Labor Standards Law

Digest Compendium 2016

Part II

_________________________________________________

University of San Carlos

College of Law
School of Law and Governance
Cebu City, Philippines
____________________________________________

Al-Emir Yusoph J. Balt

 TABLE OF CONTENTS

12. NLRC Rules & Procedures

LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC. V. UNIVERSITY OF THE PHILIPPINES
[G.R. No. 185918, April 18, 2012] ............................................................................................. 2
PORTILLO V. RUDOLF LIETZ Inc. et al [G.R. No. 196539, October 10, 2012]............................. 4
BUILDING CARE CORP. LEOPARD SECURITY AND INVESTIGATION AGENCY V. MACARAEG
[G.R. No. 198357, December 10, 2012] .................................................................................... 7
McBURNIE VS GANZON [G.R. NO. 178034 & 178117]…………………………………..9
INDOPHIL TEXTILE MILLS, INC.,V. ENGR. SALVADOR ADVIENTO. [G.R. No. 171212, 20 August
2014] ....................................................................................................................................... 12
Manila Mining Corp., v. Amor [GR No. 182800, April 20, 2015, citing 2015 Mcburnie]........ 14
Toyota Alabang, Inc. V. Edwin Games [GR. 206612, August 17, 2015] .................................. 16
SOCIAL SECURITY SYSTEM v. DEBBIE UBAÑA [G.R. No. 200114, August 24, 2015] ................ 18
ILAW AT BUKLOD NG MANGGAGAWA V. NLRC et. al. [G.R. No. 91980 June 27, 1991]......... 20
QUANTUM FOODS, INC. V. MARCELINO ESLOYO AND GLEN MAGSILA, [G.R. No. 213696,
December 09, 2015] ............................................................................................................... 22
Dela Rosa Liner Inc et v. Borela et [GR No. 207286, July 29, 2015] ........................................ 24

13. Other Important Labor Provisions

A. Contracting Arrangement
Aliviado et al v. Procter & Gamble Phils [GR No. 160506, March 9, 2010] ............................ 28
San Miguel Corp. v. Semillano et al., [GR No. 164257, July 5, 2010] ...................................... 30
Manila Water Co. v. Dalumpines, [GR No. 175501, Oct. 4, 2010] .......................................... 32
Teng v. Pahagac, [GR No. 169704, November 17, 2010] ....................................................... 34
GSIS v. NLRC et al., [GR No. 180045, Nov. 17, 2010] ............................................................. 35
Sy et al., v. Fairland Knitcraft Co Inc. [G.R. No. 189658, December 12, 2011] ....................... 36
Polyfoam-RGC International Corp., v. Concepcion, [G.R. No. 172349, June 13, 2012] ......... 37
Superior Packaging Corp., v. Balagsay et al., [G.R. No. 178909, October 10, 2012] .............. 39
Digital Telecommunications v. Digitel Employees Union [GR No. 184903-04 October 10,
2012] ....................................................................................................................................... 40
Norkis Trading Corp., v. Buenavista, et al., [G.R. No. 182018, October 10, 2012] ................ 41
Goya Inc. v. Goya Inc. Employees Union-FFW [G.R. No. 170054, Jan. 21, 2013] ................... 43
Vigilla et al., v. Phil. College of Criminology Inc., [G.R. No. 200094, June 10, 2013] .............. 45

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 BPI Employees Union-Davao city-FUBU v. Bank of the Phil Islands et al., [G.R. No. 174912,
July 24, 2013] .......................................................................................................................... 47
Alilin et al., v. Petron Corp., [GR No. 177592, June 9, 2014] ................................................. 49
Ampeleloquio v. Jaka Distribution Inc., [GR No. 196936, July 2, 2014] .................................. 50
FVR Skills & Services Exponenets Inc. v. Seva, et al., [GR No. 200857, Oct. 22, 2014] ........... 52
Fonterra Brand Phils, Inc. v Largado and Estrellado [G.R NO. 205300, March 18 2015]........ 53
W.M. MANUFACTURING, INC. V. DALAG and GOLDEN ROCK MANPOWER SERVICES [G.R. No.
209418. December 7, 2015] ................................................................................................... 54
DIAMOND FARMS, INC. (DFI) V. SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL) [G.R.
Nos. 173254-55 & 173263. January 13, 2016]........................................................................ 56

B. Worker’s Preference
BARAYOGA and BISUDECO-PHILSUCORCORFARM WORKERS UNION(PACIWU CHAP-TPC) V.
ASSET PRIVATISATION [G.R. No. 160073; October 24, 2005] ................................................. 60
Philippine Airlines v Zamora [G.R. No.166996 February 6, 2007] .......................................... 61
phil. Airlines v. Phil. Airlines Employees Association, [525 SCRA 29 [2007], citing
Rubberworld vs. NLRC, 305 SCRA 721 [1999]]........................................................................ 62
Garcia v. Phil. Air Lines, [G.R. No. 164856,January 20, 2009] ................................................. 64

C. Attorney’s Fees & Appearance of Lawyers

Sapio v. Undaloc Construction et al., [G.R. No. 155034, May 22, 2008] ................................ 67
Atty. ORTIZ V. SAN MIGUEL CORPORATION [G.R. Nos. 15198 3-84 July 31, 2008] ................ 69
EVANGELINA MASMUD (as substitute complainant for ALEXANDER J. MASMUD) V.
NATIONAL LABOR RELATIONS COMMISSION (First Division) and ATTY. ROLANDO B. GO, JR..
]G.R. NO. 183385: February 13, 2009] .................................................................................... 72
KAISAHAN V. MWC [GR No. 174179, November 16, 2011] ................................................... 75
Malvar v. Kraft [G.R. No. 183952, September 9, 2013] .......................................................... 77
TH Shopfitters Corp., et al., v. T&H Shopfitters Corp., Union, [GR No. 191714, Feb 26,
2014] ....................................................................................................................................... 78

14. MISCELLANEOUS PROVISIONS

A.SPECIAL TYPES OF WORKERS
Bernardo v. NLRC, [310 SCRA 186 [1999]] .............................................................................. 80

B.EMPLOYMENT OF WOMEN
PT&T V. NLRC, [272 SCRA 596 [1997]] .................................................................................... 82
DEL MONTE PHILS. V. VELASCO, [G.R. NO. 153477, MARCH 6, 2007].................................... 83

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 C. EMPLOYMENT OF NURSING EMPLOYEES / NIGHTWORKERS /
CHILDREN / DOMESTIC WORKERS
Remington Industrial Sales Corp., v. Castaneda, [G.R. No. 169295-96, Nov. 20, 2006 citing
Apex Mining] ........................................................................................................................... 85
Co v. Vargas, [G.R. No. 195167, November 16, 2011] ............................................................ 87

C. EMPLOYMENT OF HOMEWORKERS / NON-RESIDENT ALIENS /

STUDENTS / ACADEMIC & NON-ACADEMIC PERSONNEL IN PRIVATE
EDUCATIONAL INSTITUTION
University of the east et al., v. Pepanio, [G.R. No. 193897, Jan. 23, 2013] ............................ 89
Colegio Del Santisimo Rosario et al., v. Rojo, [G.R. No. 170388, Sept. 4, 2013 citing Mercado
et al., vs. AMA Computer College-Paranaque City, GR No. 183572, April 13, 2010].............. 90
HERRERA–MANAOIS V. ST. SCHOLASTICA’S COLLEGE, [G.R. No. 188914, December 11,
2013] ....................................................................................................................................... 92

15. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY

Tolosa v. NLRC, [G.R. No. 149578, April 10, 2003].................................................................. 96
U-Bix Corp., v. Bandiola, [525 SCRA 566 (2007)] .................................................................... 97
Ocean Builders Construction v. Sps. Cubacub, [GR No. 150898, April 13, 2011] ................. 100

16.MIGRANT WORKER'S ACT & OVERSEAS FILIPINO ACT OF 1995 &

RECRUITMENT AND PLACEMENT
ATCI OVERSEAS CORP. ET AL., V. ECHIN [G.R. No. 178551 October 11, 2010] ..................... 103
Yap v. Thenamaris Ship Management et al. [G.R. No. 179532: May 30, 2011] .................... 104
Skippers United Pacific, Inc. v. Doza, [G.R. No. 175558, February 8, 2012] ......................... 105
International Management Services v. Logarta, [G.R. No. 163657, April 18, 2012]............. 106
PERT/CPM MANPOWER EXPONENT CO., V. VINUYA ET AL. [G.R. No. 197528; September 8,
2012] ..................................................................................................................................... 107
HON. STO. TOMAS, ET AL., VS. SALAC ET AL. [G.R. No. 152642 & 152710; November 13,
2012] ..................................................................................................................................... 109
Sameer Overseas Placement v Cabiles [GR No. 170139, August 5, 2014]............................ 112
Racelis vs United Philippine Lines [G.R. No. 198408, November 12, 2014] ......................... 114
Pentagon International Shipping Services v. CA, [GR No. 169158, July 1, 2015].................. 116
Austria v. Crystal Shipping [GR No. 206256, Feb. 24, 2016] ................................................. 118
Asian International Manpower Services, Inc. v. Department of Labor and Employment [GR
No. 210308, April 6, 2016] .................................................................................................... 119

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12. NLRC Rules & Procedures
Cases:

1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
4. McBurnie vs. Ganzon, GR No. 178034/1718117, October 17, 2013, En banc
5. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014
6. Manila Mining Corp., vs. Amor GR No. 182800, April 20, 2015, citing 2015 Mcburnie
7. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015
8. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015
9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675,
Sept 23, 2015
10. Quantum Foods, Inc. vs. Esloyo, GR. No. 213696, December 9, 2015, citing 2015
Mcburnie
11. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2015

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LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC. V. UNIVERSITY OF
THE PHILIPPINES [G.R. NO. 185918, APRIL 18, 2012]
Facts: The petition is for review on certiorari under Rule 45. Petitioner Lockheed entered into a contract of
security with the University of the Philippines. In 1998, several of the guards assigned to UP filed a complaint
for unpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday pay, service
incentive leave pay, night shift differentials, 13th month pay, refund of cash bond, refund of deductions for
the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and attorney's fees.

The Labor Arbiter declared UP solidarily liable. The decision was appealed but sustained by the NLCR, albeit
a few modifications. The parties motion to reconsider were likewise denied. On July 25, 2005, a Notice of
Garnishment 10 was issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the
award of P12,142,522.69 (inclusive of execution fee).

UP contended that the funds being subjected to garnishment at PNB are government/public funds.
However, the execution of the garnishment was carried out. UP elevated their case to the court of appeals.
On reconsideration, however, the CA issued the assailed Amended Decision. It held that without departing
from its findings that the funds covered in the savings account sought to be garnished do not fall within the
classification of public funds, it reconsiders the dismissal of the petition in light of the ruling in the case of
National Electrification Administration v. Morales which mandates that all money claims against the
government must first be filed with the Commission on Audit (COA).

Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case should not apply
and that UP could be both sued and held liable. And that the quashal of garnishment sought was moot
because it had already become fait accompli.

Issues:
1. Whether the NEA Case applies and the funds be garnished directly bypassing the COA.
2. Whether the previous garnishment and withdrawal of funds was fait accompli.

Ruling:
1. YES. This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical personality
separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it
cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution
may be had, a claim for payment of the judgment award must first be filed with the COA. (suability does
not immediately mean liability).
Under Commonwealth Act No. 327, as amended by Section 26 of P.D. No. 1445, it is the COA which has
primary jurisdiction to examine, audit and settle “all debts and claims of any sort” due from or owing the
Government or any of its subdivisions, agencies and instrumentalities, including government-owned or
controlled corporations and their subsidiaries. With respect to money claims arising from the
implementation of Republic Act No. 6758, their allowance or disallowance is for COA to decide, subject only
to the remedy of appeal by petition for certiorari to this Court.
As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done
since the funds of UP had already been garnished, since the garnishment was erroneously carried out and
did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of
judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred
right after the withdrawal of the garnished funds from PNB.

2. NO. As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be
done since the funds of UP had already been garnished, since the garnishment was erroneously carried out

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and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of
judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred
right after the withdrawal of the garnished funds from PNB.

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PORTILLO V. RUDOLF LIETZ INC. ET AL [G.R. NO. 196539, OCTOBER 10, 2012]
Facts: Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in any other
gainful employment by himself or with any other company either directly or indirectly without written
consent of Lietz Inc., otherwise Potillo will be liable for liquidated damages.

Upon his promotion, Potillo signed another letter agreement containing a “Goodwill Clause” stating that:
“…on the termination of his employment and for a period of three (3) years thereafter, he shall
not engage directly or indirectly as employee, manager, proprietor, or solicitor for himself or
others in a similar or competitive business or the same character of work which he was employed
by Lietz Inc. to do and perform. Should he breach this good will clause of this Contract, he shall pay
Lietz Inc. as liquidated damages the amount of 100% of his gross compensation over the last 12
months.”

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo
declared that she intended to engage in businessa rice dealership, selling rice in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill Clause" in the
last letter agreement she had signed.

Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its
Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc.

Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions
went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions
were still being computed.

Subsequently, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-
payment of 1 months salary, two (2) months commission, 13th month pay, plus moral, exemplary and actual
damages and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of
P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should
be offset against her liability to Lietz Inc. for liquidated damages for Portillos alleged breach of the "Goodwill
Clause" in the employment contract when she became employed with Ed Keller Philippines, Limited.

Issue:
1. Who has jurisdiction over the present controversy; and Whether Portillos money claims for unpaid
salaries may be offset against respondents claim for liquidated damages.
2. Whether Portillo’s money claims for unpaid salaries may be offset against Lietz Inc.’s claim for liquidated
damages.
Ruling:
1. Jurisdiction belongs to the Civil Courts.
Petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary
relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded
are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as
payment of wages, overtime compensation or separation pay. The items claimed are the natural
consequences flowing from breach of an obligation, intrinsically a civil dispute.

Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-employment relations of the
parties. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after

4
the cessation of the employment relationship between the parties. In accordance with jurisprudence,
breach of the undertaking is a civil law dispute, not a labor law case.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages
based on the parties contract of employment as redress for respondents breach thereof. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.
More so must this be in the present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.

No, it may not be. Indeed, the application of compensation in this case is effectively barred by Article 113
of the Labor Code which prohibits wage deductions except in three circumstances:

a) ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make
any deduction from 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;
b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

2. NO. Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the CA on the
"causal connection between Portillo’s monetary claims against respondents and the latter’s claim from
liquidated damages against the former."
Art. 217. Jurisdiction of Labor Arbiters and the Commission.
(a) Except as otherwise provided under this code, the Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of stenographic notes, the
following case involving all workers, whether agricultural or non-agricultural :
xxxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations; (Underscoring supplied)
Evidently, the CA is convinced that the claim for liquidated damages emanates from the "Goodwill Clause
of the employment contract and, therefore, is a claim for damages arising from the employer-employee
relations."As early as Singapore Airlines Limited v. Paño, we established that not all disputes between an
employer and his employee(s) fall within the jurisdiction of the labor tribunals.
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor
Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other
items demanded are not labor benefits demanded by workers generally taken cognizance of in labor
disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the
natural consequences flowing from breach of an obligation, intrinsically a civil dispute.(Emphasis supplied)
The reasonable causal connection rule was discussed. Thus, in San Miguel Corporation v. National Labor
Relations Commission, we held:
xxx
The Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3
of Article 217 embraces money claims which arise out of or in connection with the employer-employee
relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money

5
claims which have some reasonable causal connection with the employer-employee relationship (Emphasis
supplied)
We thereafter ruled that the "reasonable causal connection with the employer-employee relationship" is a
requirement not only in employees’ money claims against the employer but is, likewise, a condition when
the claimant is the employer. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual
undertaking effective after the cessation of the employment relationship between the parties. In
accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case.
It is clear therefore, that while Portillo’s claim for unpaid salaries is a money claim that arises out of or in
connection with an employer-employee relationship, Lietz Inc.’s claim against Portillo for violation of the
goodwill clause is a money claim based on an act done after the cessation of the employment relationship.
And, while the jurisdiction over Portillo’s claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.’s
claim rests on the regular courts.
In the case at bar, the difference in the nature of the credits that one has against the other, conversely, the
nature of the debt one owes another, which difference in turn results in the difference of the forum where
the different credits can be enforced, prevents the application of compensation. Simply, the labor tribunal
in an employee’s claim for unpaid wages is without authority to allow the compensation of such claims
against the post employment claim of the former employer for breach of a post employment condition. The
labor tribunal does not have jurisdiction over the civil case of breach of contract. Indeed, the application of
compensation in this case is effectively barred by Article 113 of the Labor Code which prohibits wage
deductions except in three circumstances:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any
deduction from wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

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BUILDING CARE CORP. LEOPARD SECURITY AND INVESTIGATION AGENCY V.
MACARAEG [G.R. NO. 198357, DECEMBER 10, 2012]
Facts: Petitioners are in the business of providing security services to their clients.

They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in
Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to
Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any
assignment.

Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal,
underpayment of salaries, non-payment of separation pay and refund of cash bond. Respondent claimed
that petitioners failed to give her an assignment for more than nine months, amounting to constructive
dismissal, and this compelled her to file the complaint for illegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post
as requested by the client because of her habitual tardiness, persistent borrowing of money from
employees and tenants of the client, and sleeping on the job.

On May 13, 2009, the Labor Arbiter rendered a Decision dismissing the charge of illegal dismissal as wanting
in merit but ordering the Respondents Leopard Security and Investigation Agency and Rupert Protacio to
pay complainant a financial assistance in the amount of P5,000.00.

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a
Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed out of time, thereby
declaring that the Labor Arbiter's Decision had become final and executory on June 16, 2009.

Upon elevating to the CA via a petition for certiorari, the court reversed and set aside the Decision of the
NLRC and in lieu thereof, a new judgment is entered declaring petitioner to have been illegally dismissed.

Issue:
Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal
should be allowed and resolved on the merits despite having been filed out of time.

Ruling:
Yes, it erred.

It should be emphasized that the resort to a liberal application, or suspension of the application of
procedural rules, must remain as the exception to the well-settled principle that rules must be complied
with for the orderly administration of justice.
The relaxation of procedural rules in the interest of justice was never intended to be a license for erring
litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can
be invoked only in proper cases and under justifiable causes and circumstances.

The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse.

Although the CA justified such a reversal of the NLRC’s decision on the ground that the belated filing of
respondent's appeal before the NLRC was the fault of respondent's former counsel, note, however, that
neither respondent nor her former counsel gave any explanation or reason citing extraordinary
circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted

7
that she had not been remiss in following up her case with said lawyer. It is a basic rule that the negligence
and mistakes of counsel bind the client.

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of
the case is also an essential part of public policy and the orderly administration of justice. Hence, such right
is just as weighty or equally important as the right of the losing party to appeal or seek reconsideration
within the prescribed period.25
When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment. They
had the right to fully rely on the immutability of said Decision.

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ANDREW JAMES MCBURNIE, Petitioner, v. EULALIO GANZON, EGI-
MANAGERS, INC. and E. GANZON, INC., Respondents.
FACTS:

On October 4, 2002, Andrew James McBurnie (McBurnie), an Australian national, instituted a complaint
for illegal dismissal and other monetary claims against Eulalio Ganzon, EGI-Managers, Inc., and E. Ganzon,
Inc., (respondents). McBurnie claimed that on May 11, 1999, he signed a 5-year employment agreement
with the company EGI as an Executive Vice-President who shall oversee the management of the company
hotels and resorts within the Philippines. He performed work for the company until sometime in
November 1999, when he figured in an accident that compelled him to go back to Australia while
recuperating from his injuries. While in Australia, he was informed by respondent Ganzon that his services
were no longer needed because their intended project would no longer push through.

The respondents contend that their agreement with McBurnie was to jointly invest in and establish a
company for the management of the hotels. They did not intend to create an employer-employee
relationship, and the execution of the employment contract that was being invoked by McBurnie was
solely for the purpose of allowing McBurnie to obtain an alien work permit in the Philippines, and that
McBurnie had not obtained a work permit.

On September 30, 2004, the Labor Arbiter (LA) declared McBurnie as having been illegally dismissed from
employment. The respondents filed their Memorandum of Appeal and Motion to Reduce Bond, and
posted an appeal bond in the amount of P100,000.00. They claimed that an award of more than P60
Million Pesos to a single foreigner who had no work permit and who left the country for good one month
after the purported commencement of his employment was a patent nullity.

On March 31, 2005, the NLRC denied the motion to reduce bond explaining that in cases involving
monetary award, an employer seeking to appeal the LA decision to the Commission is unconditionally
required by Art. 223, Labor Code to post bond equivalent to the monetary award.

The motion for reconsideration was denied, the respondents appealed to the CA via a Petition for
Certiorari and Prohibition (with extremely urgent prayer for the issuance of a Preliminary Injunction
and/or Temporary Restraining Order) docketed as CA-G.R. SP No. 90845.

The NLRC dismissed their appeal due to respondent's failure to post the required additional bond. The
respondents motion for reconsideration was denied on June 30, 2006. This prompted respondents to filed
with the CA the Petition for Certiorari docketed as CA-G.R SP No. 95916, which was later consolidated
with CA-G.R. SP No. 90845

The CA granted the respondent's application for a writ of preliminary injunction on February 16, 2007. It
directed the NLRC, McBurnie, and all persons acting for and under their authority to refrain from causing
the execution and enforcement of the LA decision in favor of McBurnie, conditioned upon the
respondents posting of a bond in the amount of P10,000,000.00. The reconsideration of issuance of the
writ of preliminary injunction sought by McBurnie was denied by the CA.

McBurnie filed with the Supreme Court a Petition for Review on Certiorari (G.R. Nos. 178034 and 178117)
assailing the CA resolutions that granted the respondent's; application for the injunctive writ. On July 4,
2007, the Court denied the petition. A motion for reconsideration was denied with a finality on October 7,
2007.

McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration and (2) to Admit

9
the Attached Supplemental Motion for Reconsideration, a prohibited pleading under Section 2, Rule 56 of
the Rules of Court. Thus, the motion for leave was denied by the Court and the July 4, 2007 became final
and executor on November 13, 2007.

On October 27, 2008, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 and
rendered a decision allowing the respondent's motion to reduce appeal bond and directing the NLRC to
give due course to their appeal. The CA also ruled that the NLRC committed grave abuse of discretion in
immediately denying the motion without fixing an appeal bond in an amount that was reasonable, as it
denied the respondents of their right to appeal from the decision of the LA.

McBurnie filed a motion for reconsideration. The respondents moved that the appeal be resolved on the
merits by the CA. The CA denied both motions. McBurnie then filed with the Supreme Court the Petition
for Review on Certiorari (G.R. Nos. 186984-85)

The NLRC, acting on the CA order of remand, accepted the appeal from the LA decision and reversed and
set aside the decision of the LA, and entered a new on dismissing McBurnie complaint.

On September 18, 2009, the third division of this court rendered its decision granting respondents motion
to reduce appeal bond. This Court also reinstated and affirmed the NLRC decision dismissing respondent's
appeal for failure to perfect an appeal and denying their motion for reconsideration. The aforementioned
decision became final and executor on March 14, 2012.

The respondents filed a Motion for Leave to File Attached Third Motion for Reconsideration, with an
attached Motion for Reconsideration with Motion to Refer These Cases to the Honorable Court En Banc.
The Court En Banc accepted the case from the third division and issued a temporary restraining order
(TRO) enjoining the implementation of the LA Decision. McBurnie filed a Motion for Reconsideration
where he invoked that the Court September 18, 2009 decision had become final and executor.

ISSUE: Whether or not McBurnie was illegally dismissed?

HELD: There was no employer-employee relationship.

REMEDIAL LAW: second motion for reconsideration

At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as a
general rule, prohibited.Section 2, Rule 52 of the Rules of Court provides that n]o second motion for
reconsideration of a judgment or final resolution by the same party shall be entertained. The rule rests on
the basic tenet of immutability of judgments.t some point, a decision becomes final and executory and,
consequently, all litigations must come to an end./span>

The general rule, however, against second and subsequent motions for reconsideration admits of settled
exceptions. In a line of cases, the Court has then entertained and granted second motions for
reconsideration n the higher interest of substantial justice,as allowed under the Internal Rules when the
assailed decision is legally erroneous,patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. In Tirazona v. Philippine EDS Techno-Service, Inc. (PET, Inc.),
we also explained that a second motion for reconsideration may be allowed in instances of xtraordinarily
persuasive reasons and only after an express leave shall have been obtained.In Apo Fruits Corporation v.
Land Bank of the Philippines, we allowed a second motion for reconsideration as the issue involved
therein was a matter of public interest, as it pertained to the proper application of a basic constitutionally-
guaranteed right in the government implementation of its agrarian reform program.In San Miguel
Corporation v. NLRC, the Court set aside the decisions of the LA and the NLRC that favored claimants-
security guards upon the Court review of San Miguel Corporation second motion for reconsideration.In

10
Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et al., the Court en banc reversed on a third motion for
reconsideration the ruling of the Court Division on therein private respondentsclaim for wages and
monetary benefits.

The instant case qualifies as an exception to, first, the proscription against second and subsequent
motions for reconsideration, and second, the rule on immutability of judgments; a reconsideration of the
Decision dated September 18, 2009, along with the Resolutions dated December 14, 2009 and January 25,
2012, is justified by the higher interest of substantial justice.

In League of Cities of the Philippines (LCP) v. Commission on Elections, we reiterated a ruling that when a
motion for leave to file and admit a second motion for reconsideration is granted by the Court, the Court
therefore allows the filing of the second motion for reconsideration.In such a case, the second motion for
reconsideration is no longer a prohibited pleading. Similarly in this case, there was then no reason for the
Court to still consider the respondent's second motion for reconsideration as a prohibited pleading, and
deny it plainly on such ground.The Court intends to remedy such error through this resolution.

Upon review, the Court is constrained to rule differently on the petitions.We have determined the grave
error in affirming the NLRC rulings, promoting results that are patently unjust for the respondents, as we
consider the facts of the case, pertinent law, jurisprudence, and the degree of the injury and damage to
the respondents that will inevitably result from the implementation of the Court Decision dated
September 18, 2009.

11
INDOPHIL TEXTILE MILLS, INC.,V. ENGR. SALVADOR ADVIENTO. [G.R. NO.
171212, 20 AUGUST 2014]
Facts:
Engr. Salvador Adviento was hired by Indophil Textile Mills, Inc. (Indophil) to maintain its thread
manufacturing business in Bulacan. Advientoalleged that there were no adequate safety measures
introduced by Indophil when he conducted a maintenance check on the dye housearea.The workplace is
very hot and emits foul chemical odor. According to Adviento, the air washer dampers and all roof exhaust
vests are blown into open air, carrying dust thereto. He recommended to management to place roof
insulation but such was turned down by management due to high cost. Twelve years later, Adviento
experienced weakness and dizziness, and was thereafter diagnosed with Chronic Poly Sinusitis and Allergic
Rhinitis.

Adviento filed a complaint with the Regional Trial Court, alleging that he contracted such occupational
disease by reason of the gross negligence of petitioner to provide him with a safe, healthy and workable
environment. Indophil argued that the RTC has no jurisdiction over the subject matter of the complaint
because the same falls under the original and exclusive jurisdiction of the Labor Arbiter. RTC sustained its
jurisdiction on the ground that the case is a quasi-delict, that Indophil'sfailure to provide its employees with
a safe, healthy and workable environment is an act of negligence.

Issue:
Does RTC have jurisdiction over a negligent employerwho failed to provide a safe and healthy working
environment?

Ruling:
Yes, the jurisdiction rests on the regular courts. According to the Court, not all claims involving employees
can be resolved solely by labor courts, specifically when the law provides otherwise. The Court formulated
the “reasonable causal connection rule,” wherein if there is a reasonable causal connection between the
claim asserted and the employer-employee relations, then the case is within the jurisdiction of the labor
courts; and in the absence thereof, it is the regular courts that have jurisdiction.

In the case at bar, Adviento's claim for damages is specifically grounded on Indophil's gross negligence to
provide a safe, healthy and workable environment for its employees –a case of quasi-delict. The Court
ascertained this from reading the complaint, which enumerated the acts and/or omissions of Indophil
relative to the conditions in the workplace.

It is a basic tenet that jurisdiction over the subject matter is determined upon the allegations made in the
complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim asserted therein,
which is a matter resolved only after and as a result of a trial.Neither can jurisdiction of a court bemade to
depend upon the defenses made by a defendant in his answer or motion to dismiss. In this case, a perusal
of the complaint would reveal that the subject matter is one of claim for damages arising from quasi-delict,
which is within the ambit of the regular court's jurisdiction.

Adviento alleges that due to the continued and prolonged exposure to textile dust seriously inimical to his
health, he suffered work-contracted disease which is now irreversible and incurable, and deprived him of
job opportunities.Clearly, injury and damages were allegedly suffered by respondent, an element of quasi-
delict.

It also bears stressing that respondent is not praying for any relief under the Labor Code of the Philippines.
He neither claims for reinstatement nor backwagesor separation pay resulting from an illegal termination.
The cause of action herein pertains to the consequence of petitioner’s omission which led to a work-related

12
disease suffered by respondent, causing harm or damage to his person. Such cause of action is within the
realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.

Where the resolution of the dispute requires expertise, not in labor management relations nor in wage
structures and other terms and conditions of employment, but rather in the application of the general civil
law, such claim falls outside the area of competence of expertise ordinarily ascribed to the LA and the
NLRC.The RTC has jurisdiction over the subject matter of respondent’s complaint praying for moral
damages, exemplary damages, compensatory damages, anchored on petitioner’s alleged gross negligence
in failing to provide a safe and healthy working environment for respondent.

13
MANILA MINING CORP., V. AMOR [GR NO. 182800, APRIL 20, 2015, CITING
2015 MCBURNIE]
Facts:
(chronological order)
1. Respondents Lowito Amor, RollybieCeredon, Julius Cesar, Ronito Martinez and FerminTabili, Jr. were
regular employees of petitioner Manila Mining Corporation, a domestic corporation which operated a
mining claim in Placer, Surigao del Norte,
2. In compliance with existing environmental laws, petitioner maintained a tailing pond, a tailings
containment facility required for the storage of waste materials generated by its mining operations.
When the mine tailings being pumped into the tailing pond reached the maximum level in, petitioner
temporarily shut down its mining operations pending approval of its application to increase said
facilty’s capacity by the Department of Environment and Natural Resources-Environment Management
Bureau (DENR-EMB).
3. Although the DENR-EMB issued a temporary authority for it to be able to continue operating the
tailing pond for another six (6) months and to increase its capacity, petitioner failed to secure an
extension permit when said temporary authority eventually lapsed.
4. Petitioner served a notice, informing its employees and the Department of Labor and Employment
Regional Office No. XII (DOLE) of the temporary suspension of its operations for six months and the
temporary lay-off of two-thirds of its employees. After the lapse of said period, petitioner notified
the DOLE that it was extending the temporary shutdown of its operations for another six months.
5. Adversely affected by petitioner’s continued failure to resume its operations, respondents filed the
complaint for constructive dismissal and monetary claims before the Regional Arbitration Branch of the
National Labor Relations Commission (NLRC).
6. Executive Labor Arbiter Benjamin E. Pelaez held petitioner liable for constructive dismissal in view of
the suspension of its operations beyond the six-month period allowed under Article 2867 of the Labor
Code of the Philippines - finding that the cause of suspension of petitioner’s business was not beyond
its control. The labor arbiter awarded, among others, separation pay to respondents.
7. The NLRC reversed the appealed decision. Finding that the continued suspension of petitioner’s
operations was due to circumstances beyond its control, the NLRC ruled that, under Article 283 of the
Labor Code, respondents were not even entitled to separation pay considering the eventual closure
of their employer’s business due to serious business losses or financial reverses.
8. Respondents filed the Rule 65 petition for certiorari before the CA. Aside from the fact that the Labor
Arbiter decision had already attained finality, respondents faulted the NLRC for applying Article 283 of
the Labor Code absent allegation and proof of compliance with the requirements for the closure of an
employer’s business due to serious business losses. On the other hand, petitioner insist that the
cessation of its operations was due to causes beyond its control, petitioner argued that the subsequent
closure of its business due to business losses exempted it from paying separation pay.
9. The CA rendered the herein assailed decision, granting respondents’ petition and decreed that the
Labor Arbiter’s Decision had already attained finality and, for said reason, had been placed beyond the
NLRC’s power of review.
10. Petitioner seeks the reversal of the CA’s resolution.

Issue:
Whether petitioner’s cessation of its operations was due to causes beyond its control, hence, the closure
of its business due to business losses exempted it from paying separation pay.

Ruling:
NO. Closure of petitioner’s business was not beyond its control. Petitioner is liable for separation pay to
respondents.

