discriminated against because BTCI did not give
them the package of 150% of monthly salary for every year of service on top of the normal retirement package.

Furthermore, In Vergara v. Coca-Cola Bottlers Philippines, Inc., we explained that the burden of proof that the benefit has
ripened into company practice, i.e., giving of the benefit is done over a long period of time, and that it has been made
consistently and deliberately, rests with the employee, However, such concession given to such an employee was not
 Page 59

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.

7. 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.

North Davao Mining vs. NLRC

G.R. No. 112546; March 13, 1996

Facts:

Due to financial losses, North Davao Mining Corporation laid o 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 ocial time.

Ruling:

SC, arming 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 backwages 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.

 Page 60

Hiers of Sara Lee vs. Rey

G.R. No. 149013; August 31, 2006

Facts:

The House of Sara Lee (petitioner) 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. It employs Credit Administration Supervisors (CAS) to supervise and monitor the credit collection of
the Independent Business Managers (IBMs) and Independent Group Supervisors (IGSs). A 38- or 52-day rolling due
date is given to each of its IBMs and IGSs. CAS is under the direct control and supervision of Branch Operations
Manager (BOM). Cynthia Rey was a CAS at the Cagayan de Oro Branch of the petitioner. She was later transferred to
Butuan City. While respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of
the Cagayan de Oro outlet, a certain Ms. Magi Caroline Mendoza, to change the credit term of one of the IBMs of the
petitioner, a certain Ms. Mariam Rey-Petilla, who happens to be respondents sister-in-law, from the 52-day limit to an
unauthorized term of 60 days. Ms. Mendoza reported the matter to the BOM Villagracia. Villagracia discreetly
investigated the matter and found out that it was not only Ms. Petilla who was given extensions to the rolling due dates
but other IBMs as well.

On the basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the auditors report, the
petitioner formally dismissed the respondent for breach of trust and confidence. The dismissal lead to respondents filing
of her Complaint for illegal dismissal, backwages and damages, with the Labor Arbiter.

Both Labor Arbiter and the NLRC ruled in favor the respondent.

Issue:

Whether or not respondent was dismissed for just cause.

Ruling:

SC held that respondent was dismissed for just cause. In the present case, the respondent is not an ordinary rank-and-
file employee. The nature of her work requires a substantial amount of trust and confidence on the part of the employer.
Being the Credit Administration Supervisor of the Cagayan de Oro and Butuan City branches of the petitioner,
respondent occupied a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust
and confidence.

8. 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 ocers and members of San Juan De Dios Hospital Employees
Association sent a letter requesting and pleading for the expeditious implementation and payment by respondent Juan
De Dios Hospital of the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days o provided for by
Republic Act 5901 as clarified for enforcement by the Secretary of Labors Policy Instructions No. 54. RA 5901 seeks to
reduce the number of hospital personnel, considering the nature of their work, and at the same time guarantee the
payment to them of a full weekly wage for seven (7) days. 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.
Both Labor Arbiter and NLRC dismissed the complaint.

Issue:

Whether or not the Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is
valid.

Ruling:

The interpretation of Labor Secretary Drilon is not valid. A cursory reading of Article 83 of the Labor Code betrays
petitioners position that hospital employees are entitled to a full weekly salary with paid two (2) days o if they have
completed the 40-hour/5-day workweek.

 Page 61

What Article 83 merely provides are:

(1) the regular oce 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 Labors assertion that personnel in subject hospitals
and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in
any given workweek. Needless to say, the Secretary of Labor exceeded his authority by including a two days o with
pay in contravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative
interpretation of the law, we reiterate, 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.

Sime Darby vs. NLRC

G.R. No. 119205. April 15, 1998

Facts:

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber
products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly
salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in
Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on
call lunch break. Petitioner issued a memorandum to all factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant a change in work schedule and elimination of the 30 minute paid on call lunch
break. Private respondent felt aected adversely by the change in the work schedule and discontinuance of the 30-
minute paid on call lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor
practice, discrimination and evasion of liability. Labor Arbiter and NLRC dismissed the complaint of the union
ratiocinating that the actuation of Sime Derby is an exercise of management prerogative. Upon motion for
reconsideration, NLRC reversed its decision and declared that declared that the new work schedule deprived the
employees of the benefits of time-honored company practice of providing its employees a 30-minute paid lunch break
resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code.

Issue:

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

Ruling:

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

PAL vs. NLRC

G.R. No. 132805; February 2, 1999

Facts:

Dr. Herminio A. Fabros was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical
Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. While on meal break, an employee of
the PAL Cargo Services died due to a heart attack. 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
 Page 62

to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio, nurse, about
the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the
hospital without waiting for him. Finding private respondents explanation unacceptable, the management charged
private respondent with abandonment of post while on duty. He was given ten days to submit a written answer to the
administrative charge. In his answer, private respondent reiterated the assertions in his previous explanation. He further
denied that he abandoned his post. After evaluating the charge as well as the answer of private respondent, petitioner
company decided to suspend private respondent for three months. Private respondent filed a complaint for illegal
suspension against petitioner.

Both Labor Arbiter and NLRC declared the suspension illegal.

Issue:

Whether or not Dr. Herminio Fabros act of leaving the company premises during his break constitutes
abandonment of post which warrants suspension.

Ruling:

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.

Linton Commercial Co., Inc. vs. Hellera

G.R. No. 163147; October 10, 2007

Facts:

Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its
by-products. Due to the Asian Financial Crisis, it decided to suspend its operations from 18 December 1997 to 5
January 1998 and submitted it to DOLE. It submitted another memorandum informing them that eective 12 January
1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker
would be working on a rotation basis for three working days only instead for six days a week. On the same day, Linton
submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with the
implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers)
filed a Complaint for illegal reduction of workdays with the NLRC. The workers pointed out that Linton implemented the
reduction of work hours without observing Article 283 of the Labor Code, which required submission of notice thereof to
DOLE one month prior to the implementation of reduction of personnel, since Linton filed only the establishment
termination report enacting the compressed workweek on the very date of its implementation. Petitioner claimed that
due to the currency crisis it suered considerable losses and the reduction of the working hours was instituted as a cost-
cutting measure.

