1st Exam Digests

LABOR 1 DIGESTED CASES
School year 2020-2021

ABPI, CONCON, ESTORQUE, TOROBA, AND TINAMPAY
Based on the Lectures of ATTY. JACQUELINE MARIE ALUDIA B. BRANDARES-MAGDANGAL
PASEI VS. DRILON

GR 81958, June 30, 2018
DOCTRINE: the Labor Code itself vests the Department of Labor and Employment with rulemaking powers in
the enforcement whereof.
FACTS: Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the
recruitment of Filipino workers, male and female, for overseas placement," challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of
"GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS,"
Specifically, the measure is assailed for "discrimination against males or females;" that it "does not apply to all Filipino
workers but only to domestic helpers and females with similar skills;" and that it is violative of the right to travel. It is
held likewise to be an invalid exercise of the lawmaking power, police power being legislative, and not executive, in
character.
PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker participation "in policy and decision-
making processes affecting their rights and benefits as may be provided by law." 4 Department Order No. 1, it is
contended, was passed in the absence of prior consultations. It is claimed, finally, to be in violation of the Charter's
non-impairment clause, in addition to the "great and irreparable injury" that PASEI members face should the Order be
further enforced.
the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the Philippine Overseas
Employment Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor
Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy,
Norway, Austria, and Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor General
invokes the police power of the Philippine State.
ISSUE: WON DO. 1 is Unconstitutional.
HELD: NO. Department Order No. 1 is in the nature of a police power measure.
The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact
legislation that may interfere with personal liberty or property in order to promote the general welfare." As defined, it
consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences,
it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the purpose for which it is
exercised, that is, to advance the public good. Thus, when the power is used to further private interests at the
expense of the citizenry, there is a clear misuse of the power.
As a general rule, official acts enjoy a presumed vahdity. In the absence of clear and convincing evidence to the
contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no
question that Department Order No. 1 applies only to "female contract workers," but it does not thereby make
an undue discrimination between the sexes. It is well-settled that "equality before the law" under the
Constitution does not import a perfect Identity of rights among all men and women. It admits of classifications,
provided that (1) such classifications rest on substantial distinctions; (2) they are germane to the purposes of
the law; (3) they are not confined to existing conditions; and (4) they apply equally to all members of the same
class.
1
As the court have furthermore indicated, executive determinations are generally final on the Court. Under a
republican regime, it is the executive branch that enforces policy. For their part, the courts decide, in the proper
cases, whether that policy, or the manner by which it is implemented, agrees with the Constitution or the laws, but it is
not for them to question its wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief
Executive or his subalterns, especially when the legislature itself has specifically given them enough room on how the
law should be effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with this
at greater length shortly, that Department Order No. 1 implements the rule-making powers granted by the Labor Code.
But what should be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that
prevailing conditions indeed call for a deployment ban.
Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for Filipino
female overseas workers" this Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have
suffered abroad, a ban on deployment will be for their own good and welfare.
The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is
subject, among other things, to the requirements of "public safety," "as may be provided by law." Department Order
No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor," pursuant
to the respondent Department of Labor's rule-making authority vested in it by the Labor Code. The disputed Order is a
valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative
power. It is true that police power is the domain of the legislature, but it does not mean that such an authority may
not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and
Employment with rulemaking powers in the enforcement whereof.
INNODATA KNOWLEDGE SERVICES, INC. V. INTING

G.R. No. 211892, Dec. 6, 2017
FACTS: Innodata Knowledge Services, Inc. (IKSI) is a company engaged in data processing, encoding, indexing,
abstracting, typesetting, imaging, and other processes in the capture, conversion, and storage of data and information.
At one time, Applied Computer Technologies (ACT), a company based in the United States of America, hired IKSI to
review various litigation documents. Due to the nature of the job, ACT required IKSI to hire lawyers, or at least, law
graduates, to review various litigation documents, classify said documents into the prescribed categories, and ensure
that outputs are delivered on time. For this purpose, IKSI engaged the services of respondents Socorro D’Marie Inting,
Ismael R. Garaygay, Edson S. Solis, Michael A. Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon,
Juneth A. Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pefia, Ronan V. Alamillo, Ennoh Chentis R.
Fernandez, Wendell B. Quiban, Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano,
Rodolfo M. Vasquez, Ma. Nazelle B. Miralles and Carl Hennes Carskit as senior and junior reviewers with a contract
duration of five (5) years.
On January 7, 2010, however, respondents received a Notice of Forced Leave from IKSI informing them that they shall
be placed on indefinite forced leave effective that same day due to changes in business conditions, client requirements,
and specifications. Hence, respondents filed a complaint for illegal dismissal, reinstatement or payment of separation
pay, backwages, and damages against IKSI.
Subsequently, IKSI sent respondents separate notices dated May 27, 2010 informing them that due to the unavailability
of new work related to the product stream and uncertainties pertaining to the arrival of new workloads, their project
employment contracts would have to be terminated.
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ISSUE:
(1) WON they are project employees. NO
(2) WON they are illegally dismissed. YES
Nature of respondents’ employment contracts

The employment status of a person is defined and prescribed by law and not by what the parties say it should be.
Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts
must yield to the common good. Thus, provisions of applicable statutes are deemed written into the contract, and the
parties are never at liberty to insulate themselves and their relationships from the impact of labor laws and regulations
by simply entering into contracts with each other.
Project employment contracts, which fix the employment for a specific project or undertaking, are valid under the law.
By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the
project. He may no longer be employed after the completion of the project for which he was hired. But project
employment contracts are not lopsided agreements in favor of only one party. The employer's interest is equally
important as that of the employees'. While it may be true that it is the employer who drafts project employment contracts
with its business interest as overriding consideration, such contracts must not prejudice the employee.
In order to safeguard the rights of workers against the arbitrary use of the word "project" which prevents them from
attaining regular status, employers claiming that their workers are project employees have the burden of showing
that:
(a) the duration and scope of the employment was specified at the time they were engaged; and
(b) there was indeed a project.
project employment and fixed-term employment are not the same. While the former requires a particular
project, the duration of a fixed-term employment agreed upon by the parties may be any day certain, which is
understood to be "that which must necessarily come although it may not be known when."
It is evident that IKSI’s contracts of employment are suspect for being highly ambiguous. In effect, it sought to
alternatively avail of project employment and employment for a fixed term so as to preclude the regularization of
respondents' status.
The fact that respondents were lawyers or law graduates who freely and with full knowledge entered into an agreement
with the company is inconsequential.
Thus, there were no valid fixed-term or project contracts and respondents were IKSI’s regular employees who could
not be dismissed except for just or authorized causes. Any ambiguity in said contracts must be resolved against the
company, especially because under Article 1702 of the Civil Code, in case of doubt, all labor contracts shall be
construed in favor of the worker. The Court cannot simply allow IKSI to construe otherwise what appears to be clear
from the wordings of the contract itself.
Therefore, as evident in Article 295, the litmus test for determining whether particular employees are properly
characterized as project employees, as distinguished from regular employees, is whether or not the employees were
assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the
time the employees were engaged for that project.20
Here, while IKSI was able to show the presence of a specific project, the ACT Project, in the contract and the alleged
duration of the same, it failed to prove, however, that respondents were in reality made to work only for that specific
project indicated in their employment documents and that it adequately informed them of the duration and scope of
said project at the time their services were engaged. It is well settled that a party alleging a critical fact must support
his allegation with substantial evidence, as allegation is not evidence. The fact is IKSI actually hired respondents to
work, not only on the ACT Project, but on other similar projects such as the Bloomberg.
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Presence of Just or Authorized Causes

for Termination of Employment
Among the authorized causes for termination under Article 298 of the Labor Code is retrenchment, or what is sometimes
referred to as a layoff, thus:
Art. 298. Closure of Establishment and Reduction of Personnel. 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 operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month
pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (112)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one
(1) whole year.
Retrenchment is the severance of employment, through no fault of and without prejudice to the employee, which
management resorts to during the periods of business recession, industrial depression, or seasonal fluctuations, or
during lulls caused by lack of orders, shortage of materials, conversion of the plant to a new production program or the
introduction of new methods or more efficient machinery, or of automation. In other words, lay-off is an act of the
employer of dismissing employees because of losses in the operation, lack of work, and considerable reduction on the
volume of its business. However, a lay-off would amount to dismissal only if it is permanent. When it is only temporary,
the employment status of the employee is not deemed terminated, but merely suspended.
Article 298, however, speaks of permanent retrenchment as opposed to temporary lay-off, as in the present
case.1âwphi1 There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for
the requisites in effecting it or a specific period or duration
Indeed, closure or suspension of operations for economic reasons is recognized as a valid exercise of management
prerogative. But the burden of proving, with sufficient and convincing evidence, that said closure or suspension is bona
fide falls upon the employer
The Court agrees with the LA's pronouncement that requiring employees on forced leave is one of the cost-saving
measures adopted by the management in order to prevent further losses. However, IKSI failed to discharge the burden
of proof vested upon it. Having the right should not be confused with the manner in which that right is exercised; the
employer cannot use it as a subterfuge to run afoul of the employees' guaranteed right to security of tenure
There being no valid suspension of business operations, IKSI’s act amounted to constructive dismissal of respondents
since it could not validly put the latter on forced leave or floating status pursuant to Article 301.
is the ultimate penalty that can be meted to an employee, the requisites for a valid dismissal from employment must
always be met, namely:
(1) it must be for a just or authorized cause; and
(2) the employee must be afforded due process
Indubitably, IKSI’s intent was not merely to put respondents' employment on hold pending the existence of the
unfavorable business conditions and call them back once the same improves, but really to sever the employer-
employee relationship with respondents right from the very start.
Unfortunately for IKSI, they chanced upon respondents who, unlike the ordinary workingman who always plays an easy
prey to these perfidious companies, are fully aware of their rights under the law and simply refuse to ignore and endure
in silence the flagrant irruption of their rights, zealously safeguarded by the Constitution and our labor laws.
4
GUERRERO V. PHILIPPINE TRANSMARINE CARRIERS, INC.,

G.R. No. 222523, Oct. 3, 2018
A Complaint filed by petitioner Jose John C. Guerrero (Guerrero) for permanent and total disability benefits,
compensatory damages, exemplary damages, moral damages and attorney's fees against respondents Philippine
Transmarine Carriers, Inc. (PTCI), Celebrity Cruises (CC), and/or Carlos Salinas (Salinas.)
Guerrero alleged that on August 15, 2011, he was employed by PTCI, represented by its President, Carlos Salinas, on
behalf of its principal, CC, as a Casino Dealer on board the vessel GTS Constellation for a period of six (6) months with
a basic monthly salary of US$255.00. Prior to embarkation, he underwent pre-employment medical examination at
Metrics Center, Makati City, and was declared "fit to work as a seaman.
Guerrero averred that: sometime in January 2012 during a gastro-intestinal outbreak in the ship, he and other crew
members were tasked and ordered to bring elderly guests out of the ship through wheelchairs; a sudden motion
occurred which caused him to lose his balance but managed to prevent the wheelchair, the passenger and himself
from falling; in order to keep the passenger safe, he had to push the wheelchair really hard to gain control over it; after
said incident, he started experiencing back pains. While his vessel was docked at a port in the Caribbean, Guerrero
underwent a Magnetic Resonance Imaging (MRI). Findings revealed changes of Lumbar Spondylosis involving L2-3,
L3-4, L4-5 disc causing of compression of left L5 and bilateral L4 roots as described. No cords conus abnormality
seen. In view of his medical condition, he was recommended for medical repatriation. Guerrero immediately reported
to respondents and was referred to the Manila Doctors Hospital and the Philippine General Hospital (PGH) for post-
employment medical examination and for further treatment.
Guerrero alleged that since the pain still persisted notwithstanding the medical procedures performed on him, he
consulted, on January 17, 2013, Dr. Cesar H. Garcia (Dr. Garcia), an orthopedic surgeon/bone and joint disease, who
issued on even date a medical certificate 7 declaring him "UNFIT for further sea service in whatever capacity as a
SEAFARER." Guerrero alleged that despite his permanent unfitness for further sea service as determined by his
physician, respondents failed to compensate him of permanent and total disability benefits. He maintained that he
sustained a spinal injury due to an accident arising out, and in the course of, his employment.
Respondents maintained that Guerrero is not entitled to disability benefits because he sustained the alleged injury
during an incident at the crew gym. Respondents adduced in evidence documents denominated as Crew Injury
Statement, dated March 22, 2012, and Personal Injury Illness Statement11 in support their submission.
Respondents alleged that the essential duties of Guerrero as a Casino Dealer are reflected in the Job Description
Manual. They contended that going to the gym and the use of gym facilities are not part of Guerrero's job and could
not have any relation to his duties as a Casino Dealer.
Labor Arbiter rendered a Decision declaring that PTCI and CC are solidarily liable for disability compensation to
Guerrero. LA ruled that although Guerrero's injury had resulted from a gym incident, the same would not release
respondents PTCI and CC from their liability for disability benefits. It held that Guerrero's medical condition has
rendered him permanently incapacitated to be a seafarer, it observed that Guerrero has been incapacitated to work for
more than 120 days from the date he was repatriated and seen by the company-designated physician.
NLRC rendered a Decision reversing February 28, 2013 Decision of the LA. NLRC ruled that Guerrero is not entitled to
disability benefits and payment of his other monetary claims because his injury is not work-related or not an injury
sustained while working on-board the vessel.
CA resolved to deny the petition for certiorari based on the same ratiocinations the NLRC had rendered.
The petition is devoid of merit.
Guerrero is fundamentally assailing the findings of the CA and the NLRC that the evidence on record does
not support his claim for disability benefits. This clearly involves a factual inquiry, the determination of which is the
statutory function of the NLRC. Accordingly, the instant petition must be dismissed outright as it raises a question of
fact.
5
Even if the Court is willing to overlook this procedural lapse, the present petition would just the same fail.
For disability to be compensable, 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.
Work-related injury pertains to injury(ies) resulting in disability or death arising out of, and in the course of, employment.
Jurisprudence elucidates that the 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.
Guerrero utterly failed to prove a reasonable connection between his work as a Casino Dealer and his alleged lumbar
disc injury. Apart from his bare allegation that he sustained an injury sometime in January 2012 while assisting an
elderly passenger on a wheelchair to disembark from the vessel in compliance to an order from the management, no
other competent and independent evidence was proffered to substantiate and to corroborate his foregoing claim.
Respondents were able to expose the falsity of Guerrero's story when they submitted in evidence the Crew Injury
Statement dated March 22, 2012, which contained Guerrero's admission to the effect that the subject injury resulted
from his gym workout.
Further, the Court finds that the declaration of Dr. Garcia in the medical certificate that Guerrero is "UNFIT for further
sea service in whatever capacity as a SEAFARER" leaves much to be desired. Said medical certification was not
supported by any relevant and necessary diagnostic tests and/or procedures. No medical records or other sufficient
proof was adduced to justify the above-mentioned pronouncement/diagnosis. His injury is not work-related, hence, not
compensable.
Lastly, the Court observes that Guerrero proffered varying narrations/versions as to how he allegedly incurred his injury.
His conflicting and inconsistent statements cast serious doubt on the veracity of his wheelchair theory. Obviously,
Guerrero willfully made such false statements in his futile attempt to deceive the labor tribunals, the CA and this Court
that he suffered a work-related injury so as to obtain a favorable judgment. Thus, for not coming to court with clean
hands and in order to prevent him from profiting from his own deception, basic rules of fair play dictate that we should
deny his claim for disability benefits all the more.
GOPIO V. BAUTISTA
G.R. No. 205953, June 6, 2018
FACTS: On September 26, 2008, (Bautista) was hired as a Project Manager for Shorncliffe (PNG) Limited (Shomcliffe)
in Papua New Guinea through Job Asia Management Services (Job Asia), a single proprietorship owned by Dionella
A. Gopio (Gopio), which is engaged in the business of recruitment, processing, and deployment of land based
manpower for overseas work. Bautista's contract stated that his employment shall be valid and effective for 31 months
with a net monthlysalary of ₱40,000.00. On October 4, 2008, he arrived at his workplace inPapua New Guinea.
On July 6, 20091 or just nine months after his deployment in Papua New Guinea, Bautista was served a notice of
termination effective July 10, 2009 on the alleged grounds of unsatisfactory performance and failure to meet the
standards of the company. He was paid his salary for the period July 1 to 10, 2009, annual leave credits, and one-
month pay net of taxes. Thereafter, he was repatriated on July 11, 2009.
On July 27, 2009, Bautista lodged a complaint with the arbitration branch of the NLRC against Job Asia, Gopio, and
Shomcliffe for illegal dismissal and monetary claims. He claimed that he was terminated without just cause since there·
had been no job evaluation conducted prior to Shorncliffe's. decision to dismiss him from employment. As a result, he
is entitled to the payment of his salaries for the unexpired portion of his contract, or for 22 months. He alleged that while
his contract contained an understated monthly income of ₱40,000.00, he was actually being paid the amount of
6
₱115,850.00·a month. Other than salaries, Bautista also claimed unrealized employment benefits, nine days sick leave
pay, four weeks recreation leave pay, moral and exemplary damages, as well as attorney's fees.
Job Asia, Gopio, and Shomcliffe, for their part, argued that Bautista's employment was terminated because he failed
to meet Shomcliffe's standards. To buttress their claim, they submitted in evidence the work performance · evaluation
report on Bautista which listed the following observations:
1. He is not capable of performing the duties of a Project Manager.