14
Ratio:
Without necessarily resulting to a termination of employment, an employer may at any rate, bona fide
suspend the operation of its business for a period of not exceeding six months under Article 286 of the
Labor Code.43 While the employer is, on the one hand, duty bound to reinstate his employees to their
former positions without loss of seniority rights if the operation of the business is resumed within six
months, employment is deemed terminated where the suspension exceeds said period.
Not having resumed its operations within six months from the time it suspended its operations on 27 July
2001, it necessarily follows that petitioner is liable to pay respondents’ separation pay45 computed at one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher,46 as well
as the damages and attorney’s fees adjudicated by the Labor Arbiter. Without proof of the serious
business losses it allegedly sustained and/or compliance with the reportorial requirements under Article
283 of the Labor Code, petitioner cannot expediently plead exemption from said liabilities due to the
supposed financial reverses which led to the eventual closure of its business.

It is essentially required that the alleged losses in business operations must be proven for, otherwise, said
ground for termination would be susceptible to abuse by scheming employers who might be merely feigning
business losses or reverses in their business ventures in order to ease out employees.The condition of
business losses justifying retrenchment is normally shown by audited financial documents like yearly
balance sheets and profit and loss statements as well as annual income tax returns48 which were not
presented in this case.

Neither can petitioner evade said liabilities on the strength of the 28 July 2005 Decision rendered by the
CA's Twenty-Second Division in CAG.R. SP No. 00072, entitled Rosita Asumen, et al. v. National Labor
Relations Commission, et al., where its employees' claim for separation pay was denied on account of the
subsequent closure of its business due to serious business losses and financial reverses.49 Although the
employees Rule 45 petition for review on certiorari had been, the ruling in said case can hardly be
considered binding on respondents who were not parties thereto.

As for the inequality in benefits which would supposedly result if the CA's assailed decision and resolution
were not reversed, suffice it to say that this Court had sustained the claim for separation pay of
petitioner's employees in the case of Manila Mining Corp Employees Association-Federation of Free
Workers Chapter, et al. v. Manila Mining Corporation, et al. Stare decisis is inapplicable; the matter of
separation pay for petitioner's employees has been decided case to case

15
TOYOTA ALABANG, INC. V. EDWIN GAMES [GR. 206612, AUGUST 17, 2015]
Facts:
Games, who worked as a foreman for petitioner, allegedly stole its vehicle lubricants. Subsequently, it
charged him with qualified theft before the trial court. Two years thereafter, or on 24 August 2007, Games
filed a Complainant for illegal dismissal, nonpayment of benefits, and damages against petitioner. The
latter, through counsel, failed to file its Position Paper on the date set on 15 November 2007.Several
resetting’s of the hearings ensued. During the 21 December 2007 hearing, petitioner manifested that it had
failed to file its Position Paper because its handling lawyer was no longer connected with the company.
Then, in the hearing of 11 January 2008, petitioner failed to appear and even reneged on submitting its
pleading. Accordingly, on 25 January 2008, the case was declared submitted for decision.On 5 February
2008, the LA ruled against petitioner and ordered the latter to pay Games P535,553.07 for his separation
pay, back wages, service incentive leave pay and attorney's fees resulting from his illegal dismissal.
Petitioner no longer filed a motion for reconsideration. As a result, the LA's ruling became final and
executory. The LA issued a Writ of Execution, which petitioner sought to quash. It prayed that the
proceedings be reopened, explaining that it had failed to present evidence because of its counsel's
negligence in filing the appropriate pleadings. The LA denied the claims of petitioner. Aggrieved, the latter
appealed before the NLRC.

The appeal of petitioner was denied due course because it had failed to show proof of its security deposit
for the appeal bond under Section 6, Rule VI of the 2005 NLRC Rules of Procedure. According to the NLRC,
the bonding company's mere declaration in the Certification of Security Deposit that the bond was fully
secured7 was not tantamount to a faithful compliance with the rule, because there must first be an
accompanying assignment of the employer's bank deposit.

On the merits, the NLRC dismissed the case on the basis of the rule that no appeal may be taken from an
order of execution of a final judgment.8 For the NLRC, petitioner's failure to appeal the LA Decision already
made the ruling final and executory.Petitioner elevated the case to the CA via a Petition for Certiorari, but
the action was dismissed. Firstly, the CA ruled that the NLRC did not gravely abuse its discretion in denying
the appeal, given that petitioner had failed to comply faithfully with the bond requirement. Secondly, it
echoed the ruling of the NLRC that a final judgment is no longer appealable. Thirdly, the CA found that
petitioner's own negligence had caused it to lose its right to appeal.

Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for Injunctive Relief before
this Court. It disputed the finding that it did not show proof of its security deposit for the appeal bond. It
also insisted that its counsel's gross negligence justified the reopening of the proceedings below. By way of
a minute Resolution, this Court denied the petition considering that the allegations, issues and arguments
raised by petitioner failed to sufficiently show that the CA had committed any reversible error in the
challenged decision and resolution as to warrant the exercise of this Court's discretionary appellate
jurisdiction. Hence, the instant Motion for Reconsideration.
The determinative issues in this case remain the same.

Issue:
Whether the CA committed a reversible error in refusing to reopen the proceedings below.

Ruling:
This Court maintains that the CA correctly refused to reopen the proceedings below. The reopening of a
case is an extraordinary remedy,which, if abused, can make a complete farce of a duly promulgated decision
that has long become final and executory. Hence, there must be good cause on the movant's part before it
can be granted.In this case, petitioner itself was negligent in advancing its case. As found by the appellate
court, petitioner was present during the mandatory conference hearing in which the latter was informed

16
by the LA of the need to file a Position Paper on 15 November 2007. However, petitioner not only reneged
on the submission of its Position Paper, but even failed to move for the filing of the pleading at any point
before the LA resolved the case on 5 February 2008.According to the NLRC and the CA, the bonding
company's mere declaration in the Certification of Security Deposit that the bond is fully secured is not
tantamount to a faithful compliance with the rule, because there must first be an accompanying assignment
of the employer's bank deposit. On the other hand, the dissent sees this declaration as an act that satisfies
Section 6, Rule VI of the 2011 NLRC Rules of Procedure. For this reason, he opines that the NLRC should
have entertained the appeal of petitioner.

Notwithstanding this issue, the NLRC has given a well-founded reason for refusing to entertain petitioner's
appeal, namely, no appeal may be taken from an order of execution of a final and executory judgment.An
appeal is not a matter of right, but is a mere statutory privilege. It may be availed of only in the manner
provided by law and the rules. Thus, a party who seeks to elevate an action must comply with the
requirements of the 2011 NLRC Rules of Procedure as regards the period, grounds, venue, fees, bonds, and
other requisites for a proper appeal before the NLRC; and in Section 6, Rule VI, the aforesaid rules prohibit
appeals from final and executory decisions of the Labor Arbiter. We have consistently held that the
requirements of due process are satisfied when the parties are given the opportunity to submit position
papers wherein they are supposed to attach all the documents that would prove their claim in case it be
decided that no hearing should be conducted or was necessary. Here, petitioner, despite being given
several chances to pass its position paper, did not at all comply. Worse, petitioner also had other instances
of negligence. Consequently, this Court cannot redo the whole proceedings of the Labor Arbiter who had
already afforded due process to the former. Given the foregoing reasons, juxtaposed with the high
threshold for resolving appellate reviews in labor cases before this Court, we rule for the denial of
petitioner's Motion for Reconsideration.

17
SOCIAL SECURITY SYSTEM V. DEBBIE UBAÑA [G.R. NO. 200114, AUGUST 24,
2015]
Facts:
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.

In her Complaint, respondent alleged that in July 1995, she applied for employment with the petitioner. However, after
passing the examinations and accomplishing all the requirements for employment, she was instead referred to DBP
Service Corporation for "transitory employment." She took the pre-employment examination given by DBP Service
Corporation and passed the same. On May 20, 1996, she was told to report for training to SSS, Naga City branch, for
immediate deployment to SSS Daet branch. On May 28, 1996, she was made to sign a six-month Service Contract
Agreement by DBP Service Corporation, appointing her as clerk for assignment with SSS Daet branch effective May 27,
1996, with a daily wage of only P171.00. She was assigned as "Frontliner" of the SSS Members Assistance Section until
December 15, 1999. From December 16, 1999 to May 15, 2001, she was assigned to the Membership Section as Data
Encoder. On December 16, 2001, she was transferred to the SSS Retirees Association as Processor at the Membership
Section until her resignation on August 26, 2002. As Processor, she was paid only P229.00 daily or P5,038.00 monthly,
while a regular SSS Processor receives a monthly salary of P18,622.00 or P846.45 daily wage. Her May 28, 1996 Service
Contract Agreement with DBP Service Corporation was never renewed, but she was required to work for SSS
continuously under different assignments with a maximum daily salary of only P229.00; at the same time, she was
constantly assured of being absorbed into the SSS plantilla. Respondent claimed she was qualified for her position as
Processor, having completed required training and passed the SSS qualifying examination for Computer Operations
Course given by the National Computer Institute, U.P. Diliman from May 16 to June 10, 2001, yet she was not given the
proper salary. Because of the oppressive and prejudicial treatment by SSS, she was forced to resign on August 26, 2002
as she could no longer stand being exploited, the agony of dissatisfaction, anxiety, demoralization, and injustice. She
asserted that she dedicated six years of her precious time faithfully serving SSS, foregoing more satisfying employment
elsewhere, yet she was merely exploited and given empty and false promises; that defendants conspired to exploit her
and violate civil service laws and regulations and Civil Code provisions on Human Relations, particularly Articles 19, 20,
and 21. As a result, she suffered actual losses by way of unrealized income, moral and exemplary damages, attorney's
fees and litigation expenses.

Petitioner and its co-defendants SSS Retirees Association and DBP Service Corporation filed their respective motions to
dismiss, arguing that the subject matter of the case and respondent's claims arose out of employer-employee relations,
which are beyond the RTC's jurisdiction and properly cognizable by the National Labor Relations Commission (NLRC).

Respondent opposed the motions to dismiss, arguing that pursuant to civil service rules and regulations, service
contracts such as her Service Contract Agreement with DBP Service Corporation should cover only a) lump sum work
or services such as janitorial, security or consultancy services, and b) piece work or intermittent jobs of short duration
not exceeding six months on a daily basis.9She posited that her service contract involved the performance of sensitive
work, and not merely janitorial, security, consultancy services, or work of intermittent or short duration. In fact, she
was made to work continuously even after the lapse of her 6-month service contract. Citing Civil Service Commission
Memorandum Circular No. 40, respondent contended that the performance of functions outside of the nature provided
in the appointment and receiving salary way below that received by regular SSS employees amount to an abuse of
rights; and that her cause of action is anchored on the provisions of the Civil Code on Human Relations.

The RTC granted the motion to dismiss for lack of jurisdiction, said the case shall be under the NLRC. But later on granted
the petition for motion for reconsideration by the respondent.
Upon appeal to the CA by the petitioners but the same was denied. Hence the case was elevated to the Supreme Court.

Issue:
1. Petitioner simply submits that the assailed CA dispositions are contrary to law and jurisprudence.
2. Whether the Regular courts has jurisdiction over the case.

Ruling:

18
For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire jurisdiction over a dispute, there
must be an employer-employee relation between the parties thereto.

x xx It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties
and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction, x xx The action is within the realm of civil law
hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application
of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the
respondent where no employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the
labor arbiters’ exclusive original jurisdiction only over the following:
1. Unfair labor practices;
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 x xx.

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.

In this jurisdiction, the "long honored legal truism of 'equal pay for equal work'" has been "impregnably
institutionalized;" "persons who work with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries." "That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against these evils. The Constitution in the Article on Social
Justice and Human Rights exhorts Congress to 'give highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce social, economic, and political inequalities.' 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'.
Hence the petition was denied by the Supreme Court.

19
ILAW AT BUKLOD NG MANGGAGAWA V. NLRC ET. AL. [G.R. NO. 91980 JUNE
27, 1991]
Facts:
The controversy at bar had its origin in the “wage
distortions" affecting the employees of respondent SanMiguel Corporation allegedly caused by Republic
Act No.6727, otherwise known as the Wage Rationalization Act

Upon the affectivity of the Act, the union known as "Ilawat Buklod Ng Manggagawa (IBM) " said to
represent 4,500 employees of San Miguel Corporation, more or less,"working at the
various plants, offices, and warehouses located at the National Capital Region" presented to the
company a "demand" for correction of the “significant distortion in . . . (the workers') wages." In that
"demand,"the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows:

xxx xxx xxx(d) . . .Where the application of the increases in the wage rates under this Section results in
distortions as defined under existing laws in the wage structure within an establishment and gives rise to a
dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a
deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the
National Labor Relations Commission(NLRC) having jurisdiction over the workplace…The Union claims that
demand was ignored.

In this connection, the workers involved issued a joint notice reading as follows: SAMA-SAMANG PAHAYAG:
KAMINGARAWANG MANGGAGAWA NG POLO BREWERYPAWANG KASAPI NG ILAW AT BUKLOD
NGMANGGAGAWA (IBM) AY NAGKAISANG NAGPASYA NA IPATUPAD MUNA ANG EIGHTHOURS WORK
SHIFT PANSAMANTALA HABANGHINDI IPINATUTUPAD NG SMC MANAGEMENTANG TAMANG WAGE
DISTORTION. That decision to observe the "eight hours work shift" was implemented on October 16, 1989
by "some 800daily-paid workers at the Polo Plant's production line of SMC] joined by others at statistical
quality control and warehouse.

There ensued thereby a change in the work schedule which had been observed by daily-paid workers at the
Polo Plant for the past five (5) years, i e "ten (10)hours for the first shift and ten (10) to fourteen (14) hours
for the second shift, from Mondays to Fridays . . ; (and on)Saturdays, . . eight (8) hours for both shifts" a
work schedule which, SMC says, the workers had "welcomed,and encouraged" because the automatic
overtime built into the schedule "gave them a steady source of extra-income, "and pursuant to which it
(SMC) "planned its production targets and budgets .This abandonment of the long-standing schedule of
work and the reversion to the eight-hour shift apparently caused substantial losses to SMC. It is SMC's
submittal that the coordinated reduction by the Union's members of the work time theretofore willingly
and consistently observed by them, causing financial losses to the employer in order to compel it to yield
to the demand for correction of "wage distortions," is an illegal and "unprotected" activity.

Issue:
Whether the strike is illegal?

Ruling:
YES. Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted activities
in order to attain their legitimate objectives. The more common of these concerted activities as far as
employees are concerned are: strikes - the temporary stoppage of work as a result of an industrial or labor
dispute. On the other hand, the counterpart activity that management may licitly undertake is the lockout
– the temporary refusal to furnish work on account of a labor dispute, Article 263 provides that the "right
of legitimate labor organizations to strike and of employer to lockout, consistent with the national interest,
shall continue to be recognized and respected." The legality of these activities is usually dependent on the

20
legality of the purposes sought to be attained and the means employed therefor. It goes without saying
that these joint or coordinated activities may be forbidden or restricted by law or contract.

Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the
correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of
settlement of the issue. The provision states that:
xxx … the employer and the union shall negotiate to correct the distort-ions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under their collective bargaining agreement
and, if it remains unresolved, through voluntary arbitration…

Furthermore, Section 16, Chapter I of the implementing rules of said law… declares that, "Any issue
involving wage distortion shall not be a ground for a strike/lockout."Moreover, the worker’s concerted
refusal to adhere to the work schedule in force is a slowdown, an inherently illegal activity even in the
absence of a no strike clause because while the employees continue to work and remain at their positions
and accept their wages, they at the same time select part of the work they care to perform at their own
volition or in their own terms.

21
QUANTUM FOODS, INC. V. MARCELINO ESLOYO AND GLEN MAGSILA, [G.R.
NO. 213696, DECEMBER 09, 2015]
Facts:
Petitioner Quantum Foods, Inc. is a domestic corporation engaged in the distribution and selling of food
products nationwide. It hired Esloyo as Major Accounts Representative and later on promoted to the
position of Regional Sales Manager for Visayas and Mindanao. On the other hand, it hired Magsila as Key
Accounts Representative for the Panay Area.

Quantum decided to reorganize its sales force nationwide following a drastic drop in its net income, and
Magsila was among those retrenched. However, Magsila’s final pay and other benefits were not release
due to alleged discovery of unauthorized/undocumented deductions, which he purportedly failed to
explain.

Esloyo was terminated from work on the ground of loss of trust and confidence due to his numerous
violations of the company rules and regulations.

Aggrieved, Esloyo and Magsila filed separate complaints for illegal dismissal with money claims against
Quantum. They also impleaded Dole Philippines, Inc. as party to the case, claiming that said company
required them to perform additional tasks that were necessary and desirable for its operations, and that
Dole, as well as its Executive personnel had created and organized Quantum, and thus, should be held jointly
and solidarily liable with Quantum for respondent’s claims.

Quantum maintained that respondents’ dismissal were valid, hence, it is not liable for their money claims.
On the other hand, Dole deined any employer-employee relationship with respondents.

The Labor Arbiter found respondents to have been illegally dismissed and ordered Quantum to pay
respondents a total monetary judgment of P1,817,856.71 but DOLE was deleted as party to the case, upon
a finding that it has no employer-employee relationship with respondents. Dissatisfied, Quantum filed its
Notice of Appeal and Memorandum of Appeal before the NLRC.

The NLRC gave due course to Quantum’s appeal holding that there was substantial compliance with the
bond requirement and held that respondents were not illegally dismissed.

The Court of Appeals reversed and set aside the NLRC’s ruling and reinstated the LA’s Decision. It ruled that
Quantum’s failure to post the required bond in an amount equivalent to the monetary judgment impeded
the perfection of its appeal, and rendered the LA’s Decision final and executory. Thus, the NLRC was bereft
of jurisdiction and abused its discretion in entertaining the appeal.

Issue:
Whether the appeal bond posted accompanied by a motion to reduce bond is reasonable in order to
suspend the period to perfect an appeal.

Ruling:
YES. While it has been settled that the posting of a cash or surety bond is indispensable to the perfection of
an appeal in cases involving monetary awards from the decision of the LA, in several cases, the Court has
relaxed this stringent requirement whenever justified. Thus, the Rules – specifically Section 6, Rule VI –
thereof, allow the reduction of the appeal bond upon a showing of: (a) the existence of a meritorious ground
for reduction, and (b) the posting of a bond in a reasonable amount in relation to the monetary award.

22
In Nicol vs. Footjoy Industrial Corp., the Court summarized the guidelines under which the NLRC must
exercise its discretion in considering an appellant’s motion for reduction of bond in this wise:

“The bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious
cases. These cases include instances in which (1) there was substantial compliance with the Rules, (2)
surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal
interpretation of the requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good
faith by posting a partial bond during the reglementary period.

Here, Quantum posted a partial bond in the amount of P400,000, or more than twenty percent (20%) of
the monetary judgment, within the reglementary period to appeal, together with the Motion to Reduce
Bond anchored on its averred difficulty in raising the amount of the bond and searching for an insurance
company that can cover said amount within the short period of time to perfect its appeal. Before the NLRC
could even act on the Motion to Reduce Bond, Quantum posted a surety bond from an accredited insurance
company covering fully the judgment award.

As to what constitutes “a reasonable amount of bond” that must accompany the motion to reduce bond in
order to suspend the period to perfect an appeal, the Court, in McBurnei vs. Ganzon, pronounce:

To reduce that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the
chance to seek a reduction of the appeal bond are effectively carried out, without however defeating the
benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are to be
filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to 10% of the
monetary award that is subject of the appeal, which shall provisionally be deemed the reasonable amount
of the bond in the meantime that an appellant’s motion is pending resolution by the Commission. ..

Hence, the posting of a P400,000 cash bond equivalent to more than 20% of the monetary judgment,
together with Motion to Reduce Bond within the reglementary period was sufficient to suspend the period
to perfect the appeal. The posting of the said partial bond coupled with the subsequent posting of a surety
bond in an amount equivalent to the monetary judgment also signified Quantum’s good faith and
willingness to recognize the final outcome of its appeal.

It should be emphasized that the NLRC has full discretion to grant or deny the motion to reduce bond, and
its ruling will not be disturbed unless tainted with grave abuse of discretion. Verily, an act of a court of
tribunal can only be considered to be tainted with grave abuse of discretion when such act is done in a
capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction, which clearly is not
extant with respect to the NLRC’s cognizance of Quantum’s appeal. Far from having gravely abused its
discretion, the NLRC correctly preferred substantial justice over the rigid and stringent application of
procedural rules.

23
DELA ROSA LINER INC ET V. BORELA ET [GR NO. 207286, JULY 29, 2015]
Facts:
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo Amarille, conductor, filed
separate complaints (later consolidated) againstpetitioners Dela Rosa Liner, Inc., a public transport
company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for underpayment/non-payment of salaries, holiday
pay, overtime pay, service incentive leave pay, 13th month pay, sick leave and vacation leave, night shift
differential, illegal deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.

In a motion dated October 26, 2011, the petitioners asked the labor arbiter to dismiss the case for forum
shopping. They alleged that on September 28, 2011, the CA 13th Division disposed of a similar case between
the parties (CA-G.R. SP No. 118038) after they entered into a compromise agreement which covered all
claims and causes of action they had against each other in relation to the respondents' employment.

The respondents opposed the motion, contending that the causes of action in the present case are different
from the causes of action settled in the case the petitioners cited.

The petitioners now ask the Court to nullify the CA judgment in CA-G.R. SP No. 128188 (arising from the
second complaint), contending that the appellate court erred in upholding the NLRC ruling that there was
no forum shopping nor res judicata that would bar the second complaint. They submit that "private
respondents should be penalized and be dealt with more severely, knowing fully well that the same action
had been settled and they both received a considerable amount for the settlement.

In their Comment filed on September 4, 2013, the respondents pray for the denial of the petition for having
been filed out of time and for lack of merit.

They argue that the petition should not prosper as it was belatedly filed. They claim that according to the
petitioners' counsel herself, her law firm received a copy of the CA resolution of May 21, 2013, denying
their motion for reconsideration on May 28, 2013, and giving them until June 12, 2013, to file the petition.
The petition, they point out, was notarized only on June 13, 2013, which means that it was filed only on
that day, or beyond the 15-day filing period.

On the substantive aspect of the case, respondents contend that their second complaint involved two
causes of action: (1) their claim for sick leave, vacation leave, and 13th-month pay under the collective
bargaining agreement of the company; and (2) the petitioners' noncompliance with wage orders since the
year 2000 until the present. They quote the NLRC's (1st Division) decision of July 31, 2012, 13 almost in its
entirety, to support their position that they did not commit forum shopping in the filing of the second
complaint and that they should be heard on their money claims against the petitioners.

Issue:
1. Whether the review on certiorari timely filed pursuant to Rule 45, Section 2 of the Rules of Court.
2. Whether there is grave abuse of discretion could be attributed to the NLRC when it reinstated the second
complaint.

Ruling:
The procedural issue

We find the petition for review on certiorari timely filed pursuant to Rule 45, Section 2 of the Rules of Court

The last day for filing of the petition, as respondents claim, fell on June 12, 2013, Independence Day, a legal
holiday. In Reiner Pacific International Shipping, et al. v. Captain Francisco B. Guevarra, et al., 15 the Court

24
explained that under Section 1, Rule 22 of the Rules of Court,as clarified by A.M. 00-2-14 SC (in relation to
the filing of pleadings in courts), when the last day on which a pleading is due falls on a Saturday, Sunday,
or a legal holiday, the filing of the pleading on the next working day is deemed on time. The filing of the
petition therefore on June 13, 2013, a working day, fully complied with the rules.

The merits of the case

The CA 15th Division committed no reversible error when it affirmed the NLRC ruling that the second
complaint is not barred by the rule on forum shopping nor by the principle of res judicata. In other words,
no grave abuse of discretion could be attributed to the NLRC when it reinstated the second complaint.

Contrary to the petitioners' submission, respondents' second complaint (CA-G.R. SP No. 128188), a money
claim, is not a "similar case" to the first complaint (CA-G.R. SP No. 118038). Thus, the filing of the second
complaint did not constitute forum shopping and the judgment in the first case is not a res judicata ruling
that bars the second complaint.

As the CA aptly cited, the elements of forum shopping are: (1) identity of parties; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two
preceding particulars such that any judgment rendered in the other action will, regardless of which party is
successful, amount to res judicata in the action under consideration.

We concur with the CA that forum shopping and res judicata are not applicable in the present case. There
is no identity of rights asserted and reliefs prayed for, and the judgment rendered in the previous action
will not amount to res judicata in the action now under consideration.

There is also no identity of causes of action in the first complaint and in the second complaint. In Yap v.
Chua, 17 we held that the test to determine whether causes of action are identical is to ascertain whether
the same evidence would support both actions, or whether there is an identity in the facts essential to the
maintenance of the two actions. If the same facts or evidence would support both actions, then they are
considered the same; a judgment in the first case would be a bar to the subsequent action.

Under the circumstances of the case before us, sufficient basis exists for the NLRC's and CA's conclusions
that there is no identity of causes of action between the respondents' two complaints against the
petitioners. The first complaint involved illegal dismissal/suspension, unfair labor practice with prayer for
damagesand attorney's fees; while the second complaint (the subject of the present appeal) involves claims
for labor standards benefits — the petitioners' alleged violation of Wage Orders Nos. 13, 14, 15 and 16;
nonpayment of respondents' sick and vacation leave pays, 13th-month pay, service incentive leave benefit,
overtime pay, and night shift differential.

As the CA correctly held, the same facts or evidence would not support both actions. To put it simply, the
facts or the evidence that would determine whether respondents were illegally dismissed, illegally
suspended, or had been the subject of an unfair labor practice act by the petitioners are not the same facts
or evidence that would support the charge of non-compliance with labor standards benefits and several
wage orders. We thus cannot find a basis for petitioners' claim that "the same action had been settled . . .
."

Neither are we persuaded by petitioners' argument that "The Compromise Agreement covered all claims
and causes of action that the parties may have against each other in relation to the private respondents'
employment." The compromise agreement had been concluded to terminate the illegal dismissal and unfair
labor case then pending before the CA. While the parties agreed that no further action shall be brought by
the parties against each other, they pointedly stated that they referred to actions on the same grounds. The

25
phrase same grounds can only refer to the grounds raised in the first complaint and not to any other
grounds.

We likewise cannot accept the compromise agreement's application "to all claims and damages or losses
either party may have against each other whether those damages or losses are known or unknown,
foreseen or unforeseen."

This coverage is too sweeping and effectively excludes any claims by the respondents against the
petitioners, including those that by law and jurisprudence cannot be waived without appropriate
consideration such as nonpayment or underpayment of overtime pay and wages.

In Pampanga Sugar Development, Co., Inc. v. Court of Industrial Relations, et al., the Court reminded the
parties that while rights may be waived, the waiver must not be contrary to law, public policy, morals, or
good customs; or prejudicial to a third person with a right recognized by law. 22 In labor law, respondents'
claim for 13th-month pay, overtime pay, and statutory wages (under Wages Orders 13, 14, 15 and 16),
among others, cannot simply be generally waived as they are granted for workers' protection and welfare;
it takes more than a general waiver to give up workers' rights to these legal entitlements.

Lastly, the petitioners' insinuation, that the respondents are not and should not be entitled to anything
more, because they had already "received a considerable amount for the settlement" (P350,000.00 for
Borela and P150,000.00 for Amarille), should be placed and understood in its proper context.

Although the NLRC reconsidered these awards and eventually granted financial assistance of P10,000.00
each to Borela and Amarille, it is reasonable to regard the amounts they received as a fair compromise in
the settlement of the first complaint in relation with the initial NLRC award, indicated above, before its
reconsideration. To be sure, the parties, especially the respondents, could not have considered the
P10,000.00 financial assistance or their labor standards claims, particularly the alleged violation of the wage
orders, as a factor in their effort to settle the case amicably. The compromise agreement, it should be
emphasized, was executed on September 8, 2011, 26 while the labor standards complaint was filed only on
September 23, 2011.
For the reasons discussed above, we find the petition without merit.
WHEREFORE, premises considered, the petition for review on certiorari is DISMISSED for lack of merit. The
assailed decision and resolution of the Court of Appeals are AFFIRMED.

26
13. Other Important Labor Provisions
A. Contracting Arrangement
Cases:

1.Aliviado et al vs. Procter & Gamble Phils GR No. 160506, March 9, 2010
2.San Miguel Corp. vs. Semillano et al., GR No. 164257, July 5, 2010
3.Manila Water Co. vs. Dalumpines, GR No. 175501, Oct. 4, 2010
4.Teng vs. Pahagac, GR No. 169704, November 17, 2010
5.GSIS vs. NLRC et al., GR No. 180045, Nov. 17, 2010
6.Sy et al., vs. Fairland Knitcraft Co Inc. G.R. No. 189658, December 12, 2011
7.Polyfoam-RGC International Corp., vs. Concepcion, G.R. No. 172349, June 13, 2012
8.Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012
9.Digital Telecommunications Phils Inc. vs. Digitel Employees Union et al., G.R. No.
184903-04, October 10, 2012
10. Norkis Trading Corp., vs. Buenavista, et al., G.R. No. 182018, October 10, 2012
11. Goya Inc. vs. Goya Inc. Employees Union-FFW G.R. No. 170054, Jan. 21, 2013
12. Vigilla et al., vs. Phil. College of Criminology Inc., G.R. No. 200094, June 10, 2013
13. BPI Employees Union-Davao city-FUBU vs. Bank of the Phil Islands et al., G.R. No.
174912, July 24, 2013
14. Alilin et al., vs. Petron Corp., GR No. 177592, June 9, 2014
15. Ampeleloquio vs. Jaka Distribution Inc., GR No. 196936, July 2, 2014
16. FVR Skills & Services Exponenets Inc. vs. Seva, et al., GR No. 200857, Oct. 22, 2014
17. Fonterra Brand Phils vs. Largado et al., GR No. 205300, March 18, 2015
18. W.M Manufacturing Inc. vs. Dalag, GR No. 209418, December 7, 2015
19. Diamond Farms vs. Southern Phils Fed of Labor, GR No. 173254-55, January 13, 2016,
citing 2014 Alilin

27
ALIVIADO ET AL V. PROCTER & GAMBLE PHILS [GR NO. 160506, MARCH 9,
2010]
Facts:
Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five months at a time.They were assigned at different
outlets, supermarkets and stores where they handled all the products of P&G. They received their wages
from Promm-Gem or SAPS. Subsequently, petitioners filed a complaint against P&G for regularization,
service incentive leave pay and other benefits with damages. The complaint was later amended to include
the matter of their subsequent dismissal.

The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee
relationship between petitioners and P&G. He found that the selection and engagement of the petitioners,
the payment of their wages, the power of dismissal and control with respect to the means and methods by
which their work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found
that Promm-Gem and SAPS were legitimate independent job contractors. On appeal to the NLRC, the NLRC
affirmed the decision of the labor arbiter. Petitioners then filed a petition for certiorari with the CA, alleging
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Labor Arbiter and
the NLRC. However, said petition was also denied by the CA.

Issues:
1.) Is P&G the employer of petitioners?
2.) Were petitioners illegally dismissed?

Ruling:
Qualify. In order to determine whether P&G is the employer of petitioners, it is necessary to first determine
whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors. There is "labor-
only" contracting where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered merely as an agent
of the employer who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.

The Court held that Promm-Gem cannot be regarded as labor-only contractor but a legitimate
independent contractor because the financial statement of Promm-Gem shows that it has authorized
capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of
1990. It also has long term assets worth P432, 895.28 and current assets of P719, 042.32. Promm-Gem has
also proven that it maintained its own warehouse and office space with a floor area of 870 square meters.
It also had under its name three registered vehicles which were used for its promotional/merchandising
business. Promm-Gem also has other clients aside from P&G.

On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31,
250.00. There is no other evidence presented to show how much its working capital and assets are.
Furthermore, there is no showing of substantial investment in tools, equipment or other assets. Considering
that SAPS has no substantial capital or investment and the workers it recruited are performing activities
which are directly related to the principal business of P&G, the court held that SAPS is engaged in "labor-
only contracting". The contractor is considered merely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if such employees had been directly employed
by the principal employer.

28
With regard to the termination letters given by Promm-Gem to its employees uniformly specified the cause
of dismissal as grave misconduct and breach of trust. The court held that there were no valid causes for
the dismissal of petitioners-employees of Promm-Gem.

Misconduct to be valid just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the
performance of the employee’s duties; and (c) must show that the employee has become unfit to continue
working for the employer. In the case, petitioners-employees of Promm-Gem may have committed an error
of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any
wrongful intent in doing so. As such, they are guilty of only simple misconduct for assailing the integrity of
Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave,
as that existing in the instant case, cannot be a valid basis for dismissing an employee.

Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of
the trust reposed in the employee by his employer. Ordinary breach will not suffice. Loss of trust and
confidence, as a cause for termination of employment, is premised on the fact that the employee concerned
holds a position of responsibility or of trust and confidence. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and must show that the employee is unfit to continue
to work for the employer. In the case at bar, the petitioners-employees of Promm-Gem have not been
shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence
to show that they are unfit to continue to work as merchandisers for Promm-Gem. Hence, no valid cause
for dismissal by Promm-Gem against petitioner-employees.

With regard to the petitioners placed with P&G by SAPS, they were given no written notice of dismissal. The
records show that upon receipt by SAPS of P&G’s letter terminating their "Merchandising Services Contact",
they in turn verbally informed the concerned petitioners not to report for work anymore. It must be
emphasized that the onus probandi to prove the lawfulness of the dismissal rests with the employer. In
termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and
valid cause. In the instant case, P&G failed to discharge the burden of proving the legality and validity of the
dismissals of those petitioners who are considered its employees. Hence, the dismissals necessarily were
not justified and are therefore illegal.

29
SAN MIGUEL CORP. V. SEMILLANO ET AL., [GR NO. 164257, JULY 5, 2010]
Facts:
 Semillano et al filed a complaint for illegal dismissal with the Labor Arbiter against AMPCO, Merlyn V.
Polidario, SMC and Rufino I. Yatar on July 17, 1995
 The complainants claimed that they were fillers of SMC Bottling Plant, engaged in activities necessary
and desirable in the usual business of SMC. They assert, therefore, that they are regular employees of
SMC.
 SMC utilized AMPCO, thus making it appear that the latter was the complainants’ employer, with
intentions of evading the responsibility of paying the benefits due to the complainants. The
complainants further claim that AMPCO and SMC failed to give them their 13 th month pay, and that
they were prevented from entering the premises of SMC.
 In its defense, SMC raised that it is not the employer of the complainants; that AMPCO is their employer
because it is an independent contractor. AMPCO directly paid their salaries and respective benefits.
 On April 30, 1988, Labor Arbiter Jesus N. Rodriguez, Jr. rendered his decision in favor of Semillano et al,
ordering that the complainants be reinstated without loss of seniority rights and payment of full
backwages; and to pay the complainant’s counsel attorney’s fees 10% of the total award. The
complainants filed a motion for partial execution of the LA’s decision, but SMC filed its opposition to the
motion.
 Semillano et al appealed the LA decision to the NLRC. The Fourth Division affirmed the decision of the
LA, with minor modifications in favour of Semillano et al
 SMC moved for a reconsideration of the NLRC’s decision on February 28, 2002. The NLRC reversed its
earlier ruling, and instead held AMPCO liable to pay for the respondents’ backwages, salaries,
allowances and attorney’s fees. The respondents filed their motion for reconsideration, but this was
denied.
 SMC filed a motion for reconsideration, but this was denied by the CA. A petition for review on certiorari
was filed with the Supreme Court thereafter.
 Feeling aggrieved, respondents filed a petition for review on certiorari with the Court of Appeals, which
acted favourably in May 24, 2008. It applied the same control test that the NLRC used, but found that
SMC exercised control over the respondents, and had the power of dismissal as well. The CA added that
AMPCO was engaged in labor-only contracting since its capital of nearly one million pesos was
insufficient to qualify as an independent contractor.
 SMC argues that the CA erred in assuming that it exercised control over the respondents simply because
they worked within the premises of the company. SMC relied on the provision of its service contract
with AMPCO, wherein it was stipulated that the latter was to provide the materials, tools and equipment
needed to carry out the services contracted out by SMC. The contract also provides that AMPCO shall
have exclusive discretion over its personnel, and that it also determines their wages.
 SMC added that the respondents’ actions are for their regularization as employees of SMC – something
that is not recognized or allowed by law.

Issue:
Whether or not AMPCO is a legitimate job contractor.

Ruling:
 Generally, the findings of the LA and NLRC are regarded with much respect and finality when supported
with sufficient evidence and affirmed by the CA.
 Although there are many signs that AMPCO is indeed an independent contractor, other factors prove
otherwise. First, the LA found no evidence that AMPCO had substantial capital or investment. The NLRC
stated that AMPCO’s main business is trading, maintaining a store catering to members and the public –
thus making its activity of job contracting with SMC only a sideline. Thus AMPCO’s substantial capital is
invested and used in its trading business.

30
 The petitioner could not prove that AMPCO had substantial tools and equipment for use in segregation
and piling for SMC. The NLCR earlier pointed out that AMPCO had no fixed assets that it could have used
in any way for the completion of its contracted service with the petitioner. The only logical conclusion is
that the tools and equipment used by the respondents are owned by SMC, thus proving that AMPCO
has no independent business.
 The Court is not convinced that AMPCO exercised exclusive direction in the discharge of respondents,
based on Merlyn Polidario’s instructions to the respondents to “wait for further instructions from SMC’s
supervisor” after being prevented from entering SMC premises. Therefore, it would be logical to conclude
that SMC wielded the power of control.
 AMPCO’s Certificate of Registration as an Independent Contractor issued by the proper Regional office
of the DOLE is not conclusive evidence. The totality of facts and surrounding circumstances must also be
considered. Therefore, SMC (principal employer) is liable along with AMPCO (labor-only contractor) for
all the respondents’ rightful claims.
 The petition is DENIED, and the February 19, 2004 decision of the CA AFFIRMED.

31
MANILA WATER CO. V. DALUMPINES, [GR NO. 175501, OCT. 4, 2010]
Facts: By virtue of Republic Act No. 8041, otherwise known as the "National Water Crisis Act of 1995," the
Metropolitan Waterworks andSewerage System (MWSS) was given the authority to enter into concession
agreements allowing the private sector in its operations. PetitionerManila Water Company, Inc. (Manila
Water) was one of two private concessionaires contracted by the MWSS to manage the water distribution
system in the east zone of Metro Manila. The east service area included the following towns and cities:
Mandaluyong, Marikina, Pasig, Pateros,San Juan, Taguig, Makati, parts of Quezon City and Manila, Angono,
Antipolo, Baras, Binangonan, Cainta, Cardona, Jala-Jala, Morong, Pililla, Rodriguez, Tanay, Taytay, Teresa,
and San Mateo.Under the concession agreement, Manila Water undertook to absorb the regular employees
of MWSS listed by the latter effectiveAugust 1, 1997. Individual respondents, with the exception of Moises
Zapatero (Zapatero) and Edgar Pamoraga, were among the one hundred twenty-one (121) employees not
included in the list of employees to be absorbed by Manila Water. Nevertheless, Manila Water engaged
their services without written contract from August 1, 1997 to August 31, 1997. On September 1, 1997,
individual respondents signed a three (3)-month contract to perform collection services on commission
basis for Manila Water's branches in the east zone.In December 1997, Manila Water entered into a service
agreement with respondent First Classic Courier Services, Inc. (FCCSI) also for its courier needs.On various
dates between May and October 2002, individual respondents were terminated from employment. Manila
Water no longer renewed its contract with FCCSI because it decided to implement a "collector less" scheme
whereby Manila Water customers would instead remit payments through "Bayad Centers." The aggrieved
bill collectors individually filed complaints for illegal dismissal, unfair labor practice, damages, and
attorney's fees, with prayer for reinstatement and back wages against petitioner Manila Water and
respondent FCCSI.

Issues: Whether the CA erred (1) in ruling that an employment relationship exists between respondent bill
collectors and petitioner Manila Water; and(2) in ruling that respondent FCCSI is not a bona fide
independent contractor.

Ruling: "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out
or farm out with a contractor or subcontractor the performance or completion of a specific job, work, or
service within a definite or predetermined period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the principal.In legitimate contracting, the
trilateral relationship between the parties in these arrangements involves the principal which decides to
farm out a job or service to a contractor or subcontractor, which has the capacity to independently
undertake the performance of the job, work, or service,and the contractual workers engaged by the
contractor or subcontractor to accomplish the job, work, or service. In this case, the connection is obvious
when we consider the nature of the work performed and its relation to the scheme of the particular
business or trade in its entirety. Finally, the repeated and continuing need for the performance of the job
is sufficient evidence of the necessity, if not indispensability of the activity to the business.

Employer-employee relationship; test. 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 employer’s power to control the employee’s conduct. The most important
of these elements is the employer’s control of the employee’s 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 should be remembered that the
control test merely calls for the existence of the right to control, and not necessarily the exercise thereof.
Based on this four-fold test, Manila Water emerges as the employer of respondent collectors. Respondent
bill collectors were individually hired by the contractor, but were under the direct control and supervision
of Manila Water. This control is manifested in the fact that respondent bill collectors reported daily to the
branch offices of Manila Water to remit their collections with the specified monthly targets and comply

32
with the collection reporting procedures prescribed by the latter. Accordingly, respondent bill collectors
are employees of petitioner Manila Water.

33
TENG V. PAHAGAC, [GR NO. 169704, NOVEMBER 17, 2010]
Facts:
Albert Teng Fish Trading is engaged in deep sea fishing and, for this purpose, owns boats, equipment, and
other fishing paraphernalia. As owner of the business, Teng claims that he customarily enters into joint
venture agreements with master fishermen (maestros) who are skilled and are experts in deep sea fishing;
they take charge of the management of each fishing venture, including the hiring of the members of its
complement. He avers that the maestros hired the respondent workers as checkers to determine the
volume of the fish caught in every fishing voyage. On February 20, 2003, the respondent workers filed a
complaint for illegal dismissal against Albert Teng Fish Trading, Teng, and Chua before the NCMB, Region
Branch No. IX, Zamboanga City. The VA rendered a decision in Teng's favor and declared that no employer-
employee relationship existed between Teng and the respondent workers.The CA reversed the VA's
decision after finding sufficient evidence showing the existence of employer-employee relationship

Issues: Whether there exists an employer-employee relationship between Teng and the respondent
workers.

Ruling:
While petitioner Teng alleged that it was the maestros who hired the respondent workers, it was his
company that issued to the respondent workers IDs bearing their names as employees and Teng’s
signature as the employer. Generally, in a business establishment, IDs are issued to identify the holder as
a bona fide employee of the issuing entity. For the 13 years that the respondent workers worked for Teng,
they received wages on a regular basis, in addition to their shares in the fish caught. The worksheet showed
that the respondent workers received uniform amounts within a given year, which amounts annually
increaseduntil the termination of their employment in 2002.

More importantly, the element of control – which we have ruled in a number of cases to be a strong
indicator of the existence of an employer-employee relationship – is present in this case. Teng not only
owned the tools and equipment, he directed how the respondent workers were to perform their job as
checkers; in fact they acted as Teng's “eyes and ears in every fishing expedition.”

34
GSIS V. NLRC ET AL., [GR NO. 180045, NOV. 17, 2010]
Facts:
Respondents Dionisio Banlasan, Alfredo T. Tafalla, Telesforo D. Rubia, Rogelio A. Alvarez, Dominador A.
Escobal, and Rosauro Panis were employed as security guards by DNL Security Agency (DNL Security). By
virtue of the service contract entered into by DNLSecurity and petitioner Government Service Insurance
System on May 1, 1978, respondents were assigned to petitioner's Tacloban City office, each receiving a
monthly income of P1,400.00. Sometime in July 1989, petitioner voluntarily increased respondents'
monthly salary to P3,000.00. In February 1993, DNL Security informed respondents that its service contract
with petitioner was terminated. This notwithstanding, the DNL Security instructed respondents to continue
reporting for work to petitioner. Respondents worked as instructed until April 20, 1993, but without
receiving their wages; after which, they were terminated from employment. Labor Arbiter (LA) Benjamin S.
Guimoc rendered a decision against DNL Security and petitioner. The NLRC treated DNL Security's motion
for reconsideration as an appeal, but dismissed the same, as it was not legally perfected. It likewise
dismissed petitioner's appeal, having been filed beyond the reglementary period. The CA rendered the
assailed Decision affirming the NLRC ruling.

Issue:
Whether GSIS is jointly and severally liable with DNL Security Agency for payment of the unsubstantiated
amounts of salary differentials and the 13th Month Pay to the private respondent security guards.

Ruling:
The fact that there is no actual and direct employer-employee relationship between petitioner and
respondents does not absolve the former from liability for the latter's monetary claims. When petitioner
contracted DNL Security's services, petitioner became an indirect employer of respondents, pursuant to
Articles of the Labor Code,: ART. 107. Indirect employer, ART. 106. Contractor or subcontractor, ART. 109.
Solidary liability.
The declared policy of the State in Section 39 of the GSIS Charter granting GSIS an exemption from tax, lien,
attachment, levy, execution, and other legal processes should be read together with the grant of power to
the GSIS to invest its “excess funds” under Section 36 of the same Act. Under Section 36, the GSIS is granted
the ancillary power to invest in business and other ventures for the benefit of the employees, by using its
excess funds for investment purposes. In the exercise of such function and power, the GSIS is allowed to
assume a character similar to a private corporation. Thus, it may sue and be sued, as also, explicitly granted
by its charter. To be sure, petitioner’s charter should not be used to evade its liabilities to its employees,
even to its indirect employees, as mandated by the Labor Code.
Petitioner's liability covers the payment of respondents' salary differential and 13th month pay during the
time they worked for petitioner. In addition, petitioner is solidarily liable with DNL Security for respondents'
unpaid wages from February 1993 until April 20, 1993. While it is true that respondents continued working
for petitioner after the expiration of their contract, based on the instruction of DNL Security, petitioner did
not object to such assignment and allowed respondents to render service. Thus, petitioner impliedly
approved the extension of respondents' services. Accordingly, petitioner is bound by the provisions of the
Labor Code on indirect employment.
Petitioner’s liability, however, cannot extend to the payment of separation pay. An order to pay separation
pay is invested with a punitive character, such that an indirect employer should not be made liable without
a finding that it had conspired in the illegal dismissal of the employees.

35
SY ET AL., V. FAIRLAND KNITCRAFT CO INC. [G.R. NO. 189658, DECEMBER 12,
2011]

Facts: Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the
owner/proprietress of Weesan Garments (Weesan). The complaining workers are sewers, trimmers,
helpers, a guard and a secretary who were hired by Weesan.

They filed with the Arbitration Branch of the NLRC a Complaint for underpayment and/or non-payment of
wages, overtime pay, premium pay for holidays, 13th month pay and other monetary benefits against
Susan/Weesan.

Weesan filed before the Department of Labor and Employment-National Capital Region (DOLE-NCR) a
report on its temporary closure for a period of not less than six months. As the workers were not anymore
allowed to work on that same day, they filed an Amended Complaint,and on March 13, 2003, another
pleading entitled Amended Complaints and Position Paper for Complainants,to include the charge of illegal
dismissal.
Labor Arbiter Reyes rendered his Decision dismissing the complaint for lack of merit. The workers filed their
appeal which was granted by the NLRC. The NLRC however, denied both motions of Atty. Geronimo and
Fairland for lack of merit.

CA held that the labor tribunals did not acquire jurisdiction over the person of Fairland, and even assuming
they did, Fairland is not liable to the workers since Weesan is not a mere labor-only contractor but a bona
fide independent contractor.

Issue: Whether petitioner is a labor-only contractor acting as an agent of respondent Fairland.

Ruling:
The presumption is that a contractor is a labor-only contractor unless such contractor overcomes the
burden of proving that he is not. The employee should not be expected to prove the negative fact that the
contractor does not have substantial capital, investment and tools to engage in job-contracting.

"There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal. In labor-only contracting, the following elements
are present:
(a) The person supplying workers to an employer does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others; and
(b) The workers recruited and placed by such person are performing activities which are directly related to
the principal business of the employer."

As Susan (Weesan) was not able to adduce evidence that Weesan had any substantial capital, investment
or assets to perform the work contracted for, the presumption that Weesan is a labor-only contractor
stands. Failing to prove the same she is deemed as merely an agent on respondent Fairland. Fairland is now
liable to the workers for the underpayment of wages.

36
POLYFOAM-RGC INTERNATIONAL CORP., V. CONCEPCION, [G.R. NO. 172349,
JUNE 13, 2012]

Facts: Respondent filed a Complaint for illegal dismissal, non-payment of wages, premium pay for rest day,
separation pay, service incentive leave pay, 13th month pay, damages, and attorneys fees against Polyfoam
and Ms. Natividad Cheng (Cheng)

Respondent alleged that he was hired by Polyfoam as an all-around factory worker and served as such for
almost six years. He allegedly discovered that his time card was not in the rack and was later informed by
the security guard that he could no longer punch his time card.

When he protested to his supervisor, the latter allegedly told him that the management decided to dismiss
him due to an infraction of a company rule. Cheng, the company’s manager, also refused to face him.
Respondents counsel later wrote a letter to Polyfoam’s manager requesting that respondent be re-admitted
to work, but the request remained unheeded prompting the latter to file the complaint for illegal dismissal.

Gramaje filed a Motion for Intervention claiming to be the real employer of respondent.

Polyfoam and Cheng insisted that the NLRC has no jurisdiction over the case, because respondent was not
their employee. They likewise contended that respondents money claims had already prescribed. Finally,
they fault respondent for including Cheng as a party-defendant, considering that she is not even a director
of the company.

Gramaje claimed that P.A. Gramaje Employment Services (PAGES) is a legitimate job contractor who
provided some manpower needs of Polyfoam. It was alleged that respondent was hired as packer and
assigned to Polyfoam, charged with packing the latters finished foam products. She argued, however, that
respondent was not dismissed from employment, rather, he simply stopped reporting for work

The Labor Arbiter found respondent to have been illegally dismissed from employment and thus is entitled
to full backwages inclusive of allowances. In lieu of reinstatement, the LA awarded respondent separation
pay of one month salary for every year of service from April 21, 1994 until promulgation of the decision.

The LA further held that petitioners are solidarily liable to respondent for the latters money claims,
considering that Gramaje (the contractor) was not enrolled as private employment agency in the registry
of the Regional Office of the Department of Labor and Employment (DOLE) and considering further that
respondent performed a job directly related to the main business of Polyfoam.

The CA agreed with the LAs conclusion that Gramaje is not a legitimate job contractor but only a labor-
only contractor because of the following: (1) Gramaje failed to present its Audited Financial Statement that
would have shown its financial standing and ownership of equipment, machineries, and tools necessary to
run her own business;

(2) Gramaje failed to present a single copy of the purported contract with Polyfoam as to the packaging
aspect of the latters business;

(3) Gramajes licenses supposedly issued by the DOLE appeared to be spurious

(4) Gramaje was not registered with DOLE as a private recruitment agency

(5) Gramaje presented only one (1) SSS Quarterly Collection List whose authenticity is doubtful

37
Issue: Whether (1) Gramaje is an independent job contractor and (2) employer-employee relationship exists
between Polyfoam and respondent

Ruling: The test of independent contractorship is whether one claiming to be an independent contractor
has contracted to do the work according to his own methods and without being subject to the control of
the employer, except only as to the results of the work.

Applying the foregoing tests, we agree with the CAs conclusion that Gramaje is not an independent job
contractor, but a labor-only contractor.

FIRST, Gramaje has no substantial capital or investment. The presumption is that a contractor is a labor-
only contractor unless he overcomes the burden of proving that it has substantial capital, investment, tools,
and the like. The employee should not be expected to prove the negative fact that the contractor does not
have substantial capital, investment and tools to engage in job-contracting.

Second, Gramaje did not carry on an independent business or undertake the performance of its service
contract according to its own manner and method, free from the control and supervision of its principal,
Polyfoam, its apparent role having been merely to recruit persons to work for Polyfoam
A finding that a contractor is a labor-only contractor, as opposed to permissible job contracting, is
equivalent to declaring that there is an employer-employee relationship between the principal and the
employees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the
principal, the real employer.

In this case, Polyfoam is the principal employer and Gramaje is the labor-only contractor. Polyfoam and
Gramaje are, therefore, solidarily liable for the rightful claims of respondent.

38
SUPERIOR PACKAGING CORP., V. BALAGSAY ET AL., [G.R. NO. 178909,
OCTOBER 10, 2012]

Facts: Petitioner engaged the services of Lancer to provide reliever services to its business, which involves
the manufacture and sale of commercial and industrial corrugated boxes. Pursuant to a complaint filed by
the respondents against the petitioner for underpayment of wages, non-payment of premium pay for
worked rest, overtime pay and non-payment of salary, the Department of Labor and Employment (DOLE)
conducted an inspection of the petitioner’s premises and found several violations, to wit:
(1) non-presentation of payrolls and daily time records;
(2) non-submission of annual report of safety organization;
(3) medical and accident/illness reports;
(4) non-registration of establishment under Rule 1020 of Occupational and Health Standards;
(5) no trained first aide.
Due to the petitioner’s failure to appear in the summary investigations conducted by the DOLE, an Order
was issued on June 18, 2003 finding in favor of the respondents and adopting the computation of the
claims submitted. Petitioner filed a motion for reconsideration on the ground that respondents are not its
employees but of Lancer and that they pay Lancer in lump sum for the services rendered.

Issue: Whether Superior Packaging Corporation (petitioner) may be held solidarily liable with Lancer
Staffing & Services Network, Inc. (Lancer) for respondents’ unpaid money claims.

Ruling: It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent
contractor but was engaged in “labor-only contracting”; hence, the petitioner was considered an indirect
employer of respondents and liable to the latter for their unpaid money claims. Labor-only contracting is
prohibited and the person acting as contractor shall be considered merely as an agent or intermediary
of the employer who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
The ratio of Lancer’s authorized capital stock of P400,000.00 as against its subscribed and paid-up capital
stock of P25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-to-day
operations. And while the Court does not set an absolute figure for what it considers substantial capital for
an independent job contractor, it measures the same against the type of work which the contractor is
obligated to perform for the principal.
Moreover, the nature of respondents’ work was directly related to the petitioner’s business. The marked
disparity between the petitioner’s actual capitalization (P25,000.00) and the resources needed to maintain
its business, i.e., “to establish, operate and manage a personnel service company which will conduct and
undertake services for the use of offices, stores, commercial and industrial services of all kinds,” supports
the finding that Lancer was, indeed, a labor-only contractor.
The petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are
solidarily liable for respondents' money claims.

39
DIGITAL TELECOMMUNICATIONS V. DIGITEL EMPLOYEES UNION [GR NO.
184903-04 OCTOBER 10, 2012]

Facts: Digitel Employees Union and Digitel commenced collective bargaining negotiations which resulted in
a bargaining deadlock. On despite the order of the Labor Secretary to execute a CBA, still, no CBA was forged
between Digitel and the Union. Some Union members abandoned their employment with Digitel. The Union
later became dormant. 10 years thereafter, Digitel received the President of the Union, a letter containing
the list of officers, CBA proposals and ground rules. Digitel was reluctant to negotiate with the Union and
demanded that the latter show compliance with the provisions of the Union’s Constitution and By-laws on
union membership and election of officers.
The faction filed a case for Preventive Mediation before the NCMB based on Digitel’s violation of the duty
to bargain. During the pendency, Interactive Technology Solutions, Inc. (I-tech) was incorporated. Then,
Labor Secretary assumed jurisdiction over the labor dispute. During the pendency of the controversy, Digitel
Service, Inc. (Digiserv) filed with the DOLE an Establishment Termination Report stating that it will cease its
business operation. The closure affected at least 100 employees, 42 of whom are members of the herein
respondent Union.

Issue: Whether an employer commits ULP when it closed down one of its enterprises resulting to the
dismissal of the union members ending the assumption order of the Secretary of Labor regarding its duty
to bargain.

Ruling:
Yes. Bad faith was manifested by the timing of the closure of Digiserv and the rehiring of some employees
to Interactive Technology Solutions, Inc. (I-tech), a corporate arm of Digitel. The timing of the creation of
I-tech is dubious. It was incorporated while the labor dispute within Digitel was pending. I-tech’s primary
purpose was to provide call center/customer contact service, the same service provided by Digiserv. It
conducts its business inside the Digitel office.
The former head of Digiserv is also an officer of I-tech. Thus, when Digiserv was closed down, some of the
employees presumably non-union members were rehired by I-tech.
Thus, the closure of Digiserv pending the existence of an assumption order coupled with the creation of a
new corporation performing similar functions as Digiserv leaves no iota of doubt that the target of the
closure are the union member-employees. These factual circumstances prove that Digitel terminated the
services of the affected employees to defeat their security of tenure. The termination of service was not a
valid retrenchment; it was an illegal dismissal of employees.
It needs to be mentioned too that the dismissal constitutes an unfair labor practice under Article 248(c) of
the Labor Code which refers to contracting out services or functions being performed by union members
when such will interfere with, restrain or coerce employees in the exercise of their rights to self-
organization. At the height of the labor dispute, occasioned by Digitel’s reluctance to negotiate with the
Union, I-tech was formed to provide, as it did pro.

40
NORKIS TRADING CORP., V. BUENAVISTA, ET AL., [G.R. NO. 182018,
OCTOBER 10, 2012]
Facts: The petition stems from an amended complaint for illegal suspension, illegal dismissal, unfair labor
practice and other monetary claims led with the National Labor Relations Commission (NLRC) by herein
respondents Joaquin Buenavista (Buenavista), Henry Fabroa (Fabroa), Ricardo Cape (Cape), Bertuldo Tulod
(Tulod), Willy Dondoyano (Dondoyano) and Glen Villariasa (Villariasa) against Norkis Trading and
Panaghiusa sa Kauswagan Multi- Purpose Cooperative (PASAKA).

The respondents were hired by Norkis Trading, a domestic corporation engaged in the business of
manufacturing and marketing of Yamaha motorcycles and multi-purpose vehicles, on separate dates and
for various positions. Although they worked for Norkis Trading as skilled workers assigned in the operation
of industrial and welding machines owned and used by Norkis Trading for its business, they were not treated
as regular employees by Norkis Trading.

They were regarded by Norkis Trading as members of PASAKA, a cooperative organized under the
Cooperative Code of the Philippines, and which was deemed an independent contractor that merely
deployed the respondents to render services for Norkis Trading. Norkis insisted that the respondents were
members of PASAKA, which served as an independent contractor that merely supplied services to Norkis
International Co., Inc.

Norkis Trading stressed that the respondents were deployed by PASAKA to Norkis International, a company
that is entirely separate and distinct from Norkis Trading.

Issue: WON respondents shall be regarded as employees of the petitioner mainly on the question of
“whether or not PASAKA is a labor-only contractor.”

Ruling:
Norkis Trading is the principal employer of the respondents, considering that PASAKA is a mere labor-only
contractor.

Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely
recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only
contracting, the following elements are present:
(a) the contractor or subcontractor does not have substantial capital or investment to actually perform the
job, work, or service under its own account and responsibility; and
(b) the employees recruited, supplied or placed by such contractor or subcontractor perform activities
which are directly related to the main business of the principal.

First. PASAKA failed to prove that it has substantial capitalization or investment in the form of tools,
equipment, machineries, work premises, among others, to qualify as an independent contractor. Even
granting that indeed PASAKA had machineries and equipment worth P344,273.02, it was not shown that
said machineries and equipment were actually used

Second. PASAKA likewise did not carry out an independent business from NORKIS TRADING. the Project
Contract dated December 18, 1998 with NORKIS INTERNATIONAL is nothing more than an afterthought by
the petitioners to confuse its workers and defeat their rightful claims.

Third. Private respondents performed activities directly related to the principal business of NORKIS
TRADING. They worked as welders and machine operators engaged in the production of steel crates which
were sent to Japan for use as containers of motorcycles that are then sent back to NORKIS TRADING. Private

41
respondents’ functions therefore are directly related and vital to NORKIS TRADING's business of
manufacturing of Yamaha motorcycles.

With this, finding that PASAKA evidently lacked substantial capital or investment required from legitimate
job contractors. In conclusion, PASAKA and Norkis Trading were declared solidarily liable for the monetary
awards made in favor of therein claimants- employees, which included herein respondents.

WHEREFORE, premises considered, the petition is DENIED

42
GOYA INC. V. GOYA INC. EMPLOYEES UNION-FFW [G.R. NO. 170054, JAN. 21,
2013]
Facts:
Goya, Inc.(Company) is a domestic corporation engaged in the manufacture, importation, and wholesale of
top quality food products. GoyaInc. hired contractual employees from PESO Resources Development
Corporation (PESO) to perform “temporary and occasional services” in its factory in Parang, Marikina City.

This prompted respondent Goya, Inc. Employees Union-FFW (Union) to request for a grievance conference
on the ground that the contractual w orkers do not belong to the categories of employees stipulated in the
existing Collective Bargaining Agreement (CBA).

The Union asserted that the hiring of contractual employees from PESO is not a management prerogative
and in gross violation of the CBA tantamount to unfair labor practice (ULP)

It noted that the contractual workers engaged have been assigned to work in positions previously handled
by regular workers and Union members, in effect violating Section 4, Article I of the CBA, which provides
for three categories of employees in the Company, to wit:
Section 4. Categories of Employees. — The parties agree on the following categories of
employees:
(a) Probationary Employee. — One hired to occupy a regular rank-and-file position in the
Company and is serving a probationary period. If the probationary employee is hired or
comes from out side the Company (non - Goya, Inc. employee), he shall be required to
undergo a probationary period of six (6) months, which period, in the sole judgment of
management, may be shortened if the employee has already acquired the knowledge or
skills required of the job. If the employee is hired from the casual pool and has worked in
the same position at any time during the past two (2) years, the probationary period shall
be three (3) months
(b) Regular Employee. — An employee who has satisfactorily completed his probationary
period and automatically granted regular employment status in the Company.
(c) Casual Employee. — One hired by the Company to perform occasional or seasonal work
directly connected with the regular operations of the Company, or one hired for specific
projects of limited duration not connected directly with the regular operations of the
Company.

Issue: WON Goya Inc. violated the CBA when they hired contractual employees to positions perviously
handled by regular employees.

Ruling:
A collective bargaining agreement is the law between the parties. It is familiar and fundamental doctrine in
labor law that the CBA is the law between the parties and they are obliged to comply with its provisions.
“A collective bargaining agreement or CBA refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a
CBA may establish such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs, public order or public
policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties
and compliance therewith is mandated by the express policy of the law.”

It is clear that the parties agreed that in the event that the Company needs to engage the services of
additional workers who will perform "occasional or seasonal work directly connected with the regular

43
operations of the COMPANY," or "specific projects of limited duration not connected directly with the
regular operations of the COMPANY", the Company can hire casual employees which is akin to contractual
employees. If we note the Company's own declaration that PESO was engaged to perform "temporary or
occasional services"

In the case at bench, the CBA of the parties has already provided for the categories of the employees in
establishment. These categories of employees particularly with respect to casual employees serve as
limitation to the Company's prerogative to outsource parts of its operations especially when hiring
contractual employees. As stated earlier, the work to be performed by PESO was similar to that of the
casual employees. With the provision on casual employees, the hiring of PESO contractual employees,
therefore, is not in keeping with the spirit and intent of their CBA.

The petition is DENIED

44
VIGILLA ET AL., V. PHIL. COLLEGE OF CRIMINOLOGY INC., [G.R. NO. 200094,
JUNE 10, 2013]
Facts:
PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and supervisor
in the Maintenance Department of PCCr under the supervision and control of Atty. Florante A. Seril

The petitioners, how ever, were made to understand, upon application with respondent school, that they
were under MBMSI, a corporation engaged in providing janitorial services to clients. Atty. Seril is also the
President and General Manager of MBMSI.

Vigilla (Vigilla), filed their respective complaints for illegal dismissal, reinstatement, back w ages, separation
pay (for Bongot), underpayment of salaries, overtime pay, holiday pay, service incentive leave, and 13th
month pay against MBMSI, Atty. Seril, PCCr, and Bautista.

Petitioner alleged that it was the school, not MBMSI, which was their real employer because:
(a) MBMSI's certification had been revoked;
(b) PCCr had direct control over MBMSI's operations;
(c) there was no contract between MBMSI and PCCr; and
(d) the selection and hiring of employees were undertaken by PCCr.

PCCr and Bautista contended that:

(a) PCCr could not have illegally dismissed the complainants because it was not their direct employer;
(b) MBMSI was the one who had complete and direct control over the complainants; and
(c) PCCr had a contractual agreement with MBMSI, thus, making the latter their direct employer.

Issue: WON a labor-only contractor is solidarily liable with the employer.

Ruling:
The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's
employees for the more effective safeguarding of the employees' rights under the Labor Code.

The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by petitioners in
favor of MBMSI redounded to the benefit of PCCr pursuant to Article 1217 of the New Civil Code.