Issue:

Whether or not 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. Petitioners committed illegal reduction of work
hours.For the reduction of working hours to be valid, it must take into consideration the following: the arrangement was
temporary, it was a more humane solution instead of a retrenchment of personnel, there was notice and consultations
with the workers and supervisors, a consensus were reached on how to deal with deteriorating economic conditions and
it was suciently proven that the company was suering from losses.

This case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a
protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the
States policy to aord protection to labor and provide full employment. 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.

 Page 63

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 oce is located in Caloocan
City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees,
occupying the positions of helper, shipment helper and factory workers, respectively, 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 separate Memoranda of Agreement (MOA), providing for a
compressed workweek schedule to be implemented in the company eective May 20, 1996. As provided in the MOA,
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.

Issue:

Whether or not the MOA is valid and enforceable.

Ruling:

SC held that the MOA is enforceable and valid. We do not agree with the petitioners' assertion that the MOA is not
enforceable as it is contrary to law. The 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.

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:

The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which
shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek
arrangement;

There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe
benefits of the employees;

If an employee is permitted or required to work in excess of his normal weekly hours of work prior to
the adoption of the compressed workweek scheme, all such excess hours shall be considered
overtime work and shall be compensated in accordance with the provisions of the Labor Code or
applicable Collective Bargaining Agreement (CBA);

Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8)
hours a day may be devised by the parties to the agreement.

The eectivity and implementation of the new working time arrangement shall be by agreement of the parties.

Dasco et al., vs. Phiktranco Service Enterprise

GR No. 211141, June 29, 2016

Facts:

On various dates from 2006 to 2010, the petitioners were employed by the respondents as bus drivers and/or
conductors with travel routes of Manila (Pasay) to Bicol, Visayas and Mindanao, andvice versa.

On July 4, 2011, the petitioners filed a case against the respondents alleging that: (1) they were already qualified for
regular employment status since they have been working with the respondents for several years; (2) they were paid only
P404.00 per round trip, which lasts from two to five days, without overtime pay and below the minimum wage rate; (3)
they cannot be considered as field personnel because their working hours are controlled by the respondents from
dispatching to end point and their travel time is monitored and measured by the distance because they are in the
business of servicing passengers where time is of the essence; and (4) they had not been given their yearly five-day SIL
since the time they were hired by the respondents.

In response, the respondents asserted that: (1) the petitioners were paid on a fixed salary rate of P0.49 centavos per
kilometer run, or minimum wage, whichever is higher; (2) the petitioners are seasonal employees since their contracts are
for a fixed period and their employment was dependent on the exigency of the extraordinary public demand for more
buses during peak months of the year; and (3) the petitioners are not entitled to overtime pay and SIL pay because they
are field personnel whose time outside the company premises cannot be determined with reasonable certainty since
they ply provincial routes and are left alone in the field unsupervised.

 Page 64

Issue:

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

Ruling:

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 oce 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 cannot be said to be field
personnel despite the fact that they are performing work away from the principal oce 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 is unsupervised by the employer. As discussed above, field personnel are those
who regularly perform their duties away from the principal place of business of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a
field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and
performance are constantly supervised by the employer.

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 and the NLRCs finding in this regard is supported by the established facts of this case: (1) the petitioners,
as bus drivers and/or conductors, are directed to transport their passengers at a specified time and place; (2) they are
not given the discretion to select and contract with prospective passengers; (3) their actual work hours could be
determined with reasonable certainty, as well as their average trips per month; and (4) the respondents supervised their
time and performance of duties.

The Court agrees with the above-quoted findings of the NLRC. Clearly, the petitioners, as bus drivers and/or conductors,
are left alone in the field with the duty to comply with the conditions of the respondents franchise, as well as to take
proper care and custody of the bus they are using. Since the respondents are engaged in the public utility business, the
petitioners, as bus drivers and/or conductors, should be considered as regular employees of the respondents because
they perform tasks which are directly and necessarily connected with the respondents business. Thus, they are
consequently entitled to the benefits accorded to regular employees of the respondents, including overtime pay and SIL
pay.

HSY Marketing Ltd., Villatique

GR No. 219569, August 17, 2016

Facts:

HSY Mktg hired Villastique as a field driver. Villastique figured in an accident when his service vehicle bumped a
pedestrian. HSY Mktg shouldered the hospitalization and medical expenses of the injured pedestrian. Villastique was
asked to reimburse such expenses but he refused and went absence without leave. Thus, HSY Mktg withheld his salary.
Believing that he was terminated from employment, Villastique filed a complaint for illegal dismissal.

Issue:

a. Whether Villastique was illegally dismissed from work.

b. Whether he is entitled to receive separation pay in lieu of reinstatement.

Ruling:

a. No. The Court upholds the unanimous conclusion of the lower tribunals that respondent had not been dismissed at all.
There was no substantial evidence presented which shows that he was indeed dismissed or was prevented from
returning to his work. Similarly, petitioner's claims of respondent's voluntary resignation and/or abandonment deserve
scant consideration, considering petitioner's failure to discharge the burden of proving the deliberate and unjustified
refusal of respondent to resume his employment without any intention of returning. It was incumbent upon petitioner to
ascertain respondent's interest or non-interest in the continuance of his employment, but to no avail.

b. No. Since there is no dismissal or abandonment to speak of, the appropriate course of action is to reinstate the
employee (in this case, herein respondent) without, however, the payment of backwages. The reinstatement ordered
should not be construed as a relief proceeding from illegal dismissal; instead, it should be considered as a declaration or
armation that the employee may return to work because he was not dismissed in the first place. Villastique cannot
claim separation pay in lieu of reinstatement pursuant to Doctrine of Strained Relations.