2. He was unable to control or direct his workforce, equipment arid materials.
3. He is incompetent in the handling of his daily tasks.
4. [He] failed to provide any monthly reports both verbal and written on the progress of his projects as a company
requirement.
5. He has never submitted any monthly progress claims as a company requirement.
6. He demonstrated that he was technically incompetent and hides himself whe11 there is a problem.
7. He was not cap8ble of running project site meetings with the management and his staff
8. He is a lazy person, incompetent in his decision making and has poor communication skills.
9. He was w1able to pass his knowledge to young PNG Engineers, in fact they were teaching him instead.
ISSUE: whether or not Bautista was illegally dismissed from employment YES
HELD: regulatory provisions may be read all throughout R.A. No. 8042 that carry out the policy of the State to protect
and promote the rights of Filipino migrant workers. Employment agreements are verily more than contractual in nature
in the Philippines. The Philippine Constitution and laws guarantee special protection to workers here and abroad. Thus,
even if aFilipino is employed abroad, he or she is entitled to security of tenure, amongother constitutional rights.
In termination disputes or illegal dismissal cases, it has been established by Philippine law and jurisprudence that the
employer has the burden of proving that the dismissal is for just and valid causes; and failure to do so would necessarily
mean that the dismissal was not justified and is, therefore, illegal.25 Taking into account the character of the charges
and the penalty meted to an employee, the employer is bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is valid and legal. This is consistent with the principle of security of tenure as
guaranteed by the Constitution and reinforced by Article 292(b) of the Labor Code of the Philippines.
As observed by the CA, the evaluation report of Robert Aup was made only on August 22, 2009, and the declaration
of Paul Thompson was executed only on October 1, 2009, which dates are beyond the date of termination of Bautista's
employment on July 10, 2009. The CA correctly concluded that these were made as an afterthought in order to lend
credence to the claim that the termination of Bautista's employment was for a valid reason. In Skippers United Pacific,
Inc. v. Maguad, 33 we held that the Master's Statement Report presented by therein petitioners to corroborate their
claim that the dismissal of therein respondents was for just cause, i.e., incompetence, was issued 78 days34 after
therein respondents were repatriated to Manila and two months after the latter instituted a complaint for illegal dismissal
before the NLRC. Such report can no longer be a fair and accurate assessment of therein respondents' competence
as the same was presented only after the complaint was filed. Its execution was a mere afterthought in order to justify
the dismissal of therein respondents which had long been effected before the report was made; hence, such report is
a self-serving one.
The Court thus finds that Bautista's incompetence as the alleged just cause for his dismissal was not proven by
substantial evidence.1âwphi1
In addition, Bautista was not accorded due process. Consequently, the Court is not convinced that he was legally
dismissed.
The due process requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of
serious concern since it constitutes a safeguard of the highest order in response to man's innate sense of justice. To
meet the requirements of due process, the employer must furnish the worker sought to be dismissed with two written
notices before termination of employment can be legally effected, i.e.: (1) a notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice after due hearing which
informs the employee of the employer's decision to dismiss him.
7
Here, Bautista was dismissed under Article 4.3 of the employment contract which allegedly permits his employer,
Shomcliffe, to terminate the contract on unspecified "other grounds" by giving one month's written notice of its intention
to terminate, or in lieu thereof, to pay the employee a sum equivalent to one month's salary.
Bautista was notified on July 6, 2009 that his services will be terminated effective on the close of business hours on
July 10, 2009, allegedly because his performance was "unsatisfactory and did not meet the standards of the Company.
"37 He was also paid one-month salary in lieu of one month's notice of the termination of his employment.38 Surely,
this cannot be considered compliance with the two-notice requirement mandated by the Labor Code in effecting a valid
dismissal. The Labor Code requires both notice and hearing; notice alone will not suffice. The requirement of notice is
intended to inform the employee concerned of the employer's intent to dismiss him and the reason for the proposed
dismissal. On the other hand, the requirement of hearing affords the employee an opportunity to answer his employer's
charges against him and accordingly defend himself therefrom before dismissal is effected. 39 In this case, Bautista
was not given a chance to defend himself. Five days after the notice was served, he was repatriated. Clearly, he was
denied his right to due process.
Time and again, we have held that a contract of employment is imbued with public interest. The parties are not at liberty
to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with
each other. Also, while a contract is the law between the parties, the provisions of positive law that regulate such
contracts are deemed included and shall limit and govern the relations between the parties.
In sum, there being no showing of any clear, valid, and legal cause for the termination of Bautista's employment and
that he was not afforded due process, the law considers the matter a case of illegal dismissal for which Bautista is
entitled to indemnity. We uphold the Labor Arbiter's award of indemnity equivalent to Bautista's salaries for the
unexpired term of his employment contract, and damages.
PEOPLE VS. NANGCAS

G.R. No. 218806, June 13, 2018
Facts:
Gloria Nangcas recruited Judith, AAA, BBB, and CCC to work as a house helper at Camella Homes in Cagayan de
Oro City, with a salary of P1,500.00 per month and with a rest day every Sunday. After the girls had packed their things,
Nangcas brought them to Camella Homes. The alleged employer was not there, so Nangcas informed them that they
had to go to Cogon, then to Iligan riding a van. When they get to Iligan they were informed that they will work in Marawi
where they were needed. The girls wanted to go home but they didn't have any money for their fare going back to
Cagayan de Oro. They had no other choice but to stay in Marawi. Nangcas brought Judith and BBB to the house of
Baby's sister, Cairon Abantas (Cairon), while AAA and CCC remained to work for Baby. Nangcas went back to Cagayan
de Oro.
The recruits worked in Marawi for more than a month. They were not paid their salaries as, according to their employers,
Nangcas had already collected P1,600.00 for each of them. They were also made to eat leftover rice with only "pulaka"
(mixed ginger, chili and onion) as their viand. Furthermore, they were threatened not to go out or attempt to escape or
else, the soldiers would kill them since they were Christians. Since Judith failed to go home on her scheduled day-off
on Sunday, Enerio called up Nangcas to ask about his daughter. The latter told him that Judith was with her just the
other day and that she could go home only after two (2) months.
On 14 April 2009, Judith asked permission to go home since it was her birthday, but she was denied Subsequently,
with the help of the "kasambahay" of the neighboring house who lent them her cellphone, Judith was able to call her
father informing him of her whereabouts. Alarmed by the news from his daughter, Enerio went to the Lumbia Police
Station to report the incident and seek assistance to rescue her daughter and three (3) other minors. The 4 girls were
rescued and the parents of the victims filed a complaint.
Issue:
Whether or not the guilt of Nangcas was proven beyond reasonable doubt on the crime of Qualified Trafficking of
Persons.
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Held:
The answer is YES. Section 4 of RA 9208 provides: It shall be unlawful for any person, natural or juridical, to commit
any of the following acts: (a) To recruit, transport, transfer; harbor, provide, or receive a person by any means, including
those done under the pretext of domestic or overseas employment or training or apprenticeship, for the purpose of
prostitution, pornography, sexual exploitation, forced labor, slavery, involuntary servitude or debt bondage;
Section 6. Qualified Trafficking in Persons. - The following are considered as qualified trafficking: (a) When the trafficked
person is a child;
In this case, Nangcas induced and coaxed the victims to go with her by promising the victims and their parents that
their daughters would be working within Cagayan De Oro City, with an enticing salary of P1,500.00 per month. In
Marawi, the victims were constrained to work with the intention to save money for their fare going back home; however,
when they asked for their salary they were told that it had already been given to Nangcas.
Deceit is the false representation of a matter of fact intended to deceive another so that he shall act upon it to his legal
injury.
INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. V. DE VERA,

G.R. No. 205703, March 7, 2016
Petitioner Industrial Personnel & Management Services, Inc. (IPAMS) is a local placement agency duly organized and
existing under Philippine laws, with petitioner Angelito C. Hernandez as its president and managing director.
SNC Lavalin Engineers & Contractors, Inc. (SNC-Lavalin) is the principal of IPAMS, a Canadian company with business
interests in several countries. On the other hand, respondent Alberto Arriola (Arriola) is a licensed general surgeon in
the Philippines.
Arriola was offered by SNC-Lavalin, through its letter,5 dated May 1, 2008, the position of Safety Officer in its Ambatovy
Project site in Madagascar. The position offered had a rate of CA$32.00 per hour for forty (40) hours a week with
overtime pay in excess of forty (40) hours. It was for a period of nineteen (19) months. SNC-Lavalin confirmed Arriola's
assignment in the Ambatovy Project. According to Arriola, he signed the contract of employment in the Philippines.
After three months, Arriola received a notice of pre-termination of employment.
Arriola was repatriated. SNC-Lavalin deposited in Arriola's bank account his pay amounting to Two Thousand Six
Hundred Thirty Six Dollars and Eight Centavos (CA$2,636.80), based on Canadian labor law. Arriola filed a complaint
against the petitioners for illegal dismissal and non-payment of overtime pay, vacation leave and sick leave pay before
the Labor Arbiter (LA).
Petitioners argue that the rights and obligations of the OFW, the local recruiter, and the foreign employer are governed
by the employment contract, that the terms and conditions of Arriola's employment are embodied in the Expatriate
Policy, hence, the laws of Canada must be applied; the Ontario labor law, does not require any ground for the early
termination of employment and it permits the termination without any notice provided that a severance pay is given;
that the ESA was duly authenticated by the Canadian authorities and certified by the Philippine Embassy; assuming
there was illegal dismissal, the CA$2,636.80, earlier paid to Arriola, and his home leaves should be deducted from the
award of backpay.
Arriola countered that foreign laws could not apply to employment contracts if they were contrary to law, morals, good
customs, public order or public policy, that the ESA was not applicable because it was contrary to his constitutional
right to due process; that the petitioners failed to substantiate an authorized cause to justify his dismissal under
Philippine labor law; and that the petitioners could not anymore claim a deduction of CA$2,636.80 from the award of
backpay because it was raised for the first time on appeal.
Whether an overseas labor contract be governed by a foreign law? NO.
9
The petition lacks merit.
R.A. No. 8042, or the Migrant Workers Act, was enacted to institute the policies on overseas employment and to
establish a higher standard of protection and promotion of the welfare of migrant workers. It emphasized that while
recognizing the significant contribution of Filipino migrant workers to the national economy through their foreign
exchange remittances, the State does not promote overseas employment as a means to sustain economic
growth and achieve national development. Although it acknowledged claims arising out of law or contract involving
Filipino workers, it does not categorically provide that foreign laws are absolutely and automatically applicable in
overseas employment contracts.
A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law between the
parties. The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of
our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient, "provided
they are not contrary to law, morals, good customs, public order or public policy." Thus, counterbalancing the
principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially
provisions relating to matters affected with public policy, are deemed written into the contract. The law relating to
labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other. x x x
The Court held that the labor relationship between OFW and the foreign employer is "much affected with public interest
and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing
upon some other law to govern their relationship."
The general rule is that Philippine laws apply even to overseas employment contracts. This rule is rooted in the
constitutional provision of Section 3, Article XIII that the State shall afford full protection to labor, whether local or
overseas. Hence, even if the OFW has his employment abroad, it does not strip him of his rights to security of tenure,
humane conditions of work and a living wage under our Constitution.
As an exception, the parties may agree that a foreign law shall govern the employment contract. A synthesis of the
existing laws and jurisprudence reveals that this exception is subject to the followingrequisites:
chanRoblesvirtualLawlibrary
1. That it is expressly stipulated in the overseas employment contract that a specific foreign law shall
govern;
2. That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on
evidence;
3. That the foreign law stipulated in the overseas employment contract must not be contrary to law,
morals, good customs, public order, or public policy of the Philippines; and
4. That the overseas employment contract must be processed through the POEA.
If the first requisite is absent, or that no foreign law was expressly stipulated in the employment contract which was
executed in the Philippines, then the domestic labor laws shall apply in accordance with the principle of lex loci
contractus. This is based on the cases of Sameer Overseas and PCL Shipping.
If the second requisite is lacking, or that the foreign law was not proven then the international law doctrine of processual
presumption operates. The said doctrine declares that "[w]here a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the same as ours."
third requisite is not met, or that the foreign law stipulated is contrary to law, morals, good customs, public order or
public policy, then Philippine laws govern. This finds legal bases in the Civil Code, specifically: (1) Article 17, which
provides that laws which have, for their object, public order, public policy and good customs shall not be rendered
ineffective by laws of a foreign country; and (2) Article 1306, which states that the stipulations, clauses, terms and
conditions in a contract must not be contrary to law, morals, good customs, public order, or public policy.
Finally, if the fourth requisite is missing, or that the overseas employment contract was not processed through the
POEA, then Article 18 of the Labor Code is violated. Article 18 provides that no employer may hire a Filipino worker for
overseas employment except through the boards and entities authorized by the Secretary of Labor.
10
The petitioners failed to comply with the first requisite because no foreign law was expressly stipulated in the overseas
employment contract with Arriola. In its pleadings, the petitioners did not directly cite any specific provision or stipulation
in the said labor contract which indicated the applicability of the Canadian labor laws or the ESA. Further, it was shown
that the overseas labor contract was executed by Arriola at his residence in Batangas and it was processed at the
POEA on May 26, 2008. Considering that no foreign law was specified in the contract and the same was executed in
the Philippines, the doctrine of lex loci celebrationis applies and the Philippine laws shall govern.
The third requisite is not satisfied. A perusal of the ESA will show that some of its provisions are contrary to the
Constitution and the labor laws of the Philippines. The employer can dismiss any employee for any ground it so desired.
The employee under the ESA could be immediately dismissed without giving him the opportunity to explain and defend
himself. The provisions of the ESA are patently inconsistent with the right to security of tenure.
Not only do these provisions collide with the right to security of tenure, but they also deprive the employee of his
constitutional right to due process by denying him of any notice of termination and the opportunity to be heard.
TONGKO VS. MANULIFE