In such cases [labor-only contracting], the person or intermediary shall be considered merely as an agent
of the employer who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him
“Section 19. Solidary liability. — The principal shall be deemed as the direct
employer of the contractual employees and therefore, solidarily liable with the contractor
or subcontractor for whatever monetary claims the contractual employees may have
against the former in the case of violations as provided for in Sections 5 (Labor-Only
contracting), 6 (Prohibitions), 8 (Rights of Contractual Employees) and 16 (Delisting) of
these Rules. In addition, the principal shall also be solidarily liable in case the contract
between the principal and contractor or subcontractor is preterminated for reasons not
attributable to the fault of the contractor or subcontractor.”

On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an
agent of the principal employer and the latter is responsible to the employees of the labor-only contractor
as if such employees had been directly employed by the principal employer. The principal employer

45
therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the
employees.

Considering that MBMSI, as the labor-only contractor, is solidarily liable with the respondents, as the
principal employer, then the NLRC and the CA correctly held that the respondents' solidary liability was
already expunged by virtue of the releases, waivers and quitclaims executed by each of the petitioners
in favor of MBMSI pursuant to Article 1217 of the Civil Code which provides that "payment made by one of
the solidary debtors extinguishes the obligation.”

WHEREFORE, the petition is DENIED.

46
BPI EMPLOYEES UNION-DAVAO CITY-FUBU V. BANK OF THE PHIL ISLANDS ET
AL., [G.R. NO. 174912, JULY 24, 2013]

Facts:
BPI Operations Management Corporation (BOMC), which was created pursuant to Central Bank Circular No.
1388, Series of 1993 (CBP Circular No. 1388, 1993), and primarily engaged in providing and/or handling
support services for banks and other financial institutions, is a subsidiary of the Bank of Philippine Islands
(BPI) operating and functioning as an entirely separate and distinct entity.
A service agreement between BPI and BOMC was initially implemented in BPIs Metro Manila branches. In
this agreement, BOMC undertook to provide services such as check clearing, delivery of bank statements,
fund transfers, card production, operations accounting and control, and cash servicing, conformably with
BSP Circular No. 1388. Not a single BPI employee was displaced and those performing the functions, which
were transferred to BOMC, were given other assignments.

The Manila chapter of BPI Employees Union (BPIEU-Metro ManilaFUBU) then filed a complaint for unfair
labor practice (ULP). The Labor Arbiter (LA) decided the case in favor of the union. The decision was,
however, reversed on appeal by the NLRC. BPIEU-Metro Manila-FUBU filed a petition for certiorari before
the CA which denied it, holding that BPI transferred the employees in the affected departments in the
pursuit of its legitimate business.

The service agreement was likewise implemented in Davao City. Later, a merger between BPI and Far East
Bank and Trust Company (FEBTC) took effect on April 10, 2000 with BPI as the surviving corporation.
Thereafter, BPIs cashiering function and FEBTCs cashiering, distribution and bookkeeping functions were
handled by BOMC. Consequently, twelve (12) former FEBTC employees were transferred to BOMC to
complete the latters service complement.

BPI Davaos rank and file collective bargaining agent, BPI Employees Union-Davao City-FUBU (Union),
objected to the transfer of the functions and the twelve (12) personnel to BOMC contending that the
functions rightfully belonged to the BPI employees and that the Union was deprived of membership of
former FEBTC personnel who, by virtue of the merger, would have formed part of the bargaining unit
represented by the Union pursuant to its union shop provision in the CBA.

Issue: WON the act of BPI to outsource the cashiering, distribution and bookkeeping functions to BOMC is
in conformity with the law and the existing CBA.

Ruling: Yes. Labor Law - only gross violations of the economic provisions of the CBA are treated as ULP.
Otherwise, they are mere grievances.

In the present case, the alleged violation of the union shop agreement in the CBA, even assuming it was
malicious and flagrant, is not a violation of an economic provision in the agreement. The provisions relied
upon by the Union were those articles referring to the recognition of the union as the sole and exclusive
bargaining representative of all rank-and-file employees, as well as the articles on union security,
specifically, the maintenance of membership in good standing as a condition for continued employment
and the union shop clause. It failed to take into consideration its recognition of the banks exclusive rights
and prerogatives, likewise provided in the CBA, which included the hiring of employees, promotion,
transfers, and dismissals for just cause and the maintenance of order, discipline and efficiency in its
operations.

The Union, however, insists that jobs being outsourced to BOMC were included in the existing bargaining
unit, thus, resulting in a reduction of a number of positions in such unit. The reduction interfered with the

47
employees right to self-organization because the power of a union primarily depends on its strength in
number.

It is incomprehensible how the "reduction of positions in the collective bargaining unit" interferes with the
employees right to self-organization because the employees themselves were neither transferred nor
dismissed from the service. In the case at hand, the union has not presented even an iota of evidence that
petitioner bank has started to terminate certain employees, members of the union. In fact, what appears
is that the Bank has exerted utmost diligence, care and effort to see to it that no union member has been
terminated. In the process of the consolidation or merger of the two banks which resulted in increased
diversification of functions, some of these non-banking functions were merely transferred to the BOMC
without affecting the union membership.

It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business
judgment or management prerogative. Absent proof that the management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an employer. In this case, bad faith
cannot be attributed to BPI because its actions were authorized by CBP Circular No. 1388, Series of 1993
issued by the Monetary Board of the then Central Bank of the Philippines (now Bangko Sentral ng
Pilipinas).

DENIED.

48
ALILIN ET AL., V. PETRON CORP., [GR NO. 177592, JUNE 9, 2014]
Facts: Petron is a domestic corporation engaged in the oil business. It owns several bulk plants in the country for
receiving, storing and distributing its petroleum products.

In 1968, Romualdo D. Gindang Contractor, which was owned and operated by Romualdo D. Gindang (Romualdo),
started recruiting laborers for elding to Petron's Mandaue Bulk Plant. When Romualdo died in 1989, his son Romeo
D. Gindang (Romeo), through Romeo D. Gindang Services (RDG), took over the business and continued to provide
manpower services to Petron

On June 1, 2000, Petron and RDG entered into a Contract for Services 9 for the period from June 1, 2000 to May 31,
2002, whereby RDG undertook to provide Petron with janitorial, maintenance, tanker receiving, packaging and other
utility services in its Mandaue Bulk Plant. This contract was extended on July 31, 2002 and further extended until
September 30, 2002. Upon expiration thereof, no further renewal of the service contract was done.

Issue:
WON RDG is a legitimate job contractor. (determination of whether an employer-employee relationship exists between
the parties as to make Petron liable for petitioners' dismissal.)

RULING:
Petron failed to discharge the burden of proving that RDG is a legitimate contractor. Hence, the presumption that
RDG is a labor-only contractor stands.
petitioners have rendered work for Petron for a long period of time even before the service contract was executed in
2000. Petron even recognized that some of the petitioners were initially fielded by Romualdo D. Gindang, RDG’s
precursor. Petron was able to establish that RDG was financially capable as a legitimate contractor at the time of the
execution of the service contract in 2000, it nevertheless failed to establish the financial capability of RDG at the time
when petitioners actually started to work for Petron in 1968, 1979, 1981, 1987, 1990, 1992 and 1993. Petron having
failed to show that this condition was met by RDG, it can be concluded, on this score alone, that RDG is a mere labor-
only contractor.

Petron's power of control over petitioners exists in this case.

In relation to the “control test”, Of the four elements, it is the power to control which is the most crucial and most
determinative factor, so important, in fact, that, the other elements may even be disregarded.
the fact that petitioners were hired by Romeo or his father and that their salaries were paid by them do not detract
from the conclusion that there exists an employer- employee relationship between the parties due to Petron's power
of control over the petitioners.
the power of control is the power to transfer employees from one work assignment to another;
1. Petron could order petitioners to do work outside of their regular "maintenance/utility" job, and
2. Petitioners were required to report for work everyday at the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work
schedule, and
3. Wear proper uniform and safety helmets as prescribed by the safety and security measures being implemented
within the bulk plant.

Petitioners already attained regular status as employees of Petron.

The Court finds, however, that while the jobs performed by petitioners may be menial and mechanical, they are
nevertheless necessary and related to Petron's business operations. If not for these tasks, Petron's products will not
reach the consumers in their proper state. Indeed, petitioners' roles were vital in as much as they involve the
preparation of the products that Petron will distribute to its consumers.
In sum, the Court finds that RDG is a labor-only contractor. As such, it is considered merely as an agent of Petron.
Consequently, the employer-employee relationship which the Court finds to exist in this case is between petitioners as
employees and Petron as their employer

WHEREFORE, the Petition is GRANTED

49
AMPELELOQUIO V. JAKA DISTRIBUTION INC., [GR NO. 196936, JULY 2, 2014]
Facts: Ampeloquio is a reinstated employee of respondent Jaka Distribution, Inc. (JAKA), formerly RMI Marketing
Corporation (RMI). Previously, Ampeloquio had filed a complaint for illegal dismissal against RMI before the National
Labor Relations Commission (NLRC). Subsequently, the Labor Arbiter found RMI guilty of illegal dismissal. Ampeloquio
resumed work as merchandiser at JAKA and reported at JAKA’s outlets within Metro Manila, Shopwise Makati and
Alabang. He received a daily wage of P252.00, without meal and transportation allowance. In 2005, Ampeloquio was
transferred outside of Metro Manila, to Lucena City and subsequently to San Pablo City. At that time, he was receiving
the same daily wage of P252.00, without meal and transportation allowance. Ampeloquio was given a monthly cost of
living allowance (COLA) of P720.00.

Ampeloquio requested for salary adjustment and benefits retroactive to the date of his reinstatement, 6 August
2004, and payment of salary differential in the total amount of P42,196.00. In another letter, Ampeloquio wrote JAKA
reiterating his request for salary adjustment and payment of benefits retroactive to his reinstatement, and an increase
from his previous request of salary differential which amounted to a total of P180,590.00. Ampeloquio based his request
on what other merchandisers of JAKA received.

Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a complaint for underpayment of wages,
COLA, non-payment of meal and transportation allowances. LA Hernandez granted Ampeloquio’s complaint for
underpayment of wages, basic and COLA and non-payment of allowances, meal and transportation. On appeal by JAKA,
the NLRC proper, in its Resolutionmodified the amounts ordered by the Labor Arbiter to be paid by JAKA to Ampeloquio.
Ampeloquiois therefore entitled to a total salary differential of only P22,172.00. JAKA’s contention that Ampeloquio is
not entitled to reimbursement of transportation expenses from the latter’s house to the outlet where he was assigned
and back is impressed with merit as JAKA submitted a copy of their policies and the pertinent portion, states:

The only transportation expenses allowed to be reimbursed are those incurred from the first outlet to succeeding
outlets. The transportation reimbursement shall not include house to first outlet and last outlet to house."

Aggrieved by the NLRC’s modification of what Ampeloquio obviously perceived as an acceptable monetary award, the
latter filed a petition for certiorari before the Court of Appeals bewailing grave abuse of discretion in: (1) the reduction
of his award of salary differential to only 22,172.00; (2) the deletion of his entitlement to transportation expenses; and
(3) the deletion of the award of moral and exemplary damages.The appellate court dismissed Ampeloquio’s petition
for certiorari finding no grave abuse of discretion in the NLRC’s ruling and finding that, in fact, it is supported by
substantial evidence.

Issues:
1. What is the scope vis-a-vis wages of reinstatement "without loss of seniority rights and other privileges."?
2. What is the salary rate he is entitled to?

Ruling:
Seniority rights refer to the creditable years of service in the employment record of the illegally dismissed employee
as if he or she never ceased working for the employer. In other words, the employee’s years of service is deemed
continuous and never interrupted. Such is likewise the rationale for reinstatement’s twin relief of full back wages.

Ampeloquio is correct in asserting that he is a senior employee compared to the other merchandisers whom he
himself designates as casual or contractual merchandisers. He is likewise senior to other regular employees
subsequently hired by JAKA, specifically two regular messenger employees which Ampeloquio claims receive wages
higher than what he is receiving from JAKA. Attached to the recognition of seniority rights of a reinstated employee
who had been illegally dismissed is the entitlement to wages appurtenant thereto.

The case of Ampeloquio is outside the ordinary. His reinstatement was ordered when merchandisers like him were no
longer employed by JAKA. He is not entitled to the same terms and conditions of employment as that which was offered
to the other regular employees (not merchandisers) subsequently hired by JAKA. JAKA’s decision to grant or withhold
certain benefits to other employees is part of its management prerogative as a function of an employer’s
constitutionally protected right to reasonable return on investments.

50
Ampeloquio cannot likewise compare his wages to that received by "casual or contractual merchandisers" or
merchandisers who are admittedly outsourced from manpower agencies or those who are considered seasonal
employees hired only during peak season when JAKA is in need of extra merchandisers.

To say the least, these merchandisers are not, strictly speaking, employees of JAKA, but of a service provider company
which has a service contract with JAKA. The merchandisers in this case simply perform the work at JAKA’s outlets,
wearing uniforms approved by JAKA but provided by the service company who is actually their employer. There is no
employer-employee relationship between JAKA and these merchandisers.

Receipt by these merchandisers of a benefit such as transportation or meal allowance is part of the monies they receive
from their employer and embedded in the contract price of the service agreement the employer has with JAKA.

The phrase without loss of seniority rights applies with practical and real effect to Ampeloquio upon his retirement
because he will reach earlier than other regular employees of JAKA the required number of years of service to qualify
for retirement.

In all, the labor tribunals were right in using as guidepost the existing statutory minimum wages and COLA during the
three (3) year prescriptive period within which Ampeloquio can make his money claims. We are not unaware that
reinstatement is the rule and such covers reinstatement to the same or substantially equivalent position without loss
of seniority rights and privileges. In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e., (1) strained
relations, or (2) abolition of the position; JAKA immediately complied with the Labor Arbiter’s order of reinstatement.

We note that, specifically, JAKA could have claimed that the position of merchandiser no longer exists and has been
abolished with the contracting of this job function. However, it merely opted to reinstate Ampeloquio to the same
position. There is no quarrel that with his reinstatement, Ampeloquio is now the lone regular merchandiser of JAKA.

The option of reinstatement to a substantially equivalent position does not apply herein as reinstatement to a
substantially equivalent position entails the same or similar job functions and not just same wages or salary.

As applied to this case, Ampeloquio cannot be reinstated to a messengerial position although such is a regular
employment enjoying the same employment benefits and privileges. His employment cannot likewise be converted
into a contractual employment as such is actually a downgrade from his regular employment enjoying security of tenure
with JAKA. As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at the minimum, to the
standard minimum wage at the time of his employment and to the wages he would have received from JAKA had he
not been illegally dismissed, as if there was no cessation of employment. Ampeloquio is likewise entitled to any
increase which JAKA may have given across the board to all its regular employees. To repeat, Ampeloquio is not
entitled to all benefits or privileges received by other employees subsequently hired by JAKA just by the fact of his
seniority in the service with JAKA.

51
FVR SKILLS & SERVICES EXPONENETS INC. V. SEVA, ET AL., [GR NO. 200857,
OCT. 22, 2014]
Facts: Jovert R. Seva and 27 others were employed by petitioner FVR Skills and Services Exponents, Inc., an
independent contractor engaged in the business of providing janitorial and other manpower services to clients. As early
as 1998 some of the respondents had already been under the petitioners employ.

On April 21, 2008, the petitioner entered into a contract of janitorial service with Robinsons Land Corporation
(Robinsons). Both agreed that the petitioner shall supply janitorial, manpower and sanitation services to Robinsons
Place Ermita Mall for a period of one year from January 1, 2008 to December 31, 2008. Pursuant to this, the
respondents were deployed to Robinsons. Halfway through the service contract, the petitioner asked the respondents
to execute individual contracts which stipulated that their respective employments shall end on December 31, 2008,
unless earlier terminated. The petitioner and Robinsons no longer extended their contract of janitorial services.
Consequently, the petitioner dismissed the respondents as they were project employees whose duration of
employment was dependent on the petitioner’s service contract with Robinsons.

Respondents filed a complaint for illegal dismissal arguing that they were not project but regular employees who
may only be dismissed for just or authorized causes.

Issue: Does their complaint find merit?

Ruling:
Yes. The primary standard in determining regular employment is the reasonable connection between the particular
activity performed by the employee and the employer’s business or trade. This connection can be ascertained by
considering the nature of the work performed and its relation to the scheme of the particular business, or the trade in
its entirety. Guided by this test, we conclude that the respondents’ work as janitors, service crews and sanitation
aides, are necessary or desirable to the petitioner’s business of providing janitorial and manpower services to its
clients as an independent contractor. Also, the respondents had already been working for the petitioner as early as
1998.

Even before the service contract with Robinsons, the respondents were already under the petitioner’s employ. They
had been doing the same type of work and occupying the same positions from the time they were hired and until
they were dismissed in January 2009.

The petitioner did not present any evidence to refute the respondents claim that from the time of their hiring until the
time of their dismissal, there was no gap in between the projects where they were assigned to. The petitioner
continuously availed of their services by constantly deploying them to its clients. Lastly, under Department Order (DO)
18-02, the applicable labor issuance to the petitioner’s case, the contractor or subcontractor is considered as the
employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social
legislation.

DO 18-02 grants contractual employees all the rights and privileges due a regular employee, including the following:
(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation
pay;
(c) social security and welfare benefits;
(d) self-organization, collective bargaining and peaceful concerted action; and
(e) security of tenure.
In this light, we thus conclude that although the respondents were assigned as contractual employees to the petitioners
various clients, under the law, they remain to be the petitioners regular employees, who are entitled to all the rights
and benefits of regular employment.

52
FONTERRA BRAND PHILS, INC. V LARGADO AND ESTRELLADO [G.R NO.
205300, MARCH 18 2015]
Facts: Fonterra contracted the services of Zytron to provide for trade merchandising representatives
(TMRs) in the marketing and promotion of its milk and dairy products. Among those TMRs whose services
were engaged are Largado and Estrellado, who are the respondents in this case. After 4 years, Fonterra
terminated its contract with Zytron and entered into an agreement for manpower supply with AC Sicat.
Desirous of continuing their work as TMRs in Fonterra, Largado and Estrellado submitted their job
application with AC Sicat, a legitimate job contracting company. AC Sicat hired their services as TMRs for a
term of 5 months.

When their 5-month contract with AC Sicat were about to expire, they allegedly sought renewal thereof,
which was allegedly refused. This prompted them to file for complaints of illegal dismissal, regularization,
nonpayment of service incentive leave, 13th month pay, and actual and moral damages against Fonterra,
Zytron and AC Sicat.

Issues:
1. Whether Largado and Estrellado were illegally terminated by Zytron
2. Whether Largado and Estrellado were illegally terminated by AC Sicat

Ruling: On the first issue, the Supreme Court held in the negative.

When Largado and Estrella refused to renew their contract with Zytron by applying with AC Sicat, they
effectively resigned from Zytron. Hence, they were not illegally dismissed because they voluntary
terminated their employment with the latter.

On the second issue, the Supreme Court held in the negative.

There is no illegal dismissal to speak of since AC Sicat is a legitimate job contractor and their termination
is merely brought about by the expiration of their employment contracts with AC Sicat.

First, Largado and Estrellado were hired as fixed-term or project employees of AC Sicat. The determining
factor of such employment is not the duty of the employee but the day certain agreed upon by the parties
for the commencement and termination of the employment relationship. Second, the non-renewal of their
contracts by AC Sicat is a management prerogative, and failure of respondents to prove that such was done
in bad faith militates against their contention that they were illegally dismissed.

Hence, the expiration of their contract with AC Sicat simply caused the natural cessation of their fixed-term
employment thereat

53
W.M. MANUFACTURING, INC. V. DALAG AND GOLDEN ROCK MANPOWER
SERVICES [G.R. NO. 209418. DECEMBER 7, 2015]
Facts: On January 3, 2010, petitioner, as client, and respondent Golden Rock, as contractor, executed a
contract denominated as "Service Agreement". In relation to the Service Agreement, Golden Rock, on April
26, 2010, engaged the services of respondent Dalag as a factory worker to be assigned at petitioner's
factory. For this purpose, respondents inked a five-month Employment Contract for Contractual
Employees (Employment Contract).

Notwithstanding the five-month duration stipulated in the contract, respondent Dalag alleged in his
complaint for illegal dismissal that on August 7, 2010, one of WM MFG's security guards prevented him
from going to his work station and, instead, escorted him to the locker room and limited his activity to
withdrawing his belongings therefrom. Dalag further claimed that his assignment at WM MFG as side seal
machine operator was necessary and desirable for the company's plastic manufacturing business, making
him a regular employee entitled to benefits under such classification. He likewise alleged that WM MFG
and Golden Rock engaged in the illegal act of labor-only contracting based on the following circumstances:
that all the equipment, machine and tools that he needed to perform his job were furnished by WM MFG;
that the jobs are to be performed at WM MFG's workplace; and that he was under the supervision of WM
MFG's team leaders and supervisors.

In their joint position paper, therein respondents argued that Dalag was not dismissed and that, on the
contrary, it was he who abandoned his work. They offered as proof WM MFG's memos addressed to Dalag,
which ordered him to answer within 24-hours the accusations relating to the following alleged infractions:
gross negligence, qualified theft, malicious mischief, incompetence, grave misbehaviour, insubordination,
dishonesty, and machine sabotage.

Dalag, however, allegedly refused to receive the memos, and instead turned his back on his superiors,
informing them that he will no longer return, and then walked away.

Issues: Whether WM MFG and Golden Rock engaged in labor-only Contracting?

Ruling:

On the first issued, the Supreme Court held that WM MFG and Golden Rock engaged in labor-only
contracting.

There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

The essential element in labor-only contracting is that the contractor merely recruits, supplies or places
workers to perform a job, work or service for a principal. However, the presence of this essential element
is not enough and must, in fact, be accompanied by any one of the confirmatory elements to be considered
a labor-only contractor within the contemplation of the rule.

The presence of the essential element is clearly provided in the service agreement between WM MFG and
Golden Rock which states that Golden Rock's lack of substantial capital, coupled with the necessity and

54
desirability of the job he performed in WM MFG and that Golden Rock's lack of control over the
employees it supplied WM MFG.

The basis for determining the substantiality of a company's "capital" rests not only thereon but also on the
tools and equipment it owns in relation to the job, work, or service it provides. DO 18-02 defines "substantial
capital or investment" in the context of labor-only contracting as referring not only to a contractor's
financial capability, but also encompasses the tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or subcontractor in the performance or completion
of the job, work or service contracted out.

Here, the Certificate of Registration may have prevented the presumption of labor-only contracting from
arising, but the evidence Dalag adduced was sufficient to overcome the disputable presumption that Golden
Rock is an independent contractor. To be sure, in performing his tasks, Dalag made use of the raw materials
and equipment that WM MFG supplied. He also operated the side-seal machine in the workplace of WM
MFG, not of Golden Rock. With these attendant circumstances, the Court rules that the first confirmatory
element indubitably exists.

WM MFG exercised control over the employees supplied by Golden Rock. Under the same DO 18-02, the
"right to control" refers to the right to determine not only the end to be achieved, but also the manner
and means to be used in reaching that end. Here, notwithstanding the contract stipulation leaving Golden
Rock the exclusive right to control the working warm bodies it provides WM MFG, evidence irresistibly
suggests that it was WM MFG who actually exercised supervision over Dalag's work performance. As culled
from the records, Dalag was supervised by WM MFG's employees. Petitioner WM MFG even went as far as
furnishing Dalag with not less than seven (7) memos directing him to explain within twenty-four (24) hours
his alleged work infractions. The company likewise took pains in issuing investigation reports detailing its
findings on Dalag's culpability. Clearly, WM MFG took it upon itself to discipline Dalag for violation of
company rules, regulations, and policies, validating the presence of the second confirmatory element.

Having ascertained that the essential element and at least one confirmatory element obtain in the extant
case, there is then no other result than for the Court to rule that WM MFG and Golden Rock engaged in
labor-only contracting. As such, they are, by legal fiction, considered principal and agent, respectively,
jointly and severally liable to their illegally dismissed employees, in accordance with Art. 109 of the Labor
Code and Sec. 19 of DO 18-02.

55
DIAMOND FARMS, INC. (DFI) V. SOUTHERN PHILIPPINES FEDERATION OF
LABOR (SPFL) [G.R. NOS. 173254-55 & 173263. JANUARY 13, 2016]
Facts: DFI owns an 800-hectare banana plantation ("original plantation") in Alejal, Carmen, Davao which
was subject to compulsory acquisition and distribution pursuant to Republic Act No. 6657 or CARL.

The DAR Regional Director recalled DFI's deferment privilege it previously granted upon the petition of the
laid off employees alleging that DFI already abandoned its area of operations. This resulted in the original
plantation's automatic compulsory acquisition and distribution under the CARL. DFI filed a motion for
reconsideration which was denied. It then appealed to the DAR Secretary.

In the meantime, to minimize losses, DFI offered to give up its rights and interest over the original
plantation in favor of the government by way of a Voluntary Offer to Sell. The DAR accepted DFI's offer to
sell the original plantation. However, the DAR only approved the disposition of 689.88 hectares. Hence, the
original plantation was split into two: 689.88 hectares were sold to the government ("awarded plantation")
and the remaining 200 hectares, more or less, were retained by DFI ("managed area"). The managed area
is subject to the outcome of the appeal on the cancellation of the deferment privilege before the DAR
Secretary.

On January 1, 1996, the awarded plantation was turned over to qualifed agrarian reform beneficiaries
("ARBs") under the CARL. These ARBs are the same farmers who were working in the original plantation.
They subsequently organized themselves into multi-purpose cooperative named "DARBMUPCO," which is
one of the respondents in this case.

On March 27, 1996, DARBMUPCO entered into a Banana Production and Purchase Agreement ("BPPA")
with DFI. Under the BPPA, DARBMUPCO and its members as owners of the awarded plantation, agreed to
grow and cultivate only high grade quality exportable bananas to be sold exclusively to DFI. The BPPA is
effective for 10 years.

On April 20, 1996, DARBMUPCO and DFI executed a "Supplemental to Memorandum Agreement" ("SMA").
The SMA stated that DFI shall take care of the labor cost arising from the packaging operation, cable
maintenance, irrigation pump and irrigation maintenance that the workers of DARBMUPCO shall conduct
for DFI's account under the BPPA.

From the start, DARBMUPCO was hampered by lack of manpower to undertake the agricultural operation
under the BPPA because some of its members were not willing to work. Hence, to assist DARBMUPCO in
meeting its production obligations under the BPPA, DFI engaged the services of the respondent-
contractors, who in turn recruited the respondent-workers.

The engagement of the respondent-workers started a series of labor disputes among DARBMUPCO, DFI and
the respondent-contractors.

SPFL — a legitimate labor organization with a local chapter in the awarded plantation, together with more
than 300 workers, filed a case for underpayment of wages, non-payment of 13th month pay and service
incentive leave pay and attorney's fees against DFI, DARBMUPCO and the respondent-contractors before
the National Labor Relations Commission ("NLRC") in Davao City. DARBMUPCO averred that it is not the
employer of respondent-workers; neither is DFI. It asserted that the money claims should be directed
against the true employer — the respondent-contractors.

Issue:
Who among DFI, DARBMUPCO and the respondent-contractors is the employer of the respondent-workers?

56
Ruling:
The Supreme Court held that DFI is the true employer of the respondent-workers; respondent-contractors
are only agents of DFI. Under Article 106 of the Labor Code, DFI shall be solidarily liable with the
respondent-contractors for the rightful claims of the respondent-workers, to the same manner and extent
as if the latter are directly employed by DFI.

This case involves job contracting, a labor arrangement expressly allowed by law. Contracting or
subcontracting is an arrangement whereby a principal (or employer) agrees to put out or farm out with a
contractor or subcontractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal. It involves a trilateral relationship among the
principal or employer, the contractor or subcontractor, and the workers engaged by the contractor or
subcontractor.

Article 106 of the Labor Code of the Philippines (Labor Code) explains the relations which may arise between
an employer, a contractor, and the contractor's employees. The Omnibus Rules Implementing the Labor
Code distinguishes between permissible job contracting (or independent contractorship) and labor-only
contracting.

Job contracting is permissible under the Code if the following conditions are met:
(a) The contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control
and direction of his employer or principal in all matters connected with the performance of the work except
as to the results thereof; and
(b) The contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his business.

In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited by law,
if a person who undertakes to supply workers to an employer:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other materials; and
(2) The workers recruited and placed by such person are performing activities which are directly related to
the principal business or operations of the employer in which workers are habitually employed.
As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor overcomes
the burden of proving that it has the substantial capital, investment, tools and the like.

Based on the conditions for permissible job contracting, we rule that respondent-contractors are labor-
only contractors. There is no evidence showing that respondent-contractors are independent contractors.
The respondent-contractors, DFI, and DARBMUPCO did not offer any proof that respondent-contractors
were not engaged in labor-only contracting.

Further, respondent-contractors admit, and even insist that they are engaged in labor-only contracting.
Judicial admissions made by parties in the pleadings, or in the course of the trial or other proceedings in the
same case are conclusive and so does not require further evidence to prove them. Here, the respondent-
contractors voluntarily pleaded that they are labor-only contractors; hence, these admissions bind them.

A finding that a contractor is a labor-only contractor is equivalent to a declaration that there is an employer-
employee relationship between the principal, and the workers of the labor-only contractor; the labor-only
contractor is deemed only as the agent of the principal. Thus, in this case, respondent-contractors are the
labor-only contractors and either DFI or DARBMUPCO is their principal.

57
We hold that DFI is the principal. Under Article 106 of the Labor Code, a principal or employer refers to the
person who enters into an agreement with a job contractor, either for the performance of a specified work
or for the supply of manpower.

DFI, as the principal, hired the respondent-contractors and the latter, in turn, engaged the services of the
respondent-workers. That DFI is the employer of the respondent-workers is bolstered by the CA's finding
that DFI exercises control over the respondent-workers. DFI, through its manager and supervisors provides
for the work assignments and performance targets of the respondent-workers. The managers and
supervisors also have the power to directly hire and terminate the respondent-workers. Evidently, DFI
wields control over the respondent-workers.

In labor-only contracting, it is the law which creates an employer-employee relationship between the
principal and the workers of the labor-only contractor.
Inasmuch as it is the law that forms the employment ties, the stipulation in the BPPA that respondent-
workers are not employees of DFI is not controlling, as the proven facts show otherwise. The law prevails
over the stipulations of the parties.

58
B. Worker’s Preference
Cases:

1. Barayoga vs. Asset Privatization Trust, G.R. No. 160073, October 24, 2005
2. Phil. Airlines vs. Zamora, G.R. No. 166996, Feb. 6, 2007
3. Phil. Airlines vs. Phil. Airlines Employees Association, 525 SCRA 29 [2007], citing
Rubberworld vs. NLRC, 305 SCRA 721 [1999]
4. Garcia vs. Phil Air Lines, G.R. No. 164856, January 20, 2009

59
BARAYOGA AND BISUDECO-PHILSUCORCORFARM WORKERS UNION(PACIWU
CHAP-TPC) V. ASSET PRIVATISATION [G.R. NO. 160073; OCTOBER 24, 2005]
Facts: Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development
Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur. Asset Privatization
Trust (APT), a public trust was created under Proclamation No. 50, as amended, mandated to take title to
and possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine
government identified for privatization or disposition. Pursuant to Section 23 of Proclamation No. 50,
former President Corazon Aquino issued Administrative Order No.14 identifying certain assets of
government institutions that were to be transferred to the National Government. Among the assets
transferred was the financial claim of the Philippine National Bank against BISUDECO in the form of a
secured loan.

Consequently, by virtue of a Trust Agreement executed between the National Government and APT on
February 27, 1987, APT was constituted as trustee over BISUDECO’s account with the PNB.

Sometime later, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take
over the management of the sugar plantation and milling operations until August 31, 1992. Meanwhile,
because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its mortgaged
properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder. On April 2,
1991, APT was issued a Sheriff ‘s Certificate of Sale.

The union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment
of wages and other labor standard benefits plus damages. In the meantime, APT ‘s Board of Trustees issued
a resolution accepting the offer of Bicol-Agro-Industrial Cooperative (BAPCI) to buy the sugar plantation and
mill. Again, on September 23, 1992, the board passed another resolution authorizing the payment of
separation benefits to BISUDECO ‘s employees in the event of the company’s privatization.

Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT and took over its
sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil). The union alleged that
when Philsucor initially took over the operations of the company, it retained BISUDECO ‘s existing personnel
under the same terms and conditions of employment. Nonetheless, at the start of the season sometime in
May1991, Philsucor started recalling workers back to work, to the exception of the union members.
Management told them that they will be re-hired only if they resign from the union. Just the same,
thereafter, the company started to employ the services of outsiders under the pacqiao system.

Issue:
Whether APT is liable to pay petitioners’ monetary claims, including back wages from May 1, 1991, to
October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI).

