A.
INTRODUCTION
2. General principles of labor law
2.1 Existence of employer-employee relationship is necessary for
the application of labor laws
San Miguel Corporation Employees Union vs. Bersamira, 186
SCRA 496 June 13, 1990
Facts:
SanMig entered into contracts for merchandising services with
Lipercon and D'Rite, independent contractors duly licensed by
DOLE, to maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its
operation. In said contracts, it was expressly understood and agreed
that the workers employed by the contractors were to be paid by the
latter and that none of them were to be deemed employees or agents
of SanMig. There was to be no employer-employee relation between
the contractors and/or its workers, on the one hand, and SanMig on
the other.
Petitioner San Miguel Corporation Employees Union-PTWGO is the
duly authorized representative of the monthly paid rank-and-file
employees of SanMig with whom the latter executed a CBA which
provides that "temporary, probationary, or contract employees and
workers are excluded from the bargaining unit and, therefore, outside
the scope of this Agreement."
The Union advised SanMig that some Lipercon and D'Rite workers
had signed up for union membership and sought the regularization of
their employment with SMC because some employees have been
continuously working for SanMig for a period ranging from 6 months
to 15 years and that their work is neither casual nor seasonal as they
are performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there exists
a "labor-only" contracting situation and wanted to be regularized.
The Union filed a notices of strike for unfair labor practice, CBA
violations, and union busting. The two (2) notices of strike were
consolidated and several conciliation conferences were held to settle
the dispute before the National Conciliation and Mediation Board
(NCMB) of DOLE.
Series of pickets were staged by Lipercon and D'Rite workers in
various SMC plants and offices.
SMC filed a verified Complaint for Injunction and Damages before
respondent Court to enjoin the Union from their acts. The Court
issued a Temporary Restraining Order and set the application for
Injunction for hearing. The Union filed a Motion to Dismiss which
was then opposed by SanMig. The Motion was denied by the
respondent Judge. The Court then issued the Order granting the
application and enjoining the union from the acts thereof. Court
issued the corresponding Writ of Preliminary Injunction after SanMig
had posted the required bond of P100,000.00 to answer for whatever
damages petitioners may sustain by reason thereof. Petitioners then
sought for the nullification of the Writ before the SC while it also
went to strike as some of the contractual workers were laid off.
NCMB called the parties for conciliation.
Issue:
Did the respondent Court correctly assumed jurisdiction over the
present controversy and properly issued the Writ of Preliminary
Injunction to the resolution of that question, is the matter of whether,
or not the case at bar involves, or is in connection with, or relates to a
labor dispute.
Held:
While it is SanMig's submission that no employer-employee
relationship exists between itself, on the one hand, and the
contractual workers of Lipercon and D'Rite on the other, a labor
dispute can
nevertheless exist "regardless of whether the disputants stand in the
proximate relationship of employer and employee” provided the
controversy concerns, among others, the terms and conditions of
employment or a "change" or "arrangement" thereof. The existence of
a labor dispute is not negative by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and
employee.
2.4 In case of doubt or ambiguity, liberal interpretation of law in
favor of the workers
Philippine Journalist Inc. vs. Journal Employees Union, G.R. No.
192601, June 26, 2013
Facts: 
The second complainant Michael L. Alfante alleged that he started to
work with respondents as computer technician at Management
Information System under manager Neri Torrecampo on 16 May
2000; that on 15 July 2001, he was regularized receiving a monthly
salary of P9,070.00 plus other monetary benefits; that sometime in
2001, Rico Pagkalinawan replaced Torrecampo, which was opposed
by complainant and three other co-employees; that Pagkalinawan
took offense of their objection; that on 22 October 2002, complainant
Alfante received a memorandum from Pagkalinawan regarding his
excessive tardiness; that on 10 June 2003, complainant Alfante
received a memorandum from Executive Vice-President Arnold
Banares, requiring him to explain his side on the evaluation of his
performance submitted by manager Pagkalinawan; that one week
after complainant submitted his explanation, he was handed his
notice of dismissal on the ground of “poor performance”; and that
complainant was dismissed effective 28 July 2003. Complainant
Alfante submitted that he was dismissed without just cause. With
respect to the alleged non-adjustment of longevity pay and burial aid,
respondent PJI pointed out that it complies with the provisions of the
CBA and that both complainants have not claimed for the burial aid.
Issue: 
Whether or not petitioner’s denial of respondents’ claims for funeral
and bereavement aid granted under Section 4, Article XIII of their
CBA constituted a diminution of benefits in violation of Article 100
of the Labor Code.
Held: 
Yes. 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.
Accordingly, the stipulations, clauses, terms and conditions of the
CBA, being the law between the parties, must be complied with by
them. The literal meaning of the stipulations of the CBA, as with
every other contract, control if they are clear and leave no doubt upon
the intention of the contracting parties. It is further worthy to note
that petitioner granted claims for funeral and bereavement aid as
early as 1999, then issued a memorandum in 2000 to correct its
erroneous interpretation of legal dependent under Section 4, Article
XIII of the CBA. This notwithstanding, the 2001-2004 CBA35 still
contained the same provision granting funeral or bereavement aid in
case of the death of a legal dependent of a regular employee without
differentiating the legal dependents according to the employee’s civil
status as married or single. The continuity in the grant of the funeral