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 (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.
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products offered by
the Company, and collect, in exchange for provisional receipts issued by the Agent, money due to or become due to
the Company in respect of applications or policies obtained by or through the Agent or from policyholders allotted by
the Company to the Agent for servicing, subject to subsequent confirmation of receipt of payment by the Company as
evidenced by an Official Receipt issued by the Company directly to the policyholder.
b) 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 (or in 1996), Tongko became a Regional Sales Manager.
Tongko’s gross earnings consisted of commissions, persistency income, and management overrides. Since the
beginning, Tongko consistently declared himself self-employed in his income tax returns. Thus, under oath, he declared
his gross business income and deducted his business expenses to arrive at his taxable business income. Manulife
withheld the corresponding 10% tax on Tongko’s earnings
Renato Vergel de Dios wrote Tongko a letter dated November 6, 2001 on concerns about the low performance of
Tongko and he is worried of Tongko's ability to lead this group towards the new direction that we have been discussing
these past few weeks, i.e., Manulife’s goal to become a major agency-led distribution company in the Philippines.
Subsequently, de Dios wrote Tongko another letter, dated December 18, 2001, terminating Tongko’s services. Tongko
responded by filing an illegal dismissal complaint with the National Labor Relations Commission (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.
Tongko asserted that as Unit Manager, he was paid an annual over-rider not exceeding ₱50,000.00, regardless of
production levels attained and exclusive of commissions and bonuses. But 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.
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 Court of Appeals (CA), the
11
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.
Hence, this petition.
Issue:
Whether there exists an employer-employee relationship. NONE.
Held:
The primary evidence in the present case is the July 1, 1977 Agreement that governed and defined the parties’ relations
until the Agreement’s termination in 2001. This Agreement stood for more than two decades and, based on the records
of the case, was never modified or novated. It assumes primacy because it directly dealt with the nature of the parties’
relationship up to the very end; moreover, both parties never disputed its authenticity or the accuracy of its terms.
By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not as an employee.
Significantly, evidence shows that Tongko’s role as an insurance agent never changed during his relationship with
Manulife. If changes occurred at all, the changes did not appear to be in the nature of their core relationship. Tongko
essentially remained an agent, but moved up in this role through Manulife’s recognition that he could use other agents
approved by Manulife, but operating under his guidance and in whose commissions he had a share. For want of a
better term, Tongko perhaps could be labeled as a "lead agent" who guided under his wing other Manulife agents
similarly tasked with the selling of Manulife insurance.
Like Tongko, the evidence suggests that these other agents operated under their own agency agreements. Thus, if
Tongko’s compensation scheme changed at all during his relationship with Manulife, the change was solely for
purposes of crediting him with his share in the commissions the agents under his wing generated.
In applying such Labor Code tests, however, the enforcement of the Agreement during the course of the parties’
relationship should be noted. From 1977 until the termination of the Agreement, Tongko’s occupation was to sell
Manulife’s insurance policies and products. Both parties acquiesced with the terms and conditions of the Agreement.
Tongko, for his part, accepted all the benefits flowing from the Agreement, particularly the generous commissions.
Evidence indicates that Tongko consistently clung to the view that he was an independent agent selling Manulife
insurance products since he invariably declared himself a business or self-employed person in his income tax returns.
There is also no record of showing that Manulife ever exercised means-and-manner control, even to a limited extent,
over Tongko during his ascent in Manulife’s sales ladder. What, to Tongko, serve as evidence of labor law control are
the codes of conduct that Manulife imposes on its agents in the sale of insurance. The mere presentation of codes or
of rules and regulations, however, is not per se indicative of labor law control as the law and jurisprudence teach us.
Insurance Code imposes obligations on both the insurance company and its agents in the performance of their
respective obligations under the Code, particularly on licenses and their renewals, on the representations to be made
to potential customers, the collection of premiums, on the delivery of insurance policies, on the matter of compensation,
and on measures to ensure ethical business practice in the industry.
The general law on agency, on the other hand, expressly allows the principal an element of control over the agent in a
manner consistent with an agency relationship. In this sense, these control measures cannot be read as indicative of
labor law control.
The first Insular Life case teaches us is that a commitment to abide by the rules and regulations of an insurance
company does not ipso facto make the insurance agent an employee. Neither do guidelines somehow restrictive of the
insurance agent’s conduct necessarily indicate "control" as this term is defined in jurisprudence. Guidelines indicative
of labor law "control," as the first Insular Life case tells us, should not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating the means or methods to be employed
in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of these means.
12
Aside from the affidavits however, no other evidence exists regarding the effects of Tongko’s additional roles in
Manulife’s sales operations on the contractual relationship between them.
A "coordinative" standard for a manager cannot be indicative of control; the standard only essentially describes what a
Branch Manager is – the person in the lead who orchestrates activities within the group. To "coordinate," and thereby
to lead and to orchestrate, is not so much a matter of control by Manulife; it is simply a statement of a branch manager’s
role in relation with his agents from the point of view of Manulife whose business Tongko’s sales group carries.
Even de Dios’ letter is not determinative of control as it indicates the least amount of intrusion into Tongko’s exercise
of his role as manager in guiding the sales agents. Strictly viewed, de Dios’ directives are merely operational guidelines
on how Tongko could align his operations with Manulife’s re-directed goal of being a "big league player." What
happened in Tongko’s case was the grant of an expanded sales agency role that recognized him as leader amongst
agents in an area that Manulife defined.
Under this legal situation, the only conclusion that can be made is that the absence of evidence showing Manulife’s
control over Tongko’s contractual duties points to the absence of any employer-employee relationship between Tongko
and Manulife. In the context of the established evidence, Tongko remained an agent all along; although his subsequent
duties made him a lead agent with leadership role, he was nevertheless only an agent whose basic contract yields no
evidence of means-and-manner control.
The the sufficiency of Tongko’s failure to comply with the guidelines of de Dios’ letter, as a ground for termination of
Tongko’s agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and contracts.
LEGEND HOTEL V. REALUYO

G.R. No. 153511 July 18, 2012
FACTS: Hernani was a pianist employed to perform in the restaurant of a hotel. On August 9, 1999, Joey R. Roa, filed
a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his
premium pay for holidays, separation pay, service incentive leave pay, and 13111 month pay.
He averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from September 1992 with an
initial rate of P400.00/night that was given to him after each night’s performance; that his rate had increased to
P750.00/night; and that during his employment, he could not choose the time of performance, which had been fixed
from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel’s restaurant manager had
required him to conform with the venue’s motif; that he had been subjected to the rules on employees’ representation
checks and chits, a privilege granted to other employees; that on July 9, 1999, the management had notified him that
as a cost-cutting measure his services as a pianist would no longer be required effective July 30, 1999; that he disputed
the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss
of his employment made him bring his complaint.
Legend Hotel denied the existence of an employer-employee relationship with respondent, insisting that he had been
only a talent engaged to provide live music at Legend Hotel’s Madison Coffee Shop for three hours/day on two days
each week; and stated that the economic crisis that had hit the country constrained management to dispense with his
services.
ISSUE: 1. whether or not there existed an employer-employee relationship between the parties.
2. Whether or not Hernani was validly terminated.
HELD: (1) YES. The issue of whether or not an employer-employee relationship existed between petitioner and
respondent is essentially a question of fact. The factors that determine the issue include who has the power to select
the employee, who pays the employee’s wages, who has the power to dismiss the employee, and who exercises control
of the methods and results by which the work of the employee is accomplished.10 Although no particular form of
evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the
13
relationship may be admitted,11 a finding that the relationship exists must nonetheless rest on substantial evidence,
which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.
He was undeniably employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant from September
1992 until his services were terminated on July 9, 1999.
Legend hotel actually wielded the power of selection at the time it entered into the service contract dated September
1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence that respondent had only offered his
services to provide live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s position that what had really
transpired was a negotiation of his rate and time of availability. The power of selection was firmly evidenced by, among
others, the express written recommendation dated January 12, 1998 by Christine Velazco, petitioner’s restaurant
manager, for the increase of his remuneration.
Legend could not seek refuge behind the service contract entered into with Hernsnit. It is the law that defines and
governs an employment relationship, whose terms are not restricted to those fixed in the written contract, for other
factors, like the nature of the work the employee has been called upon to perform, are also considered. The law affords
protection to an employee, and does not countenance any attempt to subvert its spirit and intent. Any stipulation in
writing can be ignored when the employer utilizes the stipulation to deprive the employee of his security of tenure.
Talent fees
Hernani was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such
rate of remuneration was later increased to P750.00 upon restaurant manager Velazco’s recommendation. There is no
denying that the remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality
of the music he played during the hours of performance each night, taking into account the prevailing rate for similar
talents in the entertainment industry.
Hernani’s remuneration, albeit denominated as talent fees, was still considered as included in the term wage in the
sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration. Clearly,
respondent received compensation for the services he rendered as a pianist in petitioner’s hotel,
Time
Hernani was working less than 8 hours.
In providing that the " normal hours of work of any employee shall not exceed eight (8) hours a day," Article 83 of the
Labor Code only set a maximum of number of hours as "normal hours of work" but did not prohibit work of less than
eight hours.
Power of control
Premised on whether the person for whom the services are performed reserves the right to control both the end
achieved and the manner and means used to achieve that end.
A review of the records shows, however, that Hernani performed his work as a pianist under petitioner’s supervision
and control. Specifically, petitioner’s control of both the end achieved and the manner and means used to achieve that
end was demonstrated by the following, to wit:
a. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six
times a week;
b. He could not choose the place of his performance;
c. The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear barong
Tagalog to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees’ representation check and chits, a privilege granted to other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties by the
employee, for it sufficed that the employer has the right to wield that power.
Power to dismiss
14
Indeed, the memorandum informing respondent of the discontinuance of his service because of the present business
or financial condition of petitioner20 showed that the latter had the power to dismiss him from employment.
(2) NO.
The Court has laid down the following standards that an employer should meet to justify retrenchment and to foil abuse,
namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved
by sufficient and convincing evidence.22
Anent the last standard of sufficient and convincing evidence, it ought to be pointed out that a less exacting standard
of proof would render too easy the abuse of retrenchment as a ground for termination of services of employees.
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the
employer. Here, petitioner did not submit evidence of the losses to its business operations and the economic havoc it
would thereby imminently sustain. It only claimed that respondent’s termination was due to its "present
business/financial condition." This bare statement fell short of the norm to show a valid retrenchment. Hence, there
was no valid cause for the retrenchment of respondent.
LU VS. ENOPIA
G.R. No. 197899 March 6, 2017
Facts: Enopia and others were hired from January 20, 1994 to March 20, 1996 as crew members of the fishing mother
boat F/B MG-28 owned by Joaquin "Jake" Lu who is the sole proprietor of Mommy Gina Tuna Resources [MGTR]
based in General Santos City. Enopia and Lu had an income-sharing arrangement wherein 55% goes to Lu, 45% to
the crew members, with an additional 4% as "backing incentive." They also equally share the expenses for the
maintenance and repair of the mother boat, and for the purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between them, but petitioners
refused to sign the same as they opposed the one-year term provided in the agreement. According to petitioners, during
their dialogue on August 18, 1997, Lu terminated their services right there and then because of their refusal to sign the
agreement. On the other hand, Lu alleged that the master fisherman (piado) Ruben Salili informed him that petitioners
still refused to sign the agreement and have decided to return the vessel F/B MG-28.
Enopia et al. filed their complaint for illegal dismissal, monetary claims and damages. In their Position Paper, they
alleged that their refusal to sign the Joint Venture Fishing Agreement is not a just cause for their termination. Petitioners
also asked for a refund of the amount of P8,700,407.70 that was taken out of their 50% income share for the repair and
maintenance of boat as well as the purchase of fishing materials, as Lu should not benefit from such deduction.
Lu denied claiming that their relationship was one of joint venture where he provided the vessel and other fishing
paraphernalia, while petitioners, as industrial partners, provided labor by fishing in the high seas. Lu alleged that there
was no employer-employee relationship as its elements were not present, viz.: it was the piado who hired petitioners;
they were not paid wages but shares in the catch, which they themselves determine; they were not subject to his
discipline; and respondent had no control over the day-to-day fishing operations, although they stayed in contact
through respondent's radio operator or checker. Lu also claimed that petitioners should not be reimbursed for their
share in the expenses since it was their joint venture that shouldered these expenses.
LA rendered a Decision dismissing the case for lack of merit finding that there was no employer-employee relationship
existing between petitioner and the respondents but a joint venture. The NLRC affirmed such decision. Thus, Enopia
filed a petition for review with the CA.
The CA assailed its decision and found that Lu exercised control over respondents based on the following: (1)
respondents were the fishermen crew members of petitioner's fishing vessel, thus, their services to the latter were so
indispensable and necessary that without them, petitioner's deep-sea fishing industry would not have come to existence
15
much less fruition; (2) he had control over the entire fishing operations undertaken by the respondents through the
master fisherman (piado) and the assistant master fisherman (assistant piado) employed by him; (3) respondents were
paid based on a percentage share of the fish catch did not in any way affect their regular employment status; and (4)
petitioner had already invested millions of pesos in its deep-sea fishing industry, hence, it is highly improbable that he
had no control over respondents' fishing operations.
Issue:
Whether there was employer-employee relationship between the parties. YES
Held:
In determining the existence of an employer-employee relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) the power to control the worker's conduct; (3) the payment of wages by
whatever means; and (4) the power of dismissal.16 We find all these elements present in this case.
It is settled that no particular form of evidence is required to prove the existence of an employer-employee relationship.
Any competent and relevant evidence to prove the relationship may be admitted.
In this case, Lu contends that it was the piado who hired respondents, however, it was shown by the latter's evidence
that the employer stated in their Social Security System (SSS) online inquiry system printouts was MGTR, which is
owned by petitioner. We have gone over these printouts and found that the date of the SSS remitted contributions
coincided with the date of respondents' employment with petitioner. Petitioner failed to rebut such evidence. Thus, the
fact that petitioner had registered the respondents with SSS is proof that they were indeed his employees. The coverage
of the Social Security Law is predicated on the existence of an employer-employee relationship.
Moreover, the records show that the 4% backing incentive fee which was divided among the fishermen engaged in the
fishing operations approved by petitioner was paid to respondents after deducting the latter's respective vale or cash
advance. It was established that petitioner exercised control over respondents. It should be remembered that the control
test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that
the employer actually supervises the performance of duties by the employee. It is enough that the former has a right to
wield the power.
Lu admitted in his pleadings that he had contact with respondents at sea via the former's radio operator and their
checker. He claimed that the use of the radio was only for the purpose of receiving requisitions for the needs of the
fishermen in the high seas and to receive reports of fish catch so that they can then send service boats to haul the
same. However, such communication would establish that he was constantly monitoring or checking the progress of
respondents' fishing operations throughout the duration thereof, which showed their control and supervision over
respondents' activities.The payment of respondents' wages based on the percentage share of the fish catch would not
be sufficient to negate the employer-employee relationship existing between them.
Lu wielded the power of dismissal over respondents when he dismissed them after they refused to sign the joint fishing
venture agreement.
The primary standard for determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer. Respondents' jobs as fishermen-
crew members of F/B MG 28 were directly related and necessary to petitioner's deep-sea fishing business and they
had been performing their job for more than one year.
DE ROCA V. DABUYAN
G.R. No. 215281 March 5, 2018
FACTS: In 2012, private respondents filed a complaint for illegal dismissal against "RAF Mansion Hotel Old
Management and New Management and Victoriano Ewayan." Later, private respondents amended the complaint and
included petitioner De Roca as co-respondent. Summons was sent through registered mail to petitioner, but it was
returned.
16
Thereafter, a conference was set but only complainants attended. Thus, another summons was issued and personally
served to petitioner by the bailiff of the NLRC. Despite service of summons, petitioner did not attend the subsequent
hearings prompting the labor arbiter to direct private respondents to submit their position paper. Private respondents
submitted their position paper.
On the same day, petitioner filed his motion to dismiss on the ground of lack of jurisdiction. He alleged that, while he
was the owner of RAF Mansion Hotel building, the same was being leased by Ewayan, the owner of Oceanics Travel
and Tour Agency. Petitioner claims that Ewayan was the 5 employer of private respondents. Consequently, he asserted
that there was no employer-employee relationship between him and private respondents and the labor arbiter had no
jurisdiction.
The labor arbiter rendered a decision directing petitioner, among others, to pay backwages and other monetary award
to private respondents. The labor arbiter also denied the motion to dismiss for having been filed beyond the
reglementary period. Petitioner filed a petition for annulment of judgment on the ground of lack of jurisdiction before the
NLRC. However, the petition was dismissed because it was also filed beyond the 10-day reglementary period
prescribed under Section 3, Rule XII of the 2011 NLRC Rules of Procedure. The CA affirmed the decision.
ISSUE: Whether the petitioner is solidarily liable with Ewayan/Oceanic to private respondents.
RULING: No. All throughout the proceedings, petitioner has insisted that he was not the employer of respondents; that
he did not hire the respondents, nor pay their salaries nor exercise supervision or control over them, nor did he have
the power to terminate their services.
In support of his claim, he attached copies of a lease agreement - a Contract of Lease of a Building executed by him
and Oceanic represented by Ewayan through his attorney-in-fact. Petitioner likewise attached to the instant Petition
copies of: 1) a January 23, 2012 letter of demand to pay and vacate sent to Ewayan, directing the latter's attention to
previous demand letters sent to him and making a final demand to pay rentals in arrears; and 2) a written waiver and
acknowledgment executed by respondents and other Oceanic employees to the effect that petitioner should not be
held liable as owner of the premises for the "problems" caused by Ewayan.
There is no connection between petitioner and Oceanic other than through the lease agreement executed by them;
they are not partners in the operation of RAF Mansion Hotel. It just so happens that Oceanic decided to continue
operating the hotel using the original name - "RAF Mansion Hotel".
The only claim respondents have in resorting to implead petitioner as a co-respondent in the labor case is the fact that
he is the owner of the entire building called "RAF Mansion Hotel" which happens to be the very same name of the hotel
which Ewayan and Oceanic continued to adopt, for reasons not evident in the pleadings.
It must be noted as well that when they originally filed the labor case, respondents did not include petitioner as
respondent therein. It was only later on that they moved to amend their complaint impleading petitioner, such belated
attempt to implead him must be seen as an afterthought.
"Contracts take effect only between the parties, their assigns and heirs, except in case where the tights and obligations
arising from the contract are not transmissible by their nature, or by stipulation or by provision of law."
The contract of employment between respondents, on the one hand, and Oceanic and Ewayan on the other, is effective
only between them; it does not extend to petitioner, who is not a party thereto. His only role is as lessor of the premises
which Oceanic leased to operate as a hotel; he 6 cannot be deemed as respondent's employer. Thus, to allow
respondents to recover their monetary claims from petitioner would necessarily result in their unjust enrichment.
"In rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that on the
balance, technicalities take a backseat against substantive rights, and not the other way around. "In short, substantive
law outweighs procedural technicalities as in this case.
Indeed, where as here, there is a strong showing that grave miscarriage of justice would result from the strict application
of the [r]ules, we will not hesitate to relax the same in the interest of substantial justice. It bears stressing that the rules
of procedure are merely tools designed to facilitate the attainment of justice. They were conceived and promulgated to
effectively aid the court in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of
judicial discretion. In rendering justice, courts have always been as they ought to be, conscientiously guided by the
17
norm that on the balance, technicalities take a backseat against substantive rights, and not the other way around. Thus,
if the application of the Rules would tend to frustrate rather than promote justice, it is always within our power to suspend
the rules, or except a particular case from its operation.
Taking this to mind, the labor tribunals and the CA should have considered petitioner's repeated pleas to scrutinize the
facts and particularly the lease agreement executed by him and Oceanic, which would naturally exculpate him from
liability as this would prove the absence of an employment relation between him and respondents. Instead, the case
was determined on pure technicality which in labor disputes, is not necessarily sanctioned - given that proceedings
before the Labor Arbiter and the NLRC are non-litigious in nature where they are encouraged to avail of all reasonable
means to ascertain the facts of the case without regard to technicalities of law or procedure. Petitioner's motion to
dismiss, though belated, should have been given due attention.
EXPEDITION VS. AFRICA ET. AL.