Held:
No. Pursuant to Administrative Order No. 14, Series of 1987, PNB ‘s assets, loans and receivables from its
borrowers were transferred to APT as trustee of the national government. Among the liabilities
transferred to APT was PNB ‘s financial claim against BISUDECO, not the latter ‘s assets and chattel.

BISUDECO remained the owner of the mortgaged properties in August 1988, when the Philippine Sugar
Corporation (Philsucor) undertook the operation and management of the sugar plantation until August
31,1992, under a so-called Contract of Lease between the two corporations. At the time, APT was merely a
secured creditor of BISUDECO.

60
PHILIPPINE AIRLINES V ZAMORA [G.R. NO.166996 FEBRUARY 6, 2007]
Facts:
Respondent Zamora had been in the employ of petitioner PAL since 9 February 1981 when the former was hired as
a Cargo Representative at petitioner PAL ‘s Import Operations Division. Respondent Zamora was then dismissed from
service for having been found by petitioner PAL ‘s management to be liable for insubordination, neglect of customer,
disrespect for authority and absence without official leave. On 12 March 1996, respondent Zamora filed a complaint
against petitioners PAL and Francisco X. Yngente IV before the NLRC for illegal dismissal, unfair labor practice, non-
payment of wages, damages and attorney‘s fees. On 1 February 2005, the Court of Appeals promulgated an Amended
Decision modifying its 13 August 2004 Decision but at the same time resolving petitioner PAL's Motion for
Reconsideration in this wise:

WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED, the dispositive portion to read as
follows:WHEREFORE, in view of the foregoing, the petition is GRANTED. The NLRC resolution dated April 27, 2001 is
MODIFIED.

Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is hereby ordered to pay
petitioner Zamora his separation pay, in lieu of reinstatement, to be computed at one-month salary for every year of
service from February 9, 1981 and back wages to be computed from December 19, 1995, both up to October 1, 2000,
the date of his incarceration. Considering that PAL is still under receivership, the monetary claims of petitioner
Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits. The Court
of Appeals took into account respondent Zamora's incarceration when it recalled its order of reinstatement. Anent its
earlier pronouncement against the suspension of the proceedings of the case owing to the present rehabilitation of
petitioner PAL, the appellate court only had this to say: However, since PAL is still under receivership, the provisions of
PD 902-A, should apply. The enforcement of the monetary claims of petitioner should be brought before the PAL
Rehabilitation Receiver for proper disposition.

Issue:
WON respondent Zamora ‘s monetary claim should be presented to the PAL rehabilitation receiver, subject to the rules
on preference of credits.

Ruling:
No. The relevant law dealing with the suspension of actions for claims against corporations is Presidential Decree No.
902-A, 52 as amended. The term "claim," as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts
or demands of a pecuniary nature. It means 'the assertion of a right to have money paid. It is plain from the foregoing
provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver" all
actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended.

The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all
claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law.
Since the law makes no distinction or exemptions, neither should this Court.

Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of
suspension— what are automatically stayed or suspended are the proceedings of an action or suit and not just the
payment of claims during the execution stage after the case had become final and executory.

The suspension of action for claims against a corporation under rehabilitation receiver or management committee
embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions
that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of
contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. As to the appellate court's
amended directive that "the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation
Receiver, subject to the rules on preference of credits," the same is erroneous for there has been no declaration of
bankruptcy or judicial liquidation. Thus, the rules on preference of credits does not apply.

61
PHIL. AIRLINES V. PHIL. AIRLINES EMPLOYEES ASSOCIATION, [525 SCRA 29
[2007], CITING RUBBERWORLD VS. NLRC, 305 SCRA 721 [1999]]
Facts:
On 6 February 1987, herein parties, PAL and PALEA, the collective bargaining agent of the rank and file
employees of PAL, entered into a CBA that was to cover the period of 1986 – 1989. Part of said agreement
required PAL to pay its rank and file employees the following bonuses:

Section 4 – 13th Month Pay (Mid-year Bonus)A 13th month pay, equivalent to one month's current basic
pay, consistent with the existing practice shall be paid in advance in May.

Section 5 – Christmas Bonus. The equivalent of one month's basic pay as of November 30, shall be paid in
December as a Christmas bonus. Payment may be staggered in two (2) stages. It is distinctly understood
that nothing herein contained shall be construed to mean that the Company may not at its sole discretion
give an additional amount or increase the Christmas bonus.

Prior to the payment of the 13th month pay (mid –year bonus), PAL released an implementing guideline on
22 April 1988. It stated that:

1) Eligibility
a) Ground employees in the general payroll who are regular as of April 30, 1988;
b) Other ground employees in the general payroll, not falling within category) above shall receive their 13th
Month Pay on or before December 24, 1988;

2) Amount
a) For category a) above, one-month basic salary as of April 30,1988;
b) Employees covered under 1 b) above shall be paid not less than 1/12 of their basic salary for every month
of service within the calendar year.

3) Payment Date:

May 9, 1988 for category 1 a) above.

PALEA assailed the implementation of the foregoing guideline. In response to the above, PAL informed
PALEA that rank and file employees who were regularized after 30 April 1988 were not entitled to the
13th month pay as they were already given the Christmas bonus in December of 1988, per the
Implementing Rules of Presidential Decree No. 851. PALEA, disagreeing with PAL, filed a Complaint for
unfair labor practice before the NLRC.PAL answered that those rank and file employees who were not
regularized by 30 April of a particular year are, in principle, not denied their 13 month pay, considering they
receive said mandatory bonus in the form of the Christmas Bonus.

Issue:
Can a court or quasi-judicial agency amend or alter a Collective Bargaining Agreement by expanding its
coverage to non-regular employees who are not covered by the bargaining unit?

Ruling:
The Securities and Exchange Commission (SEC) had mandated the rehabilitation of PAL. Thus, PAL is still
undergoing rehabilitation. The pertinent law concerning the suspension of actions for claims against
corporations due to its rehabilitation is Presidential Decree No. 902-A, as amended.

62
The aforementioned law provides that SEC assumes jurisdiction in cases where the corporation is
undergoing rehabilitation with pending money claims against the corporation. The underlying principle
behind the suspension of claims pending rehabilitation proceedings was explained in the case of BF Homes,
Incorporated v. Court of Appeals: “the real justification is to enable the management committee or
rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial
interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other
action to continue would only add to the burden of the management committee or rehabilitation receiver,
whose time, effort and resources would be wasted in defending claims against the corporation instead of
being directed toward its restructuring and rehabilitation. The Supreme Court citing Rubberworld vs. NLRC
said:―we held that worker's claims before the NLRC and labor arbiters are included among the actions
suspended upon the placing under receivership of the employer-corporations. Although strictly speaking,
the ruling in Rubberworld dealt with actions for claims pending before the NLRC and labor arbiters, we find
that the rationale for the automatic suspension therein set out would apply to the instant case where the
employee's claim was elevated on certiorari before this Court. In another PAL case, specifically, Philippine
Airlines, Inc. v. Court of Appeal, the SC held that:―that this Court is "not prepared to depart from the well-
established doctrines" essentially maintaining that all actions for claims against a corporation pending
before any court, tribunal or board shall ipso jure be suspended in whatever stage such actions may be
found upon the appointment by the SEC of a management committee or a rehabilitation receiver. In view
of the ongoing rehabilitation of petitioner
Philippine Airlines, Inc., herein proceedings are heretofore. SUSPENDED.

63
GARCIA V. PHIL. AIR LINES, [G.R. NO. 164856,JANUARY 20, 2009]
Facts:
The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners after they were
allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the
PAL Technical Center ‘s Toolroom Section on July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, prompting
them to file a complaint for illegal dismissal and damages resolved by the Labor Arbiter in their favor, thus ordering PAL
to, inter alia, immediately comply with the reinstatement aspect of the decision.

Prior to the promulgation of the Labor Arbiter ‘s decision, the Securities and Exchange Commission (SEC) placed PAL
(hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation
Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.
The Labor Arbiter issued a Writ of Execution (Writ) respecting therein statement aspect of his January 11, 1999 Decision,
and on October 25, 2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash the Writ
and to lift the Notice while petitioners moved to release the garnished amount.

Issue/s:
1. Whether petitioners may collect their wages during the period between the Labor Arbiter ‘s order of
reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that
respondent has exited from rehabilitation proceedings.

2. WON peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise
its option under the circumstances.

Ruling:
1. The decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect
is concerned, shall immediately be executory, pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein. The view as maintained in a number of cases is that:x xx [E]ven if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he
actually rendered services during the period.

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to
comply therewith.

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court. It settles the view that the Labor Arbiter's order of reinstatement
is immediately executory and the employer has to either re-admit them to work under the same terms and conditions
prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the
alternative, employer must pay the employee ‘s salaries.
2. The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the
decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration.
Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to
serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution, as
observed in Panuncillo and as what actually transpired in Kimberly, Composite, Air Philippines, and Roquero, should
not be countenanced.

64
After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing the reinstatement pending.

Appeal was without fault on the part of the employer. The test is two-fold: (1) there must be actual delay or the fact
that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be
due to the employer ‘s unjustified act or omission. If the delay is due to the employer ‘s unjustified refusal, the
employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter ‘s decision. The new
NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit areport of
compliance within 10 calendar days from receipt of the Labor Arbiter ‘s decision, disobedience to which clearly denotes
a refusal to reinstate. The employee need not file a motion for the issuance of the writ of execution since the Labor
Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty in
determining the employer’s intransigence in immediately complying with the order.

In the case at bar, petitioners exerted efforts to execute the Labor Arbiter ‘s order of reinstatement until they were
able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiter
‘s decision. Technically, there was still actual delay which brings to the question of whether the delay was due to
respondent ‘s unjustified act or omission. It is apparent that there was inaction on the part of respondent to reinstate
them, but whether such omission was justified depends on the onset of the exigency of corporate rehabilitation. It is
settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal
or board against the corporation shall ipso jure be suspended. As stated early on, during the pendency of petitioners’
complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the
Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent
Rehabilitation Receiver.

Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is
ministerial and mandatory. This injunction or suspension of claims by legislative fiat partakes of the nature of a
restraining order that constitutes a legal justification for respondent ‘s non-compliance with the reinstatement order.
Respondent ‘s failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus
justified. Such being the case, respondent ‘s obligation to pay the salaries pending appeal, as the normal effect of the
non-exercise of the options, did not attach. While reinstatement pending appeal aims to avert the continuing threat or
danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period
when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive.

The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its
options, on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the
other hand, stops at the red line on the financial statements. More importantly, there are legal effects arising from a
judicial order placing a corporation under rehabilitation. Respondent was, during the period material to the case,
effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory
injunction but also in view of the interim relinquishment of management control to give way to the full exercise of the
powers of the rehabilitation receiver. Had there been no need to rehabilitate, respondent may have opted for actual
physical reinstatement pending appeal to optimize the utilization of resources. Then again, though the management
may think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence of the injunction
on claims.

In sum, the obligation to pay the employee ‘s salaries upon the employer ‘s failure to exercise the alternative options
under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate
rehabilitation.

65
C. Attorney’s Fees & Appearance of Lawyers
Cases:

1. Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008
2. Atty. Ortiz vs. San Miguel Corp., G.R. No. 151983-84, July 31, 2008
3. Masmud vs. NLRC et al., G.R. No. 183385, Feb. 13, 2009
4. Kaisahan at kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union vs.
Manila Water Company, G.R. No. 174179, November 16, 2011
5. Malvar vs. Kraft Food Phils Inc. et al., G.R. No. 183952, Sept. 9, 2013
6. T&H Shopfitters Corp., vs. T&H Shopfitters Corp Workers Union, GR No. 191714,
February 26, 2014

66
SAPIO V. UNDALOC CONSTRUCTION ET AL., [G.R. NO. 155034, MAY 22, 2008]
Facts:
Petitioner filed against Undaloc Construction and/or Engineer CiriloUndaloc for illegal dismissal,
underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single
proprietorship owned by CiriloUndaloc, is engaged in road construction business in Cebu City.

Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was terminated
on the ground that the project he was assigned to was already finished, he being allegedly a project
employee. Petitioner asserted he was a regular employee having been engaged to perform works which
are “usually necessary or desirable” in respondents’ business. He claimed that from 1 May to 31 August
1995 and from 1 September to 31 December 1995, his daily wage rate was only P80.00 and P90.00,
respectively, instead of P121.87 as mandated by Wage Order No. ROVII-03. From 1 March 1996 to 30 May
1998, his daily rate was P105.00. He further alleged that he was made to sign two payroll sheets, the first
bearing the actual amount he received wherein his signature was affixed to the last column opposite his
name, and the second containing only his name and signature. To buttress this allegation, petitioner
presented the payroll sheet covering the period from 4 to 10 December 1995 in which the entries were
written in pencil. He also averred that his salary from 18 to 30 May 1998 was withheld by respondents.

Respondent Cirilo Undaloc maintained that petitioner was hired as a project employee on 1 May 1995 and
was assigned as watchman from one project to another until the termination of the project on 30 May
1998. Refuting the claim of underpayment, respondent presented the payroll sheets from 2 September to
8 December 1996, 26 May to 15 June 1997, and 12 January to 31 May 1998.

Issue:
Whether petitioner was entitled to the award of salary differential and attorney’s fees.

Ruling:
While the SC adhered to the position of the appellate court that the “tendency” to alter the entries in the
payrolls was not substantiated, it did subscribe to the total deletion of the award of salary differential and
attorney’s fees.

The Labor Arbiter erred in his computation, it granted a higher salary differential. He fixed the daily wage
rate actually received by petitioner at P105.00 without taking into consideration the P141.00 rate indicated
in the typewritten payroll sheets submitted by respondents. Moreover, the Labor Arbiter misapplied the
wage orders when he wrongly categorized respondent as falling within the first category. Based on the
stipulated number of employees and audited financial statements, respondents should have been covered
by the second category (which is lower).

The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00. However,
pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are
required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00.

Section 12. Any person, corporation, trust, firm, partnership, association or entity which
refuses or fails to pay any of the prescribed increases or adjustments in the wage rates
made in accordance with this Act shall be punished by a fine not less than Twenty-five
thousand pesos (P25,000.00) nor more than One hundred thousand pesos (P100,000.00)
or imprisonment of not less than two (2) years nor more than four (4) years, or both such
fine and imprisonment at the discretion of the court: Provided, That any person convicted
under this Act shall not be entitled to the benefits provided for under the Probation Law.

67
 The employer concerned shall be ordered to pay an amount equivalent to double the
unpaid benefits owing to the employees: Provided, That payment of indemnity shall not
absolve the employer from the criminal liability imposable under this Act.

If the violation is committed by a corporation, trust or firm, partnership, association or

any other entity, the penalty of imprisonment shall be imposed upon the entity’s
responsible officers, including, but not limited to, the president, vice president, chief
executive officer, general manager, managing director or partner. (Emphasis supplied)
The award of attorney’s fees is warranted under the circumstances of this case. Under Article 2208
of the New

Civil Code, attorney's fees can be recovered in actions for the recovery of wages of laborers and actions
for indemnity under employer's liability laws but shall not exceed 10% of the amount awarded. The fees
may be deducted from the total amount due the winning party.

68
ATTY. ORTIZ V. SAN MIGUEL CORPORATION [G.R. NOS. 15198 3-84 JULY 31,
2008]
Facts:
The petitioner in this case, Jose Max S. Ortiz, is a member of the Philippine Bar who represented the
complainants in NLRC Cases No. V-0255-94 (hereinafter referred to as the Aguirre Cases) and No. V-0068-
95 (hereinafter referred to as the Toquero Case) instituted against herein private respondent San Miguel
Corporation sometime in 1992 and 1993.The respondent is a corporation duly organized and existing under
and by virtue of the laws of the Republic of the Philippines. It is primarily engaged in the manufacture and
sale of food and beverage particularly beer products. In line with its business, it operates breweries and
sales offices throughout the Philippines.The complainants in NLRC Cases, Aguirre Cases and Toquero Case
were employees at private respondent's Sales Offices in the Province of Negros Occidental.

The complainants of Cases, Aguire and Toquero got a favorable decision in NLRC regarding their money
claims against San Miguel Corporation. In effect, San Miguel Corporation filed a Petitions for Certiorari.
While this respondent’s petitions were pending before the Court of Appeals, all but one of the remaining
complainants in Aguirre and Toquero Cases on various dates before two Labor Arbiters and in the presence
of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim in favor of private respondent.
Based on the Deeds they executed, complainants agreed to settle their claims against private respondent
for amounts less than what the NLRC actually awarded. Private respondent withheld 10% of the total
amount agreed upon by the parties in the said Deeds as attorney's fees and handed it over to petitioner.
Private respondent then attached the Deeds to its Manifestation and Motion filed before the appellate
court. Then the Court of appeals rendered a decision affirming the NLRC decisions, only in so far as it
concerned complainant Alfredo Gadian, Jr. (complainant Gadian), the only complainant who did not execute
a Deed of Release, Waiver and Quitclaim. With respect to the other complainants in the Aguirre and Toquero
Cases, their complaints were dismissed on account of their duly executed Deeds of Release, Waiver and
Quitclaim. In a Resolution dated 9 January 2002, the appellate court denied the motion of complainant
Gadian and his counsel, herein petitioner , that the award of attorney's fees of 10% should be based on the
monetary awards adjudged by the NLRC.

Thus, this petition filed before the Court praying to affirm the award of attorney's fees equivalent to 10% of
the monetary award adjudged by the NLRC in its Decisions dated 21 July 1995 and 25 July 1995 in Toquero
Case and Aguirre Cases respectively.

Issue:
Whether he is entitled to the amount of attorney's fees as adjudged by the NLRC in its Decisions in the
Aguirre and Toquero Cases or only to the 10% of the amounts actually paid to his clients, the complainants
who signed the Deeds of Release, Waiver and Quitclaim.

Ruling:
This Court has consistently ruled that a question of law exists when there is a doubt or controversy as to
what the law is on a certain state of facts. On the other hand, there is a question of fact when the doubt
or difference arises as to the alleged truth or falsehood of the alleged facts. For a question to be one of
law, it must involve no examination of the probative value of the evidence presented by the litigants or any
of them. The test of whether a question is one of law or of fact is not the appellation given to such question
by the party raising the same; rather, it is whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question
of fact.

The aforesaid issue evidently involves a question of law. What it needs to do is ascertain and apply the
relevant law and jurisprudence on the award of attorney's fees to the prevailing parties in labor cases

69
 Article 111 of the Labor Code, as amended, specifically provides:
ART. 111. ATTORNEY'S FEES. —
(a) In cases of unlawful withholding of wages the culpable party may be assessed
attorney's fees equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of the wages, attorney's fees which
exceed ten percent of the amount of wages recovered.

In PCL Shipping Philippines, Inc. v. National Labor Relations Commission citing Dr. Reyes v. Court of Appeals,
this Court enunciated that there are two commonly accepted concepts of attorney's fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid
to a lawyer by his client for the legal services the former has rendered to the latter. The basis of this
compensation is the fact of the attorney's employment by and his agreement with the client. In its
extraordinary concept, attorney's fees are deemed indemnity for damages ordered by the court to be paid
by the losing party in a litigation. The instances in which these may be awarded are those enumerated in
Article 2208 of the Civil Code, specifically paragraph 7 thereof, which pertains to actions for recovery of
wages, and is payable not to the lawyer but to the client, unless they have agreed that the award shall
pertain to the lawyer as additional compensation or as part thereof. Article 111 of the Labor Code, as
amended, contemplates the extraordinary concept of attorney's fees.

Based on the foregoing, the attorney's fees awarded by the NLRC in its Decisions in the Aguirre and Toquero
Cases pertain to the complainants, petitioner's clients, as indemnity for damages; and not to petitioner as
compensation for his legal services. Records show that the petitioner neither alleged nor proved that his
clients, the complainants, willingly agreed that the award of attorney's fees would accrue to him as an
additional compensation or part thereof. What the complainants explicitly agreed to in their individual
Deeds of Release, Waiver, and Quitclaim was that the 10% attorney's fees of the petitioner shall be deducted
from the amount of the gross settlement.

Thus, this Court has no recourse but to interpret the award of attorney's fees by the NLRC in its
extraordinary concept. And since the attorney's fees pertained to the complainants as indemnity for
damages, it was totally within the complainants' right to waive the amount of said attorney's fees and settle
for a lesser amount thereof in exchange for the immediate end to litigation. Petitioner cannot prevent
complainants from compromising and/or withdrawing their complaints at any stage of the proceedings
just to protect his anticipated attorney's fees.

Even assuming arguendo that the complainants in the Aguirre and Toquero Cases did indeed agree that the
attorney's fees awarded by the NLRC should be considered in their ordinary concept, i.e., as compensation
for petitioner's services, we refer back to Article 111 of the Labor Code, as amended, which provides that
the attorney's fees should be equivalent to 10% of the amount of wages recovered. Since the complainants
decided to settle their complaints against the private respondent, the amounts actually received by them
pursuant to the Deeds of Release, Waiver and Quitclaim are the amounts "recovered" and the proper basis
for determining the 10% attorney's fees.

In the case at bar, it is beyond cavil that the petitioner is not the real party in interest; hence, he cannot file
this Petition to recover the attorney's fees as adjudged by the NLRC in its Decisions dated 21 July 1995 and
25 July 1995 in the Aguirre and Toquero Cases, respectively. To reiterate, the award of attorney's fees
pertain to the prevailing parties in the NLRC cases, namely, the complainants, all but one of whom no
longer pursued their complaints against private respondent after executing Deeds of Release, Waiver and
Quitclaim. Not being the party to whom the NLRC awarded the attorney's fees, neither is the petitioner the
proper party to question the non-awarding of the same by the appellate court.

70
This would show that petitioner has been compensated for the services he rendered the complainants. It
may do well for petitioner to remember that as a lawyer, he is a member of an honorable profession, the
primary vision of which is justice. The practice of law is a decent profession and not a money-making trade.
Compensation should be but a mere incident.

If petitioner earnestly believes that the amounts he already received are grossly deficient, petitioner's
remedy is not against the private respondent, but against his own clients, the complainants. He should
file a separate action for collection of sum of money against complainants to recover just compensation for
his legal services, and not the present Petition for Review to claim from private respondent the attorney's
fees which were adjudged by the NLRC in favor of complainants as the prevailing parties in the Aguirre and
Toquero Cases.

WHEREFORE, the instant Petition is hereby DENIED.

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EVANGELINA MASMUD (AS SUBSTITUTE COMPLAINANT FOR ALEXANDER J.
MASMUD) V. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION)
AND ATTY. ROLANDO B. GO, JR.. ]G.R. NO. 183385: FEBRUARY 13, 2009]
Facts:
On July 9, 2003, Evangelina Masmud's (Evangelina) husband, the late Alexander J. Masmud (Alexander),
filed a complaint against First Victory Shipping Services and Angel Akos (Hellas) S.A. for non-payment of
permanent disability benefits, medical expenses, sickness allowance, moral and exemplary damages, and
attorney's fees. Alexander engaged the services of Atty. Rolando B. Go, Jr. (Atty. Go) as his counsel.

In consideration of Atty. Go's legal services, Alexander agreed to pay attorney's fees on a contingent basis,
as follows: twenty percent (20%) of total monetary claims as settled or paid and an additional ten percent
(10%) in case of appeal. It was likewise agreed that any award of attorney's fees shall pertain to
respondent's law firm as compensation.

On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary claims of
Alexander.

Alexander's employer filed an appeal before the National Labor Relations Commission (NLRC). During the
pendency of the proceedings before the NLRC, Alexander died. After explaining the terms of the lawyer's
fees to Evangelina, Atty. Go caused her substitution as complainant. On April 30, 2004, the NLRC rendered
a Decision dismissing the appeal of Alexander's employer.

Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the execution of the
NLRC decision, which was later granted by the LA. The surety bond of the employer was garnished. Upon
motion of Atty. Go, the surety company delivered to the NLRC Cashier, through the NLRC Sheriff, the check
amounting to P3,454,079.20. Thereafter, Atty. Go moved for the release of the said amount to Evangelina.

On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20 to
Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum of P680,000.00.

Dissatisfied, Atty. Go filed a motion to record and enforce the attorney's lien alleging that Evangelina
reneged on their contingent fee agreement. Evangelina paid only the amount of P680,000.00, equivalent
to 20% of the award as attorney's fees, thus, leaving a balance of 10%, plus the award pertaining to the
counsel as attorney's fees.

In response to the motion filed by Atty. Go, Evangelina filed a comment with motion to release the amount
deposited with the NLRC Cashier. In her comment, Evangelina manifested that Atty. Go's claim for
attorney's fees of 40% of the total monetary award was null and void based on Article 111 of the Labor
Code.

Issue:
Whether the 40% Lawyer’s fee on contingent basis of Atty. Go is proper?

Ruling:
Yes. There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the
reasonable compensation paid to a lawyer by his client for the legal services rendered to the latter. On
the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for
damages to be paid by the losing party to the prevailing party, such that, in any of the cases provided by

72
law where such award can be made, e.g., those authorized in Article 2208 of the Civil Code, the amount is
payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the
lawyer as additional compensation or as part thereof.

Here, we apply the ordinary concept of attorney's fees, or the compensation that Atty. Go is entitled to
receive for representing Evangelina, in substitution of her husband, before the labor tribunals and before
the court.

Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Go's
compensation as her counsel and assiduously opposes their agreed retainer contract.

Article 111 of the said Code provides:

ART. 111. Attorney's fees. - (a) In cases of unlawful withholding of wages the culpable party may be assessed
attorney's fees equivalent to ten percent of the amount of the wages recovered.

Contrary to Evangelina's proposition, Article 111 of the Labor Code deals with the extraordinary concept of
attorney's fees. It regulates the amount recoverable as attorney's fees in the nature of damages sustained
by and awarded to the prevailing party. It may not be used as the standard in fixing the amount payable to
the lawyer by his client for the legal services he rendered.

In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining Atty. Go's
compensation. The said Rule provides:

SEC. 24. Compensation of attorney's; agreement as to fees. - An attorney shall be entitled to have and
recover from his client no more than a reasonable compensation for his services, with a view to the
importance of the subject matter of the controversy, the extent of the services rendered, and the
professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert
witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its
own professional knowledge. A written contract for services shall control the amount to be paid therefor
unless found by the court to be unconscionable or unreasonable.

The retainer contract between Atty. Go and Evangelina provides for a contingent fee. The contract shall
control in the determination of the amount to be paid, unless found by the court to be unconscionable or
unreasonable. Attorney's fees are unconscionable if they affront one's sense of justice, decency or
reasonableness. The decree of unconscionability or unreasonableness of a stipulated amount in a
contingent fee contract will not preclude recovery.

The criteria found in the Code of Professional Responsibility are also to be considered in assessing the
proper amount of compensation that a lawyer should receive.ςrαlαω Canon 20, Rule 20.01 of the said Code
provides:

CANON 20 - A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01. - A lawyer shall be guided by the following factors in determining his fees:
(a) The time spent and the extent of the services rendered or required;
(b) The novelty and difficulty of the question involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered case;
(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he
belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the service;

73
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients
may be protected from unjust charges. The amount of contingent fees agreed upon by the parties is subject
to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much
higher compensation is allowed as contingent fees because of the risk that the lawyer may get nothing if
the suit fails. The Court finds nothing illegal in the contingent fee contract between Atty. Go and
Evangelina's husband. The CA committed no error of law when it awarded the attorney's fees of Atty. Go
and allowed him to receive an equivalent of 39% of the monetary award.

Considering that Atty. Go successfully represented his client, it is only proper that he should receive
adequate compensation for his efforts. Even as we agree with the reduction of the award of attorney's fees
by the CA, the fact that a lawyer plays a vital role in the administration of justice emphasizes the need to
secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the
legal profession. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud
on the part of his client as the client is against abuse on the part of his counsel.

The duty of the court is not alone to ensure that a lawyer acts in a proper and lawful manner, but also to
see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at
tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection
of any judicial tribunal against any attempt on the part of his client to escape payment of his just
compensation. It would be ironic if after putting forth the best in him to secure justice for his client, he
himself would not get his due.

74
KAISAHAN V. MWC [GR NO. 174179, NOVEMBER 16, 2011]
Facts:
On February 21, 1997, the Metropolitan Waterworks and Sewerage System (MWSS) entered into a Concession
Agreement (Agreement) with the Manila Water Company to privatize the operations of the MWSS. Article 6.1.3 of the
Agreement provides that "the Concessionaire shall grant [its] employees benefits no less favorable than those granted
to MWSS employees at the time of [their] separation from MWSS." Among the benefits enjoyed by the employees of
the MWSS were the amelioration allowance (AA) and the cost-of-living allowance (COLA). The payment of the AA and
the COLA was discontinued pursuant to Republic Act No. 6758, otherwise known as the "Salary Standardization Law,"
which integrated the allowances into the standardized salary. The Company initially turned down the demand to include
the AA and COLA, however, it subsequently agreed to an amendment of the CBA on the matter.

Thereafter, the Company integrated the AA into the monthly payroll of all its employees beginning August 1, 2002. The
Company, however, did not subsequently include the COLA since the Commission on Audit disapproved its payment
because the Company had no funds to cover this benefit.

As a result, the Union and Borela filed on April 15, 2003 a complaint against the Company for payment of the AA, COLA,
moral and exemplary damages, legal interest, and attorney's fees before the National Labor Relations
Commission(NLRC).

In his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog (LA) ruled in favor of the petitioners and ordered
the payment of their AA and COLA, six percent (6%) interest of the total amount awarded, and ten percent (10%)
attorney's fees.On appeal by the Company, the NLRC affirmed with modification the LA's decision. It set aside the award
of the COLA benefits because the claim was not proven and established, but ordered the Company to pay the petitioners
their accrued AA of about P107,300,000.00 in lump sum and to continue paying the AA starting August 1, 2002. It also
upheld the award of 10% attorney's fees to the petitioners.

In its Motion for Partial Reconsideration of the NLRC's December 19, 2003 decision, the Company pointed out that the
award of ten percent (10%) attorney's fees to the petitioners is already provided for in their December 19, 2003
Memorandum of Agreement (MOA) which mandated that attorney's fees shall be deducted from the AA and CBA
receivables. It provided that 10% Attorney’s Fees are to be deducted from the AA and CBA receivables.Petitioners argue
that the 10% attorney's fees paid by the members/employees is separate and distinct from the obligation of the
company to pay the 10% awarded attorney's fees which we also gave to our counsel as part of our contingent fee
agreement.

The NLRC subsequently denied both parties' Motions for Partial Reconsideration, prompting the Company to elevate
the case to the CA via a petition for certiorari under Rule 65 of the Rules of Court.

In its Decision promulgated on March 6, 2006, the CA modified the assailed NLRC rulings by deleting "[t]he order for
respondent MWCI to pay attorney's fees equivalent to 10% of the total judgment awards." The CA recognized the
binding effect of the MOA between the Company and the Union; it stressed that any further award of attorney's fees
is unfounded considering that it did not find anything in the Agreement that is contrary to law, morals, good customs,
public policy or public order.

Issues:
The core issues posed for our resolution are:
(1) Whether the CA can review the factual findings of the NLRC in a Rule 65 petition; and
(2) Whether the NLRC gravely abused its discretion in awarding ten percent (10%) attorney's fees to the petitioners.

The Court's Ruling

We find the petition and its arguments meritorious.

On the First Issue:

The CA cannot undertake a re-assessment of the evidence presented in the case in certiorari proceedings under Rule
65 of the Rules of Court. However, the rule admits of exceptions.

75
As discussed below, our review of the records and of the CA decision shows that the CA erred in ruling that the NLRC
gravely abused its discretion in awarding the petitioners ten percent (10%) attorney's fees without basis in fact and in
law.

On the Second Issue:

Article 111 of the Labor Code, as amended, governs the grant of attorney's fees in labor cases.

The Court explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission, that there are two
commonly accepted concepts of attorney's fees — the ordinary and extraordinary. In its ordinary concept, an
attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders.
In its extraordinary concept, attorney's fees are deemed indemnity for damages ordered by the court to be paid by
the losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the
Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the lawyer but to the
client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of
compensation.

The Court also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary
concept of attorney's fees and that Article 111 is an exception to the declared policy of strict construction in the
award of attorney's fees. Although an express finding of facts and law is still necessary to prove the merit of the
award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the
wages.

In the present case, we find it undisputed that the union members are entitled to their AA benefits and that these
benefits were not paid by the Company. That the Company had no funds is not a defense as this was not an insuperable
cause that was cited and properly invoked. As a consequence, the union members represented by the Union were
compelled to litigate and incur legal expenses. On these bases, we find no difficulty in upholding the NLRC's award of
ten percent (10%) attorney's fees.