and bereavement aid to regular employees for the death of their legal
dependents has undoubtedly ripened into a company policy. With
that, the denial of Alfante’s qualified claim for such benefit pursuant
to Section 4, Article XIII of the CBA violated the law prohibiting the
diminution of benefits.
B. EMPLOYER-EMPLOYEE RELATIONSHIP
3. Employer relationship as matrix
3.2 Tests to determine the existence of employer-employee
relationship
Hacienda Leddy, et al. vs. Paquito Villegas, G.R. No. 179654,
September 2014
Facts:
Paquito Villegas has been working as a sugar farmer and an
employee in the coconut lumber business for the owner of Hacienda
Leddy, Ricardo Gamboa Sr., for nearly twenty years. His son,
however, needing the property of which Villegas’ house stands on (an
offer made by his father out of gratuity to Villegas), and thus
dismissed Villegas for no other reason, so he would be able to use the
property in full. Gamboa Jr. justified his decision by saying that
Villegas himself abandoned the job, that he was not a regular
employee anyway and was merely a casual worker for piece-rate,
doing odd jobs at the farm. When Villegas filed a complaint for
illegal dismissal, Gamboa Jr. said that Villegas only filed it out of
spite for being kicked out of the property, and insisted again that
Gamboa Jr. was definitely not a regular employee.
Issue:
Whether or not Paquito Villegas is a regular employee or a casual
worker only
Ruling:
The Supreme Court held here that Villegas was a regular employee
for two main reasons: first, there is a connection between nature of
the activities performed in relation to the particular business or trades,
and second, the length of time in the performance of said work and its
continued existence. The two reasons all in all show that indeed
Villegas was a regular employee and not just a casual worker. Casual
workers are (1) employed to perform a job, work or service, which is
merely incidental to the business of the employer; and (2) are only
employed for a definite period made known at the time of
engagement. With such, Villegas was found to have been illegally
dismissed.
3.4 Reasonable causal connection:
Counterclaim involving transfer of ownership of company car
falls within ambit of the Labor Arbiter’s jurisdiction
Domondon vs. NLRC, 471 SCRA 559 [2005]
Facts:
Petitioner Domondon was hired as Materials Manager by the Van
Melle Phils. All things went well until a precious general manager
was replaced by a Dutch National- Have. Have requested that
Domondon file his resignation letter. He refused and his life at work
became difficult until he was removed from the company. He later
filed for a complaint. In their counter complaint, the respondent
denied Domondon‘s allegations and even allowed him to resign.
Respondent further averred the parties agreed that in order for him to
own the car, he had an agreement with company that petitioner must
pay for it in order to transfer ownership thereof. Subsequent demands
were made but to no avail. When raised to the Labor Arbiter, the
complaint by Domondon was denied.
Issue:
Whether or not the Labor Arbiter has jurisdiction to hear the
counterclaim of the employer and the return of the car for failure of
Domondon to pay.
Ruling:
Yes. The Labor Arbiter has jurisdiction.
The Court holds that by the designating clause ― arising from
employer-employee relationship‖ Article 217 should apply with equal
force to the claim of an employer for actual damages against its
employee where the basis of the claim arises from or necessarily
connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case.
Private respondent herein made a counterclaim involving the transfer
of ownership of the company car to petitioner. Such transfer is
connected with Domondon‘s resignation and thus is covered in
jurisdiction by the LaborArbiter.
3.6 Effect when NO employer-employee relationship exists, or
when the main issue does not involve Employer-Employee
relationship- jurisdiction devolves with the regular courts
Eviota vs. Court of Appeals, 407 SCRA 394 [2003]
Facts:
Sometime on January 26, 1998, the respondent Standard Chartered
Bank and petitioner Eduardo G. Eviota executed a contract of
employment under which the petitioner was employed by the
respondent bank as Compensation and Benefits Manager, VP (M21).
Petitioner came up with many proposals which the bank approved
and made preparations of. He was also given privileges like car,
renovation of the office, and even a trip to Singapore at the
company’s expense.  However, the petitioner abruptly resigned from
the respondent bank barely a month after his employment and
rejoined his former employer. On June 19, 1998, the respondent bank
filed a complaint against the petitioner with the RTC of Makati City
for damages brought about his abrupt resignation. Though petitioner
reimbursed part of the amount demanded by Standard, he was not
able to pay it full. Standard alleged that assuming arguendo that
Eviota had the right to terminate his employment with the Bank for
no reason, the manner in and circumstances under which he exercised
the same are clearly abusive and contrary to the rules governing
human relations, governed by the Civil Code. Further, Standard
alleged that petitioner also violated the Labor Code when he
terminated his employment without one (1) notice in advance. This
stipulation was also provided in the employment contract of Eviota
with Standard, which would also constitute breach of contract.
The petitioner filed a motion to dismiss the complaint on the ground
that the action for damages of the respondent bank was within the
exclusive jurisdiction of the Labor Arbiter under paragraph 4, Article
217 of the Labor Code of the Philippines, as amended.  The petitioner
averred that the respondent bank’s claim for damages arose out of or
were in connection with his employer-employee relationship with the
respondent bank or some aspect or incident of such relationship.  The
respondent bank opposed the motion, claiming that its action for
damages was within the exclusive jurisdiction of the trial court.
Although its claims for damages incidentally involved an employer-
employee relationship, the said claims are actually predicated on the
petitioner’s acts and omissions which are separately, specifically and
distinctly governed by the New Civil Code.
 