G.R. No. 228671 December 14, 2017
Facts: Expedition Construction Corporation (Expedition) is a domestic corporation engaged in garbage

collection/hauling. It engaged the services of respondents as garbage truck drivers to collect garbage from different
cities and transport the same to the designated dumping site.
Respondents filed separate cases (which were later on consolidated) against Expedition for illegal dismissal;
underpayment and non-payment of salaries/wages, holiday pay, holiday premium, rest day premium, service incentive
leave pay, 13th month pay, separation pay, and Emergency Cost of Living Allowance (ECOLA); illegal deduction; moral
and exemplary damages and attorney's fees. In their Position Paper, respondents alleged that in August 2013, they
were illegally terminated from employment when they were prevented from entering the premises of Expedition without
cause or due process. They claimed that they were regular employees of Expedition; were required to work a minimum
of 12 hours a day, seven days a week, even on holidays, without rest or vacation; and, were not paid the minimum
wage, holiday or premium pay, overtime pay, service incentive leave pay and 13th month pay. They also averred that
the costs of repair and maintenance of the garbage trucks were illegally deducted from their salaries.
Expedition denied that respondents were its employees. It claimed that respondents were not part of the company's
payroll but were being paid on a per trip basis. Respondents were not under Expedition's direct control and supervision
as they worked on their own, were not subjected to company rules nor were required to observe regular/fixed working
hours, and that respondents hired/paid their respective garbage collectors. As such, respondents' money claims had
no legal basis.
Respondents insisted however that they worked under Expedition's control and supervision considering that: (1)
Expedition owned the dump trucks; (2) Expedition expressly instructed that the trucks should be used exclusively to
collect garbage in their assigned areas and transport the garbage to the dump site; (3) Expedition directed them to park
the dump trucks in the garage located at Group 5 Area Payatas, Quezon, City after completion of each delivery; and
(4) Expedition determined how, where, and when they would perform their tasks.
LA dismissed respondents' complaints and held that there was no employer-employee relationship between Expedition
and respondents. The LA did not find any substantial proof that respondents were regular employees of Expedition.
The NLRC ruled that respondents were employees of Expedition in view of Expedition's admission that it hired and
paid respondents for their services. The NLRC was also persuaded that Expedition exercised control on when and how
respondents would collect garbage.
18
The NLRC, however, sustained its earlier finding that there was no illegal dismissal ratiocinating that respondents were
merely placed on a floating status when the contract with Quezon City and Caloocan City expired and thus were merely
waiting to be re-assigned to other similar work.
Expedition sought recourse with the CA. CA dismissed Expeditions Petition for Certiorari and ruling in favor of
respondents. The CA affirmed the April 30, 2015 Resolution of the NLRC insofar as the existence of an employer-
employee relationship between the parties. The CA, however, did not agree with the NLRC that respondents were on
floating status since petitioners did not adduce proof of any dire exigency justifying failure to give respondents any
further assignments.
Hence, this petition.
Issue:
Whether or not there was an employer-employee relationship between the parties. YES
Held:
Jurisprudence has adhered to the four-fold test in determining the existence of an employer-employee relationship, to
wit: "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the power to control the employee's conduct, or the so-called 'control test'".
In ruling that respondents were employees of Expedition, the CA found all the elements of employer-employee
relationship to be present. As shown in the records, Expedition hired respondents as dump truck drivers and paid them
the amount of P620.00 per trip. The CA held that Expedition wielded the power to dismiss respondents based on
Expedition's admission that when the dispatch of drivers became irregular, it tried to accommodate them by giving trips
when the need arose. The control test was likewise established because Expedition determined how, where, and when
respondents would perform their tasks.
Expedition, however, proffers that the actual findings of the CA on this matter had no legal basis. It claims that
respondents were never hired but were merely engaged as drivers; that they worked on their own and were not
subjected to its control and supervision; that they were compensated based on output or number of trips made in a
day; that they selected their own garbage collectors, chose their own route and determined the manner by which they
would collect the garbage; and, that they performed their work at their own pleasure without fear of being sanctioned if
they chose not to report for work.
The Court finds Expedition's position untenable. First, as clearly admitted, respondents were engaged/hired by
Expedition as garbage truck drivers. Second, it is undeniable that respondents received compensation from Expedition
for the services that they rendered to the latter. The fact that respondents were paid on a per trip basis is irrelevant in
determining the existence of an employer-employee relationship because this was merely the method of computing the
proper compensation due to respondents.Third, Expedition's power to dismiss was apparent when work was withheld
from respondents as a result of the termination of the contracts with Quezon City and Caloocan City. Finally, Expedition
has the power of control over respondents in the performance of their work. It was held that "the power of control refers
merely to the existence of the power and not to the actual exercise thereof.” As aptly observed by the CA, the
agreements for the collection of garbage were between Expedition and the various LGUs, and respondents needed
the instruction and supervision of Expedition to effectively perform their work in accordance with the stipulations of the
agreements.
Moreover, the trucks driven by respondents were owned by Expedition. There was an express instruction that these
trucks were to be exclusively used to collect and transport garbage. Respondents were mandated to return the trucks
to the premises of Expedition after the collection of garbage. Expedition determined the clients to be served, the location
where the garbage is to be collected and when it is to be collected. Indeed, Expedition determined how, where, and
when respondents would perform their tasks.
19
Respondents were neither independent contractors nor project employees. There was no showing that respondents
have substantial capital or investment and that they were performing activities which were not directly related to
Expedition's business to be qualified as independent contractors There was likewise no written contract that can prove
that respondents were project employees and that the duration and scope of such employment were specified at the
time respondents were engaged. Therefore, respondents should be accorded the presumption of regular employment
pursuant to Article 280 of the Labor Code which provides that "employees who have rendered at least one year of
service, whether such service is continuous or broken x x x shall be considered [as] regular employees with respect to
the activity in which they are employed and their employment shall continue while such activity exists." Furthermore,
the fact that respondents were performing activities which were directly related to the business of Expedition confirms
the conclusion that respondents were indeed regular employees.
UNIVERSAL ROBINA SUGAR MILLING CORPORATION V. ACIBO

G.R. No. 186439; January 15, 2014;
URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is URSUMCO’s Business
Unit General Manager.
The complainants were employees of URSUMCO. They were hired on various dates (between February 1988 and April
1996) and on different capacities, i.e., drivers, crane operators, bucket hookers, welders, mechanics, laboratory
attendants and aides, steel workers, laborers, carpenters and masons, among others.
The complainants signed contracts of employment for a period of one (1) month or for a given season. URSUMCO
repeatedly hired the complainants to perform the same duties and, for every engagement, required the latter to sign
new employment contracts for the same duration of one month or a given season.
Complainants filed before the LA complaints for regularization, entitlement to the benefits under the existing Collective
Bargaining Agreement (CBA)
Whether the complainants are regular employees? NO.
We find the respondents to be regular seasonal employees of URSUMCO.
Article 280 of the Labor Code provides for three kinds of employment arrangements, namely: regular, project/seasonal
and casual. Regular employment refers to that arrangement whereby the employee "has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer, the primary standard
that determines regular employment is the reasonable connection between the particular activity performed by the
employee and the usual business or trade of the employer; 20 the emphasis is on the necessity or desirability of the
employee’s activity. Thus, when the employee performs activities considered necessary and desirable to the overall
business scheme of the employer, the law regards the employee as regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also considers regular a casual employment
arrangement when the casual employee’s engagement has lasted for at least one year, regardless of the engagement’s
continuity. The controlling test in this arrangement is the length of time during which the employee is engaged.
A project employment, on the other hand, contemplates on arrangement whereby "the employment has been fixed for
a specific project or undertaking whose completion or termination has been determined at the time of the engagement
of the employee[.]"Two requirements, therefore, clearly need to be satisfied to remove the engagement from the
presumption of regularity of employment, namely: (1) designation of a specific project or undertaking for which the
employee is hired; and (2) clear determination of the completion or termination of the project at the time of the
employee’s engagement. The services of the project employees are legally and automatically terminated upon the end
or completion of the project as the employee’s services are coterminous with the project.
20
Seasonal employment operates much in the same way as project employment, albeit it involves work or service that is
seasonal in nature or lasting for the duration of the season. The employer must show that: (1) the employee must be
performing work or services that are seasonal in nature; and (2) he had been employed for the duration of the season.
Casual employment, the third kind of employment arrangement, refers to any other employment arrangement that does
not fall under any of the first two categories, i.e., regular or project/seasonal.
Interestingly, the Labor Code does not mention another employment arrangement – contractual or fixed term
employment (or employment for a term) – which, if not for the fixed term, should fall under the category of regular
employment in view of the nature of the employee’s engagement, which is to perform an activity usually necessary or
desirable in the employer’s business.
"where the circumstances evidently show that the employer imposed the period precisely to preclude the employee
from acquiring tenurial security, the law and this Court will not hesitate to strike down or disregard the period as contrary
to public policy, morals, etc." In such a case, the general restrictive rule under Article 280 of the Labor Code will apply
and the employee shall be deemed regular.
Clearly, therefore, the nature of the employment does not depend solely on the will or word of the employer or on the
procedure for hiring and the manner of designating the employee. Rather, the nature of the employment depends on
the nature of the activities to be performed by the employee, considering the nature of the employer’s business, the
duration and scope to be done, and, in some cases, even the length of time of the performance and its continued
existence.
First, the respondents were made to perform various tasks that did not at all pertain to any specific phase of
URSUMCO’s strict milling operations that would ultimately cease upon completion of a particular phase in the milling
of sugar; rather, they were tasked to perform duties regularly and habitually needed in URSUMCO’s operations during
the milling season. The respondents’ duties as loader operators, hookers, crane operators and drivers were
necessary to haul and transport the sugarcane from the plantation to the mill; laboratory attendants, workers
and laborers to mill the sugar; and welders, carpenters and utility workers to ensure the smooth and
continuous operation of the mill for the duration of the milling season, as distinguished from the production
of the sugarcane which involves the planting and raising of the sugarcane until it ripens for milling. The
production of sugarcane, it must be emphasized, requires a different set of workers who are experienced in
farm or agricultural work. Needless to say, they perform the activities that are necessary and desirable in
sugarcane production. As in the milling of sugarcane, the plantation workers perform their duties only during
the planting season.
Second, the respondents were regularly and repeatedly hired to perform the same tasks year after year. This regular
and repeated hiring of the same workers (two different sets) for two separate seasons has put in place, principally
through jurisprudence, the system of regular seasonal employment.
Regular seasonal employees, like the respondents in this case, should not be confused with the regular employees of
the sugar mill such as the administrative or office personnel who perform their tasks for the entire year regardless of
the season. The NLRC, therefore, gravely erred when it declared the respondents regular employees of URSUMCO
without qualification and that they were entitled to the benefits granted, under the CBA, to URSUMCO’S regular
employees.
Third, while the petitioners assert that the respondents were free to work elsewhere during the off-season, the records
do not support this assertion. There is no evidence on record showing that after the completion of their tasks at
URSUMCO, the respondents sought and obtained employment elsewhere.
Citing jurisprudential standards, it then proceeded to explain that the respondents cannot be lumped with the regular
employees due to the differences in the nature of their duties and the duration of their work vis-a-vis the operations of
the company.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. Except for the denial of the respondents'
claim for CBA benefits.
21
EXODUS INTERNATIONAL CONSTRUCTION CORPORATION V. BISCOCHO, ET AL.