 Page 65

Liability for the payment of separation pay is but a legal consequence of illegal dismissal where reinstatement is no
longer viable or feasible. As a relief granted in lieu of reinstatement, it goes without saying that an award of separation
pay is inconsistent with a finding that there was no illegal dismissal. This is because an employee who had not been
dismissed, much less illegally dismissed, cannot be reinstated. Moreover, as there is no reinstatement to speak of,
respondent cannot invoke the doctrine of strained relations.

Nate Casket Maker et al., vs. Arango, et al.

GR No. 192282, October 5, 2016

Facts:

Petitioner (A. Nate Casket Maker) employed Arango and others on various dates as carpenters, mascilladors, and
painters in their casket-making business from 1998 until their alleged termination in March 2007. The company claimed
that they were pakyaw workers who are paid per job order. One day, the pakyaw workers were directed to sign a
contract indicating an employment of five months. Since they had been continuously working since 1998, they had
second thoughts on signing. They filed a complaint with the NLRC claiming for illegal dismissal and non-payment of
separation pay against petitioners. And amended their complaint to include claims for underpayment of wages, non-
payment of overtime pay, holiday pay, 5-day SIL and 13th month pay.

Issue:

Whether or not respondents employment was terminated, and whether or not respondents are pakyaw workers
and considered regular workers who are entitled to overtime pay, holiday pay, SOL and 13th month pay

Ruling:

Illegal Termination. It is specifically stated in the employment agreement that during the period of employment,
respondents would not be eligible to earn or receive any sick leave pay, vacation leave pay, or any other benefits given to
regular employees such as 13th month pay and bonuses. Hence, the key to understanding petitioners' motive in
severing respondents' employment lies in the tenor of the contract itself. These circumstances, taken together, conclude
that petitioners indeed terminated respondents' employment.

A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the
following factors (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of
wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of the power to control
the conduct of the putative employee or the power to control the employee with respect to the means or methods by
which his work is to be accomplished. The "control test" assumes primacy in the overall consideration. Under this test,
an employment relation obtains where work is performed or services are rendered under the control and supervision of
the party contracting for the service, not only as to the result of the work but also as to the manner and details of the
performance desired.

There is no dispute that the tasks performed by respondents as carpenters, painters, andmascilladorswere necessary
and desirable in the usual business of petitioners who are engaged in the manufacture and selling of caskets. We have to
also consider the length of time that respondents worked for petitioners, commencing on various dates from 1998 to
2007. In addition, the power of control of petitioners over respondents is clearly present in this case. Respondents follow
the steps in making a casket, as instructed by the petitioners, like carpentry, mascilla, rubbing and painting. It is not
essential that the employer actually supervises the performance of duties by the employee. It is enough that the former
has a right to wield the power. Hence,pakyawworkers 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.

As regular employees, respondents were entitled to security of tenure and could be dismissed only for just or authorized
causes and after the observance of due process.

Under Article 279 of the Labor Code, an employee unjustly dismissed from work is entitled to reinstatement and
backwages, among others. Reinstatement restores the employee who was unjustly dismissed to the position from which
he was removed, that is, to hisstatus quoante dismissal, while the grant of backwages allows the same employee to
recover from the employer that which he had lost by way of wages as a result of his dismissal. These twin remedies -
reinstatement and payment of backwages - make the dismissed employee whole who can then look forward to
continued employment. Thus, do these two remedies give meaning and substance to the constitutional right of labor to
security of tenure. Respondents are, therefore, entitled to reinstatement with full backwages pursuant to Article 279 of
the Labor Code, as amended by R.A. No. 6715. As respondents are piece-rate workers being paid by the piece, there is
need to determine the varying degrees of production and days worked by each worker. Clearly, this issue is best left to
the NLRC.

 Page 66

Holiday pay, 13thmonth pay, Service Incentive Leave Pay and Overtime Pay

In the case of David v. Macasio, We 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:

In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the
presence (or absence) of employer supervision as regards the worker's 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)40 and Article 95 (SIL payof 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.

With respect to the payment of 13th month pay, however, We find that respondents are not entitled to such benefit.
Again, as ruled in the case ofDavid v. Macasio:

The governing law on 13th month pay is Presidential Decree No. 851. 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.

9. MINIMUM LABOR STANDARD BENEFITS

San Miguel Corp., vs. CA

G.R. No. 146775; Jan. 30, 2002

Facts:

On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Oce, 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 ocer 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 Oce 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 oce in Manila. However, the appeal was dismissed for lack of merit and the order of
Director Macaraya was armed. 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:

1) 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.

2) Whether or not SMC was not accorded with due process of law in the issuance of the compliance order.

3) 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:

 Page 67

Art. 169. Ocial 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 Dhl-Hijja.

Art. 170. Provinces and cities where ocially observed. - (1) Muslim holidays shall be ocially 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 ocially 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, oces, 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 eect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor employment and enforcement ocers 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 ocer 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.

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 Ocer. 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.

 Page 68

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, everytime he spoke, Tan
shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with
the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and
sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary dierential, 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 kwages which, in accordance with the ruling in Bustamante v. NLRC
should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any
deduction or qualification.

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

 Page 69

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 they were dismissed by private respondents 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 dicult to quantify. 4 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 aect 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 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.

 Page 70

R&E Transport vs. Latag

G.R. No. 155214; Feb. 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 ocer 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 favour 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. This is
not to 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.

Undisputably, 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.

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
 Page 71

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 aord 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.

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 he was compelled by the management to
go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila
from Roxas, Isabela.