The more significant issue in this case is the effect of the MOA provision that attorney's fees shall be deducted from
the AA and CBA receivables. In this regard, the CA held that the additional grant of 10% attorney's fees by the NLRC
violates Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of
10% attorney's fees deductible from the AA and CBA receivables of the Union's members.

In the present case, the ten percent (10%) attorney's fees awarded by the NLRC on the basis of Article 111 of the Labor
Code accrue to the Union's members as indemnity for damages and not to the Union's counsel as compensation for
his legal services, unless, they agreed that the award shall be given to their counsel as additional or part of his
compensation;whichin this case, the Union bound itself to pay 10% attorney's fees to its counsel under the
MOA and also gave up the attorney's fees awarded to the Union's members in favor of their counsel. This is supported
by Borela's affidavit which stated that "[t]he 10% attorney's fees paid by the members/employees is separate and
distinct from the obligation of the company to pay the 10% awarded attorney's fees which we also gave to our counsel
as part of our contingent fee agreement."The limit to this agreement is that the indemnity for damages imposed by
the NLRC on the losing party (i.e., the Company) cannot exceed ten percent (10%).

Simply stated, the attorney's fees contracted under the MOA do not refer to the amount of attorney's fees awarded
by the NLRC; the MOA provision on attorney's fees does not have any bearing at all to the attorney's fees awarded by
the NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that the CA erred in ruling that
the LA's award of attorney's fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the Labor
Code.

76
MALVAR V. KRAFT [G.R. NO. 183952, SEPTEMBER 9, 2013]
Facts:
Malvar was a former employee of Kraft who eventually rose to the ranks to become Vice-President. In 1999, she was
asked to explain why no administrative sanctions should be imposed on her for possible breach of trust and confidence
and for willful violations of company rules and regulations. She was then terminated on March 2000.

Malvar then filed a complaint for illegal suspension and illegal dismissal against Kraft and Bautista against the NLRC.
The LA found her dismissal illegal and ordered her reinstatement, payment of her full backwages, inclusive of allowance
and benefits plus attorney’s fees.

When the judgment in her favor became final and executory, Malvar filed a motion for a writ of execution. The RCU of
the NLRC computed her award and arrived at a total sum of P41,627,593.74. The Labor Arbiter found that this sum
lacked basis and reduced the award to P27,786,378.11. Both parties appealed to the NLRC who set aside the LA’s
decision and adopted the computation by the RCU. Respondents went to the CA to assail the decision of the NLRC. The
CA granted the petition and ruled that the Labor Arbiter must compute the monetary award based on her salary at the
time of termination, without the projected salary increases. The CA also allowed the garnishment of Kraft’s bank
account from Citibank amounting to P14,252,192.12 which would be deducted from the final amount to be awarded
to Malvar. From the judgement by the CA, Malvar appealed to the Court.

While her appeal was pending, Malvar and respondents entered into a Compromise Agreement. It stipulated that
Malvar would be receiving P40,000,000.00 from Kraft on top of the P14,252,192.12 she had received. Thus, Malvar filed
a Motion to Withdraw the Case in view of the Compromise Agreement.
Before the Court could act on the Motion filed by Malvar, a Motion for Intervention to Protect Attorney’s Rights was
filed by the firm of Dasal, Llasos and Associates where it sought that Malvar and Kraft be ordered to pay jointly and
severally its contingent fees.

Issues:
1. Whether Malvar’s Motion to dismiss would prosper in view of the Compromise Agreement
2. Whether the Motion for Intervention will prosper to protect attorney’s rights and if so, how much it could
recover

Ruling
The Court approved the Compromise Agreement. It held that it could do so despite favorable action in the Motion for
Intervention.

The Court found that the Intervenor’s services were unjustifiably terminated. In the absence of the lawyer’s fault, a
client cannot deprive the lawyer of his just fees already earned in the guise of a justifiable reason. Here, Malvar not
only downplayed the worth of the Intervenor’s legal service to her but also attempted to camouflage the intent to
defraud her lawyer by offering excuses that were not only inconsistent with her actions, but most importantly, fell short
of being justifiable. The Intervenor’s withdrawal from the case neither cancelled nor terminated written agreement on
the contingent attorney’s fees.

Kraft is also liable since they were shown to have connived with Malvar in the execution of the compromise agreement,
with the intention of depriving Intervenor of its Attorney’s fees. There was unusual timing of Malvar’s termination of
her lawyer’s services, the execution of the Compromise Agreement and the Motion to Withdraw Case. They are deemed
joint tort-feasers, those who command, instigate, promote, encourage, advise, countenance, cooperate in, aid, or abet
the commission of a tort, or who approve of it after it is done or if done for their benefit.

Therefore, the Court approves the compromise agreement. It also ordered Malvar and Kraft to pay the Law Firm the
stipulated contingent attorney’s fees pf 10% P41,627,593.75 and a further sum of 10% equivalent of the stock option.

77
TH SHOPFITTERS CORP., ET AL., V. 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 attorney’s fees, against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before
the Labor Arbiter (LA).

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.

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

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

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

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

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

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

Issues: Whether or not the respondents are entitled to attorney’s fees

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

However, the respondents are not entitled to Attorney’s Fees. The applicable law in this case is Article 111 of the Labor
Code. Pursuant thereto, the award of Attorney’s Fees is limited to cases of unlawful withholding of wages. In this case,
the Court cannot find any claim or proof that petitioners unlawfully withtheld the wages of respondents.

78
14. MISCELLANEOUS PROVISIONS
A.SPECIAL TYPES OF WORKERS
Cases:

1. Bernardo vs. NLRC, [310 SCRA 186 [1999]]

79
BERNARDO V. NLRC, [310 SCRA 186 [1999]]
Facts:
The 43 petitioners are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent
Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called
"Employment Contract for Handicapped Workers". The said agreement provides for the manner of how
they are hired and be rehired, the amount of their wages (P118.00 per day), period of employment (5 days
a week, 8 hours a day, training for 1 month, 6 months period) and the manner and methods of how their
works are to be done (Sort out bills according to color; Count each denomination per hundred, either
manually or with the aid of a counting machine; Wrap and label bills per hundred; Put the wrapped bills
into bundles; and Submit bundled bills to the bank teller for verification.) Many of their employments were
renewed every six months. Claiming that they should be considered as regular employees they filed a
complaint for illegal dismissal and recovery of various benefits.

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

Issues:
Does petitioners considered as regular employees?

Law:
Art.78 & 80 of the Labor Code and the Magna Carta for Disabled Persons.

Ruling:
Yes. The petition is meritorious. However, only the employees, who worked for more than six months and
whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal.

The stipulations in the employment contracts indubitably conform with Article 80, however, the application
of Article 280 of the Labor Code is justified because of the advent of RA No. 7277 (the Magna Carta for
Disabled Persons) which mandates that a qualified disabled employee should be given the same terms and
conditions of employment as a qualified able-bodied person (compensation, privileges, benefits, fringe
benefits, incentives or allowances) 27 of the petitioners are considered regular employees by provision of
law regardless of any agreement between the parties as embodied in article 280 in relation to article 281
of the Labor Code.

The test is whether the former is usually necessary or desirable in the usual business or trade of the
employer. Hence, the employment is considered regular, but only with respect to such activity, and while
such activity exist. Without a doubt, the task of counting and sorting bills is necessary and desirable to the
business of respondent bank.

When the bank renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees. No employer is allowed to determine indefinitely the
fitness of its employees. Those who have worked for only 6 months and employments were not renewed
are not considered regular employees.

80
B.EMPLOYMENT OF WOMEN
Cases:

1. PT&T vs. NLRC, 272 SCRA 596 [1997]

2. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007]

81
PT&T V. NLRC, [272 SCRA 596 [1997]]
Facts:
PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman specifically as
“Supernumerary Project Worker”, for a fixed period from November 21, 1990 until April 20, 1991 as
reliever for C.F. Tenorio who went on maternity leave. She was again invited for employment as
replacement of Erlina F. Dizon who went on leave on 2 periods, from June 10, 1991 to July 1, 1991 and July
19, 1991 to August 8, 1991.

On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employee where
probationary period will cover 150 days. She indicated in the portion of the job application form under
civil status that she was single although she had contracted marriage a few months earlier. When
petitioner learned later about the marriage, its branch supervisor, Delia M. Oficial, sent de Guzman a
memorandum requiring her to explain the discrepancy. Included in the memorandum, was a reminder
about the company’s policy of not accepting married women for employment. She was dismissed from the
company effective January 29, 1992. Labor Arbiter handed down decision on November 23, 1993 declaring
that petitioner illegally dismissed De Guzman, who had already gained the status of a regular
employee. Furthermore, it was apparent that she had been discriminated on account of her having
contracted marriage in violation of company policies.

Issue:
Whether the alleged concealment of civil status can be grounds to terminate the services of an employee.

Ruling:
Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits discrimination
merely by reason of marriage of a female employee. It is recognized that company is free to regulate
manpower and employment from hiring to firing, according to their discretion and best business judgment,
except in those cases of unlawful discrimination or those provided by law.

PT&T’s policy of not accepting or disqualifying from work any woman worker who contracts marriage is
afoul of the right against discrimination provided to all women workers by our labor laws and by our
Constitution. The record discloses clearly that de Guzman’s ties with PT&T were dissolved principally
because of the company’s policy that married women are not qualified for employment in the company,
and not merely because of her supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature adopted by PT&T. As stated in the labor
code:
“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.”

The policy of PT&T is in derogation of the provisions stated in Art.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 and
it likewise is contrary to good morals and public policy, depriving a woman of her freedom to choose her
status, a privilege that is inherent in an individual as an intangible and inalienable right. The kind of policy
followed by PT&T strikes at the very essence, ideals and purpose of marriage as an inviolable social
institution and ultimately, family as the foundation of the nation. Such policy must be prohibited in all its
indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land not
only for order but also imperatively required.

82
DEL MONTE PHILS. V. VELASCO, [G.R. NO. 153477, MARCH 6, 2007]
Facts:
Velasco started working with Del Monte Philippines (petitioner) on October 21, 1976 as a seasonal
employee and was regularized on May 1, 1977. Her latest assignment was as Field Laborer. On June 16,
1987, respondent was warned in writing due to her absences. On May 4, 1991, respondent, thru a letter,
was again warned in writing by petitioner about her absences without permission and a forfeiture of her
vacation leave entitlement for the year 1990-1991 was imposed against her. On September 14, 1992,
another warning letter was sent to respondent regarding her absences without permission during the year
1991-1992. Her vacation entitlement for the said employment year affected was consequently forfeited.

In view of the said alleged absences without permission, on September 17, 1994, a notice of hearing was
sent to respondent notifying her of the charges filed against her for violating the Absence Without Official
Leave rule: that is for excessive absence without permission on August 15-18, 29-31 and September 1-10,
1994. Respondent having failed to appear on September 23, 1994 hearing, another notice of hearing was
sent to her resetting the investigation on September 30, 1994. It was again reset to October 5, 1994. After
hearing, the petitioner terminated the services of respondent effective January 16, 1994 due to excessive
absences without permission.

Issue: Whether the employment of respondent had been terminated on account of her pregnancy.

Ruling:
Respondent's sickness was pregnancy-related and, therefore, the petitioner cannot terminate
respondent's services because in doing so, petitioner will, in effect, be violating the Labor Code which
prohibits an employer to discharge an employee on account of the latter's pregnancy. Article 137 of the
Labor Code provides: that 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, while on leave or in confinement due to her pregnancy; or (3) To discharge or
refuse the admission of such woman upon returning to her work for fear that she may again be pregnant.

Respondent was able to subsequently justify her absences in accordance with company rules and policy;
that the respondent was pregnant at the time she incurred the absences; that this fact of pregnancy and
its related illnesses had been duly proven through substantial evidence; that the respondent attempted to
file leaves of absence but the petitioner's supervisor refused to receive them; that she could not have filed
prior leaves due to her continuing condition; and that the petitioner, in the last analysis, dismissed the
respondent on account of her pregnancy, a prohibited act.

Petitioner terminated the services of respondent on account of her pregnancy which justified her absences
and, thus, committed a prohibited act rendering the dismissal illegal.

83
C. EMPLOYMENT OF NURSING EMPLOYEES /
NIGHTWORKERS / CHILDREN / DOMESTIC WORKERS

Cases:

1. Remington Industrial Sales Corp., vs. Castaneda, G.R. No. 169295-96, Nov. 20, 2006
citing Apex Mining

2. Co vs. Vargas, G.R. No. 195167, November 16, 2011

84
REMINGTON INDUSTRIAL SALES CORP., V. CASTANEDA, [G.R. NO. 169295-96,
NOV. 20, 2006 CITING APEX MINING]
Facts: Castaneda alleged that she started working in August 1983 as company cook with a salary
P4,000/month for Remington, a corporation engaged in the trading business; that she worked for 6
days a week, starting as early as 6am because she had to do the marketing and would end at 5:30pm
or even later, after most of the employees, if not all, had left the company premises.
1. She continuously worked for Remington until she was unceremoniously prevented from reporting
for work when Remington transferred to a new site in EDSA, Caloocan City. She averred that she
reported for work at the new site on January 15, 1998, only to be informed that Remington no
longer needed her services. Castaneda believed that her dismissal was illegal because she was not
given any notice as required by law. Hence, she filed a complaint for reinstatement without loss
of seniority rights, salary differentials, service incentive leave pay, 13th month pay and fees.
2. Remington denied that it dismissed Castaneda illegally. It posited that Castaneda was a domestic
helper, not a regular employee and that her work as a cook had nothing to do with Remington’s
business of trading in construction materials.
3. Remington also maintained that it did not exercise any degree of control and/or supervision over
Castaneda’s work as her only concern was to ensure that the employees’ lunch and snacks were
available and served at the designated time.
4. Remington also claimed that it was Castaneda who refused to report for work when the company
transferred to the new location

Issue: WON Castañeda is a regular employee of petitioner or a mere domestic worker of the Tan Family.

Ruling:
Yes, Castaneda was a regular employee of petitioner.
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms “house helper” or “domestic
servant” are defined as follows: “The term ‘house helper’ as used herein is synonymous to the term
‘domestic servant’ and shall refer to any person, whether male or female, who renders services in and
about the employer’s home and which services are usually necessary or desirable for the maintenance
and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the
employer’s family.”

The foregoing definition clearly contemplates such house helper or domestic servant who is employed
in the employer’s home to minister exclusively to the personal comfort and enjoyment of the
employer’s family. Such definition covers family drivers, domestic servants, laundry women, yayas,
gardeners, houseboys and similar house helps. The criteria are the personal comfort and enjoyment
of the family of the employer in the home of said employer. While it may be true that the nature of
the work of a house helper, domestic servant or laundrywoman in a home or in a company staff house
may be similar in nature, the difference in their circumstances is that in the former instance they are
actually serving the family while in the latter case, the mere fact that the house helper or domestic
servant is working within the premises of the business of the employer and in relation to or in
connection with its business, as in its staff houses for its guest or even for its officers and employees,
warrants the conclusion that such house helper or domestic servant is and should be considered as a
regular employee of the employer and not as a mere family house helper or domestic servant as
contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.

Clearly, the situs, as well as the nature of respondent’s work as a cook, who caters not only to the
needs of Mr. Tan and his family but also to that of the petitioner’s employees, makes her fall squarely
within the definition of a regular employee under the doctrine enunciated in the Apex Mining case.

85
 That she works within company premises, and that she does not cater exclusively to the personal
comfort of Mr. Tan and his family, is reflective of the existence of the petitioner’s right of control over
her functions, which is the primary indicator of the existence of an employer-employee relationship.
Moreover, it is wrong to say that if the work is not directly related to the employer's business, then
the person performing such work could not be considered an employee of the latter. The
determination of the existence of an employer-employee relationship is defined by law according to
the facts of each case, regardless of the nature of the activities involved.

In addition, no less than the company’s corporate secretary has certified that respondent is a bona fide
company employee; she had a fixed schedule and routine of work and was paid a monthly salary of
P4,000.00; she served with the company for 15 years starting in 1983, buying and cooking food served to
company employees at lunch and merienda, and that this service was a regular feature of employment
with the company.

In the second issue, abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty; hence, a just cause for termination of employment by the
employer under Article 282 Labor Code, which enumerates the just causes for termination by the
employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report
for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-
employee relationship, with the second as the more determinative factor which is manifested by overt acts
from which it may be deduced that the employee has no more intention to work. The intent to discontinue
the employment must be shown by clear proof that it was deliberate and unjustified.

In the instant case, Erlinda’s immediate filing of her complaint with the NLRC negates abandonment.
Indeed, an employee who loses no time in protesting her layoff cannot by any reasoning be said to
have abandoned her work, for it is well-settled that the filing of an employee of a complaint for illegal
dismissal with a prayer for reinstatement is proof enough of her desire to return to work, thus,
negating the employer’s charge of abandonment. In termination cases, the burden of proof rests upon
the employer to show that the dismissal is for a just and valid cause; failure to do so would necessarily
mean that the dismissal was illegal. The employer’s case succeeds or fails on the strength of its
evidence and not on the weakness of the employee’s defense. If doubt exists between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

86
CO V. VARGAS, [G.R. NO. 195167, NOVEMBER 16, 2011]
Facts:
Respondent alleged that she started working at the bakeshop in October 1994 as a baker and worked from 8:00 a.m.
until 8:30 p.m., Monday to Saturday. Aside from baking, respondent also served the customers and supervised the
other workers in the absence of the owner. Furthermore, respondent claimed that she sometimes cooked and did the
chores of a housemaid whenever the latter was not available. Respondent had a salary of P220 per day, which she
received every Saturday afternoon. During the period of her employment, respondent was not given a payslip and she
was never asked to sign a payroll.

On 6 April 2003, petitioner Co's wife, Nely Co, told respondent to cook their lunch because the housemaid was ironing
clothes. Since respondent was busy preparing customers' orders, she lost track of time and was unable to cook lunch
as instructed. Irate at respondent's failure to cook, Nely Co cussed respondent and told her to leave and never to return
because she was not needed anymore. Respondent was so humiliated and could no longer bear the treatment she
received from her employers that she decided to take her salary and leave that same day. Respondent later filed the
complaint against Nathaniel Bakeshop and its owner Fernando Co.
The Labor Arbiter found that the place of business of petitioner is the same as his place of residence and that respondent
works for petitioner as well as for his business which is based in his home. The NLRC reversed and set aside the Labor
Arbiter's Decision. The Court of Appeals promulgated its Decision in favor of respondent.

Issue:
Whether the "Court of Appeals erred in ruling that at the time Respondent was working with the Co family, the business
was being conducted at the residence."

Ruling:
The issue raised by petitioner is clearly a question of fact which requires a review of the evidence presented. The
Supreme Court is not a trier of facts. It is not the function of this Court to examine, review or evaluate the evidence
all over again, specially on evidence raised for the first time on appeal.

A petition for review under Rule 45 of the Rules of Court should cover only questions of law, thus:
Section 1.Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized
by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only
questions of law which must be distinctly set forth.
As a rule, the findings of fact of the Court of Appeals are final and conclusive and this Court will not review them on
appeal, subject to exceptions such as those enumerated by this Court in Development Bank of the Philippines v. Traders
Royal Bank:

The jurisdiction of the Court in cases brought before it from the appellate court is limited to reviewing errors of law,
and findings of fact of the Court of Appeals are conclusive upon the Court since it is not the Court's function to analyze
and weigh the evidence all over again. Nevertheless, in several cases, the Court enumerated the exceptions to the rule
that factual findings of the Court of Appeals are binding on the Court: (1) when the findings are grounded entirely on
speculations, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case,
or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary
to that of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are
based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed
by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted
by the evidence on record; or (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed
by the parties, which, if properly considered, would justify a different conclusion.

Petitioner failed to show that this case falls under any of the exceptions. The finding of the Labor Arbiter that
petitioner's bakery and his residence are located at the same place was not reversed by the NLRC. Furthermore, the
Court of Appeals upheld this finding of the Labor Arbiter.

87
C. EMPLOYMENT OF HOMEWORKERS / NON-RESIDENT
ALIENS / STUDENTS / ACADEMIC & NON-ACADEMIC
PERSONNEL IN PRIVATE EDUCATIONAL INSTITUTION
Cases:

1. University of the east et al., vs. Pepanio, G.r. No. 193897, Jan. 23, 2013

2. Colegio Del Santisimo Rosario et al., vs. Rojo, G.R. No. 170388, Sept. 4, 2013
citing Mercado et al., vs. AMA Computer College-Paranaque City, GR No. 183572, April
13, 2010

3. Herrera-Manaois vs. St. Scholasticas College, GR No. 188914, December 11, 2013

88
UNIVERSITY OF THE EAST ET AL., V. PEPANIO, [G.R. NO. 193897, JAN. 23,
2013]
Facts:
In 1992, DECS issued the Revised Manual of Regulations for Private Schools, which requires college faculty members to
have a master's degree as a minimum educational qualification for acquiring regular status.

University of the East hired respondent Mariti D. Bueno (Bueno) in 1997 and respondent Analiza F. Pepanio (Pepanio)
in 2000, both on a semester-to-semester basis to teach in its college. During this time, the 1994 CBA was still in force.
It provided that UE shall extend only semester-to-semester appointments to college faculty staffs who did not possess
the minimum qualifications. Meantime, DECS-CHED-TESDA-DOLE Joint Order 1 was issued which provides that
“teaching or academic personnel who do not meet the minimum academic qualifications shall not acquire tenure or
regular status.”

Then in 2001, UE and the faculty union entered into a new CBA that would have the school extend probationary full-
time appointments to full-time faculty members who did not yet have the required postgraduate degrees provided
that the latter would obtain such requirement during their probationary period. Hence, UE extended probationary
appointments to Bueno and Pepanio. The two, however, failed to obtain post-graduate degrees.

UE informed Bueno and Pepanio that their probationary status is about to expire since they lack the required post-
graduate qualification. However, Bueno and Pepanio demanded that they should be considered as regular employees
since they were hired in 1997 and 2000, when what was in force was the 1994 CBA which did not require a master’s
degree before attaining regular status. UE did not heed to their demands.

Thus, they filed a case for illegal dismissal before the Labor Arbiter. The LA ruled in their favor. Dissatisfied, UE
appealed to the NLRC. The NLRC reversed the LA’s ruling.

On petition for certiorari, the Court of Appeals rendered a Decision reinstating the LA’s Decision by reason of
technicality. This prompted UE to file the present petition.

Issue:
Whether Bueno and Pepanio were validly terminated from their employment?

Ruling:
Petition is granted.
LABOR LAW: collective bargaining agreement
The policy requiring postgraduate degrees of college teachers was provided in the Manual of Regulations as early as
1992. Indeed, recognizing this, the 1994 CBA provided even then that UE was to extend only semester-to-semester
appointments to college faculty staffs, like Bueno and Pepanio, who did not possess the minimum qualifications for
their positions.

Besides, as the Court held in Escorpizo v. University of Baguio, a school CBA must be read in conjunction with statutory
and administrative regulations governing faculty qualifications. Such regulations form part of a valid CBA without need
for the parties to make express reference to it. While the contracting parties may establish such stipulations, clauses,
terms and conditions, as they may see fit, the right to contract is still subject to the limitation that the agreement must
not be contrary to law or public policy.

Here, UE gave Bueno and Pepanio more than ample opportunities to acquire the postgraduate degree required of
them. But they did not take advantage of such opportunities. Justice, fairness, and due process demand that an
employer should not be penalized for situations where it had little or no participation or control.

NLRC’s decision is reinstated.

89
COLEGIO DEL SANTISIMO ROSARIO ET AL., V. ROJO, [G.R. NO. 170388, SEPT.
4, 2013 CITING MERCADO ET AL., VS. AMA COMPUTER COLLEGE-
PARANAQUE CITY, GR NO. 183572, APRIL 13, 2010]
Facts:
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary
basis for the school years 1992-1995. On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP
(Mofada), decided not to renew respondents services.

Respondent filed a Complaint for illegal dismissal. He alleged that since he had served three consecutive
school years which is the maximum number of terms allowed for probationary employment, he should be
extended permanent employment. Citing paragraph 75 of the 1970 Manual of Regulations for Private
Schools (1970 Manual), respondent asserted that "full-time teachers who have rendered three (3)
consecutive years of satisfactory services shall be considered permanent."

On the other hand, petitioners argued that respondent knew that his Teachers Contract for school year
1994-1995 with CSR would expire on March 31, 1995. Accordingly, respondent was not dismissed but his
probationary contract merely expired and was not renewed. Petitioners also claimed that the "three years"
mentioned in paragraph 75 of the 1970 Manual refer to "36 months," not three school years. And since
respondent served for only three school years of 10 months each or 30 months, then he had not yet served
the "three years" or 36 months mentioned in paragraph 75 of the 1970 Manual.

LA ruled in favor of respondent. The decision was affirmed by the NLRC and the CA respectively on appeal
hence this petition before the SC.

Issue:
Whether respondent has become a permanent employee upon three years of service

HELD:
Yes. CA decision affirmed.
Labor Law- Manual of Regulations for Private Schools (the Manual) in relation to the Labor Code

In Mercado v. AMA Computer College-Paraque City, Inc.,we had occasion to rule that cases dealing with
employment on probationary status of teaching personnel are not governed solely by the Labor Code as
the law is supplemented, with respect to the period of probation, by special rules found in the Manual of
Regulations for Private Schools (the Manual). With regard to the probationary period, Section 92 of the
1992 Manual provides

Section 92. Probationary Period. Subject in all instances to compliance with the Department and school
requirements, the probationary period for academic personnel shall not be more than three (3) consecutive
years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.

However, this scheme "of fixed-term contract is a system that operates during the probationary period and
for this reason is subject to Article 281 of the Labor Code," which provides-

x xx The services of an employee who has been engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.

90
However, for teachers on probationary employment, in which case a fixed term contract is not specifically
used for the fixed term it offers, it is incumbent upon the school to have not only set reasonable standards
to be followed by said teachers in determining qualification for regular employment, the same must have
also been communicated to the teachers at the start of the probationary period, or at the very least, at the
start of the period when they were to be applied. Corollarily, should the teachers not have been apprised
of such reasonable standards at the time specified above, they shall be deemed regular employees.

In this case, glaringly absent from petitioner's evidence are the reasonable standards that respondent was
expected to meet that could have served as proper guidelines for purposes of evaluating his performance.
Nowhere in the Teacher's Contract could such standards be found. Neither was it mentioned that the same
were ever conveyed to respondent. Even assuming that respondent failed to meet the standards set forth
by CSR and made known to the former at the time he was engaged as a teacher on probationary status,
still, the termination was flawed for failure to give the required notice to respondent.

Curiously, despite the absence of standards, Mofada mentioned the existence of alleged performance
evaluations in respondent's case. We are, however, in a quandary as to what could have been the basis of
such evaluation, as no evidence were adduced to show the reasonable standards with which respondents
performance was to be assessed or that he was informed thereof. Notably too, none of the supposed
performance evaluations were presented. These flaws violated respondent's right to due process. As such,
his dismissal is, for all intents and purposes, illegal.

It should be pointed out that absent any showing of unsatisfactory performance on the part of
respondent, it can be presumed that his performance was satisfactory, especially taking into consideration
the fact that even while he was still more than a year into his probationary employment, he was already
designated Prefect of Discipline. In such capacity, he was able to uncover the existence of a drug syndicate
within the school and lessen the incidence of drug use therein. Yet despite respondent's substantial
contribution to the school, petitioners chose to disregard the same and instead terminated his services;
while most of those who were involved in drug activities within the school were punished with a slap on
the wrist as they were merely made to write letters promising that the incident will not happen again.

PETITION DENIED.

91
HERRERA–MANAOIS V. ST. SCHOLASTICA’S COLLEGE, [G.R. NO. 188914,
DECEMBER 11, 2013]
Facts:
St. Scholastica’s College (SSC), situated in the City of Manila, is a private educational institution offering
elementary, secondary, and tertiary education. Manaois graduated from SSC in October 1992 with a degree
in Bachelor of Arts in English. In 1994, she returned to her alma mater as a part–time English teacher. After
taking a leave of absence for one year, she was again rehired by SSC for the same position. Four years into
the service, she was later on recommended by her Department Chairperson to become a full–time faculty
member of the English Department.

Manaois thus applied for a position as full–time instructor for school year 2000–2001. She mentioned in
her application letter that she had been taking the course Master of Arts in English Studies, Major in
Creative Writing, at the University of the Philippines, Diliman (UP); that she was completing her master’s
thesis; and that her oral defense was scheduled for June 2000. In a reply letter4 dated 17 April 2000, the
Dean of Arts and Sciences informed her of the SSC Administrative Council’s approval of her application. She
was then advised to maintain the good performance that she had shown for the past years and to submit
the necessary papers pertaining to her master’s degree. Accordingly, SSC hired her as a probationary full–
time faculty member with the assigned rank of instructor for the school year 2000–2001.5 Her probationary
employment continued for a total of three consecutive years. Throughout her service as a probationary
full–time faculty member with no derogatory record, she was given above–satisfactory ratings by both the
Department Chairperson and the Dean of Arts and Sciences.

Because of the forthcoming completion of her third year of probationary employment, Manaois wrote the
Dean of Arts and Sciences requesting an extension of her teaching load for the school year 2003–2004. She
again mentioned in her letter that she was a candidate for a master’s degree in English Studies; that the
schedule of her oral defense may actually materialize anytime within the first academic semester of 2003;
and that she intended to fully earn her degree that year. She also furnished the school with a Certification
from UP, stating that she had already finished her coursework in her master’s studies. Furthermore, she
indicated that it was her long–term goal to apply for a return to full–time faculty status by then and for SSC
to consider the aforesaid matters.
Manaois eventually received a letter from the Dean of College and Chairperson of the Promotions and
Permanency Board officially informing her of the board’s decision not to renew her contract.

Manaois sought clarification and reconsideration of the decision of SSC to terminate her services. SSC
denied her request in a letter dated 11 July 2003. Consequently, she filed a complaint for illegal dismissal,
payment of 13th month pay, damages, and attorney’s fees against SSC.SSC explained that upon
consideration of the written application of Manaois, the Dean of Arts and Sciences wrote the following
notation at the bottom of her letter of application “APPROVED: on the basis that she finishes her MA.” The
college clarified that the application for full–time faculty status of Manaois was accepted with the specific
qualification that she would submit the necessary papers pertaining to her master’s degree. It stressed that
permanency may only be extended to full–time faculty members if they had fulfilled the criteria provided
in the SSC Faculty Manual. According to SSC, the Chair of the English Department did not endorse the
application for permanency of Manaois, since the latter had not finished her master’s degree within the
three–year probationary period. SSC then refuted the supposed performance ratings of Manaois and
instead pointed out that she had merely received an average rating from her students. Finally, it asserted
that her specialization was the subject of writing and not English Literature, which was the subject area that
they needed a faculty member for.

The labor arbiter rendered a Decision finding the dismissal of petitioner to be illegal. In addressing the
issues, he first noted the two reasons given by SSC for not renewing the contract of Manaois: (1) the failure

92
of petitioner to finish her master’s degree within the three–year probationary period; and (2) SSC’s inability
to maximize petitioner’s specialization due to curriculum changes and streamlining.

The National Labor Relations Commission (NLRC) issued a Resolution upholding the labor arbiter’s Decision.
The NLRC reiterated the labor arbiter’s finding that the failure of petitioner to finish her master’s degree
within the three–year probationary period was not a valid ground for the termination of employment, as
the condition was not made known to her at the time of engagement.

The CA issued the presently assailed Decision reversing the NLRC judgment on the ground of grave abuse
of discretion and thus dismissing the complaint of Manaois. According to the appellate court, it was
compelled to conduct its independent evaluation of the facts of the case, since the factual findings of the
labor arbiter and the NLRC were contrary to the evidence on record. It also ruled that various pieces of
evidence showed that Manaois had been, at the time of engagement, aware and knowledgeable that
possession of a master’s degree was a criterion for permanency as a full–time faculty member at SSC.

Issue:
Whether the completion of a master’s degree is required in order for a tertiary level educator to earn the
status of permanency in a private educational institution.

Ruling:
Yes, a master’s degree is required in order for a tertiary level educator to earn the status of permanency
in a private educational institution.

The Supreme Court stated that it is settled jurisprudence that the probationer can only qualify upon
fulfillment of the reasonable standards set for permanent employment as a member of the teaching
personnel. In line with academic freedom and constitutional autonomy, an institution of higher learning
has the discretion and prerogative to impose standards on its teachers and determine whether these have
been met. Upon conclusion of the probation period, the college or university, being the employer, has the
sole prerogative to make a decision on whether or not to re–hire the probationer. The probationer cannot
automatically assert the acquisition of security of tenure and force the employer to renew the
employment contract. In the case at bar, Manaois failed to comply with the stated academic qualifications
required for the position of a permanent full–time faculty member.