G.R. NO. 166109, 23 February 2011
Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor contractor for the painting
of residential houses, condominium units and commercial buildings. Petitioner Antonio P. Javalera is the President and
General Manager of Exodus.
Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contracts for the painting of the Imperial Sky Garden
and Pacific Plaza Towers.
Exodus hired respondents as painters on different dates.
Guillermo, Fernando, Ferdinand, and Miguel filed a complaint for illegal dismissal and non-payment of holiday pay,
service incentive leave pay, 13th month pay and night-shift differential pay.
Petitioners contend that, contrary to their allegations, respondents were never dismissed from the service. Further,
granting that they were dismissed, respondents’ prolonged absences is tantamount to abandonment which is a valid
ground for the termination of their employment.
Respondents, in support of their claim that they were illegally dismissed, argue that as painters, they performed
activities which were necessary and desirable in the usual business of petitioners, who are engaged in the business of
contracting painting jobs. According to the respondents, they did not abandon their job. For abandonment to serve as
basis for a valid termination of their employment, it must first be established that there was a deliberate and unjustified
refusal on their part to resume work. Mere absences are not sufficient for these must be accompanied by overt acts
pointing to the fact that they simply do not want to work anymore.
Whether the painters were illegally dismissed? No.
There was no dismissal in this case, hence, there is no question that can be entertained regarding its legality or illegality.
As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor were they prevented from
returning to their work. It was only respondents’ unsubstantiated conclusion that they were dismissed. As a matter of
fact, respondents could not name the particular person who effected their dismissal and under what particular
circumstances.
Petitioners were able to show that they never dismissed respondents. As to the case of Fernando, Miguel and
Ferdinand, it was shown that on November 25, 2000, at around 7:30 a.m., the petitioners’ foreman, Wenifredo Lalap
(Wenifredo) caught the three still eating when they were supposed to be working already. Wenifredo reprimanded them
and, apparently, they resented it so they no longer reported for work. In the case of Gregorio, he absented himself from
work on September 15, 2000 to apply as a painter with SAEI-EEI, the general contractor of Pacific Plaza Towers. Since
then he never reported back to work. Lastly, in the case of Guillermo, he absented himself without leave on November
27, 2000, and so he was reprimanded when he reported for work the following day. Because of the reprimand, he did
not report for work anymore.
Labor Arbiter is also correct in ruling that there was no abandonment on the part of respondents that would justify their
dismissal from their employment.
It is a settled rule that "[m]ere absence or failure to report for work x x x is not enough to amount to abandonment of
work." "Abandonment is the deliberate and unjustified refusal of an employee to resume his employment."
In Northwest Tourism Corporation v. Former Special 3rd Division of the Court of Appeals26 this Court held that
"[t]o constitute abandonment of work, two elements must concur, [namely]:
(1) the employee must have failed to report for work or must have been absent without valid or justifiable
reason; and
(2) there must have been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act."
22
"It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume
his employment without any intention of returning.”
Clearly therefore, there was no dismissal, much less illegal, and there was also no abandonment of job to speak of.
The Labor Arbiter is therefore correct in ordering that respondents be reinstated but without any backwages.
However, petitioners are of the position that the reinstatement of respondents to their former positions, which were no
longer existing, is impossible, highly unfair and unjust. The project was already completed by petitioners on September
28, 2001. Thus the completion of the project left them with no more work to do. Having completed their tasks, their
positions automatically ceased to exist. Consequently, there were no more positions where they can be reinstated as
painters.
They forgot that there are two types of employees in the construction industry. The first is referred to as project
employees or those employed in connection with a particular construction project or phase thereof and such
employment is coterminous with each project or phase of the project to which they are assigned. The second
is known as non-project employees or those employed without reference to any particular construction project
or phase of a project.
The second category is where respondents are classified. As such they are regular employees of petitioners. It is clear
from the records of the case that when one project is completed, respondents were automatically transferred to the
next project awarded to petitioners. There was no employment agreement given to respondents which clearly spelled
out the duration of their employment, the specific work to be performed and that such is made clear to them at the time
of hiring. It is now too late for petitioners to claim that respondents are project employees whose employment is
coterminous with each project or phase of the project to which they are assigned.
The evidence on record shows that respondents were employed and assigned continuously to the various projects of
petitioners. As painters, they performed activities which were necessary and desirable in the usual business of
petitioners, who are engaged in subcontracting jobs for painting of residential units, condominium and commercial
buildings. As regular employees, respondents are entitled to be reinstated without loss of seniority rights. Respondents
are also entitled to their money claims such as the payment of holiday pay, service incentive leave pay, and 13th month
pay. Petitioners as the employer of respondents and having complete control over the records of the company could
have easily rebutted the monetary claims against it.
D.M. CONSUNJI, INC. V. JAMIN

G.R. No. 192514 April 18, 2012
Facts: On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent Estelito
L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter. Since his initial hiring, Jamin’s employment
contract had been renewed a number of times.4 On March 20, 1999, his work at DMCI was terminated due to the
completion of the SM Manila project. This termination marked the end of his employment with DMCI as he was not
rehired again. On April 5, 1999, Jamin filed a complaint5 for illegal dismissal, with several money claims (including
attorney’s fees), against DMCI and its President/General Manager, David M. Consunji. Jamin alleged that DMCI
terminated his employment without a just and authorized cause at a time when he was already 55 years old and had
no independent source of livelihood. He claimed that he rendered service to DMCI continuously for almost 31 years.
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his engagement in
1968 until the completion of its SM Manila project on March 20, 1999 where Jamin last worked.
LA dismissed the complaint. NLRC affirmed the dismissal. CA reversed the decision of NLRC and ruled that Jamin is
a regular employee.
Issue:
23
Whether or not the CA is correct in ruling that Jamin is a regular employee.
Held:
The answer is YES. The SC agreed with the ruling of CA that (1) Jamin’s repeated and successive engagements in
DMCI’s construction projects, and (2) Jamin’s performance of activities necessary or desirable in DMCI’s usual trade
or business are bases of his regularization.
SC also applied the case of Liganza v. RBL Shipyard Corporation that "[a]ssuming, without granting[,] that [the]
petitioner was initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his
services for over eight (8) years have undeniably made him a regular employee." The Liganza ruling squarely applicable
to this case, considering that for almost 31 years, DMCI had repeatedly, continuously and successively engaged
Jamin’s services since he was hired on December 17, 1968 or for a total of 38 times — 35 as shown by the schedule
of projects submitted by DMCI to the labor arbiter and three more projects or engagements added by Jamin, which he
claimed DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his
engagements.
(SC dismissed the petition because of late submission of appeal of D.M. Consunji, Inc, thus making the CA decision
final and executory)
HERMA SHIPYARD, INC. VS. OLIVEROS, ET AL.,

G.R. No. 208936 April 17, 2017
Facts: Respondents were employees of Herma Shipyard occupying various positions who were dismissed from
employment on various dates. They filed a case against Herma Shipyard with the contention that they are regular
employees who have been continuously performing tasks usually necessary and desirable in its business. For their
defense, petitioners argued that respondents were its project-based employees in its shipbuilding projects, and that
their dismissal is proper since the specific project for which the respondents were hired had already been completed.
Issue: Whether or not respondents were project-based employees
Ruling: Yes. Under Article 294 of the Labor Code, a project employee is one whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee. It is crucial that the employees were informed of their status as project employees at the
time of hiring and that the period of their employment must be knowingly and voluntarily agreed upon by the parties.
Here, respondents were fully apprised of the nature and scope of their work, and were adequately informed of their
employment status as project-based employees.
Moreover, the fact that the respondents were performing task necessary and desirable to the business of petitioners
will not make them regular employees. It is settled that the performance by project-based employees of task necessary
and desirable to the usual business or trade of the employer will not automatically result to regularization. Neither the
repeated rehiring of project-based employees to different projects will make them regular employees. Length of service
through rehiring is not the controlling determinant of the employment tenure of project-based employees. Respondents
remained project employees regardless of the number of projects in which they have worked.
FVR SKILLS AND SERVICES EXPONENTS, INC. VS. SEVA

G.R. No. 200857 October 22, 2014
24
Facts: The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and Services Exponents,
Inc. On April 21, 2008, the petitioner entered into a Contract of Janitorial Service8 (service contract) 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, 2008.9 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. The respondents responded to the
termination of their employment by filing a complaint for illegal dismissal with the NLRC. They argued that they were
not project employees; they were regular employees who may only be dismissed for just or authorized causes. The LA
ruled in the petitioner's favor. He held that the respondents were not regular employees. They wereproject employees
whose employment was dependent on the petitioner's service contract with Robinsons. The respondents disagreed
with the LA and appealed to the NLRC, which reversed the LA's ruling, and held that they were regular employees. The
NLRC considered that the respondents had been under the petitioner's employ for more than a year already, some of
them as early as 1998. CA affirmed NLRC.
Issue:
1. Whether or not respondents are regular employees.
2. Whether or not respondents are illegally dismissed.
Held:
1. The answer is 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.26 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 torefute 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 theywere assigned to. The petitioner
continuously availed of their servicesby constantly deploying them to its clients. Lastly, under Department Order (DO)
18-02,27 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.
2. The answer is YES. To be valid, an employee's dismissal must comply with the substantive and procedural
requirements of due process.1âwphi1 Substantively, a dismissal should be supported by a just or authorized cause.32
Procedurally, the employer must observe the twin notice and hearing requirements in carrying out an employee's
dismissal. Having already determined that the respondents are regular employees and not project employees, and that
the respondents' belated employment contracts could not be given any binding effect for being signed under duress,
we hold that illegal dismissal took place when the petitioner failed to comply with the substantive and procedural due
process requirements of the law.
WILFREDO ARO VS. NLRC
25
G.R. No. 174792 March 7, 2012
Facts: Several employees of private respondent Benthel Development Corporation (Benthel), including the petitioners,
filed a Complaint for illegal dismissal with various money claims and prayer for damages against the latter, in the NLRC
of Cebu City. Thereafter, Labor Arbiter Carreon rendered a decision finding private respondent guilty of illegal dismissal
and ordering it to pay its thirty-six (36) employees P446,940.00 as separation pay.
The employees, including the petitioners herein, appealed from the said decision. The NLRC affirmed the decision of
Labor Arbiter Carreon in its Decision with the modification that private respondent pay backwages computed from the
respective dates of dismissal until finality of the decision.
Private respondent Benthel, unsatisfied with the modification made by the NLRC, filed a motion for reconsideration with
the contention that, since it has been found by the Labor Arbiter and affirmed in the assailed decision that the employees
were project employees, the computation of backwages should be limited to the date of the completion of the project
and not to the finality of the decision. The NLRC, however, denied the motion ruling that private respondent failed to
establish the date of the completion of the project.
Fifteen (15) employees have executed Affidavits of Full Settlement after having settled amicably with the private
respondent. Labor Arbiter Violeta Ortiz-Bantug issued an Order for the issuance of a writ of execution only for the
payment of the claims of the twenty-one (21) remaining employees in the total amount of ₱4,383,225.00, which included
attorney's fees equivalent to ten (10%) percent of the sum received as settlement by the fifteen (15) employees who
had earlier settled with the private respondent.
Benthel appealed to public respondent NLRC contending that the computation for backwages must be only until the
completion of the project and not until the finality of the decision. NLRC affirmed the Order of Labor Arbiter Bantug,
but reduced the total amount to ₱4,073,858.00, inclusive of attorney's fees. Thereafter, private respondent filed a
motion for reconsideration. In the resolution of the private respondent's motion for reconsideration, the award was
reduced to the sum of ₱1,374,339.00, inclusive of attorney's fees.
As recourse, private respondent filed a petition for certiorari with the CA, alleging that public respondent committed
grave abuse of discretion in promulgating its assailed decision and denying its motion for reconsideration. The CA
granted the petition, therefore, annulling and setting aside the decision and resolution of the NLRC as to the award for
backwages and remanded the case to the same public respondent for the proper computation of the backwages due
to each of the petitioners herein. Hence, this petition to the Supreme Court.
Issue: Whether or not petitioners are project employees
Ruling: Yes, this Court agrees with the findings of the CA that petitioners were project employees. It is not disputed
that petitioners were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu. By the nature of
the contract alone, it is clear that petitioner's' employment was to carry out a specific project.
“x x x [T]he principal test for determining whether particular employees are properly characterized as “project
employees” as distinguished from “regular employees” is whether or not the project employees were assigned to carry
out a “specific project or undertaking,” the duration and scope of which were specified at the time the employees were
engaged for that project.
Article 280 of the Labor Code distinguishes a “project employee” from a “regular employee,” thus: Article 280. Regular
and Casual Employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual
if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year
service, whether such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists
26
WILLIAM UY CONSTRUCTION CORPORATION V. TRINIDAD

G.R. No. 183250 March 10, 2010
Facts: Respondent Jorge R. Trinidad filed a complaint for illegal dismissal and unpaid benefits against petitioner
William Uy Construction Corporation. Trinidad claimed that he had been working with the latter company for 16 years
since 1988. He had signed several employment contracts with the company that identified him as a project employee
although he had always been assigned to work on one project after another with some intervals.
Petitioner William Uy Construction Corporation countered that it was in the construction business. By the nature of such
business, it had to hire and engage the services of project construction workers, including respondent Trinidad, whose
employments had to be co-terminous with the completion of specific company projects. For this reason, every time the
company employed Trinidad, he had to execute an employment contract with it, called Appointment as Project Worker.
After it finished its Boni Serrano-Katipunan Interchange Project in December 2004, Trinidad's work ended as well. In
compliance with labor rules, the company submitted an establishment termination report to the Department of Labor
and Employment (DOLE).
The Labor Arbiter held that, since Trinidad was a project employee and since his company submitted the appropriate
establishment termination report to DOLE, his loss of work cannot be regarded as unjust dismissal. The Labor Arbiter
found no basis for granting Trinidad overtime pay, holiday pay, and 13th month pay.
Issue: Whether or not William Uy Construction Corporation’s repeated hiring of Trinidad over several years as project
employee for its various projects automatically entitled him to the status of a regular employee
Ruling: No. Although respondent Trinidad initially worked as a project employee, he should be deemed to have
acquired the status of a regular employee since petitioner company repeatedly rehired him in its past 35 projects that
lasted 16 years. Trinidad's work as driver of the company's service vehicle, dump truck, and transit mixer was vital,
necessary, and indispensable to the company's construction business.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary
basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair,
if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its
payrolls beyond the life of each project.
In Caseres v. Universal Robina Sugar Milling Corporation, the Court held that the repeated and successive rehiring of
project employees do not qualify them as regular employees, as length of service is not the controlling determinant of
the employment tenure of a project employee, but whether the employment has been fixed for a specific project or
undertaking, its completion has been determined at the time of the engagement of the employee.
Trinidad's series of employments with petitioner company were co-terminous with its projects. When a project is
finished, Trinidad's employment ended with it. He was not dismissed. His employment contract simply ended with the
project for which he had signed up.
Both the Labor Arbiter and the NLRC were satisfied that the fact of petitioner company's compliance with DOLE Order
19 requiring employers to submit a report of termination of employees every completion of construction project.
BRENT SCHOOL VS ZAMORA

G.R. No. L-48494, February 5, 1990
Facts: Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of
P20,000.00. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of
execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28,
1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained
in the original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of
the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of
27
contract, expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted
the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period
May 16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for clearance to terminate employment (not
a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance
and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of
seniority rights and with full back wages.
Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the
Secretary of Labor for review.The latter sustained the Regional Director. Brent appealed to the Office of the President.
Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision,
ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and expiration of the
employment contract was not one of the just causes provided in the Labor Code for termination of services.
The School is now before this Court in a last attempt at vindication. That it will get here.
Issue:
Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or
employment for a term.
Held:
Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the
expiration of the agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor
Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was
impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code
of Commerce (Article 302) which governed employment without a fixed period, and also implicitly acknowledged the
propriety of employment with a fixed period. The Civil Code of the Philippines, which was approved on June 18, 1949
and became effective on August 30,1950, itself deals with obligations with a period. No prohibition against term-or
fixed-period employment is contained in any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly
legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly
recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD 442),
which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or
employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment
began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary employees and those employed WITH
A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Article 321 prescribed
the just causes for which an employer could terminate "an employment without a definite period." And Article 319
undertook to define "employment without a fixed period" in the following manner: …where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or service to be performed
is seasonal in nature and the employment is for the duration of the season.
28
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment were
amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to
persons "employed with a fixed period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the
gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to
restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given
a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment
and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to
prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly,
curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good
rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989)
where, in the fairly analogous case of a teacher being served by her school a notice of termination following the
expiration of the last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary,
contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her
appointment was deemed terminated and the letter informing her of the non-renewal of her contract is not a condition
sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere
reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is
not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance
written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending
expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the
approval of the Department of Labor to make the termination of his services effective. In any case, such clearance
should properly have been given, not denied.
FUJI TELEVSION NETWORK, INC VS. ESPIRITU