Respondent further alleged that he was not allowed to work until he fully paid the amount of 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--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;

 Page 72

A careful examination of said provisions of law will result in the conclusion that the grant of service incentive leave has
been delimited by the Implementing Rules and Regulations of the Labor Code 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."

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 ejusdem 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 oce 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 oce 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 oce 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 employee's time and performance are constantly supervised by the
employer. 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.

 Page 73

San Miguel Corp., vs. Del Rosario

G.R. No. 168194; Dec. 13, 2005

Facts:

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

Issue:

Whether or not respondent is a regular employee of petitioner.

Ruling:

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

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

Moreover, even assuming that the employment of respondent from April 7, 2000 to September 3, 2000, is only
temporary, and that the reckoning period of her probationary employment is September 4, 2000, she should still be
declared a regular employee because by the time she was dismissed on March 12, 2001, her alleged probationary
employment already exceeded six months, i.e., six months and eight days to be precise. A worker was found to be a
regular employee notwithstanding the presentation by the employer of a Payroll Authority indicating that said employee
was hired on probation, since it was shown that he was terminated four days after the 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
eective 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 overhiring of workers, decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.

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

The following evidence may be proered to substantiate redundancy: the new stang 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 adavit of its Sales Manager and a memorandum of the company both to the
eect 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.

 Page 74

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 eected by petitioner, these notices and the proof of payment of separation pay to
the dismissed regular employees should have been oered 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
eect a fair and reasonable criterion in dismissing respondent. The criteria in implementing a redundancy are: (a) less
preferred status, e.g. temporary employee; (b) eciency; 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
eect 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.

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.

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 Banganga 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 dierentials 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
 Page 75

Oce 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 he was
still employed by BPC. 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 sta, which also takes him out of the coverage of labor standards. Like managerial
employees, ocers and member of the managerial sta are not entitled to the provisions of law on labor standards.

The Implementing Rules of the Labor Code define members of a managerial sta 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;

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 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 eective and safety white working.

Recommend parts and suppliers purchases. acEHSI

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
sta. His duties and responsibilities conform to the definition of a member of a managerial sta 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 sta.

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.

 Page 76

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

G.R. No. 1577745; October 19, 2007

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 eective 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.

Ruling:

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.

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, the monthly salary was fixed by Wellington 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 dierence, 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. 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 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.

Bahia Shipping Services vs. Chua

G.R. No. 162195; April 8, 2008

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.

 Page 77

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.

PNCC vs. Skyway Trac Management and Security Division Workers Organization
GR NO. 171231 Feb 17, 2010

Facts:

Petitioner PNCC Skyway Corporation Trac 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 dierently, 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 dierent 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.

 Page 78

Radio Mindanao Network Inc. et al., vs. Ybarola, Jr.

G.R. No. 198662, Sept. 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 adavits.

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 adavits 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 adavits 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 oered. Significantly, they dallied and it took them three months to sign the
release/quitclaim adavits.

Issue:

Whether or not the release/quitclaim adavits are invalid for being against public policy.

Ruling:

Release/Quitclaim; Separation pay. The release/quitclaim adavits 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 oered. 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.

 Page 79

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:

(1) 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 oer. Hence, her consent cannot be
deemed to have been knowingly and freely given.

(2) 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 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.

(3) Service Incentive Leave: YES

Grant of vacation or sick eave 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.

Dela Salle Araneta University vs. Bernardo

GR No. 190809, February 13, 2017

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
 Page 80

absence from June 1, 1975 to October 31, 1977 when he was assigned by the Philippine Government 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 the DOLE regarding his entitlement to retirement benefits after 27 years of
employment. In letters dated January 20, 2004[6]and February 3, 200,the DOLE, through its Public Assistance Center
and Legal Service Oce, 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[8]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 Collective Bargaining
Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five years immediately preceeding 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.

Labor Arbiter: Dismissed Bernardo's complaint on the ground of prescription. The prescriptive period referred to in
Article 291 of the Labor Code, as amended, where money claims should be filed within 3 years from the time the cause
of action accrued, applies to all kinds of money claims arising from employer-employee relations including claims for
retirement benefits.

NLRC: 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.

CA: Armed NLRCs ruling

Issue:

1) Whether or not part-time employees are excluded from the coverage of those entitled to retirement benefits
under Republic Act No. 7641.

2) Whether of not a claim for retirement benefits filed beyond the period provided for under Art. 291 of the Labor
code has prescribed.

Ruling:

As a part-time employee with fixed-term employment, Bernardo is entitled to retirement benefits.

In the present case, DLS-AU, through Dr. Bautista, denied Bernardo's claim for retirement benefits because only full-time
permanent faculty of DLS-AU are entitled to said benefits pursuant to university policy and the CBA. Since Bernardo has
not been granted retirement benefits under any agreement with or by voluntary act of DLS-AU, the next question then is,
can Bernardo claim retirement benefits by mandate of any law?

We answer in the armative.

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.

Republic Act No. 7641 states that "any employee may be retired upon reaching the retirement age x x x;" and "[i]n case
of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing
laws and any collective bargaining agreement and other agreements." The Implementing Rules provide that Republic Act
No. 7641 applies 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, except to those specifically exempted x x x." And Secretary
Quisumbing's Labor Advisory further clarifies that the employees covered by Republic Act No. 7641 shall "include part-
 Page 81

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, its Implementing Rules, and Secretary Quisumbing's Labor Advisory, Bernardo, as a
part-time employee of DLS-AU, is entitled to retirement benefits. The general coverage of Republic Act No. 7641 is
broad enough to encompass all private sector employees, and part-time employees are not among those specifically
exempted from the law. The provisions of Republic Act No. 7641 and its Implementing Rules are plain, direct,
unambiguous, and need no further elucidation. Any doubt is dispelled by the unequivocal statement in Secretary
Quisumbing's Labor Advisory that Republic Act No. 7641 applies to even part-time employees.