Issue:
Whether or not the RTC had jurisdiction over the case.
 
Held:  4.3
The SC held that the RTC has jurisdiction. Case law has it that the
nature of an action and the subject matter thereof, as well as which
court has jurisdiction over the same, are determined by the material
allegations of the complaint and the reliefs prayed for in relation to
the law involved. Not every controversy or money claim by an
employee against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter.  A money claim by a worker against
the employer or vice-versa is within the exclusive jurisdiction of the
labor arbiter only if there is a “reasonable causal connection”
between the claim asserted and employee-employer relation.  Absent
such a link, the complaint will be cognizable by the regular courts of
justice.
 
Actions between employees and employer where the employer-
employee relationship is merely incidental and the cause of action
precedes from a different source of obligation is within the exclusive
jurisdiction of the regular court.  The jurisdiction of the Labor Arbiter
under Article 217 of the Labor Code, as amended, is limited to
disputes arising from an employer-employee relationship which can
only be resolved by reference to the Labor Code of the Philippines,
other labor laws or their collective bargaining agreements.  Labor Arbiter Julie C. Rendoque found petitioners to be regular
 
Jurisprudence has evolved the rule that claims for damages under
paragraph 4 of Article 217, to be cognizable by the Labor Arbiter,
must have a reasonable causal connection with any of the claims
provided for in that article.  Only if there is such a connection with
the other claims can the claim for damages be considered as arising
from employer-employee relations.
 