G.R. No. 204944-45 December 3, 2014
Facts: In 2005, Arlene S. Espiritu was engaged by Fuji Television Network, Inc. ("Fuji") asa news
correspondent/producer. Arlene’s employment contract initially provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon every renewal. Sometime in January 2009, Arlene was
diagnosed with lung cancer. Arlene and Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that
her contract would no longer be renewed after its expiration on May 31, 2009. The contract also provided that the
parties release each other from liabilities and responsibilities under the employment contract. Espiritu signed under
protest.
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for illegal dismissal and
attorney’s fees with the National Capital Region Arbitration Branch of the National Labor Relations Commission. She
alleged that she was forced to sign the nonrenewal contract when Fuji came to know of her illness and that Fuji withheld
her salaries and other benefits for March and April 2009 when she refused to sign. Arlene claimed that she was left
with no other recourse but to sign the non-renewal contract, and it was only upon signing that she was given her salaries
and bonuses, in addition to separation pay equivalent to four (4) years.
29
Labor Arbiter dismissed the complaint. NLRC reversed the decision of LA. CA affirmed the NLRC.
Issue:
1. Whether or not Espiritu is a regular employee or a fixed-term contractual employee;
2. Whether or not Espiritu was illegally dismissed;
Held:
1. Regular employee. The CA is correct in applying the case of Dumpit-Murillo v. Court of Appeals. Arlene was
hired by Fuji as a news producer, but there was no showing that she was hired because of unique skills that would
distinguish her from ordinary employees. Neither was there any showing that she had a celebrity status. Her monthly
salary amounting to US$1,900.00 appears tobe a substantial sum, especially if compared to her salary whenshe was
still connected with GMA. On the power to control, Arlene alleged that Fuji gave her instructions on what to report. Even
the mode of transportation in carrying out her functions was controlled by Fuji based on paragraph 6 of her employment
contract.
2. The answer is YES. The Court cannot subscribe to Fuji’s assertion that Espiritu’s contract merely expired and
that she voluntarily agreed not to renew the same. Even a cursory perusal of the subject Non-Renewal Contract readily
shows that the same was signed by Espiritu under protest. What is apparent is that the Non-Renewal Contract was
crafted merely as a subterfuge to secure Fuji’s position that it was Espiritu’s choice not to renew her contract. As a
regular employee, Arlene was entitled to security of tenure and could be dismissed only for just or authorized causes
and after the observance of due process.
There is no evidence showing that Arlene was accorded due process. After informing her employer of her lung cancer,
she was not given the chance to present medical certificates. Fuji immediately concluded that Arlene could no longer
perform her duties because of chemotherapy. It did not ask her how her condition would affect her work. Neither did it
suggest for her to take a leave, even though she was entitled to sick leaves. Worse, it did not present any certificate
from a competent public health authority. What Fuji did was to inform her that her contract would no longer be renewed,
and when she did not agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the finding of the
National Labor Relations Commission that for failure of Fuji to comply with due process, Arlene was illegally dismissed.
JAIME N. GAPAYAO VS. ROSARIO FULO, SOCIAL SECURITY SYSTEM AND SOCIAL SECURITY COMMISSION
G.R. NO. 193493 JUNE 13, 2013
FACTS: Jaime Fulo died of "acute renal failure secondary to 1st degree burn 70% secondary electrocution" while doing
repairs at the residence and business establishment of Gapayao. Gapayao extended some financial assistance to
Rosario Fulo, the wife of the deceased and the latter executed an Affidavit of Desistance stating that she was not
holding them liable for the death of her late husband.
Thereafter, private respondent filed a claim for social security benefits with the Social Security System (SSS) Sorosogon
Branch. However, upon verification and evaluation, it was discovered that the deceased was not a registered member
of the SSS.
Upon Rosario's insistence that her late husband had been employed by petitioner from January 1983 up to his untimely
death on 4 November 1997, the SSS conducted a field investigation to clarify his status of employment.
The findings revealed that Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983 to 1997 and
that Mr. Jaime Fulo receives compensation on a daily basis ranging from P5.00 to P60.00 from 1983 to 1997.
30
As per interview, Mrs. Estela Gapayao contends that Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao on an
extra basis.
The SSS demanded that petitioner remit the social security contributions of the deceased. Gapayao denied that the
deceased was his employee but was rather an independent contractor whose tasks were not subject to his control and
supervision. Assuming arguendo that the deceased was his employee, he was still not entitled to be paid his SSS
premiums for the intervening period when he was not at work, as he was an "intermittent worker who was only
summoned every now and then as the need arose." Hence, Gapayao insisted that he was under no obligation to report
the former s demise to the SSS for social security coverage.
Rosario alleges that her late husband had been in the employ of petitioner for 14 years, from 1983 to 1997. During that
period, he was made to work as a laborer in the agricultural landholdings, a harvester in the abaca plantation, and a
repairman/utility worker in several business establishments owned by petitioner. The considerable length of time during
which [the deceased] was given diverse tasks by Gapayao was a clear indication of the necessity and indispensability
of her late husband s services to Gapayao's business.
ISSUE: Whether or not there exists between the deceased Jaime Fulo and Gapayao an employer-employee
relationship that would merit an award of benefits in favor of Rosario Fulo under social security laws.
RULING: Yes. Farm workers may be considered regular seasonal employees. Farm workers generally fall under the
definition of seasonal employees. Court held that seasonal employees may be considered as regular employees.
Regular seasonal employees are those called to work from time to time. The nature of their relationship with the
employer is such that during the off season, they are temporarily laid off; but reemployed during the summer season
or when their services may be needed. They are in regular employment because of the nature of their job, and not
because of the length of time they have worked.
The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of an employer-
employee relationship. It only proves that even during the off season, the deceased was still in the employ of Gapayao.
The most telling indicia of this relationship is the Compromise Agreement executed by Gapayao and Rosario. Gapayao
entered into the agreement with full knowledge that he was described as the employer of the deceased.
Pakyaw workers are considered employees for as long as their employers exercise control over them. In this case,
Gapayao wielded control over the deceased in the discharge of his functions.
The right of an employee to be covered by the Social Security Act is premised on the existence of an employer-
employee relationship. That having been established, the Court ruled in favor of Rosario.
FREYSSINET FILIPINAS V. LAPUZ

G.R. NO. 226722, MARCH 18, 2019
FACTS: Respondent Amado R. Lapuz (respondent) worked as warehouse supervisor for petitioner Freyssinet Filipinas
Corporation (FFC). Respondent claimed that he commenced work for FFC since 1977 under the latter's previous
company names. Except for FPTSPI which was owned by one Philip Cruz, the remaining firms were allegedly owned
and operated by petitioner Eric A. Cruz (Cruz). Respondent was assigned at the different projects of FFC, the last of
which was at the Wharton Parksuite Project in Binondo, Manila.
31
Sometime in December 2011, respondent averred that he was verbally informed of his termination from work by the
project manager Reyes when he was told "Hoy umalis ka na dyan" and no longer allowed to perform his work and enter
the premises. Believing to have been dismissed without substantive and procedural due process, respondent filed a
complaint for illegal dismissal with prayer for reinstatement and payment of attorney's fees, against FFC, Cruz, Reyes,
and one Carlota R. Satorre (petitioners) before the NLRC.
Believing to have been dismissed without substantive and procedural due process, respondent filed a complaint for
illegal dismissal with prayer for reinstatement and payment of attorney's fees, against FFC, Cruz, Reyes, and one
Carlota R. Satorre (petitioners) before the NLRC.
For their part, petitioners asserted that respondent started working as warehouse supervisor for FFC only on April 11,
2007 under a project employment contract for its Texas Instruments project located in Pampanga, which lasted until
September 2008. Thereafter, respondent was rehired on a per project basis. FFC submitted copies of respondent's
project employment contracts at his last assignment in Wharton Parksuite which showed that his services were
engaged intermittently for a fixed period of one (1) or three (3) months only. They further contended that respondent's
termination was also reported to the DOLE. Thus, they maintained that respondent was not illegally dismissed as his
project employment contract merely expired. They further averred that the corporate officers should not be held liable
in view of the separate personality of the corporation from its officers and absent showing of bad faith on their part.
The LA declared respondent to be a regular employee of FFC and as such, was dismissed without just or authorized
cause. The LA ruled that petitioners' failure to adduce proof of the filing of termination reports with the DOLE every time
a project or phase was completed is an indication that respondent was not a project employee. Moreover, the LA noted
that respondent has been employed as warehouse supervisor for FFC since 1977, and that in such capacity, performed
tasks that were usually necessary or desirable in the usual business of the company.
The NLRC reversed and set aside the LA's decision, holding that respondent was a project employee whose services
ended upon completion of a specific project. It pointed out that FFC was primarily engaged in the construction industry
whose workers are hired for specific phases of work in the project site, and that respondent was made aware of the
nature of his employment and the duration thereof. It held that respondent's engagement as project employee was
further manifested by his identification card, clearance, project employment contracts, and establishment termination
report to the DOLE. Since respondent's most recent project contract had already ended, he cannot be said to have
been illegally dismissed and thus, was not entitled to backwages, separation pay and other benefits.
The CA reversed and set aside the NLRC ruling and instead, reinstated the LA ruling, finding respondent to be a regular
employee of FFC as early as 1977. The CA agreed with the findings of the LA that petitioners' failure to religiously
report the termination of respondent's employment contracts established that the latter was a regular employee, and
that the employment contracts were a mere after-thought in order to escape from their legal obligation attached to
regular employment.
ISSUE: Whether or not the CA erred in finding grave abuse of discretion on the part of the NLRC
RULING: The Court finds that the CA committed no reversible error in granting respondent's certiorari petition insofar
as it ruled that respondent was a regular - and not a project -employee.
Under Article 295 of the Labor Code, regular employment exists when the employee is: (a) engaged to perform activities
that are usually necessary or desirable in the usual business or trade of the employer; or (b) a casual employee whose
activities are not usually necessary or desirable in the employer's usual business or trade, and has rendered at least
one year of service, whether continuous or broken, with respect to the activity in which he is employed.
In GMA Network, Inc. v. Pabriga, the Court pointed out that if the particular job or undertaking is within the regular or
usual business of the employer company and it is not identifiably distinct or separate from the other undertakings of the
32
company such that there is clearly a constant necessity for the performance of the task in question, said job or
undertaking should not be considered a project.
In this case, respondent was supposedly engaged by FFC as warehouse supervisor for its various projects. However,
for the first three (3) projects, petitioners failed to show that respondent was hired on a project basis and that he was
informed of the duration and scope of his work. In fact, no employment contracts for the said projects were presented
to substantiate their claim. While the absence of a written contract does not per se grant regular status to respondent,
it is nonetheless evidence that he was informed of the duration and scope of his work and his status as project
employee.
In addition, no termination reports for each completed projects were shown to have been submitted by petitioners to
the DOLE. In fact, it was only during respondent's last assignment at the Wharton Parksuite project that they complied
with the directive. It bears stressing that the failure of an employer to file a termination report with the DOLE every time
a project or a phase thereof is completed indicates that the workers hired were not project employees.
Even on the assumption that respondent was a project employee, the Court has held that an employment ceases to be
co-terminous with specific projects when the employee is continuously rehired due to the demands of employer's
business and re-engaged for many more projects without interruption. In the case of Maraguinot, Jr. v. NLRC, once a
project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer
for the same tasks or nature of tasks; and (2) these tasks are vital, necessary, and indispensable to the usual business
or trade of the employer, then the employee must be deemed a regular employee.
The CA properly deemed respondent to be a regular employee. To reiterate, where the employment of project
employees is extended long after the supposed project has been finished, the employees are removed from the scope
of project employees and are considered regular employees.
As a regular employee, respondent is entitled to security of tenure and may only be dismissed for just or authorized
causes. Thus, not having been dismissed for a valid and legal cause, the CA was correct in declaring respondent to
have been illegally dismissed.
ABBOTT LABORATORIES PHIL. ET.AL. V. PEARLIE ANN F. ALCARAZ

G.R. NO. 192571, JULY 23, 2013
FACTS: Abbott Laboratories, Philippines (Abbott) caused the publication in a major broadsheet newspaper of its need
for a Medical and Regulatory Affairs Manager who would: (a) be responsible for drug safety surveillance operations,
staffing, and budget; (b) lead the development and implementation of standard operating procedures/policies for drug
safety surveillance and vigilance; and (c) act as the primary interface with internal and external customers regarding
safety operations and queries.
PEARLIE ANN F. ALCARAZ, respondent, applied and hired thereafter under probationary contract for 6 months from
February 15, 2005 to August 14, 2005 with salary of ₱110,000.00/ month. Her responsibilities were discussed to her
during her pre-orientation, including the handling of some staffs in the company and handling the evaluation of the
probationary staffs in coordination with the HR director. She was also given copies of Abbott’s Code of Conduct and
Probationary Performance Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules
(Performance Modules) which she have to apply in her task of evaluating the staff.
Abbott’s PPSE procedure mandates that the job performance of a probationary employee should be formally reviewed
and discussed with the employee at least twice: first on the third month and second on the fifth month from the date of
employment.
33
The necessary Performance Improvement Plan should also be made during the third-month review in case of a gap
between the employee’s performance and the standards set. These performance standards should be discussed in
detail with the employee within the first two (2) weeks on the job. The signed copy of the PPSE form shall serve as
documentation of the employee’s performance during his/her probationary period for recommendation or termination
in the employment.
She was accorded too strict by her immediate supervisor in handling the behaviors of the staffs when reprimanding
them of their misbehaviors, dress code, moonlighting, and disrespect of Abbott officers.
On May 15, She was informed that that she failed to meet the regularization standards for the position of Regulatory
Affairs Manager. Next day she was told that Walsh and Terrible already announced to the whole Hospira ALSU staff
that Alcaraz already resigned due to health reasons. A week later, she was handed a letter stating that her services
had been terminated effective May 19, 2005.
She was given the following reason through a letter:

(a) did not manage her time effectively; (b) failed to gain the trust of her staff and to build an effective rapport with them;
(c) failed to train her staff effectively; and (d) was not able to obtain the knowledge and ability to make sound judgments
on case processing and article review which were necessary for the proper performance of her duties.
Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal dismissal and
damages against Abbott and its officers.
Labor Arbiter Dismissed Alcaraz’s complaint for lack of merit. She was informed of the reasonable standards to qualify
as a regular employee and she received the Abbott’s Code of Conduct and Performance Modules.
NLRC reversed LA decision, Abbot have committed illegal dismissal. Alcaraz’s receipt of her job description and
Abbott’s Code of Conduct and Performance Modules was not equivalent to her being actually informed of the
performance standards upon which she should have been evaluated on.
CA Affirmed the ruling of the NLRC.
ISSUES:
1. Whether or not Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular
employee
2. Whether or not Alcaraz was validly terminated from her employment
RULING:
1. YES. Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior
to, during the time of her engagement, and the incipient stages of her employment. On this score, the Court
finds it apt to detail not only the incidents which point out to the efforts made by Abbott but also those
circumstances which would show that Alcaraz was well-apprised of her employer’s expectations that would,
in turn, determine her regularization.
Considering the totality of the circumstances, Alcaraz was well-aware that her regularization would depend on
her ability and capacity to fulfill the requirements of her position as Regulatory Affairs Manager and that her
failure to perform such would give Abbott a valid cause to terminate her probationary employment. Verily,
basic knowledge and common sense dictate that the adequate performance of one’s duties is, by and of itself,
an inherent and implied standard for a probationary employee to be regularized; such is a regularization
standard which need not be literally spelled out or mapped into technical indicators in every case.
2. NO. Abbott failed to follow the above-stated procedure in evaluating Alcaraz. For one, there lies a hiatus of
evidence that a signed copy of Alcaraz’s PPSE form was submitted to the HRD. It was not even shown that a
PPSE form was completed to formally assess her performance. Neither was the performance evaluation
discussed with her during the third and fifth months of her employment. Nor did Abbott come up with the
34
necessary Performance Improvement Plan to properly gauge Alcaraz’s performance with the set company
standards.
The Court modified Agabon v. NLRC in the case of Jaka Food Processing Corporation v. Pacot where it
created a distinction between procedurally defective dismissals due to a just cause, on one hand, and those
due to an authorized cause, on the other.
If the dismissal is based on a just cause under Article 296 of the Labor Code but the employer failed to comply
with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee
If the dismissal is based on an authorized cause under Article 297 but the employer failed to comply with the
notice requirement, the sanction should be stiffer because the dismissal process was initiated by the
employer’s exercise of his management prerogative.
Alcaraz’s dismissal proceeded from her failure to comply with the standards required for her regularization.
As such, it is undeniable that the dismissal process was, in effect, initiated by an act imputable to the employee,
akin to dismissals due to just causes under Article 296 of the Labor Code.
PLDT V. TEVES
G.R. NO. 143511 NOVEMBER 15, 2010
FACTS: Respondent was employed as Clerk of PLDT until he was terminated because he violated the (3) unauthorized
leaves of absence committed within 3 years, contrary to the policy of PLDT. From 1990 and 1992, there were 3
instances of unauthorized leaves of absence from the Respondent. On the final instance, the explanation of Teves was
unmeritorious, which led to his dismissal. He filed a complaint of illegal dismissal before the Labor Arbiter.
The Arbiter found out that the dismissal was legal, but it ordered PLDT to give 20,000 php to Teves. Teves appealed
to the NLRC, which reversed the Arbiters decision. It upheld the validity of the absence on account of Teves wife having
complications during childbirth.
PLDT filed a petition for Certiorari with the CA, which affirmed the decision of the NLRC. The CA found that respondent's
comportment cannot be characterized as grave so as to constitute grave misconduct; that his first two leaves of absence
were satisfactorily justified.
ISSUE: Whether or not Teves was illegally dismissed
RULING: Even assuming that respondent's absenteeism constitutes willful disobedience, such offense does not
warrant respondent's dismissal. Not every case of insubordination or willful disobedience by an employee reasonably
deserves the penalty of dismissal. There must be a reasonable proportionality between the offense and the penalty.
While management has the prerogative to discipline its employees and to impose appropriate penalties on erring
workers, pursuant to company rules and regulations, however, such management prerogatives must be exercised in
good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws and valid agreements. The Court is wont to reiterate that while an employer
has its own interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such prerogative
to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered
with compassion and understanding. The employer should bear in mind that, in the execution of said prerogative, what
is at stake is not only the employees position, but his very livelihood, his very breadbasket.
35
Dismissal is the ultimate penalty that can be meted to an employee. Even where a worker has committed an infraction,
a penalty less punitive may suffice, whatever missteps maybe committed by labor ought not to be visited with a
consequence so severe. This is not only the laws concern for the workingman. There is, in addition, his or her family to
consider. Unemployment brings untold hardships and sorrows upon those dependent on the wage-earner.
MERCADO V. AMA COMPUTER