Under the rule of statutory construction ofexpressio unius est exclusio alterius, Bernardo's claim for retirement benefits
cannot be denied on the ground that he was a part-time employee as part-time employees are not among those
specifically exempted under Republic Act No. 7641 or its Implementing Rules.

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 DLSAU.

Bernardo's right to retirement benefits and the obligation of DLS-AU to pay such benefits are already established under
Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641. However, there was a violation of Bernardo's
right only after DLS-AU informed him on November 8, 2003 that the university no longer intended to oer him another
contract of employment, and already accepting his separation from service, Bernardo sought his retirement benefits, but
was denied by DLS AU. Therefore, 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
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, we cannot
simply overlook the fact that DLS-AU had repeatedly extended Bernardo's employment even when he already reached
65 years old. DLS-AU still knowingly oered Bernardo, and Bernardo willingly accepted, contracts of employment to
teach for semesters and summers in the succeeding 10 years. Since DLS-AU was still continuously engaging his
services even beyond his retirement age, Bernardo deemed himself still employed and deferred his claim for retirement
benefits, under the impression that he could avail himself of the same upon the actual termination of his employment.
The equitable doctrine of estoppel is thus applicable against DLS-AU.

10. OTHER SPECIAL BENEFITS

Reyes vs. NLRC et al.
G.R. No. 160233; August 8, 2007

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.

 Page 82

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 eect 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 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 eectively 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 eect 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, the disputed
commissions were not regularly received by him. Only when the salesmen were able to collect from the sale transactions
can petitioner receive the commissions. Conversely, if no collections were made by the salesmen, then petitioner would
receive no commissions at all. 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.

 Page 83

Arco Metal Products Co., Inc., et al. vs. Samahan ng Mga Manggagawa sa Arco 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 constitute 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 aord 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 DavaoFruits 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 adavit of its manufacturing group head. Hence, petition was denied.

Universal Robina Sugar Milling Corp. vs. Caballeda

G.R. 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.

 Page 84

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 eect, 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.

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 ineective 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 dierential 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.

 Page 85

Cercado vs. Uniprom, Inc.

GR NO. 188154 October 13, 2010

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 oered an early
retirement package amounting to P171, 982.90 but Cercado rejected the oer. UNIPROM exercised its option under the
retirement plan and decided to retire petitioner eective 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 abona 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.

Issue:

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.

No, 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.

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 adavits.

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.

 Page 86

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 really profit-sharing bonuses to the respondents, they should have received the same amounts.
Yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and P586,998.50 commissions, respectively, in
2002. The variance in amounts the respondents received as commissions supports the CA's finding that the salary
structure of the respondents was such that they only received a minimal amount as guaranteed wage; a greater part of
their income was derived from the commissions they get from soliciting advertisements; these advertisements are the
"products" they sell. As the CA aptly noted, this kind of salary structure does not detract from the character of the
commissions being part of the salary or wage paid to the employees for services rendered to the company, as the Court
held in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding the "proper
appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and Ybarola and Rivera, in this
case, are not unlettered employees, their situations dier 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 adavits. Without jobs and
with families to support, they dallied in executing the quitclaim instrument, but were eventually forced to sign given their
circumstances.

Padillo vs. Rural bank of Nabunturan Inc.

G.R. No. 199338, Jan. 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 suered a mild stroke due to hypertension which consequently impaired his ability to eectively 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 (45) years old when he resigned, while the law specifically provides
for an optional retirement age of sixty (60) and compulsory retirement age of sixty-five (65).

Padillo elevated the matter to the NLRC. The NLRC reversed the Labor Arbiters ruling. Aggrieved, Oropeza and the Bank
filed a petition for certiorari with the CA. The CA reversed the NLRCs ruling but with modification. It directed the
respondents to pay Padillo the amount of P50,000.00 as financial assistance exclusive of the P100,000.00 Philam Life
Plan benefit.

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to his death) filed the instant petition
before the Supreme Court.

Issue:

Whether or not Padillo is entitled to claim for separation and retirement benefits under the Labor Code?

 Page 87

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 suering 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.

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.

Grace Christian High School vs. Lavandera

G.R. No. 177845, August 20, 2014

Facts:

Lavandera was a teacher at the school since June 1977 with a monthly salary of PhP18,662.00 as of May 31, 2001. She
alleged that on May 11, 2001, she was informed that her services were to be terminated eective May 31, 2001,
pursuant to GCHSs retirement plan which gives the school the option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay of one-half month for every year of service.

The Labor Arbiter dismissed the illegal dismissal complaint for lack of merit. It found out that GCHS has a retirement plan
for its faculty and non-faculty members. GCHS appealed to NLRC. The NLRC set aside the LAs award and ruled that
Lavanderas retirement pay should be computed based on her monthly salary at the time of her retirement on May 31,
1997. Further, the retirement package consists of 15 days salary plus, 13th month pay and SIL pay pro-rated to their
1/12 equivalent. Aggrieved, Lavandera filed a petition for certiorari before the CA. The CA armed with modification the
NLRC Decision. It held that the multiplier is 22.5 days.

Issue:

Whether or not the CA committed reversible error in using the multiplier 22.5 days in computing the retirement pay
dierentials of Filipinas.

Ruling:

The CA is correct. In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives
ti the option to retire a teacer who has rendered at least 20 years of service, regardless of age, with a retirement pay of
month for evry year of service. Considering, however, that GCHS computed Lavanderas retirement pay without
including1/12 of her 13th month pay and the cash equivalent of her 5 days SIL.

Legal interest is also imposed on GCHS reckoned from the LAs Decision in 2002.