In this case, the private respondent’s first cause of action for damages
is anchored on the petitioner’s employment of deceit and of making
the private respondent believe that he would fulfill his obligation
under the employment contract with assiduousness and earnestness.  independent contractors who possess unique skills, expertise, and
The petitioner volte face when, without the requisite thirty-day notice
under the contract and the Labor Code of the Philippines, as
amended, he abandoned his office and rejoined his former employer;
thus, forcing the private respondent to hire a replacement.  The
private respondent was left in a lurch, and its corporate plans and
program in jeopardy and disarray.  Moreover, the petitioner took off
with the private respondent’s computer diskette, papers and
documents containing confidential information on employee
compensation and other bank matters.  On its second cause of action,
the petitioner simply walked away from his employment with the
private respondent sans any written notice, to the prejudice of the
private respondent, its banking operations and the conduct of its
business.  Anent its third cause of action, the petitioner made false
and derogatory statements that the private respondent reneged on its
obligations under their contract of employment; thus, depicting the
private respondent as unworthy of trust.
 
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.
 
It is evident that the causes of action of the private respondent against
the petitioner do not involve the provisions of the Labor Code of the
Philippines and other labor laws but the New Civil Code.  Thus, the
said causes of action are intrinsically civil.  There is no causal
relationship between the causes of action of the private respondent’s
causes of action against the petitioner and their employer-employee
relationship.  The fact that the private respondent was the erstwhile
employer of the petitioner under an existing employment contract
before the latter abandoned his employment is merely
incidental. Petition is denied.
Examples:
Masiador and sentenciador in a cockpit; not employees
Semblante vs. Court of Appeals, G.R. No. 196426, August 15,
2011
Facts:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar)
assert that they were hired by respondents-spouses Vicente and Maria
Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as the
official masiador and sentenciador, respectively, of the cockpit
sometime in 1993. Petitioners had both been issued employees’
identification cards that they wear every time they report for duty.
They alleged never having incurred any infraction and/or violation of
the cockpit rules and regulations. Petitioners were denied entry into
the cockpit upon the instructions of respondents, and were informed
of the termination of their services effective that date. This prompted
petitioners to file a complaint for illegal dismissal against
respondents.
employees of respondents as they performed work that was necessary
and indispensable to the usual trade or business of respondents for a
number of years. NLRC denied the appeal for its non-perfection. The
NLRC held that there was no employer-employee relationship
between petitioners and respondents, respondents having no part in
the selection and engagement of petitioners, and that no separate
individual contract with respondents was ever executed by
petitioners. , the appellate court found for respondents, noting that
referees and bet-takers in a cockfight need to have the kind of
expertise that is characteristic of the game to interpret messages
conveyed by mere gestures. Hence, petitioners are akin to
talent to distinguish them from ordinary employees. Further,
respondents did not supply petitioners with the tools and
instrumentalities they needed to perform work. Petitioners only
needed their unique skills and talents to perform their job as masiador
and sentenciador. The CA refused to reconsider its Decision.
Issue:
WON there is an ER-EE relationship.
Ruling:
While respondents had failed to post their bond within the 10-day
period provided above, it is evident, on the other hand, that
petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of employment. As
found by both the NLRC and the CA, respondents had no part in
petitioners’ selection and management; petitioners’ compensation
was paid out of the arriba (which is a percentage deducted from the
total bets), not by petitioners; and petitioners performed their
functions as masiador and sentenciador free from the direction and
control of respondents. In the conduct of their work, petitioners relied
mainly on their "expertise that is characteristic of the cockfight
gambling," and were never given by respondents any tool needed for
the performance of their work.
Respondents, not being petitioners’ employers, could never have
dismissed, legally or illegally, petitioners, since respondents were
without power or prerogative to do so in the first place. The rule on
the posting of an appeal bond cannot defeat the substantive rights of
respondents to be free from an unwarranted burden of answering for
an illegal dismissal for which they were never responsible.
Insurance company vs. Commission agents
Tongko vs. Manufacturers’ Life Insurance Company, G.R. No.