SSC Faculty Manual in turn provides for the following conditions in order for a faculty member to acquire
permanent employment status:

PERMANENCY
1. Prior to the end of the probationary period, the faculty member formally applies for permanency
to her/his Department Chair/Coordinator. The Department Chair/Coordinator, in consultation
with the faculty member, reviews the applicant’s over–all performance. If the records show that
the criteria for permanency are met, the applicant is recommended for permanency to the
Promotions and Permanency Board by the Department Chair/Coordinator. In certain instances
(i.e., when the Department Chair/Coordinator does not give a recommendation for permanency),
the Academic Dean can exercise her prerogative to recommend the applicant.

CRITERIA FOR PERMANENCY

1. The faculty member must have completed at least a master’s degree.

Notwithstanding the existence of the SSC Faculty Manual, Manaois still cannot legally acquire a permanent
status of employment. Private educational institutions must still supplementarily refer to the prevailing
standards, qualifications, and conditions set by the appropriate government agencies (presently the

93
Department of Education, the Commission on Higher Education, and the Technical Education and Skills
Development Authority). This limitation on the right of private schools, colleges, and universities to select
and determine the employment status of their academic personnel has been imposed by the state in view
of the public interest nature of educational institutions, so as to ensure the quality and competency of our
schools and educators.

The applicable guidebook at the time petitioner was engaged as a probationary full–time instructor for the
school year 2000 to 2003 is the 1992 Manual of Regulations for Private Schools (1992 Manual).21 It provides
the following conditions of a probationary employment.
Section 44. Minimum Faculty Qualifications. The minimum qualifications for faculty for the different grades
and levels of instruction duly supported by appropriate credentials on file in the school shall be as follows:

c. Tertiary
(1) For undergraduate courses, other than vocational:
(a) Holder of a master’s degree, to teach largely in his major field; or, for professional courses,
holder of the appropriate professional license required for at least a bachelor’s degree.
Any deviation from this requirement will be subject to regulation by the Department.

Section 45. Full–time and Part–time Faculty. As a general rule, all private schools shall employ full–time
academic personnel consistent
with the levels of instruction.

Full–time academic personnel are those meeting all the following requirements:
a. Who possess at least the minimum academic qualifications prescribed by the Department under this
Manual for all academic personnel;

Thus, pursuant to the 1992 Manual, private educational institutions in the tertiary level may extend “full–
time faculty” status only to those who possess, inter alia, a master’s degree in the field of study that will
be taught. This minimum requirement is neither subject to the prerogative of the school nor to the
agreement between the parties. For all intents and purposes, this qualification must be deemed impliedly
written in the employment contracts between private educational institutions and prospective faculty
members. The issue of whether probationers were informed of this academic requirement before they
were engaged as probationary employees is thus no longer material, as those who are seeking to be
educators are presumed to know these mandated qualifications. Thus, all those who fail to meet the criteria
under the 1992 Manual cannot legally attain the status of permanent full–time faculty members, even if
they have completed three years of satisfactory service.

94
15. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY
Cases:

1. Tolosa vs. NLRC, G.R. No. 149578, April 10, 2003

2. U-Bix Corp., vs. Bandiola, 525 SCRA 566 [2007)
3. Ocean Builders Construction vs. Sps. Cubacub, GR No. 150898, April 13, 2011

95
TOLOSA V. NLRC, [G.R. NO. 149578, APRIL 10, 2003]
Facts:
Petitioner is the wife of Capt. Tolosa who was hired to be the master of M/V Lady Dona with private
respondents Garate and Asis as Chief Mate and Second Mate of the vessel respectively. Capt. Tolosa was
hired by co-private respondent Qwana-Kaiun through the manning agent Asia Bulk Transport Phils., Inc. The
voyage was from Yokohama, Japan to Long Beach, California. Capt. Tolosa was given a compensation of
US$1,700 monthly plus US$400 overtime allowance monthly. Upon embarkation, Capt. Tolosa’s health was
still in good shape but after being drenched in rainwater after embarkation, he suffered Loose Bowel
Movement and fever which led eventually to his death after several days.

Petitioner filed a Complaint/Position Paper with the Philippine Overseas Employment Agency against
private respondents herein but because of the amendatory law expanding the jurisdiction of the National
Labor Relations Commission (NLRC), the case was raffled to a Labor Arbiter. She sought to recover (a) loss
of earning capacity as ‘actual damages’ and (b) blacklisting imputing gross negligence to private
respondents Garate and Asis. She anchored her claim on Article 161 of the Labor Code regarding Assistance
of Employer.

Private respondents, on the other hand, asserted that the Labor Arbiter has no jurisdiction as the
complaint is based on torts which the regular courts have jurisdiction.

The Labor Arbiter ruled in favor of petitioner granting her the relief sought. On appeal, the NLRC reversed
the Labor Arbiter’s Decision. It ruled that the Labor Arbiter had no jurisdiction over the subject matter. The
Court of Appeals affirmed the NLRC. It ruled that the case did not arise from a quasi-delict or tort and not
from an employee-employer relationship nor does it have any reasonable causal connection for damages
to be awarded incident to an employee-employer relationship. Hence, this instant petition.

Petitioner argued that her cause of action is not based on negligence but on Art. 161 of the Labor Code. She
alleged that the reasonable causal rule should be applied in her favor.

Issue:
Whether the Labor Arbiter has jurisdiction over the subject matter?

Ruling:
No, the Labor Arbiter does not have jurisdiction over the subject matter. The Court ruled that labor
arbiters and the NLRC have no power to grant reliefs from claims that do not arise from employer-
employee relationships. They have no jurisdiction over torts that do not have a reasonable causal
connection to any of the claims provided for in the Labor Code, other labor statutes, or collective bargaining
agreements.

It has been emphasized that the allegation of the complaint determines the nature of the action and
consequently, the jurisdiction of the courts. The Court was convinced that the allegations were in the nature
of an action based on quasi-delict or tort resulting from gross negligence. Even though Labor Arbiters have
jurisdiction to grant damages under the Civil Code, these reliefs must still be based on an action that has
a reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining
agreements. It is the character of the principal relief that appears essential in this connection.

In the case at hand, loss of earning capacity and blacklisting cannot be equated to wages, overtime
compensation or separation pays. They arise from causes within the realm of civil law. Petitioner cannot
also anchor her claim on Article 161 as this does not grant or specify a claim or relief.

96
U-BIX CORP., V. BANDIOLA, [525 SCRA 566 (2007)]
Facts:
Sometime in April 1995, Bandiola was employed by U-BIX to install furniture for its customers. On 13 April
1997, Bandiola and two other U-BIX employees were involved in a vehicular accident on their way to Baguio,
where they were assigned by U-BIX to install furniture for an exhibit. As a result of the accident, Bandiola
sustained a fracture on his left leg.

Bandiola and his co-employees were initially brought to the Rosario District Hospital. The next day, 14 April
1997, they were transferred to the Philippine Orthopedic Hospital (Orthopedic). After his broken leg was
cemented, Bandiola was advised to go back for further medical treatment. U-BIX paid for the medical
expenses incurred in both hospitals.

Bandiola claims that he asked U-BIX for financial assistance but that the latter refused. He attached the
receipts, issued by Medical Center Parañaque (MCP) and Dr. Celestino Musni, for medical expenses with a
total amount of P7,742.50. He also attached a copy of the Roentgenological Report by a Radiologist in MCP.
Bandiola added that he paid for other medical expenses for which no receipts were issued.

On September 1998, Bandiola filed a Complaint before the Labor Arbiter, where he alleged underpayment
of salary; non-payment of overtime pay; premium pay for work performed on holidays and rest days;
separation pay; service incentive leave pay; 13th month pay; and the payment of actual, moral and
exemplary damages. The Labor Arbiter ordered in its Decision that respondent pay the complainant: Salary
Differential, Service incentive and 13th Month pay while dismissing all other claims.

Bandiola filed an appeal before the NLRC. The NLRC amended the Decision rendered by the Labor Arbiter.
It ruled that U-BIX should reimburse Bandiola the amount of P12,742.50 for the medical expenses he
incurred in connection with his fractured leg. It further ruled that U-BIX is liable to pay Bandiola P25,000.00
in moral damages and P25,000.00 in exemplary damages for refusing to reimburse Bandiola for the medical
expenses he incurred after it failed to report to the Social Security System (SSS) the injuries sustained by
Bandiola. Thereafter, U-BIX filed a Motion for Reconsideration, which was denied by the NLRC.

On appeal, the Court of Appeals modified the NLRC Resolution. It affirmed Bandiola's entitlement to
reimbursement of his medical expenses, but reduced the amount to P7,742.50, the amount of actual
damages he was able to prove. It also affirmed without modification the award of moral and exemplary
damages, and the monetary award granted by the Labor Arbiter.

Issue:
Whether or not the Honorable Court of Appeals erred in ordering petitioner U-Bix to reimburse respondent
Bandiola for the alleged medical expenses when there was no evidence submitted by respondent in
support thereof.

SC Ruling:
The petition is without merit. Contrary to the arguments put forward by U-BIX, it is liable to reimburse
Bandiola the amount of P7,742.50 for medical expenses because its failure to comply with its duty to
record and report Bandiola's injury to the SSS precluded Bandiola from making any claims. Moreover, U-
BIX, by its own admission, reimbursed its other employees who were involved in the same accident for their
medical expenses.

Clearly, the reimbursement of medical expenses for injuries incurred in the course of employment is part
of the benefits enjoyed by U-BIX's employees. The only justification for its refusal to reimburse Bandiola

97
was that he intended to defraud the company by presenting spurious receipts amounting to P7,742.50 that
were allegedly issued four months before their presentation.

ART. 205 RECORD OF DEATH OR DISABILITY

(a) All employers shall keep a logbook to record chronologically the sickness, injury or
death of their employees, setting forth therein their names, dates and places of the
contingency, nature of the contingency and absences. Entries in the logbook shall be made
within five days from notice or knowledge of the occurrence of contingency. Within five
days after entry in the logbook, the employer shall report to the System only those
contingencies he deems to be work-connected.
(b) All entries in the employers logbook shall be made by the employer or any of his
authorized official after verification of the contingencies or the employees absences for a
period of a day or more. Upon request by the System, the employer shall furnish the
necessary certificate regarding information about any contingency appearing in the
logbook, citing the entry number, page number and date. Such logbook shall be made
available for inspection to the duly authorized representatives of the System.

ART 206. NOTICE OF SICKNESS, INJURY OR DEATH

Notice of sickness, injury or death shall be given to the employer by the employee or by his
dependents or anybody on his behalf within five days from the occurrence of the
contingency. No notice to the employer shall be required if the contingency is known to the
employer or his agents or representatives.

As a general rule, the injured employee must notify his employer, who is obligated to enter the notice
in a logbook within five days after notification. Within five days after making the entry, the employer
of a private company reports the work-related sickness or injury to the SSS. The claim is forwarded to
the SSS, which decides on the validity of the claim. When the SSS denies the claim, the denial may be
appealed to the Employees' Compensation Commission (ECC) within 30 days.

However, the law provides an exception to the rule requiring an employee to notify his or her employer of
his injuries. Under Section B of ECC Board Resolution No. 2127, issued on 5 August 1982, notice of injury,
sickness or death of the employee need not be given to the employer in any of the following situations: (1)
When the employee suffers the contingency within the employer's premises; (2) When the employee
officially files an application for leave of absence by reason of the contingency from which he suffers; (3)
When the employer provides medical services and/or medical supplies to the employee who suffers from
the contingency; and (4) When the employer can be reasonably presumed to have had knowledge of the
employee's contingency, in view of the following circumstances:
(4.1) The employee was performing an official function for the employer when the contingency occurred;
(4.2) The employee's contingency has been publicized through mass media outlets; or (4.3) The specific
circumstances of the occurrence of the contingency have been such that the employer can be reasonably
presumed to have readily known it soon thereafter; or (4.4) Any other circumstances that may give rise to
a reasonable presumption that the employer has been aware of the contingency.

In the present case, there is no dispute that Bandiola's leg injury was sustained in the course of his
employment with U-BIX. At the time of the accident, Bandiola was on the way to Baguio, where he was
ordered by U-BIX to install furniture for an exhibit. Moreover, U-BIX was aware that Bandiola, as well as his
other co-employees, were injured during the accident. U-BIX admitted to providing Bandiola and his co-
employees with medical assistance and it even sent its representative, Rey Reynes, to Rosario District
Hospital, where they were confined, and had them transferred to the Orthopedic. U-BIX was also aware
that the Orthopedic instructed Bandiola to return for further medical treatment. It is implicit that
Bandiola needed further treatment for his broken leg and was, thus, incapacitated to work.

98
Given the foregoing circumstances, U-BIX had the legal obligation to record pertinent information in
connection with the injuries sustained by Bandiola in its logbook within five days after it had known about
the injuries; and to report the same to the SSS within five days after it was recorded in the logbook, in
accordance with Articles 205 and 206 of the Labor Code. Had U-BIX performed its lawful duties, the SSS, or
the ECC on appeal, could have properly considered whether or not Bandiola was entitled to reimbursement
for his medical expenses, as well as disability benefits while he was unable to work. However, U-BIX did not
present any evidence showing that it had complied with these legal requirements. It had not even replied
to Bandiola's allegations in his Position Paper, dated 13 April 1998, that its employees were not even
members of the SSS.

By failing to report Bandiola's injury to the SSS, U-BIX disregarded the law and its purpose; that is, to
provide a proper and prompt settlement of his claims. Instead, U-BIX arrogated upon itself the duty of
determining which medical expenses are proper for reimbursement. In doing so, it could unnecessarily
delay and unjustifiably refuse to reimburse Bandiola for medical expenses even if they were adequately
supported by receipts, as was done in this instance. The expense and delay undergone by Bandiola since
1997 in obtaining reimbursement for his medical expenses of P7,742.50 very clearly defeat the purpose
of the law.
The instant Petition is denied.
.

99
OCEAN BUILDERS CONSTRUCTION V. SPS. CUBACUB, [GR NO. 150898, APRIL
13, 2011]
Facts:
Bladimir Cubacub (Bladimir) was employed as maintenance man by petitioner company Ocean Builders
Construction Corp. at its office in Caloocan City.

On April 9, 1995, Bladimir was afflicted with chicken pox. He was thus advised by petitioner Dennis Hao
(Hao), the company's general manager, to rest for three days which he did at the company's "barracks"
where he lives free of charge.

Three days later or on April 12, 1995, Bladimir went about his usual chores of manning the gate of the
company premises and even cleaned the company vehicles. Later in the afternoon, however, he asked a co-
worker, Ignacio Silangga (Silangga), to accompany him to his house in Capas, Tarlac so he could rest.
Informed by Silangga of Bladimir's intention, Hao gave Bladimir P1,000.00 and ordered Silangga to instead
bring Bladimir to the nearest hospital.

Along with co-workers Narding and Tito Vergado, Silangga thus brought Bladimir to the Caybiga Community
Hospital (Caybiga Hospital), a primary-care hospital around one kilometer away from the office of the
company.
The hospital did not allow Bladimir to leave the hospital. He was then confined, with Narding keeping watch
over him. The next day, April 13, 1995, a doctor of the hospital informed Narding that they needed to talk
to Bladimir's parents, hence, on Silangga's request, their co-workers June Matias and Joel Edrene fetched
Bladimir's parents from Tarlac. AIcaDC

At about 8 o'clock in the evening of the same day, April 13, 1995, Bladimir's parents-respondent spouses
Cubacub, with their friend Dr. Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and transferred
Bladimir to the Quezon City General Hospital (QCGH) where he was placed in the intensive care unit and
died the following day. The death certificate issued by the QCGH recorded Bladimir's immediate cause of
death as cardio-respiratory arrest and the antecedent cause as pneumonia. On the other hand, the death
certificate issued by Dr. Frias recorded the causes of death as cardiac arrest, multiple organ system failure,
septicemia and chicken pox.

Issue:
Whether the petitioners are guilty of negligence and if they were, can the respondents claims for damages
based on torts?

Ruling:
To successfully prosecute an action anchored on torts, three elements must be present, viz.: (1) duty (2)
breach (3) injury and proximate causation. The assailed decision of the appellate court held that it was the
duty of petitioners to provide adequate medical assistance to the employees under Art. 161 of the Labor
Code, failing which a breach is committed.

Art. 161 of the Labor Code provides:

ART. 161. Assistance of employer. — It shall be the duty of any employer to provide all
the necessary assistance to ensure the adequate and immediate medical and dental
attendance and treatment to an injured or sick employee in case of emergency.
(emphasis and underscoring supplied)

100
The Implementing Rules of the Code do not enlighten what the phrase "adequate and immediate" medical
attendance means in relation to an "emergency."

In the present case, there is no allegation that the company premises are hazardous. Neither is there any
allegation on the number of employees the company has. If Hao's testimony would be believed, the
company had only seven regular employees and 20 contractual employees — still short of the minimum
50 workers that an establishment must have for it to be required to have a full-time registered nurse.
The Court can thus only determine whether the actions taken by petitioners when Bladimir became ill
amounted to the "necessary assistance" to ensure "adequate and immediate medical . . . attendance" to
Bladimir as required under Art. 161 of the Labor Code.
As found by the trial court and borne by the records, petitioner Hao's advice for Bladimir to, as he did, take
a 3-day rest and to later have him brought to the nearest hospital constituted "adequate and immediate
medical" attendance that he is mandated, under Art. 161, to provide to a sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical background. He may not be thus
expected to have known that Bladimir needed to be brought to a hospital with better facilities than the
Caybiga Hospital, contrary to appellate court's ruling. aDSAEI
AT ALL EVENTS, the alleged negligence of Hao cannot be considered as the proximate cause of the death
of Bladimir. Proximate cause is that which, in natural and continuous sequence, unbroken by an efficient
intervening cause, produces injury, and without which, the result would not have occurred.

IN FINE, petitioner company and its co-petitioner manager Dennis Hao are not guilty of negligence.

101
16.MIGRANT WORKER'S ACT & OVERSEAS FILIPINO
ACT OF 1995 & RECRUITMENT AND PLACEMENT
Cases:

1. ATCI Overseas Corp. et al., vs. Echin, GR No. 178551, Oct. 11, 2010
2. Yap vs. Thenamaris Ship Management et al., G.R. No. 179532, May 30, 2011

3. Skippers United Pacific vs. Doza et al., G.R. No. 175558, February 8, 2012
4. International Management Services vs. Logarta, G.R. No. 163657, April 18, 2012

5. Pert/Cpm Manpower Exponent Co., Inc. vs. Vinuya et al., G.R. No. 197528,
September 8, 2012

6. Hon. Sto. Tomas, et al., vs. Salac et al., G.R. No. 152642 & 152710, November 13,
2012

7. Sameer Overseas Placement Agency Inc., vs. Cabiles, GR No. 170139, August 5,
2014, En Banc

8. Racelis vs. United Philippine Lines Inc. GR No. 198408, November 12, 2014

9. Pentagon International Shipping Services vs. CA, GR No. 169158, July 1, 2015
10. Austria vs. Crystal Shipping GR No. 206256, Feb. 24, 2016

11. Asian International Manpower Services, Inc. vs. Department of Labor and
Employment, GR No. 210308, April 6, 2016

102
ATCI OVERSEAS CORP. ET AL., V. ECHIN [G.R. NO. 178551 OCTOBER 11, 2010]
Facts:
Respondent Echin was hired by petitioner ATCI in behalf of its principal co-petitioner, Ministry of Public
Health of Kuwait, for the position of medical technologist under a two-year contract with a monthly salary
of US$1,200.00. Within a year, Respondent was terminated for not passing the probationary period which
was under the Memorandum of Agreement. Ministry denied respondent‘s request and she returned to the
Philippines shouldering her own fair. Respondent filed with the National Labor Relations Commission
(NLRC) a complaint against ATCI for illegal dismissal. Labor Arbiter rendered judgment in favor of
respondent and ordered ATCI to pay her $3,600.00, her salary for the three months unexpired portion of
the contract.

ATCI appealed Labor Arbiter‘s decision, however, NLRC affirmed the latter‘s decisionand denied petitioner
ATCI‘s motion for reconsideration. Petitioner appealed to the Court Appeals contending that their principal
being a foreign government agency is immune from suit, and as such, immunity extended to them.
Appellate Court affirmed NLRC‘s decision. It noted that under the law, a private employment agency shall
assume all responsibilities for the implementation of the contract of employment of an overseas,worker;
hence, it can be sued jointly and severally with the foreign principal for any violation of the recruitment
agreement or contract of employment. Petitioner‘s motion for reconsideration was denied; hence, this
present petition.

Issue:
Whether petitioners be held liable considering that the contract specifically stipulates that respondent‘s
employment shall be governed by the Civil Service Law and Regulations of Kuwait.

Ruling:
Court denied the petition. According to RA 8042: “The obligations covenanted in the recruitment
agreement entered into by and between the local agent and its foreign principal are not coterminous
with the term of such agreement so that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the agreement do not at all end,
but the same extends up to and until the expiration of the employment contracts of the employees
recruited and employed pursuant to the said recruitment agreement. In international law, the party who
wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. Where
a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the
same as ours. Thus, we apply Philippine labor laws in determining the issues presented before us.

103
YAP V. THENAMARIS SHIP MANAGEMENT ET AL. [G.R. NO. 179532: MAY 30,
2011]
Facts:
Petitioner was employed as an electrician of the vessel, M/T SEASCOUT by Intermare Maritime Agencies, Inc. in
behalf of its principal, Vulture Shipping Limited. The contract was for 12 months. On 23 August 2001,Yapboarded M/T
SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. Yap
received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus.However, he insisted that he
was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from
employment.He alleged that he opted for immediate transfer but none was made. Respondents contended that Yap
was not illegally dismissed.They further alleged that Yaps contract was validly terminated due to the sale of the vessel
and no arrangement was made for Yaps transfer to Thenamaris other vessels.

Thus, Yap brought the issue before the Labor Arbiter (LA) which ruled that petitioner was illegally dismissed; that
respondents acted in bad faith when they assured petitioner of re-embarkation but he was not able to board; and that
petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine months
(US$12,870.00), P100,000 for moral damages, and P50,000 for exemplary damages with 10% of the same for Attys fees.
Respondents sought recourse from the NLRC which modified the award of salaries from that corresponding to nine
months to only three months (US$4,290.00) pursuant to Section 10 R.A. No. 8042.

Respondents and petitioner both filed a Motion for Partial Reconsideration. NLRC affirmed the finding of Illegal
Dismissal and Bad Faith on the part of respondent. However, the NLRC reversed its earlier Decision, holding that "there
can be no choice to grant only 3 months salary for every year of the unexpired term because there is no full year of
unexpired term which this can be applied." Respondents filed an MR, which the NLRC denied. Undaunted, respondents
filed a petition for certiorari under Rule 65 before the CA. The CA affirmed the findings and ruling of the LA and the
NLRC. However, the CA ruled that the NLRC erred in sustaining the LAs interpretation of Section 10 of R.A. No. 8042.
The CA relied on the clause "or for three months for every year of the unexpired term, whichever is less" provided in
the 5th paragraph of Section 10 of R.A. No. 8042. Both parties filed their respective MRs which the CA denied. Thus,
this petition.

Issue:
1. Whether Section 10 of R.A. 8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit
of "salaries for [the] unexpired portion of his employment contract for three (3) months for every year of the unexpired
term,whichever is less" is constitutional;
2. Assuming that it is, whether the CA gravely erred in granting petitioner only three (3) months backwages when his
unexpired term of 9 months is far short of the "every year of the unexpired term" threshold.

Ruling:
The petition is impressed with merit. We have previously declared that the clause "or for three months for every year
of the unexpired term, whichever is less" is unconstitutional for being violative of the rights of (OFWs) to equal
protection. Moreover, the subject clause does not state any definitive governmental purpose, hence, it also violates
petitioner's right to substantive due process. Generally, an unconstitutional act is not a law. An exception to this is the
doctrine of operative fact applied when a declaration of unconstitutionality will impose an undue burden on those who
have relied on the invalid law. This case should not be included in the exception. It was not the fault of petitioner that
he lost his job due to an act of illegal dismissal committed by respondents. Also, we cannot subscribe to respondents
postulation that the tanker allowance of US$130.00 should not be included in the computation of the lump-sum salary.
First, fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this
question. Second, the allowance was encapsulated in the basic salary clause.

104
SKIPPERS UNITED PACIFIC, INC. V. DOZA, [G.R. NO. 175558, FEBRUARY 8,
2012]
Facts:
‘Petitioner deployed De Gracia, Lata and Aprosta to work on board the vessel MV Wisdom Star. On
December 3, 1998, Skippers alleges that De Garcia smelling strongly of alcohol, went to the cabin of Gabriel
Oleszek, MV Wisdom Stars’ Master. Skippers claims that he was rude and shouted noisily to the master. De
Gracia left the master’s cabin after a few minutes and was heard shouting very loudly somewhere down
the corridors. The incident was evidenced by the Captain’s Report sent on said date.

Furthermore, Skippers also claim that on January 22, 1999, Aprosta, De Gracia, Lata and Daza arrived in
the master’s cabin and demanded immediate repatriation because they were not satisfied with the ship.
De Gracia, et al. threatened that they may become crazy any moment and demanded for all outstanding
payments due to them. The incident is evidenced by a telex of Cosmoship MV Wisdom to skippers but had
conflicting dates. De Gracia claims that Skippers failed to remit their respective allotments, compelling them
to vent their grievances with the Romanian Seafarers Union. On January 28, 1999, the Filipino seafarers
were unceremoniously discharged and immediately repatriated. Upon arrival in the Philippines, they filed
a complaint for illegal dismissal with the LA.

Issue:
Whether the seafarer’s demand for immediate repatriation can be considered an act of voluntary
resignation.

Ruling:
For a worker’s dismissal to be considered valid, it must comply with both procedural and substantive due
process. The legality of the manner of dismissal constitutes procedural due process, while the legality of
the act of dismissal constitutes substantive due process. Procedural due process in dismissal cases consists
of the twin requirements of notice and hearing. The employer must furnish the employee with two written
notices before the termination of employment can be effected: (1) the first notice apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the
employee of the employer's decision to dismiss him. Before the issuance of the second notice, the
requirement of a hearing must be complied with by giving the worker an opportunity to be heard.

It is not necessary that an actual hearing be conducted. Substantive due process, on the other hand,
requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to 284
of the Labor Code. In this case, there was no written notice furnished to De Gracia, et al., regarding the
cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local manning agency,
claiming that De Gracia, et al., were repatriated because the latter voluntarily pre-terminated their
contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there
was pre-termination of the employment contract "akin to resignation" and no illegal dismissal. However, as
correctly ruled by the CA, the telex message is "a biased and self-serving document that does not satisfy
the requirement of substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated their
contracts, then De Gracia, et al., should have submitted their written resignations.

105
INTERNATIONAL MANAGEMENT SERVICES V. LOGARTA, [G.R. NO. 163657,
APRIL 18, 2012]
Facts:
Proper notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and must be
complied with despite the fact that Logarta is an overseas Filipino worker. Petitioner International Management
Services (IMS), owned by Marilyn C. Pascual, deployed respondent Roel P. Logarta to work for Petrocon Arabia
Limited (Petrocon) in connection with services of Petrocon for the Saudi Arabian Oil Company (Saudi Aramco).
Logarta was employed as Piping Designer for a period of two (2) years, with a monthly salary of eight hundred US Dollars
(US$800.00). Due to the reduction of man-hours allotted for cross-country pipeline projects, Petrocon was constrained
to terminate some of its employees, including Logarta.

Petrocon sent Logarta a 30-day notice of termination, with payment of all due benefits in accordance with the terms
and conditions of his employment contract, including his ticket back to the Philippines. Before his departure, Logarta
received his final paycheck from Petrocon amounting SR7,488.57. Upon his return, Logarta filed a complaint with the
National Labor Relations Commission (NLRC) against IMS on the ground of illegal dismissal. The NLRC ruled in favor of
Logarta. After its motion for reconsideration was denied, the matter was brought before the Court of Appeals (CA),
which dismissed the petition. The CA agreed that the reason for the termination was valid but the Department of Labor
and Employment (DOLE) was not given a copy of the 30-day notice of termination.

Issue:
Whether it is necessary to send the 30-day requirement notice to DOLE prior to retrenchment of overseas Filipino
workers (OFWs)

Ruling:
Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker
under Article 283 of the Labor Code, which provided that the employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of the said Title, by serving a written notice on the workers and the Department of Labor and Employment at
least one (1) month before the intended date thereof. Thus, retrenchment is a valid exercise of management prerogative
subject to the strict requirements set by jurisprudence, to wit: (1) That the retrenchment is reasonably necessary and
likely to prevent business losses which, if already incurred, are not merely de 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 month pay or at least 1⁄2 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, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

As for the notice requirement, however, contrary to IMS’ contention, proper notice to the DOLE within 30 days prior
to the intended date of retrenchment is necessary and must be complied with despite the fact that Logarta is an
overseas Filipino worker. In the present case, although Logarta was duly notified of his termination by Petrocon 30
days before its effectivity, no allegation or proof was advanced by IMS to establish that Petrocon ever sent a notice
to the DOLE 30 days before Logarta was terminated.

Thus, this requirement of the law was not complied with.

106
PERT/CPM MANPOWER EXPONENT CO., V. VINUYA ET AL. [G.R. NO. 197528;
SEPTEMBER 8, 2012]
Facts:
Respondents filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. and
its President Romeo P. Nacino. The respondents alleged that the petitioner agency deployed them to work as
aluminum fabricator/installer for the agency's principal, Modern Metal Solution LLC/MMS Modern Metal Solution
LLC in Dubai, United Arab Emirates. The respondents' employment contracts, which were approved by the POEA,
provided for a two-year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free
and suitable housing, free transportation, free laundry, and free medical and dental services. They each paid a
P15,000.00 processing fee.

Before deployment, Modern Metal gave the respondents, except Era, appointment letters with terms different from
those in the employment contracts, which they signed at the agency's office in the Philippines. Under the letters of
appointment, their employment was increased to three years at 1,000 to 1,200 AED and food allowance of 200 AED.

The respondents claimed that they were shocked to find out what their working and living conditions were in Dubai.
They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When
they rendered overtime work, they were most of the time either underpaid or not paid at all. Their housing
accommodations were cramped and were shared with 27 other occupants. The lodging house was far from their jobsite
in Dubai, leaving them only three to four hours of sleep a day because of the long hours of travel to and from their place
of work; there was no potable water and the air was polluted.

The respondents then called up the agency and complained about their predicament. The agency assured them that
their concerns would be promptly addressed, but nothing happened. Subsequently, Modern Metal required the
respondents, except for Era who was made to sign later, to sign new employment contracts, which reflected the
terms of their appointment letters. Burdened by all the expenses and financial obligations they incurred for their
deployment, they were left with no choice but to sign the contracts. They raised the matter with the agency, which
again took no action.

Thereafter, the respondents expressed to Modern Metal their desire to resign. Out of fear that Modern Metal would
not give them their salaries and release papers, the respondents, except Era, cited personal/family problems for their
resignation. Era, on the other hand, mentioned the real reason of not being amenable to the company policy for his
resignation.

For its part, petitioner agency countered that the respondents were not illegally dismissed and that they voluntarily
resigned from their employment to seek a better paying job. It further alleged that the respondents even voluntarily
signed affidavits of quitclaim and release after they resigned; thus, the respondents’ claim for benefits, under Section
10 of RA 8042, damages and attorney's fees is unfounded.

The Labor Arbiter (LA) then rendered a decision dismissing the complaint, finding that the respondents voluntarily
resigned from their jobs. It also found that four of the respondents executed a compromise agreement with quitclaim
and release before the POEA. However, this decision was reversed by the NLRC, which ruled that the respondents were
illegally dismissed. It stressed that it is illegal for an employer to require its employees to execute new employment
papers, especially those which provide benefits that are inferior to the POEA-approved contracts. Consequently, the
NLRC ordered petitioner agency, its President and Modern Metal to pay the respondents, jointly and severally. Upon
appeal, the CA upheld the ruling by the NLRC and stressed that the filing of a complaint for illegal dismissal is
inconsistent with resignation.

Issue:
Whether or not the respondents were illegally dismissed.

Ruling:
The Court held that the CA committed no reversible error in affirming the NLRC’s illegal dismissal ruling. The agency
and its principal, Modern Metal, committed flagrant violations of the law on overseas employment, as well as basic

107
norms of decency and fair play in an employment relationship, pushing the respondents to look for a better
employment and, ultimately, to resign from their jobs.

First. The agency and Modern Metal are guilty of contract substitution. The Court held that petitioner agency and
Modern Metal committed a prohibited practice and engaged in illegal recruitment, citing Article 34 of the Labor Code
which provides:

Art. 34. Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or holder of authority: xxx xxx
xxx
(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of
actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of
the Secretary of Labor.