 Page 88

Goodyear Philippines Inc. vs. Angus

G.R. No. 185449, November 12, 2015

Facts:

Complainant Marina L. Angus filed a labor complaint against her previous employer Defendants Goodyear Philippines,
Inc. and its Human Resource Director Remigio M. Ramos. In order to maintain the viability of its operations in the midst
of economic reversals, Goodyear implemented cost-saving measures which included the streamlining of its workforce.
Complainant received from Defendant Ramos a letter stating that her position as Secretary to the Manager of Quality and
Technology is already redundant or is no longer necessary for its eective operation and is to be abolished eective
today. After 30 days, complainant would be terminated.

The letter further stated: As Company practice, termination dueto redundancy or retrenchment is paid at 45 days pay
per year of service. Considering, that you have rendered 34.92 years of service to the Company as of October 18, 2001,
and have reached the required minimum age of 55 to qualify for early retirement, Management has decided to grant you
early retirement benefit at 47 days per year of service.

On the day she received the letter, Complainant replied thereto accepting the managements decision but protesting on
the terms. She wrote: I accept Management decision to avail early retirement benefit. However, I do not agree on the
terms stated therein. I suggest I be given a premium of additional 3 days for every year of service which is only 6.3% or a
total of 50 days. I gathered it is Philippine industrys practice to give premium to encourage employees to avail of the
early retirement benefit Acceptance of this proposal will make my separation from Goodyear pleasant.

Meanwhile, Defendant Goodyear submitted an Establishment Termination Report with DOLE in connection with
complainants termination.

Subsequently, complainant accepted the checks which covered payment of her retirement benefits computed at 47
days pay per year of service and other company benefits. However, she made an annotation in the acknowledgment
receipt: Received under protest amount is not acceptable. Acceptance is on condition that I will be given a premium
of 3 days for every year of service. This time she also asked for separatin pay. Since my service was terminated due to
redundancy, I now claim my separation pay as mandated by law. This is a separate claim from my early retirement
benefit.

It is claimed that the check were taken back due to the annotation and complainants refusal to sign a Release and
Quitclaim. Through another letter, Defendant Ramos explained that the company has already oered her the most
favorable separation benefits due to redundancy, that is, 47 days pay per year of service instead of the applicable rate of
45 days pay per year of service. And based on the Retirement Plan under the Collective Bargaining Agreement (CBA)
and the parties Employment Contract, Angus is entitled to only one of the following kinds of separation pay: (1) normal
retirement which is payable at 47 days pay per year of service; (2) early retirement at a maximum of 47 days pay per
year of service; (3) retrenchment, redundancy, closure of establishment at 45 days pay per year of service; (4) medical
disability at 45 days pay per year of service; or (5) resignation at 20 days pay per year of service. Because of these,
[defendant] Ramos informed [complainant] that the company cannot anymore entertain any of her additional claims.

Complainant replied to the last letter reiterating her claims adding the following demands: that she be furnished a copies
of the Notice of Redundancy filed with DOLE, 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 [defendants].
However, her last letter was merely brushed aside and instead she was simply reminded to claim her checks.

As a result, complainant finally accepted a check in the amount of P1,958,927.89 which supposedly includes all
termination benefits computed at 47 days pay per year of service. Then, she executed a Release and Quitclaim in favor
of defendant Goodyear.

Notwithstanding, complainant initiated a labor complaint for illegal dismissal with claims for separation pay, damages
and attorneys fees, against defendants.

The Labor Arbiter upheld the validity of complainants termination. However, her claim for both separation pay and
retirement benefit were denied holding that such was not allowed under the Retirement Plan/CBA. On appeal, NLRC
armed the Labor Arbiter. On Petition for Certiorari, the Court of Appeals partially granted complainants claims. While
the appellate court upheld the dismissal, it ruled that she was entitled to both separation pay and retirement benefits in
view of the absence of any provision in the CBA prohibiting the payment of both. Further, it was observed that
complainant did not voluntarily sign the Release and Quitclaim as that would result in her receiving less than what she
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was legally entitled to receive. She was granted moral damages and attorneys fees. On motion for reconsideration by
respondents/defendants, the appellate court denied the same.

Ruling:

Defendants were made liable. Complainant is entitled to both separation pay and early retirement benefit as there is no
express and specific provision in the CBA that prohibits recovering for both. Citing earlier jurisprudence, an employee is
entitled to recover both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement
Plan or CBA. Concomitantly, the Court ruled that an employees right to receive separation pay in addition to retirement
benefits depends upon the provisions of the companys Retirement Plan and/or CBA.

Retirement benefits and separation pay are not mutually exclusive. Retirement benefits are a form of reward for an
employees 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, 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 in illegal dismissal cases when reinstatement is not feasible. In the case at bar, Article 283 clearly entitles
[complainant] to separation pay apart from the retirement benefits she received from petitioners.

The release and quitclaim is invalid. The Supreme Court concurred with the appellate court that the terms of the
quitclaim authorizes Angus to receive less than what she is legally entitled to. This is contrary to prevailing jurisprudence
holding that a quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. Such
quitclaim was held to be ineective in barring claims for the full measure of the workers rights and the acceptance of
benefits therefrom does not amount to estoppel. Further, release and quitclaims are often looked upon with disfavor
when the waiver was not done voluntarily by employees who were pressured into signing them by unscrupulous
employers seeking to evade their obligations.

Complainant was entitled to moral damages and attorneys fees. Moral damages is awarded when fraud and bad faith
have been established, as in this case. [Defendants] false contention over what has been paid to Angus suggests an
attempt to feign compliance with their legal obligation to grant their employee all the benefits provided for by agreement
and law. Their bad faith is evident in the intent to circumvent this legal mandate. And as [complainant] was then forced to
litigate her just claims when [defendants] refused to heed her demands for the payment of separation pay, the award of
attorneys fees equivalent to 10% of the amount of separation pay is also in order.