167622, June 29, 2010
Facts:
The contractual relationship between Tongko and Manulife had two
basic phases. The first or initial phase began on July 1, 1977, under a
Career Agent’s Agreement that provided:
It is understood and agreed that the Agent is an independent
contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between
the Company and the Agent.
Tongko additionally agreed (1) to comply with all regulations and
requirements of Manulife, and (2) to maintain a standard of
knowledge and competency in the sale of Manulife’s products,
satisfactory to Manulife and sufficient to meet the volume of the new
business, required by his Production Club membership.  amount to the elements of control that characterizes an employment
The second phase started in 1983 when Tongko was named Unit
Manager in Manulife’s Sales Agency Organization. In 1990, he
became a Branch Manager. Six years later, Tongko became a
Regional Sales Manager.  defines an agent as a person who binds himself to do something in
De Dios addressed a letter to Tongko stating that the former found
the latter’s views and comments unaligned with the directions the
company was taking. The allegations stated that some Managers were
unhappy with their earnings. However, no Managers confirmed the
said allegations. De Dios worried about Tongko’s inability to push
for the company’s development and growth.
Subsequently, de Dios wrote Tongko another letter terminating
Tongko’s services. Tongko responded by filing an illegal dismissal
complaint with the NLRC Arbitration Branch. He essentially alleged
– despite the clear terms of the letter terminating his Agency
Agreement – that he was Manulife’s employee before he was
illegally dismissed.
Manulife argues that Tongko had no fixed wage or salary. Under the
Agreement, Tongko was paid commissions of varying amounts,
computed based on the premium paid in full and actually received by
Manulife on policies obtained through an agent. As sales manager,
Tongko was paid overriding sales commission derived from sales
made by agents under his unit/structure/branch/region. Manulife also
points out that it deducted and withheld a 10% tax from all
commissions Tongko received; Tongko even declared himself to be
self-employed and consistently paid taxes as such—i.e., he availed of
tax deductions such as ordinary and necessary trade, business and
professional expenses to which a business is entitled.
Manulife asserts that the labor tribunals have no jurisdiction over
Tongko’s claim as he was not its employee as characterized in the
four-fold test.
The labor arbiter decreed that no employer-employee relationship
existed between the parties. However, the NLRC reversed the labor
arbiter’s decision on appeal; it found the existence of an employer-
employee relationship and concluded that Tongko had been illegally
dismissed. In the petition for certiorari with the CA, the appellate
court found that the NLRC gravely abused its discretion in its ruling
and reverted to the labor arbiter’s decision that no employer-
employee relationship existed between Tongko and Manulife.
Issue:  On November 13, 1995, an audit team of the COA, one of the
Whether or not petitioner as insurance agent is an employee of
respondent company.
Held:  also a Respondent, sent MCWD several notices disallowing the
No. Based on the evidence on record, the petitioner’s occupation was
to sell Manulife’s insurance policies and products from 1977 until the
termination of the career agent’s agreement. The evidence also shows
that through the years, Manulife permitted him to exercise guiding
authority over other agents who operate under their own agency
agreements with Manulife and whose commissions he shared. Under
this scheme — an agreement that pervades the insurance industry —
petitioner in effect became a “lead agent” and his own commissions
increased as they included his share in the commissions of the other
agents; he also receive greater reimbursement for expenses and was
allowed to use Manulife’s facilities. His designation also changed
from unit manager to branch manager and then to regional sales
manager, to reflect the increase in the number of agents he recruited
and guided, as well as the increase in the area where these agents
operated.
In our June 29, 2010 resolution, we noted that there are built in
elements of control specific to an insurance agency, which do not
relationship governed by the labor code. The insurance code provides
definite parameters in the way an agent negotiates for the sale of the
company’s insurance products, his collection activities and his
delivery of the insurance contract or policy. In addition, the civil code
behalf of another, with the consent or authority of the latter. Article
1887 of the civil code also provides that in the execution of the
agency, the agent shall act in accordance with the instructions of the
principal.
5. COVERAGE OF LABOR CODE, ART. 6:
5.2 Excluded employment
Special Circumstances: Government employees with CBA
Abanilla vs. Commission on Audit, 468 SCRA 87 [2005]
Facts:  
Pursuant to Presidential Decree 198 or the Provincial Water Utilities
Act of 1973, Metropolitan Cebu Water District (MCWD), a local
water district was organized as a government-owned corporation with
original charter.
 