G. R. NO. 183572, APRIL 13, 2010
FACTS: The petitioners were faculty members who started teaching at AMACC on May 25, 1998. The petitioner
Mercado was engaged as a Professor 3, while petitioner Tonog was engaged as an Assistant Professor 2. On the other
hand, petitioners De Leon, Lachica and Alba, Jr., were all engaged as Instructor 1.5 The petitioners executed individual
Teacher’s Contracts for each of the trimesters that they were engaged to teach.
The petitioners amended their labor arbitration complaint to include the charge of illegal dismissal against AMACC. In
their Position Paper, the petitioners claimed that their dismissal was illegal because it was made in retaliation for their
complaint for monetary benefits and discriminatory practices against AMACC. The petitioners also contended that
AMACC failed to give them adequate notice; hence, their dismissal was ineffectual.
AMACC contended in response that the petitioners worked under a contracted term under a non-tenured appointment
and were still within the three-year probationary period for teachers. Their contracts were not renewed for the following
term because they failed to pass the Performance Appraisal System for Teachers (PAST) while others failed to comply
with the other requirements for regularization, promotion, or increase in salary. This move, according to AMACC, was
justified since the school has to maintain its high academic standards.
Labor Arbiter (LA) Florentino R. Darlucio declared in his decision14 that the petitioners had been illegally dismissed,
and ordered AMACC to reinstate them to their former positions without loss of seniority rights and to pay them full
backwages, attorney’s fees and 13th month pay. The LA ruled that Article 281 of the Labor Code on probationary
employment applied to the case.
The NLRC denied AMACC’s appeal for lack of merit and affirmed in toto the LA’s ruling. The NLRC, however, observed
that the applicable law is Section 92 of the Manual of Regulations for Private Schools (which mandates a probationary
period of nine consecutive trimesters of satisfactory service for academic personnel in the tertiary level where collegiate
courses are offered on a trimester basis), not Article 281 of the Labor Code (which prescribes a probationary period of
six months) as the LA ruled. Despite this observation, the NLRC affirmed the LA’s finding of illegal dismissal since the
petitioners were terminated on the basis of standards that were only introduced near the end of their probationary
period.
The CA granted AMACC’s petition for certiorari and dismissed the petitioners’ complaint for illegal dismissal.
ISSUE: Whether or not the CA gravely erred in reversing the LA and NLRC illegal dismissal rulings
RULING: We agree with the petitioners that the CA does not assess and weigh each piece of evidence introduced in
the case. The CA only examines the factual findings of the NLRC to determine whether or not the conclusions are
supported by substantial evidence whose absence points to grave abuse of discretion amounting to lack or excess of
jurisdiction.
The school, cannot forget that its system of fixed-term contract is a system that operates during the probationary period
and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the
requirements of this Article on probationary status would be fully negated as the school may freely choose not to renew
36
contracts simply because their terms have expired. The inevitable effect of course is to wreck the scheme that the
Constitution and the Labor Code established to balance relationships between labor and management.
It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to
stipulate its precise duration could lead to the inference that the contract is binding for the full three-year probationary
period.
The probationary standards must not only be reasonable but 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. These
terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of
the probationary contract.
In the above case, the exact terms of the standards were never introduced as evidence; neither does the evidence
show how these standards were applied to the petitioners. Without these pieces of evidence the termination of
employment of employees on probationary status is illegal.
ROYALE HOMES VS. ALCANTARA

G.R. No. 195190 July 28, 2014
FACTS:
In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara asits Marketing
Director for a fixed period of one year. His work consisted mainly of marketing Royale Homes’ realestate inventories
on an exclusive basis. Royale Homes reappointed him for several consecutive years, the last of which covered the
period January 1 to December 31, 2003 where he held the position of Division 5 Vice-President-Sales.
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal alleging that he is a rehular employee.
ince he is performing tasks that are necessary and desirable to its business; that in 2003 the company gave him ₱1.2
million for the services he rendered to it; that in the first week of November 2003, however, the executive officers of
Royale Homes told him that they were wondering why he still had the gall to come to office and sit at his table; 10 and
that the actsof the executive officers of Royale Homes amounted to his dismissal from work without any valid or just
cause and in gross disregard of the proper procedure for dismissing employees.
Royale Homes argued that the appointment paper of Alcantara isclear that it engaged his services as an
independent sales contractorfor a fixed term of one year only. He never received any salary, 13th month pay, overtime
pay or holiday pay from Royale Homes as hewas paid purely on commission basis. In addition, Royale Homes had no
control on how Alcantara would accomplish his tasks and responsibilities as he was free to solicit sales at any time and
by any manner which he may deem appropriateand necessary. He is even free to recruit his own sales personnel to
assist him in pursuance of his sales target.
ISSUE: Whether or not Alcantara is a regular employee of Royale Homes.
RULING:
The answer is No. The primary evidence of the nature of the parties' relationship in this case is the written
contract that they signed and executed in pursuance of their mutual agreement. While the existence of employer-
employee relationship is a matter of law, the characterization made by... the parties in their contract as to the nature of
their juridical relationship cannot be simply ignored, particularly in this case where the parties' written contract
unequivocally states their intention at the time they entered into it.
In this case, the contract,[27] duly signed and not disputed by the parties, conspicuously provides that "no employer-
employee relationship exists between" Royale Homes and Alcantara, as well as his sales agents. It is clear that they
did not want to... be bound by employer-employee relationship at the time of the signing of the contract.
37
Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations should control."[28] No construction is even needed as they already expressly state their
intention. Also, this Court adopts the observation of the NLRC that it is rather strange on the part of Alcantara, an
educated man and a veteran sales broker who claimed to be receiving P1.2 million as his annual salary, not to have
contested the portion of the contract... expressly indicating that he is not an employee of Royale Homes if their true
intention were otherwise.
Not every form of control is indicative of employer-employee relationship. A person who performs work for another and
is subjected to its rules, regulations, and code of ethics does not necessarily become an employee.[34] As long as the
level of... control does not interfere with the means and methods of accomplishing the assigned tasks, the rules imposed
by the hiring party on the hired party do not amount to the labor law concept of control that is indicative of employer-
employee relationship.
In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and periodic evaluation
alluded to by Alcantara do not involve control over the means and methods by which he was to perform his job.
Understandably, Royale Homes has to fix the... price, impose requirements on prospective buyers, and lay down the
terms and conditions of the sale, including the mode of payment, which the independent contractors must follow. It is
also necessary for Royale Homes to allocate its inventories among its independent... contractors, determine who has
priority in selling the same, grant commission or allowance based on predetermined criteria, and regularly monitor the
result of their marketing and sales efforts. But to the mind of this Court, these do not pertain to the means and
methods... of how Alcantara was to perform and accomplish his task of soliciting sales. They do not dictate upon him
the details of how he would solicit sales or the manner as to how he would transact business with prospective clients.
In Tongko, this Court held that... guidelines or rules and regulations that do not pertain to the means or methods to be
employed in attaining the result are not indicative of control as understood in labor law.
Guidelines indicative of labor law "control," as the first Insular Life case tells us, should not merely relate to the mutually
desirable... result intended by the contractual relationship; they must have the nature of dictating the means or methods
to be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the
use of these means.
As the party claiming the existence of employer-employee relationship, it behoved upon Alcantara to prove the elements
thereof, particularly Royale Homes' power of control over the means and methods of accomplishing the work.[38] He,
however, failed... to cite specific rules, regulations or codes of ethics that supposedly imposed control on his means
and methods of soliciting sales and dealing with prospective clients. On the other hand, this case is replete with
instances that negate the element of control and the... existence of employer-employee relationship. Notably, Alcantara
was not required to observe definite working hours.[39] Except for soliciting sales, Royale Homes did not assign other
tasks to him. He had full control over the means and... methods of accomplishing his tasks as he can "solicit sales at
any time and by any manner which [he may] deem appropriate and necessary." He performed his tasks on his own
account free from the control and direction of Royale Homes in all matters connected therewith,... except as to the
results thereof.[40]
Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship.[41] As discussed
above, the absence of control over the means and methods disproves employer-employee relationship. The continuous
rehiring of
Alcantara simply signifies the renewal of his contract with Royale Homes, and highlights his satisfactory services
warranting the renewal of such contract. Nor does the exclusivity clause of contract establish the existence of the labor
law concept of control.
The element of payment of wages is also absent in this case. As provided in the contract, Alcantara's remunerations
consist only of commission override of 0.5%, budget allocation, sales incentive and other forms of company support.
There is no proof that he received fixed... monthly salary. No payslip or payroll was ever presented and there is no
38
proof that Royale Homes deducted from his supposed salary withholding tax or that it registered him with the Social
Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund.
All of these indicate an independent contractual relationship.
This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere independent
contractor.
W.M. MANUFACTURING VS. DALAG

G.R. No. 209418, December 07, 2015
FACTS:
W.M, Manufacturing, as client, and respondent Golden Rock, as contractor, executed a contract denominated
as "Service Agreement," In relation to the Service Agreement, Golden Rock 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 Dalag claimed that he was illegally dismissed, his employment having been
terminated without either notice or cause, in violation of his right to due process, both substantive and procedural. 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.
ISSUES:
Whether or not WM MFG and Golden Rock engaged in labor-only contracting
RULING:
The answer is Yes. 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.
It is clear from the above section that 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.
MALICDEM V. MARULAS INDUSTRIAL

G.R. No. 204406, February 26, 2014
FACTS:
Petitioners Malicdem and Flores were hired by respondent corporation as extruder operators in 2006 They
were responsible for the bagging of filament yarn, the quality of pp yarn package and the cleanliness of the work place
area. Their employment contracts were for a period of one (1) year. Every year thereafter, they would sign a
Resignation/Quitclaim in favor of Marulas a day after their contracts ended, and then sign another contract for one (1)
year until such time that they were told not to report to work anymore. They were asked to sign a paper acknowledging
the completion of their contractual status. Claiming that they were illegally dismissed, the corporation countered that
their contracts showed that they were fixedterm employees for a specific undertaking which was to work on a particular
39
order of a customer for a specific period. Their severance from employment then was due to the expiration of their
contracts.
ISSUE:
Whether or not petitioners were illegally dismissed.
RULING:
The answer is Yes. Once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a
regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow
circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No.
19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already
gained the status of regular employees by the employer’s conduct.
It is clear then that there was deliberate intent on the part of the employer to prevent the regularization of
petitioners. To begin with, there is no actual project. The only stipulations in the contracts were the dates of their
effectivity, the duties and responsibilities of the petitioners as extruder operators, the rights and obligations of the
parties, and the petitioner’s compensation and allowances. As there was no specific project or undertaking to speak of,
the respondents cannot invoke the exception in Article 280 of the Labor Code. This is a clear attempt to frustrate the
regularization of the petitioners and to circumvent the law.
Even granting that petitioners were project employees, they can still be considered as regular as they were
continuously hired by the same employer for the same position as extruder operators. Being responsible for the
operation of machines that produced sacks, their work was vital and indispensable the business of the employer. The
respondents cannot use the alleged expiration of the employment contracts of the petitioners as a shield of their illegal
acts. The project employment contracts that the petitioners were made to sign every year since the start of their
employment were only a stratagem to violate their security of tenure in the company.
The respondent’s invocation of William Uy Construction Corp. v. Trinidadis misplaced because it is applicable
only in cases involving the tenure of project employees in the construction industry. It is widely known that in the
construction industry, a project employees work depends on the availability of projects, necessarily the duration of his
employment. It is not permanent but coterminous with the work to which he is assigned.It would be extremely
burdensome for the employer, who depends on the availability of projects, to carry him as a permanent employee and
pay him wages even if there are no projects for him to work on.The rationale behind this is that once the project is
completed it would be unjust to require the employer to maintain these employees in their payroll.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement.
SAMONTE ET AL. V. LA SALLE GREENHILLS, INC.

G.R. No. 199683 February 10, 2016
FACTS:
Petitioners are medical professional hired by LSGI under a uniform one-page Contract of Retainer for the
period of a specific academic calendar beginning in June of 1989 and the succeeding 15 years and terminating in
March of the following year when the school year ends. The contract specifically provides that the retainer is only
temporary in character and exclusively limited to the undertaking and/or to the job/task assigned to the retainer within
the said undertaking. Furthermore, at any time prior to the expiration or completion date/s, LSGI may upon written
40
notice to the retainers, terminate the contract should the retainer fail in anyway to perform his assigned job or task to
the satisfaction of the school of for any just cause.
Accordingly, after 15 consecutive years of renewal each academic year, on the last day of the 15th year in
2004, the school (LSGI) informed the petitioner that their contracts will no longer be renewed for the following school
year. When petitioners’ requests for payment of their separation pay were denied, they filed a complaint for illegal
dismissal with prayer for separation pay, damages and attorneys’ fees. They alleged that they were regular employees
because received regular benefits, bonuses & more, that they were subjected to the school’s administrative and
disciplinary rules and regulations. On the other hand, LSGI posited that petitioners were independent contractors
retained by LSGI by reason of their medical skills and expertise to provide ancillary medical and dental services to both
students and faculty. More importantly, petitioners were paid retainer fees and not regular salaries and whose
performance is not subject to the control of the school.
ISSUE:
Whether or not petitioners were regular employees.
RULING:
The answer is Yes. A fixed-term employment is allowable under the Labor Code wherein the parties agree
upon the day certain for the commencement and termination of their employment relationship. A day certain being
understood to be "that which must necessarily come, although it may not be known when. Furthermore, the term must
be voluntarily and knowingly entered into by the parties who must have dealt with each other on equal terms not one
exercising moral dominance over the other.
Further, a fixed-term contract is an employment contract, the repeated renewals of which make for a regular
employment. In Fuji Network Television v. Espiritu, the court noted that Fuji's argument that Espiritu was an
independent contractor under a fixed-term contract is contradictory where employees under fixed-term contracts cannot
be independent contractors because in fixed-term contracts, an employer-employee relationship exists. The uniform
one-page Contracts of Retainer signed by petitioners were prepared by LSGI alone. Petitioners, medical professionals
as they were, were still not on equal footing with LSGI as they obviously did not want to lose their jobs that they had
stayed in for fifteen (15) years. There is no specificity in the contracts regarding terms and conditions of employment
that would indicate that petitioners and LSGI were on equal footing in negotiating it. Notably, without specifying what
are the tasks assigned to petitioners, LSGI "may upon prior written notice to the retainer, terminate [the] contract should
the retainer fail in any way to perform his assigned job/task to the satisfaction of La Salle Greenhills, Inc. or for any
other just cause."
In all, given the following: (1) repeated renewal of petitioners' contract for fifteen years, interrupted only by the
close of the school year; (2) the necessity of the work performed by petitioners as school physicians and dentists; and
(3) the existence of LSGI's power of control over the means and method pursued by petitioners in the performance of
their job, we rule that petitioners attained regular employment, entitled to security of tenure who could only be dismissed
for just and authorized causes. Consequently, petitioners were illegally dismissed and are entitled to the twin remedies
of payment of separation pay and full back wages.
CCBPI VS. AGITO