Banco De Oro Unibank vs. Sagaysay

G.R. No. 214961, Sept 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 Metropolit an 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 eective 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 ve (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 af liates and its subsidiaries from any action, suit, claim or demand in
 Page 90

connection with his employment.

On January 10, 2011, Sagaysay led a complaint 12 for illegal dismissal with prayer for reinstatement and payment of
backwages, moral damages, exemplary damages, and attorney's fee against BDO before the Labor Arbiter (LA). He
claimed that despite his appeal, BDO compulsory retired him on September 1, 2010. As a result, he and his family
suered 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 eective 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 eect. Thus, the NLRC
concluded that when he accepted his employment with BDO, he assented to the provisions of the retirement plan.

CA: Reversed the NLRC ruling. Ruled that a retirement plan with no voluntary acquiescence on the part of the
employee was ineective.

ISSUE:

W/N a retirement plan adopted before the employment of an employee is deemed binding on the latter.

RULING:

Sagaysay was suciently 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 oer 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
ocers. 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 aliates 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.

WHEREFORE, the petition is GRANTED.

Perez vs. Camparts 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 ocers covered by "Comparts Industries, Inc.
Employees Retirement Plan" (Retirement Plan) which took eect on 01 June 1999 and was amended on 25 January
2001. Included therein are provisions relating to optional or early retirement and optional retirement benefits.

 Page 91

Prior to her resignation, [Perez] manifested to [CII] sometime in November 2007 her intention to avail of the optional
retirement program since she was already qualified to retire under it. Her application was denied. In January 2008,
while vacationing in the United States of America (USA), she again filed an application for optional retirement to take
advantage of a job oered to her in the said country. Still, her application was denied. [CII] justified its denial of
[Perez's] application saying that, under the Retirement Plan, it has the option to grant or deny her application for
optional retirement and considering that it is experiencing financial crisis, it has no choice but to disallow her
intention.

In April 2008, [Perez] asked for reconsideration of the denial of her application for optional retirement. She also
requested to be included in the retrenchment that [CII] was planning to implement. Again, her application was
declined and she was not one of those employees who were retrenched. In December 2008, [Perez] needed to go to
the USA to attend to her mother who suered a mild stroke. Thus, she applied for optional retirement again to be
eective on 10 January 2009. She also claimed the benefits concomitant to it as provided by the Retirement Plan.

In response, [Perez] was informed by [CII] that it could only give her Php100,000.00 as gratuity for her twenty years of
service as this was the only amount it could aord. [Perez] refused the oer.

On 08 January 2001, [Perez] received a letter from [CII] which contained the, acceptance of her resignation eective
10 January 2009. The letter likewise contained [CIFs] denial of [Perez's] claim for optional retirement benefits or
separation pay for the following reasons: 1) [CII] has no policy or rules on optional retirement benefits; 2) [CII] has
been so aected by the global crisis and has been suering financial losses; 3) there is no provision in the Labor Code
which grants separation pay to voluntarily resigning employees; and 4) [Perez] cannot invoke the provisions of the
Collective Bargaining Agreement (CBA) on optional retirement benefits because the CBA is for rank-and-file
employees.

[Perez] e-mailed [CII] on 09 January 2009 to counter the latter's reasons and she cited therein rulings of the Supreme
Court which supposedly supported her claim for optional retirement benefits or separation pay. [CII] was not
persuaded. She, again e-mailed [CII] to reconsider its stand and she cited names of former employees of [CII] who
were allowed to optionally retire and who were given separation pays even if they were managerial employees. Still,
[CII] was not convinced.

Issue:

Whether or not Perez is entitled to an optional retirement

Ruling:

First and foremost, we emphasize that termination of employment by the employee, as in this instance, does not
entitle the employee to separation pay.[7]Separation pay is that 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[8]and 284[9]of
the Labor Code or in illegal dismissal cases when reinstatement is not feasible.

Second, in the matter of Perez's entitlement to optional retirement benefits, we agree with the NLRC and the appellate
court that as a managerial employee, she is covered by the Retirement Plan for CII Ocers which took eect in 1999
and was amended in 2001.

A Retirement Plan in a company partakes the nature of a contract, with the emplbyer and the employee as the
contracting parties. It creates a contractual obligation in which the promise to pay retirement benefits is made in,
consideration of the continued faithful service of,the employee for the requisite iperiod. Being a contract, the
employer and employee may establish such stipulations, clauses, terms and conditions as they may deem
convenient.

Observably, as stipulated in the Retirement Plan, 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.
In this case, [Perez's] application for optional retirement was denied several times as CII still needs her services.
[Perez's] unilateral act of retiring without the consent of [CII] does not bind the latter with the provisions of the
Retirement Plan. Therefore, [CII] is not liable to give [Perez] the optional retirement benefits provided therein.

In all, we agree with the NLRC and the appellate court's finding that; (1) Perez is not entitled to optional retirement
benefits without the consent thereto of CII to the grant under the Retirement Plan; (2) neither is she entitled to the
same benefits under the CBA where there is no established company practice-on such benefit; and (3) Perez is
likewise not entitled to separation pay due to a retrenchment of personnel.

 Page 92

Catotocan vs. Lourdes School of Quezon City

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. The portion on Normal Retirement reads, as follows:

NORMAL RETIREMENT:

An employee may apply for retirement or be retired by the school when he/she reaches the age of sixty (60) years or
when he/she completes thirty (30) years of service, whichever comes first;

LSQC retired Catotocan sometime in June 2006 after completing thirty-five (35) years of service. Full retirement
benefits were given to her computed based on the latest salary multiplied by the total years of service. Under the
school's retirement policy, sixty percent (60%) of her retirement benefit was paid in lump sum by the trustee bank,
and the balance was to be paid in equal monthly pensions over the next three (3) years. The trustee bank holding the
retirement portfolio of LSQC was Banco De Oro(BDO).