Subsequently, MCWD, through its Board of Directors, issued the
following Resolutions giving benefits and privileges to its personnel,
one of whom is Dulce M. Abanilla, MCWD's General
Manager, Petitionerherein: (1) Board Resolution No. 054-83 dated
May 23, 1983 granting hospitalization privileges; (2) Board
Resolution Nos. 091-83 and 0203-85 dated October 21, 1983 and
November 20, 1985, respectively, allowing the monetization of leave
credits; (3) Board Resolution No. 0161-86 dated November 29, 1986
granting Christmas bonus; and (4) Board Resolution No. 083-88
granting longevity allowance.
 
MCWD and Metropolitan Cebu Water District Employees
Union, petitioner-in-intervention, executed a collective bargaining
agreement (CBA) providing for the continuous grant to all its regular
rank and file employees of existing benefits, such as cash advances,
thirteenth month pay, mid-year bonus, Christmas bonus, vacation and
sick leave credits, hospitalization, medicare, uniform privileges, and
water allowance.
 
On January 1, 1992, the parties renewed their CBA.
herein Respondents, conducted an audit of the accounts and
transactions of MCWD.
Thereafter, the Regional Director of COA Regional Office No. VII,
amount of P12,221,120.86 representing hospitalization benefits, mid-
year bonus, 13th month pay, Christmas bonus and longevity pay.
 
Aggrieved, petitioner interposed an appeal to respondent COA at
Quezon City. She cited COA Memorandum Circular No. 002-94
providing that "all benefits provided under the duly existing CBAs
entered into prior to March 12, 1992, the date of official entry of
judgment of the Supreme Court ruling in Davao City Water
District, et al. v. CSC and COA, shall continue up to the
respective expiry dates of the benefits or CBA whichever comes
earlier.
COA Denied. respondent COA cited this Court's ruling in Davao
City Water District v. Civil Service Commission that "a water district
is a corporation created pursuant to a special law - P.D. No. 198, as
amended, and as such, its officers and employees are covered by
the Civil Service Law."
Petitioner contends that respondent COA acted with grave abuse of
discretion in disallowing the above benefits and privileges and
contravened the Labor Code provision on non-diminution of benefits.

Issue: 
Whether or not the disallowance of COA is valid despite the
provision in the CBA

Ruling: 
Yes. In light of this Court's ruling in Davao City Water District that
the officers and employees of a water district are covered by the Civil
Service Law, petitioner’s invocation of the CBA, in justifying the
receipt by the MCWD personnel of benefits and privileges, is utterly
misplaced. Thus, we sustain the disallowance by respondent COA.
In Alliance of Government Workers v. Minister of Labor and
Employment, this Court held:
"Subject to the minimum requirements of wage laws and other labor
and welfare legislation, the terms and conditions of employment in
the unionized private sector are settled through the process of
collective bargaining. In government employment, however, it is the
legislature and, where properly given delegated power, the
administrative heads of government which fix the terms and
conditions of employment. And this is effected through statutes or
administrative circulars, rules, and regulations, not through
collective bargaining agreements."
While we sustain the disallowance of the above benefits by
respondent COA, however, we find that the MCWD affected
personnel who received the above-mentioned benefits and
privileges acted in good faith under the honest belief that the
CBA authorized such payment. Consequently, they need not
refund them.