Further, Article 38 of the Labor Code, as amended by RA 8042, defined "illegal recruitment" to include the following
act:
(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the
Department of Labor and Employment from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of the Department of Labor and
Employment.

Second. The agency and Modern Metal committed breach of contract by subjecting the respondents to suffer
substandard working and living arrangements. Significantly, petitioner agency failed to refute the respondents’ claims,
anchored on the ordeal that they went through while in Modern Metal's employ.

Third. With their original contracts substituted and their oppressive working and living conditions unmitigated or
unresolved, the respondents' decision to resign is not surprising. They were compelled by the dismal state of their
employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or
discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer
involving a demotion in rank and a diminution in pay."

Fourth. The compromise agreements with quitclaim and release between the respondents and the agency before the
POEA did not foreclose their employer-employee relationship claims before the NLRC.

Fifth. The petitioner agency's objection to the application of the Serrano ruling, which declared unconstitutional the
clause in RA 8042 limiting the entitlement of illegally dismissed OFWs to their salaries for the unexpired term of their
contract or three months, whichever is less, is of no moment. Its argument that the ruling cannot be given retroactive
effect, because it is curative and remedial, is untenable.

Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An
Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As
Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their
Families and Overseas Filipinos in Distress, and for Other Purposes." It argues that R.A. 10022 restored the subject
clause in the 5th paragraph, Section 10 of R.A. 8042. However, this argument should fail. Laws shall have no retroactive
effect, unless the contrary is provided. By its very nature, the amendment introduced by R.A. 10022 — restoring a
provision of R.A. 8042 declared unconstitutional — cannot be given retroactive effect, not only because there is no
express declaration of retroactivity in the law, but because retroactive application will result in an impairment of a right
that had accrued to the respondents by virtue of the Serrano ruling — entitlement to their salaries for the unexpired
portion of their employment contracts.

108
HON. STO. TOMAS, ET AL., VS. SALAC ET AL. [G.R. NO. 152642 & 152710;
NOVEMBER 13, 2012]
Facts:
On June 7, 1995, Congress enacted RA 8042 or the Migrant Workers and Overseas Filipinos Act of 1995
that sets the Government's policies on overseas employment and establishes a higher standard of
protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in
distress.

G.R. 152642 and G.R. 152710

Sections 29 and 30 of the statute commanded the DOLE to begin deregulating within one year of its passage
the business of handling the recruitment and migration of OFWs and phase out within five years the
regulatory functions of the POEA.

On January 8, 2002, respondents Salac, et al. filed a petition for certiorari, prohibition and mandamus with
application for TRO and preliminary injunction against petitioners SOLE, the POEA Administrator, and the
TESDA Secretary-General seeking primarily to enjoin the petitioners to comply with the policy of
deregulation mandated under Sections 29 and 30 of Republic Act 8042. The petition was granted by the
RTC on March 20, 2002, which also annulled all other orders, circulars and issuances that are inconsistent
with the policy of deregulation under RA 8042. This decision was then appealed by the government officials
concerned; thus, the present petition.

On December 4, 2008, however, the Republic informed the Court that on April 10, 2007 former President
Gloria Macapagal-Arroyo signed into law RA 9422 which expressly repealed Sections 29 and 30 of RA 8042
and adopted the policy of close government regulation of the recruitment and deployment of OFWs.

G.R. 167590

On August 21, 1995, respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a petition for
declaratory relief and prohibition with prayer for issuance of TRO and writ of preliminary injunction seeking
to annul Sections 6, 7, and 9 of RA 8042 for being unconstitutional.PASEI also sought to annul a portion of
Section 10 of the same statute.

Section 6 defines the crime of "illegal recruitment" and enumerates the acts constituting the same; while,
Section 7 provides the penalties for prohibited acts.Section 9 of R.A. 8042 allowed the filing of criminal
actions arising from "illegal recruitment" before the RTC of the province or city where the offense was
committed or where the offended party actually resides at the time of the commission of the offense.

The RTC declared Section 6 unconstitutional and held that the definition of "illegal recruitment" is vague as
it fails to distinguish between licensed and non-licensed recruiters, giving undue advantage to the non-
licensed recruiters in violation of the right to equal protection of those that operate with government
licenses or authorities. It also declared Section 7 unconstitutional on the ground that its sweeping
application of the penalties failed to make any distinction as to the seriousness of the act committed for
the application of the penalty imposed on such violation. Further, The RTC also invalidated Section 9 on the
ground that allowing the offended parties to file the criminal case in their place of residence would negate
the general rule on venue of criminal cases which is the place where the crime or any of its essential
elements were committed. According to the RTC, venue is jurisdictional in penal laws and allowing the filing
of criminal actions at the place of residence of the offended parties violates their right to due process.
Finally, the RTC declared as unconstitutional the last sentence of the second paragraph of Section 10 and
pointed out that, absent sufficient proof that the corporate officers and directors of the erring company

109
had knowledge of and allowed the illegal recruitment, making them automatically liable would violate their
right to due process of law.

G.R. 167590, G.R. 182978-79 and G.R. 184298-99

Respondent spouses Simplicio and Mila Cuaresma filed a claim for death and insurance benefits and
damages against petitioners Becmen Service Exporter and Promotion, Inc. and White Falcon Services, Inc.
for the death of their daughter Jasmin Cuaresma while working as staff nurse in Riyadh, Saudi Arabia.

The Labor Arbiter dismissed the claim on the ground that the Cuaresmas had already received insurance
benefits arising from their daughter's death from OWWA. Due credence was also given to the findings of
the Saudi Arabian authorities that Jasmin committed suicide.

However, the NLRC found Becmen and White Falcon jointly and severally liable for Jasmin's death and
ordered them to pay the Cuaresmas the amount of US$113,000.00 as actual damages. The NLRC relied on
the Cabanatuan City Health Office's autopsy finding that Jasmin died of criminal violence and rape.

Upon appeal to the CA, Becmen and White Falcon were held to be jointly and severally liable with their
Saudi Arabian employer for actual damages, with Becmen having a right of reimbursement from White
Falcon.

On April 7, 2009, the Court found Jasmin's death not work-related or work-connected since her rape and
death did not occur while she was on duty at the hospital or doing acts incidental to her employment. The
Court deleted the award of actual damages but ruled that Becmen's corporate directors and officers are
solidarily liable with their company for its failure to investigate the true nature of her death. Becmen and
White Falcon abandoned their legal, moral, and social duty to assist the Cuaresmas in obtaining justice for
their daughter. Consequently, the Court held the foreign employer Rajab and Silsilah, White Falcon,
Becmen, and the latter's corporate directors and officers jointly and severally liable to the Cuaresmas for
moral damages, exemplary damages, attorney's fees and cost of suit.

On July 16, 2009 the corporate directors and officers of Becmenfiled a motion for leave to Intervene and
questioned the constitutionality of the last sentence of the second paragraph of Section 10 of RA 8042
which holds the corporate directors, officers and partners jointly and solidarily liable with their company
for money claims filed by OFWs against their employers and the recruitment firms.

Issues:
1. Whether or not Sections 6,7, 9, 29 and 30 of RA 8042 are not unconstitutional.
2. Whether or not the second paragraph of Section 10 of RA 8042 is valid.

Ruling:

In G.R. 152642 and G.R. 152710, the Court dismissed the petition as to the constitutionality of Sections 29
and 30 of RA 8042 as the petition has become moot and academic considering the express repeal of the
assailed provisions by the passing into law of RA 9422.

In G.R. 167590, the Court held that Sections 6, 7 and 9 of RA 8042 are valid and constitutional. It was held
that the term "illegal recruitment" as defined in Section 6 is clear and unambiguous and actually makes a
distinction between licensed and non-licensed recruiters, contrary to the RTC’s ruling. By its terms, persons
who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers"
without the appropriate government license or authority are guilty of illegal recruitment whether or not
they commit the wrongful acts enumerated in that section. On the other hand, recruiters who engage in the

110
canvassing, enlisting, etc. of OFWs, although with the appropriate government license or authority, are
guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6.

It is not within the power of the Court to question the wisdom of this kind of choice. It was held that in
fixing such tough penalties, the law considered the unsettling fact that OFWs must work outside the
country's borders and beyond its immediate protection. The law must, therefore, make an effort to
somehow protect them from conscienceless individuals within its jurisdiction who, fueled by greed, are
willing to ship them out without clear assurance that their contracted principals would treat such OFWs
fairly and humanely.

Finally, the Court ruled that there is nothing arbitrary or unconstitutional in Congress fixing an alternative
venue for violations of Section 6 of RA 8042 that differs from the venue established by the Rules on Criminal
Procedure. Indeed, Section 15 (a), Rule 110 of the ROC allows exceptions provided by laws, to wit: “Subject
to existing laws, the criminal action shall be instituted and tried in the court of the municipality or territory
where the offense was committed or where any of its essential ingredients occurred.”

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that
law's declared policy of providing a criminal justice system that protects and serves the best interests of
the victims of illegal recruitment.

In G.R. 167590, G.R. 182978-79 and G.R. 184298-99,the last sentence of the second paragraph of Section
10 is valid and constitutional. The Court held that the liability of corporate directors and officers is not
automatic. To make them jointly and solidarily liable with their company, there must be a finding that they
were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal
activities. In the case of Becmen and White Falcon, while there is evidence that these companies were at
fault in not investigating the cause of Jasmin's death, there is no mention of any evidence in the case against
them that intervenors Becmen's corporate officers and directors, were personally involved in their
company's particular actions or omissions in Jasmin's case.

As a final note, the Court held that RA 8042 is a police power measure intended to regulate the
recruitment and deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered
by numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor the
presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws
enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that the
statute is unconstitutional, the Court must uphold its validity.

111
SAMEER OVERSEAS PLACEMENT V CABILES [GR NO. 170139, AUGUST 5,
2014]
Facts:
Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency. Respondent
Joy Cabiles was hired thus signed a one-year employment contract for a monthly salary of NT$15,360.00.
Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that in her
employment contract, she agreed to work as quality control for one year. In Taiwan, she was asked to work
as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior notice,
that she was terminated and that “she should immediately report to their office to get her salary and
passport.” She was asked to “prepare for immediate repatriation.” Joy claims that she was told that from
June 26 to July 14, 1997, she only earned a total of NT$9,000.15 According to her, Wacoal deducted
NT$3,000 to cover her plane ticket to Manila.

Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency,
negligence in her duties, and her "failure to comply with the work requirements [of] her foreign
[employer]”. The agency also claimed that it did not ask for a placement fee of PhP70,000.00. As evidence,
it showed Official Receipt No. 14860 dated June 10, 1997, bearing the amount of PhP20,360.00. Petitioner
added that Wacoal's accreditation with petitioner had already been transferred to the Pacific Manpower &
Management Services, Inc. (Pacific) as of August 6, 1997. Thus, petitioner asserts that it was already
substituted by Pacific Manpower.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against petitioner and Wacoal.
LA dismissed the complaint. NLRC reversed LA’s decision. CA affirmed the ruling of the National Labor
Relations Commission finding respondent illegally dismissed and awarding her only three months’ worth
of salary, the reimbursement of the cost of her repatriation, and attorney’s fees

Issue:
WON Cabiles was entitled to the unexpired portion of her salary due to illegal dismissal.

Ruling:
YES. Sameer Overseas Placement Agency failed to show that there was just cause for causing Joy's
dismissal. The employer, Wacoal, also failed to accord her due process of law. The burden of proving that
there is just cause for termination is on the employer.

Security of tenure for labor is guaranteed by our Constitution and even if they move to different
jurisdiction, still our labor laws would apply following the principle lex loci contractus. Under our laws,
the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause. Failure to show that there was valid or just cause for termination would necessarily mean that the
dismissal was illegal. To show that dismissal resulting from inefficiency in work is valid, it must be shown
that: 1) the employer has set standards of conduct and workmanship against which the employee will be
judged; 2) the standards of conduct and workmanship must have been communicated to the employee;
and 3) the communication was made at a reasonable time prior to the employee's performance
assessment. The bare allegations of petitioner are not sufficient to support a claim that there is just cause
for termination. There is no proof that respondent was legally terminated.

The Court also held that the award of the three-month equivalent of respondent’s salary should be
increased to the amount equivalent to the unexpired term of the employment contract.

112
Respondent Joy Cabiles is entitled to her salary for the unexpired portion of her contract, in accordance
with Section 10 of Republic Act No. 8042. The award of the three-month equivalence of respondent's salary
must be modified accordingly. Since she started working on June 26, 1997 and was terminated on July 14,
1997, respondent is entitled to her salary from July 15, 1997 to June 25, 1998. "To rule otherwise would be
iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers
and recruitment/manning agencies may violate an OFW's security of tenure which an employment contract
embodies and actually profit from such violation based on an unconstitutional provision of law.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that the clause
“or for three (3) months for every year of the unexpired term, whichever is less” is unconstitutional for
violating the equal protection clause and substantive due process. A statute or provision which was declared
unconstitutional is not a law. It “confers no rights; it imposes no duties; it affords no protection; it creates
no office; it is inoperative as if it has not been passed at all.”

The Court said that they are aware that the clause “or for three (3) months for every year of the unexpired
term, whichever is less” was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No.
10022 in 2010.
Ruling on the constitutional issue:

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise
its powers in any manner inconsistent with the Constitution, regardless of the existence of any law that
supports such exercise. The Constitution cannot be trumped by any other law. All laws must be read in light
of the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity
cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A law or
provision of law that was already declared unconstitutional remains as such unless circumstances have so
changed as to warrant a reverse conclusion.

The Court observed that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the
constitutional rights to equal protection and due process. Petitioner as well as the Solicitor General have
failed to show any compelling change in the circumstances that would warrant us to revisit the precedent.

The Court declared, once again, the clause, “or for three (3) months for every year of the unexpired term,
whichever is less” in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is
declared unconstitutional and, therefore, null and void.

113
RACELIS VS UNITED PHILIPPINE LINES [G.R. NO. 198408, NOVEMBER 12,
2014]
Facts:
Complainant Conchita J. Racelis, as the surviving spouse of Rodolfo L. Racelis, initiated a claim for death benefits
pursuant to the International Transport Workers’ Federation-Collective Bargaining Agreement (ITWF-CBA), of which
her husband was a member. However, her claim was denied by the employer on the ground that the death was not
work-related as it was due to Brainstem (pontine) Cavernous Malformation, which was congenital and it had familiar
strains according to a doctor. Thus, complainant instituted a labor case against them.

Previously, Rodolfo L. Racelis “was recruited and hired by respondent United Philippine Lines, Inc. (UPL) for its principal,
respondent Holland America Lines, Inc. (HAL) to serve as ‘Demi Chef De Partie’ on board the vessel MS Prinsendam,
with a basic monthly salary of US$799.55.5 The Contract of Employment was for a term of four (4) months, extendible
for another two (2) months upon mutual consent. After complying with the required pre-employment medical
examination where he was declared fit to work, Rodolfo joined the vessel on January 25, 2008. Prior thereto, Rodolfo
was repeatedly contracted by said respondents and was deployed under various contracts since December 17, 1985.”

On his last employment, Rodolfo experienced severe pain in his ears and high blood pressure causing him to collapse
while in the performance of his duties. He consulted a doctor in Argentina and was medically repatriated on February
20, 2008 for further medical treatment. Upon arrival in Manila, he was immediately brought to Medical City, Pasig City,
where he was seen by a company-designated physician, Dr. Gerardo Legaspi, M.D. (Dr. Legaspi), and was diagnosed to
be suffering from Brainstem (pontine) Cavernous Malformation. He underwent surgery twice for the said ailment but
developed complications and died on March 2, 2008.

Rodolfo's surviving spouse, herein petitioner, sought to claim death benefits pursuant to the International Transport
Workers' Federation-Collective Bargaining Agreement (ITWF-CBA), of which her husband was a member, but to no
avail. Consequently, she filed a Complaint for death benefits, burial assistance, moral and exemplary damages, and
attorney's fees against herein respondents before the LA.

The Labor Arbiter (LA) ruled in favor of petitioner, and thereby ordered respondents to pay her death benefits pursuant
to the ITWF-CBA in the amount of US$60,000.00, burial assistance in the amount of US$1,000.00, and attorney's fees
equivalent to 10% of the total monetary awards. The NLRC likewise affirmed the LA decision.

However, the CA granted respondents' certiorari petition, and thereby annulled and set aside the ruling of the NLRC
granting petitioner's claim for death benefits.

Issue:
WON United Philippine Lines can be held liable for the death benefits of Rodolfo Racelis,

Ruling:
The employer is liable. “Deemed incorporated in every seafarer’s employment contract, denominated as the POEA-
SEC or the Philippine Overseas Employment Administration-Standard Employment Contract, is a set of standard
provisions determined and implemented by the POEA, called the ‘Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean Going Vessels,’ which are considered to be the minimum
requirements acceptable to the government for the employment of Filipino seafarers on board foreign ocean-going
vessels.”

In the 2000 POEA-SEC, it stipulates that “the beneficiaries of a deceased seafarer may be able to claim death benefits
for as long as they are able to establish that (a) the seafarer’s death is work-related, and (b) such death had occurred
during the term of his employment contract.”

Under the 2000 POEA-SEC, “work-related injury” is defined as “injury(ies) resulting in disability or death arising out
of and in the course of employment.” On the other hand, “work-related illness” is defined as “any sickness resulting
to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the
conditions set therein satisfied.”

114
Jurisprudence provides that “[t]he words ‘arising out of’ refer to the origin or cause of the accident, and are descriptive
of its character, while the words ‘in the course of’ refer to the time, place, and circumstances under which the accident
takes place. As a matter of general proposition, an injury or accident is said to arise ‘in the course of employment’ when
it takes place within the period of the employment, at a place where the employee reasonably may be, and while he is
fulfilling his duties or is engaged in doing something incidental thereto.”

Here, the death of the seafarer is evidently work-related. “While it is true that Brainstem (pontine) Cavernous
Malformation is not listed as an occupational disease under Section 32-A of the 2000 POEA-SEC, Section 20 (B) (4) of
the same explicitly provides that the liabilities of the employer when the seafarer suffers work-related injury or
illness during the term of his contract are as follows: those illnesses not listed in Section 32 of this Contract are
disputably presumed as work related.’ In other words, the 2000 POEA-SEC ‘has created a disputable presumption in
favor of compensability, saying that those illnesses not listed in Section 32 are disputably presumed as work-related.
This means that even if the illness is not listed under Section 32-A of the POEA-SEC as an occupational disease or illness,
it will still be presumed as work-related, and it becomes incumbent on the employer to overcome the presumption.’
This presumption should be overturned only when the employer’s refutation is found to be supported by substantial
evidence, which, as traditionally defined is “such relevant evidence as a reasonable mind might accept as sufficient to
support a conclusion.”

Further, the seafarer’s death occurred during the term of employment. “While it is true that a medical repatriation has
the effect of terminating the seafarer’s contract of employment, it is, however, enough that the work-related illness,
which eventually becomes the proximate cause of death, occurred while the contract was effective for recovery to be
had.”

The 1987 Constitution affords full protection to labor. “Consistent with the State’s avowed policy to afford full
protection to labor as enshrined in Article XIII of the 1987 Philippine Constitution, the POEA-SEC was designed primarily
for the protection and benefit of Filipino seafarers in the pursuit of their employment on board ocean-going vessels. As
such, it is a standing principle that its provisions are to be construed and applied fairly, reasonably, and liberally in their
favor.”
Guided by these principles, it has been held that “a medical repatriation case constitutes an exception to the second
requirement under Section 20 (A) (1) of the 2000 POEA-SEC, i.e., that the seafarer’s death had occurred during the term
of his employment, in view of the terminative consequences of a medical repatriation under Section 18 (B) of the same.
In essence, the Court held that under such circumstance, the work-related death need not precisely occur during the
term of his employment as it is enough that the seafarer’s work-related injury or illness which eventually causes his
death had occurred during the term of his employment.”

As for the award, respondents never died and therefore admitted that “the late Rodolfo’s membership in the AMOSUP
that had entered into a collective bargaining agreement with HAL, or the ITWF-CBA” is applicable. Its provisions
therefore must prevail over the standard terms and benefits formulated by the POEA in its Standard Employment
Contract. Hence, the NLRC’s award of US$60,000.00 as compensation for the death of Rodolfo in accordance with
Article 21.2.1 of the ITWF-CBA was in order. The same holds true for the award of burial assistance in the amount of
US$1,000.00 which is provided under Section 20 (A) (4) (c) of the 2000 POEA-SEC. Moreover, conformably with existing
case law, the NLRC’s grant of attorney’s fees in the amount of US$6,100.00 was called for since petitioner was forced
to litigate to protect her valid claim. Where an employee is forced to litigate and incur expenses to protect his right and
interest, he is entitled to an award of attorney’s fees equivalent to 10% of the award.

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PENTAGON INTERNATIONAL SHIPPING SERVICES V. CA, [GR NO. 169158,
JULY 1, 2015]
Facts:
Pentagon International Shipping Services, Inc. (Pentagon), a domestic corporation, was a private manning
agency licensed by the Philippine Overseas Employment Administration (POEA) to engage in the
recruitment of seafarers to service the crewing and personnel management needs of shipping companies
accredited to it. Respondent JDA Inter-Phil, also a domestic corporation, was similarly engaged in the
recruitment of seafarers.

On March 27, 1998, Pentagon hired respondents Madrio and Rubiano as chief officer and second
engineer, respectively, in behalf of its foreign principal, Baleen Marine, a corporation based in Singapore.
When their 10-month contract expired, they were repatriated to the Philippines. Alleging non-payment
and underpayment of wages, and claiming damages and attorney's fees, they separately brought claims
against Pentagon and the owners and managers of Baleen Marine on January 13, 2000 and January 31,
2000,5 stating that Pentagon and Baleen Marine had reduced their monthly gross salary by 20% without
the prior approval by the POEA; and that Pentagon and Baleen Marine had not paid their salaries from
November 1, 1998 until their repatriation on March 24, 1999.

Pentagon denied liability, countering that it had ceased to be the manning agency of Baleen Marine
effective October 1, 1998, and that on October 9, 1998, Baleen Marine had appointed JDA Inter-Phil as its
new local agent for Baleen Marine's vessels NP Trader No. 3 and NP Prima.

On its part, IDA Inter-Phil insisted that although it had applied with the POEA for the transfer and
accreditation of Baleen Marine's vessels in its favor, it withdrew the application and did not execute an
affidavit of assumption and responsibility as required; that, consequently, Pentagon continued to be jointly
and severally liable with Baleen Marine for the money claims of Madrio and Rubiano.

The Labor Arbiter ruled in favor of Pentagon, declaring JDA Inter-Phil jointly and solidarily liable with Baleen
Marine. However, the NLRC reversed the Labor Arbiter on December 26, 2002.

Issue:
WON there was a valid substitution of the manning agent from Pentagon to IDA Inter-Phil.

Ruling:
Before a transfer of accreditation can be effected, the transferee agency should likewise have to comply
with the requirements for accreditation contained in Section 2. The POEA can act on the transfer of
accreditation only after all the requirements shall have been submitted.

Section 2. Requirements for Accreditation. An agency applying for the accreditation of its principals or
projects shall submit the following:L

b. For a Manning Agency for its Principals

(1) Authenticated special power of attorney and manning agreement;
(2) Crew complement and wages;
(3) List of vessels and their particulars; and
(4) Other documents which the Administration may find necessary.

In light of the foregoing, there was no effective transfer of agency from Pentagon to JDA Inter-Phil. Even
assuming arguendo that JDA Inter-Phil did not withdraw its application for accreditation with the POEA,
there was still no valid transfer of agency to speak of in the first place because JDA Inter-Phil did not submit

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the required authenticated special power of attorney and manning agreement. The minutes of the October
9, 1998 meeting could not, by any stretch of the imagination, supplant this mandatory requirement. The
special power of attorney and manning agreement were necessary for the validity or enforceability of the
transfer of accreditation.

It is relevant to observe that Pentagon cannot feign ignorance of Section 10, paragraph 2, of the Migrant
Workers' Act of 1995 to the effect that its liabilities would continue during the entire period or duration
of the employment contract, and would not be affected by any substitution, amendment or modification
of the contract made either locally or in a foreign country. The provisions of the POEA Rules and
Regulations to the effect that the manning agreement extends up to and until the expiration of the
employment contracts of the employees recruited and employed pursuant to the recruitment agreement
are also clear enough. As such, Pentagon is not exempt from its liabilities and responsibilities towards
Madrio and Rubiano.

SEC. 10. MONEY CLAIMS.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under
this section shall be joint and several. This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages
that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with
the corporation or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not
be affected by any substitution, amendment or modification made locally or in a foreign country of the said
contract.

Although JDA Inter-Phil undertook in the meeting of October 1, 1998 to assume the responsibility as the
local agent to Baleen Marine, the actual transfer of the accreditation would not be completed without
JDA Inter-Phil's compliance with the requirements under the aforementioned rules. What actually
happened between the time the meeting took place and the eventual withdrawal of the application by the
JDA Inter-Phil remained to be mere conjecture. Nevertheless, Madrio and Rubiano should not be
prejudiced by any purported transfer of accreditation or agreement that they were not privy to. For sure,
Pentagon remained under the law the only recognized manning agent of Baleen Marine.

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AUSTRIA V. CRYSTAL SHIPPING [GR NO. 206256, FEB. 24, 2016]
Facts:
It must be shown that there is causal connection between the seafarer’s illness or injury and the work for
which he had been contracted.

Crystal Shipping Inc., a foreign juridical entity engaged in maritime business, hired Austria as chief cook.
Prior to the execution of contract, Austria underwent a Pre-Employment Medical Examination and was
thereafter certified as “fit to work”. After a month, Austria, while on board the vessel, started suffering from
chronic cough with excessive phlegm and experienced difficulty in breathing. After giving the Austria proper
medication, he was declared “fit for duty” and so he resumed his work in the vessel. After several months,
Austria again complained of similar symptoms. Consequently, Austria’s repatriation to the Philippines was
recommended by doctors due to the seriousness of his ailment. Upon arrival in the Philippines, he was
immediately confined at the hospital. It was found that Austria was suffering from “Dilated
Cardiomyopathy, Bicuspid Aortic Stenosis” rendering him unfit for any sea duty.

Austria sought for the payment of permanent disability benefits. Crystal Shipping Inc. denied liability for
the illness of Austria citing that Austria’s condition is congenital in nature and is not caused or aggravated
by his work as Chief Cook.

Ruling:
Austria is entitled to disability benefits.
The Supreme Court ruled that:
“For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must concur:
(1) the injury or illness must be work-related; and (2) the work-related injury or illness must have existed
during the term of the seafarer’s employment contract. In other words, to be entitled to compensation and
benefits under this provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered
him permanently or partially disabled; it must also be shown that there is causal connection between the
seafarer’s illness or injury and the work for which he had been contracted.”

The Court held that Austria’s illness which caused his repatriation is an occupational disease and thus
compensable as permanent total disability. Austria, as chief cook, was exposed to heat. The steady and
prolonged exposure to heat naturally causes exhaustion which could unduly burden his heart and interfere
with the normal functioning of his cardio-vascular system. Further, the court ratiocinated that:

“Even if it were shown that Austria’s condition is congenital in nature, it does automatically take his ailment
away from purview of compensability. Pre-existence of an illness does not irrevocably bar compensability
because disability laws still grant the same provided seafarer’s working conditions bear causal connection
with his illness. As succinctly pointed above, Austria’s working environment as chef constantly exposed
him to factors that could aggravate his heart condition.”

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ASIAN INTERNATIONAL MANPOWER SERVICES, INC. V. DEPARTMENT OF
LABOR AND EMPLOYMENT [GR NO. 210308, APRIL 6, 2016]
Facts:
On November 8, 2006, the Anti-Illegal Recruitment Branch of the POEA, pursuant to Surveillance Order No.
033, Series of 2006, conducted a surveillance of Asian International Manpower Services, Inc. (AIMS) with
office address at 1653 Taft Avenue comer Pedro Gil Street, Malate, Manila to determine whether it was
operating as a recruitment agency despite the cancellation of its license on August 28, 2006. The operatives
reported that their surveillance did not reveal the information needed, so another surveillance was
recommended.

On February 20, 2007, another surveillance was conducted on the premises of AIMS' office pursuant to
Surveillance Order No. 011. This time the POEA operatives observed that there were people standing
outside its main entrance, and there were announcements of job vacancies posted on the main glass door
of the office. The POEA operatives later confirmed through the POEA Verification System that AIMS had
regained its license and good standing on December 6, 2006, but that it had no existing approved job orders
yet at that time.9

On March 26, 2007, the POEA issued a Show Cause Order directing AIMS and its covering surety, Country
Bankers Insurance Corporation, to submit their answer or explanation to the Surveillance Report dated
November 8, 2006 of the POEA operatives. 10 However, no copy of the Surveillance Report dated February
21, 2007 was attached.

In compliance thereto, Danilo P. Pelagio, AIMS President, wrote to the POEA on April 3, 2007 maintaining
that AIMS was not liable for any recruitment misrepresentation. Invoking the Surveillance Report dated
November 8, 2006, he cited the POEA operatives' own admission that when they first came posing as
applicants, the AIMS staff advised them that it had no job vacancies for waiters and that its license had
been cancelled. He also called POEA's attention to the notice issued to AIMS, which was received on
November 27, 2006, that the cancellation of its license had been set aside on December 6, 2006; and that
the POEA Adjudication Office even circulated an advise to all its operating units of the restoration of AIMS'
license.

In the Order dated June 30, 2008, then POEA Administrator Rosalinda Baldoz ruled that on the basis of the
Surveillance Report dated February 21, 2007 of the POEA operatives, AIMS was liable for misrepresentation
under Section 2(e), Rule I, Part VI of the 2002 POEA Rules, since the POEA records showed that AIMS had
no job orders to hire hotel workers for Macau, nor grape pickers for California, as its flyer allegedly
advertised.

AIMS filed a motion for reconsideration before the DOLE. It alleged that its right to due process was
violated because the POEA did not furnish it with a copy of the Surveillance Report dated February 21,
2007, which was the basis of the POEA Administrator's factual findings. DOLE affirmed the order of the
POEA, asserting that due process was observed.

AIMS filed a petition for certiorari in the CA,

The CA dismissed AIMS's charge of denial of due process for failure of POEA to furnish it with a copy of the
Surveillance Report dated February 21, 2007. It held that AIMS' misrepresentation with regard to the
recruitment of workers for non-existent overseas jobs was supported by substantial evidence.

Lugatiman was obviously informed of the charges against AIMS. Instead of rebutting the allegations of the
operatives in the two (2) Surveillance Reports, Lugatiman failed to clarify the issues or the charges and

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merely manifested that AIMS already filed an answer and thus moved for the resolution of the Complaint
against it. Clearly, AIMS was given the opportunity to be heard and to present its side but failed to make
use of the same. Thus, AIMS cannot feign denial of due process.

Issue:
WON AIMS right to due process was violated.

Ruling:

The petition is granted.

The Court does not agree. In concluding that, through Lugatiman, AIMS was "obviously informed of the
charges" during the preliminary hearing, the CA overlooked the crucial fact that, as the POEA itself
admitted, it did not furnish AIMS with a copy of its Surveillance Report dated February 21, 2007, which
contains the factual allegations of misrepresentation supposedly committed by AIMS. It is
incomprehensible why the POEA would neglect to furnish AIMS with a copy of the said report, since other
than the fact that AIMS was represented at the hearing on May 9, 2007, there is no showing that Lugatiman
was apprised of the contents thereof. In fact, as AIMS now claims, the alleged recruitment flyer distributed
to its applicants was not even presented. Needless to say, its right to due process consisting of being
informed of the charges against it has been grossly violated.

Moreover, AIMS also points out that the flyer advertising the jobs in Macau and California was never
presented or made part of the record, and neither was the AIMS lady clerk who allegedly distributed the
same even identified, as AIMS demanded. Besides, granting that AIMS did advertise with flyers for hotel
workers or grape pickers, for which it allegedly had no existing approved job orders, it is provided in Sections
I and 2 of Rule VII (Advertisement for Overseas Jobs), Part II of the 2002 POEA Rules28 that the said activity
is permitted for manpower pooling purposes, without need of prior approval from the POEA, upon the
following conditions: (1) it is done by a licensed agency; (2) the advertisement \indicates in bold letters
that it is for manpower pooling only; (3) no fees are collected from the applicants; and (4) the name,
address and POEA license number of the agency, name and worksite of the prospective
registered/accredited principal and the skill categories and qualification standards are indicated.

Clearly, AIMS 's right to be informed of the charges against it, and its right to be held liable only upon
substantial evidence, have both been gravely violated.

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