Catotocan's retirement, eective 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.|||Catotocan re-applied as a Guidance Counseler for every year, until 2009. But after 2009, her
application was denied. She then filed for a complaint for illegal dismissal, and monetary claims such as claim for step
increment, moral and exemplary damages and attorney's fees.||

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 eect, abandoned her objection
thereto.

NLRC armed 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.

Issue:

Whether or not there was in illegal dismissal of Catotocan after receipt of her retirement benefits

Ruling:

The retirement age is primarily determined by the existing agreement or employment contract. Only in the absence of
such an agreement shall the retirement age be fixed by law, which provides for a compulsory retirement age at 65
years, while the minimum age for optional retirement is set at 60 years.

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 notper serepugnant to the constitutional guaranty of security
of tenure. By its express language, theLabor Codepermits 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.

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 to the addendum to the LSQC's retirement policy of retiring her from service upon serving
the school for at least thirty (30) continuous years, to wit: (1) after being notified that she was being retired from
service by LSQC, she opened a savings account with BDO, the trustee bank; (2) she accepted all the proceeds of her
retirement package: the lump sum and all the monthly payments credited to her account until June 2009; (3) upon
acceptance of the retirement benefits, there was no notation that she is accepting the retirement benefits under
 Page 93

protest or without prejudice to the filing of an illegal dismissal case. We also did not find aniotaof evidence showing
that LSQC exerted undue influence against Catotocan to acquire her consent on the school's retirement policy.
Suce it to say that from the foregoing, Catotocan performed all the acts to ratify her retirement in accordance with
LSQC's retirement policy.

The most telling detail indicative of Catotocan's voluntary assent to LSQC's retirement policy was her
correspondence with the latter following her "retirement." In particular, in her Letter dated January 27, 2005,
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
exclusiveonly for those employees who hasavailed of the retirement benefits or who hasbeen retired by the school
but who has not yet reached 65 years of age. Thus, since Catotocan has availed of this contractual employment
which is exclusively oered only to LSQC's qualified retirees for three (3) consecutive years following her retirement,
she can no longer dispute that she has indeed legitimately retired from employment, and was not illegally dismissed.

Philippine Airlines vs. Hassaram

GR. No. 217730, June 5, 2017

Facts:

Hassaram had applied for retirement from PAL in August 2000 after rendering 24 years of service as a pilot, but his
application was denied. Instead, PAL informed him that he had lost his employment in the company as of June 9,
1998, in view of his failure to comply with the Return to Work Order issued by the Secretary of Labor against
members of the ALPAP on June 7, 1998.

Hence, Hassaram filed a complaint against PAL for illegal dismissal and the payment of retirement benefits, damages,
and attorneys fees. Hassaram argued that he was not covered by the Return to Work Order; hence, PAL had no valid
ground for his dismissal. He asserted that on June 9, 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. He 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 the LA had no jurisdiction over the case, which was a mere o-shoot of ALPAPs strike, a matter
over which the Secretary of Labor had already assumed jurisdiction. Further, that the Complaint should be considered
barred by res judicata, forum shopping, and prescription, and that the case should be suspended while PAL was
under receivership; and finally, if at all, Hassaram was entitled only to retirement benefits of P5,000 for ever year of
service pursuant to the CBA between PAL and ALPAP.

LA Ruling: Retirement benefits and attorneys fees should be awarded to Hassaram. The former explained that
Hassaram did not defy the Return to Work Order, as he was in fact already on leave when the order was implemented.
AS to the computation of benefits, the LA ruled that Article 287 of the LC should be applied, since the statute
provided better benefits than the PAL-ALPAP CBA. Hassarams other claims on the other hand, were dismissed.

NLRC: Armed LAs Decision to award retirement benefits to Hassaram under Article 287 of the LC. PAL seeked
reconsideration citing for the first time, Hassarams purported receipt of retirement benefits in the amount of
P4,456,817.75 pursuant to the plan, where NLRC granted such. It reversed its earlier decision and set aside the ruling
of the LA on account of Hassarams receipt of retirement benefits under the Plan.

CA: Reversed the NLRC and reinstated the ruling of the LA. CA declared that the funds received under the Plan were
not retirement benefits contemplated by law. Hence, it ruled that Hassaram was entitled to receive retirement benefits
in the amount of P2,111,984.60 pursuant to Article 287 of the LC.

Issue:

Whether or not Hassaram is entitled to retirement benefit under Article 287 despite availment of benefit under
the companys retirement plan

Ruling:

Hassarams retirement benefits should be computed based on the retirement plans of PAL and not Art. 287 of the
Labor Code.

In Philippine Airlines, Inc. v. Airline Pilots Associations of the Phils, the SC utilized these provisions to explain the
nature of the Plan: The PAL Pilots Retirement Benefit Plan is a retirement fund raised from contributions exclusively
from PAL of amounts equivalent to 20% of each pilots gross monthly pay. Based on the foregoing characterization,
the Court included the amount received from the Plan in the computation of the retirement pay of the pilot involved in
 Page 94

that case. The same rule was later applied to Elegir v. Philippine Airlines, Inc. where it was held that apart from the
abovementioned benefit, the employee is also entitled to the equity of the retirement fund under PALs Pilot retirement
Benefit Plan, which pertains to the retirement fund raised from contributions exclusively from PAL of amounts
equivalent to 20% of each pilots gross monthly pay.

Considering that the very same plan is involved in the petition, the SC adopted the pronouncements in the said cases.
The SC therefore ruled that the amount received by Hassaram from the Plan formed part of its retirement pay. As held
in Elegir, Article 287 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 1967 PAL-ALPAP CBA and 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. This scheme was thus considered by
the Court as inferior to the retirement plans granted by PAL to the latters pilots in Elegir and PAL.