G.R. No. 179546 December 13 2009
FACTS:
Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) and
engaged in manufacturing, bottling and distributing soft drink beverages and other allied products. Respondents were
salesmen and leadman assigned at the Lagro Sales Office of Coke. They filed 2 complaints against Coke for
reinstatement and regularization.
41
Petitioner averred that respondents were employees of Interserve who were tasked to perform contracted
services in accordance with the provisions of the Contract of Services5 executed. It constituted legitimate job
contracting given that Interserve was a a bona fide independent contractor with substantial capital or investment in the
form of tools, equipment, and machinery necessary in the conduct of its business.
LA: found that respondents were employees of Interserve and not of petitioner. LA placed considerable weight
on the fact that Interserve was registered with the DOLE as an independent job contractor. NLRC affirmed LA. CA
reversed NLRC. Interserve was a labor-only contractor, with insufficient capital and investments for the services which
it was contracted to perform. Respondents used the equipment, tools, and facilities of petitioner in the day-to-day sales
operations. Hence, this petition..
ISSUE:
Whether Interserve is a legitimate job contracting.
RULING:
Then answer is No. Interserve is a labor-only contractor. The Contract between petitioner and Interserve does
not even specify the work or the project that needs to be performed or completed by the latter employees, and uses
the dubious phrase „tasks and activities that are considered contractible under existing laws and regulations. The
importance of identifying with particularity the work or task which Interserve was supposed to accomplish for petitioner
becomes even more evident, considering that the Articles of Incorporation of Interserve states that its primary purpose
is to operate, conduct, and maintain the business of janitorial and allied services. But respondents were hired as
salesmen and leadman for petitioner. The Court cannot, under such ambiguous circumstances, make a reasonable
determination if Interserve had substantial capital or investment to undertake the job it was contracting with petitioner.
It is also apparent that Interserve is a labor-only contractor under Section 5(ii) of the Rules Implementing
Articles 106-109 of the Labor Code, as amended, since it did not exercise the right to control the performance of the
work of respondents. The lack of control of Interserve over the respondents can be gleaned from the Contract of
Services. Also significant was the right of petitioner under paragraph 2 of the Contract to „request the replacement of
the CONTRACTOR’S personnel. The power to recommend penalties or dismiss workers is the strongest indication of
a company’s right of control as direct employer.
The contractor, not the employee, has the burden of proof that it has the substantial capital, investment, and
tool to engage in job contracting. Although not the contractor itself (since Interserve no longer appealed the judgment
against it by the Labor Arbiter), said burden of proof herein falls upon petitioner who is invoking the supposed status of
Interserve as an independent job contractor.
SONZA VS. ABS-CBN

G.R. No. 138051, June 10, 2004
FACTS: respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") with the
Mel and Jay Management and Development Corporation ("MJMDC"). ABS-CBN was represented by its corporate
officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco
("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement as "AGENT," MJMDC agreed to provide SONZA’s
services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the services SONZA would
render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.3
ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of ₱310,000 for the first year and ₱317,000 for the
second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.
SONZA wrote a letter to ABS-CBN’s President
42
“As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and
career. We consider these acts of the station violative of the Agreement and the station as in breach thereof.
In this connection, we hereby serve notice of rescission of said Agreement at our instance effective as of date.”
30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National
Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service
incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock
Option Plan ("ESOP").
ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties.
SONZA filed an Opposition to the motion on 19 July 1996
ISSUE: WON SONZA is an Employee of ABS-CBN
HELD: NO. A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and radio programs because of SONZA’s peculiar skills,
talent and celebrity status. SONZA contends that the "discretion used by respondent in specifically selecting and hiring
complainant over other broadcasters of possibly similar experience and qualification as complainant belies
respondent’s claim of independent contractorship."
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity
status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent
contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but would have hired him through its personnel department just like any
other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must
consider all the circumstances of the relationship, with the control test being the most important element.
Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that
this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted
him benefits and privileges "which he would not have enjoyed if he were truly the subject of a valid job contract
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the
AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.
Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show
that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent
losses as provided under labor laws.
Power of Control
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply in distinguishing an employee from an independent
contractor
A radio broadcast specialist who works under minimal supervision is an independent contractor. 40 SONZA’s work as
television and radio program host required special skills and talent, which SONZA admittedly possesses. The records
do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his
shows.
43
Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent
contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. 46 This practice is
not designed to control the means and methods of work of the talent, but simply to protect the investment of the
broadcast station
DIGITEL v. DEU
G.R. No. 184903-04, October 10, 2012
FACTS: By virtue of a certification election, Digitel Employees Union (Union) became the exclusive bargaining agent
of all rank and file employees of Digitel in 1994. The Union and Digitel then commenced collective bargaining
negotiations which resulted in a bargaining deadlock. The Union threatened to go on strike, but then Acting Labor
Secretary Bienvenido E. Laguesma assumed jurisdiction over the dispute and eventually directed the parties to execute
a CBA.2
However, no CBA was forged between Digitel and the Union. Some Union members abandoned their employment with
Digitel. The Union later became dormant.
Ten (10) years thereafter or on 28 September 2004, Digitel received from Arceo Rafael A. Esplana (Esplana), who
identified himself as President of the Union, a letter containing the list of officers, CBA proposals and ground rules.
On 4 November 2004, Esplana and his group filed a case for Preventive Mediation before the National Conciliation and
Mediation Board based on Digitel’s violation of the duty to bargain. On 25 November 2004, Esplana filed a notice of
strike.
ISSUE: whether Digiserv is a legitimate contractor
HELD: Digiserv is a labor-only contractor.
Labor-only contracting is expressly prohibited by our labor laws. Article 106 of the Labor Code defines labor-only
contracting as "supplying workers to an employer [who] 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."
After an exhaustive review of the records, there is no showing that first, Digiserv has substantial investment in the form
of capital, equipment or tools. Under the Implementing Rules, substantial capital or investment refers to "capital stocks
and subscribed capitalization in the case of corporations, 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." The NLRC, as echoed by the Court of Appeals, did not find substantial Digiserv’s
authorized capital stock of One Million Pesos (₱ 1,000,000.00). It pointed out that only Two Hundred Fifty Thousand
Pesos (₱ 250,000.00) of the authorized capital stock had been subscribed and only Sixty-Two Thousand Five Hundred
Pesos (₱ 62,500.00) had been paid up. There was no increase in capitalization for the last ten (10) years.
Additional ruling (for study purposes): The affected employees were

illegally dismissed.
In addition to finding that Digiserv is a labor-only contractor, records teem with proof that its dismissed employees are
in fact employees of Digitel. The NLRC enumerated these evidences, thus:
44
That the remaining thirteen (13) affected employees are indeed employees of DIGITEL is sufficiently established by
the facts and evidence on record.
It is undisputed that the remaining affected employees, except for two (2), were already hired by DIGITEL even before
the existence of DIGISERV. (The other two (2) were hired after the existence of DIGISERV). The UNION submitted a
sample copy of their appointment paper (Annex "A" of UNION’s Position Paper, Records, Vol. 1, p. 100) showing that
they were appointed on March 1, 1994, almost three (3) months before DIGISERV came into existence on May 30,
1994 (Annex "B", Ibid, Records, Vol. 1, p. 101). On the other hand, not a single appointment paper was submitted by
DIGITEL showing that these remaining affected employees were hired by DIGISERV.
It is equally undisputed that the remaining, affected employees continuously held the position of Customer Service
Representative, which was earlier known as Traffic Operator, from the time they were appointed on March 1, 1994 until
they were terminated on May 30, 2005. The UNION alleges that these Customer Service Representatives were under
the Customer Service Division of DIGITEL. The UNION’s allegation is correct. Sample of letter of commendations
issued to Customer Service Representatives (Annexes "C" and "C-1" of UNION’s Position Paper, Records, p. 100 and
111) indeed show that DIGITEL has a Customer Service Division which handles its Call Center operations.
Further, the Certificates issued to Customer Service Representative likewise show that they are employees of DIGITEL
(Annexes "C-5", "C-6" - "C-7" of UNION’s Position Paper, Records, Vol. 1, pp. 115 to 117), Take for example the
"Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees (Annex "C-5", Supra). The
"Service Award" was signed by the officers of DIGITEL – the VP-Customer Services Division, the VP-Human Resources
Division and the Group Head-Human Resources Division. It was issued by DIGITEL to Esen thru the above named
officers "In recognition of her seven (7) years continuous and valuable contributions to the achievement of Digitel’s
organization objectives". It cannot be gainsaid that it is only the employer that issues service award to its
employees.22 (Emphasis not supplied)
As a matter of fact, even before the incorporation of Digiserv, the affected employees were already employed by Digitel
as Traffic Operators, later renamed as Customer Service Representatives.
As an alternative argument, Digitel maintains that the affected employees were validly dismissed on the grounds of
closure of Digiserv, a department within Digitel.
In the recent case of Waterfront Cebu City Hotel v. Jimenez,23 we referred to the closure of a department or division of
a company as retrenchment. The dismissed employees were undoubtedly retrenched with the closure of Digiserv.
For a valid retrenchment, the following elements must be present:
(1) That 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 (1) month pay or at least ½
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, efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.24
Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to close
a department of the company. Digitel’s decision to outsource the call center operation of the company is a valid reason
to close down the operations of a department under which the affected employees were employed. Digitel cited the
decline in the volume of transaction of operator-assisted call services as supported by Financial Statements for the
years 2003 and 2004, during which Digiserv incurred a deficit of ₱ 163,624.00 and ₱ 164,055.00, respectively. 25 All
affected employees working under Digiserv were served with individual notices of termination. DOLE was likewise
served with the corresponding notice. All affected employees were offered separation pay. Only 9 out of the 45
employees refused to accept the separation pay and chose to contest their dismissal before this Court.
45
The fifth element regarding the criteria to be observed by Digitel clearly does not apply because all employees under
Digiserv were dismissed. The instant case is all about the fourth element, that is, whether or not the affected employees
were dismissed in good faith. We find that there was no good faith in the retrenchment.
Prior to the cessation of Digiserv’s operations, the Secretary of Labor had issued the first assumption order to enjoin
an impending strike. When Digiserv effected the dismissal of the affected employees, the Union filed another notice of
strike. Significantly, the Secretary of Labor ordered that the second notice of strike be subsumed by the previous
assumption order. Article 263(g) of the Labor Code provides:
When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute
and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall
have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to ensure the compliance with
this provision as well as with such orders as he may issue to enforce the same.
The effects of the assumption order issued by the Secretary of Labor are two-fold. It enjoins an impending strike on the
part of the employees and orders the employer to maintain the status quo.
There is no doubt that Digitel defied the assumption order by abruptly closing down Digiserv. The closure of a
department is not illegal per se. What makes it unlawful is when the closure is undertaken in bad faith. In St. John
Colleges, Inc. v. St. John Academy Faculty and Employees Union, 26 bad faith was evidenced by the timing of and
reasons for the closure and the timing of and reasons for the subsequent opening. There, the collective bargaining
negotiations between St. John and the Union resulted in a bargaining deadlock that led to the filing of a notice of strike.
The labor dispute was referred to the Secretary of Labor who assumed jurisdiction.
Pending resolution of the dispute, St. John closed the school prompting the Union to file a complaint for illegal dismissal
and unfair labor practice. The Union members alleged that the closure of the high school was done in bad faith in order
to get rid of the Union and render useless any decision of the SOLE on the CBA deadlocked issues. We held that
closure was done to defeat the affected employees’ security of tenure, thus:
The determination of whether SJCI acted in bad faith depends on the particular facts as established by the evidence
on record. Bad faith is, after all, an inference which must be drawn from the peculiar circumstances of a case. The two
decisive factors in determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the closure of the
high school, and (2) the timing of, and the reasons for the subsequent opening of a college and elementary department,
and, ultimately, the reopening of the high school department by SJCI after only one year from its closure.
Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to the SOLE for
assumption of jurisdiction under Article 263 of the Labor Code. As a result, the strike ended and classes resumed. After
the SOLE assumed jurisdiction, it required the parties to submit their respective position papers. However, instead of
filing its position paper, SJCI closed its high school, allegedly because of the "irreconcilable differences between the
school management and the Academy’s Union particularly the safety of our students and the financial aspect of the
ongoing CBA negotiations." Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE contending
that it had become moot because of the closure. Nevertheless, a year after said closure, SJCI reopened its high school
and did not rehire the previously terminated employees.
Under these circumstances, it is not difficult to discern that the closure was done to defeat the parties’ agreement to
refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision of the
SOLE; and to circumvent the Union’s right to collective bargaining and its members’ right to security of tenure. By
admitting that the closure was due to irreconcilable differences between the Union and school management,
specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the
bargaining deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what the
Labor Code abhors and punishes as unfair labor practice since the net effect is to defeat the Union’s right to collective
bargaining.27 (Emphasis not supplied)
46
As in St. John, 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 assumption order directs employees to
return to work, and the employer to reinstate the employees. The existence of the assumption order should have
prompted Digitel to observe the status quo. Instead, Digitel proceeded to close down Digiserv. The Secretary of Labor
had to subsume the second notice of strike in the assumption order. This order notwithstanding, Digitel proceeded to
dismiss the employees.
The timing of the creation of I-tech is dubious. It was incorporated on 18 January 2005 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 at 110 E. Rodriguez Jr. Avenue, Bagumbayan,
Quezon City. The former head of Digiserv, Ms. Teresa Taniega, 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 provide, the same
services performed by Digiserv, the Union members’ nominal employer.
Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to backwages and reinstatement.
Where reinstatement is no longer viable as an option, as in this case where Digiserv no longer exists, separation pay
equivalent to one (1) month salary, or one-half (1/2) month pay for every year of service, whichever is higher, should
be awarded as an alternative.28 The payment of separation pay is in addition to payment of backwages. 29
Indeed, while we have found that the closure of Digiserv was undertaken in bad faith, badges thereof evident in the
timing of Digiserv’s closure, hand in hand, with I-tech’s creation, the closure remains a foregone conclusion. There is
no finding, and the Union makes no such assertion, that Digiserv and I-tech are one and the same corporation. The
timing of Digiserv’s closure and I-tech’s ensuing creation is doubted, not the legitimacy of I-tech as a business process
outsourcing corporation providing both inbound and outbound services to an expanded local and international
clientele.30
The finding of unfair labor practice hinges on Digitel’s contracting-out certain services performed by union member-
employees to interfere with, restrain or coerce them in the exercise of their right to self-organization.
We have no basis to direct reinstatement of the affected employees to an ostensibly different corporation. The
surrounding circumstance of the creation of I-tech point to bad faith on the part of Digitel, as well as constitutive of
unfair labor practice in targeting the dismissal of the union member-employees. However, this bad faith does not
contradict, much less negate, the impossibility of the employees’ reinstatement because Digiserv has been closed and
no longer exists.
Even if it is a possibility that I-tech, as though Digitel, can absorb the dismissed union member-employees as I-tech
was incorporated during the time of the controversy with the same primary purpose as Digiserv, we would be hard
pressed to mandate the dismissed employees’ reinstatement given the lapse of more than seven (7) years.
This length of time from the date the incident occurred to its Resolution 31 coupled with the demonstrated litigiousness
of the disputants: (1) with all sorts of allegations thrown by either party against the other; (2) the two separate filings of
a notice of strike by the Union; (3) the Assumption Orders of the DOLE; (4) our own finding of unfair labor practice by
Digitel in targeting the union member-employees, abundantly show that the relationship between Digitel and the union
member-employees is strained. Indeed, such discordance between the parties can very well be a necessary
consequence of the protracted and branched out litigation. We adhere to the oft-quoted doctrine that separation pay
may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. 32
47
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust. 33
Finally, an illegally dismissed employee should be awarded moral and exemplary damages as their dismissal was
tainted with unfair labor practice.34 Depending on the factual milieu, jurisprudence has awarded varying amounts as
moral and exemplary damages to illegally dismissed employees when the dismissal is attended by bad faith or fraud;
or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good customs or public policy;
or if the dismissal is effected in a wanton, oppressive or malevolent manner. 35 1âwphi1
In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association v. National Labor Relations
Commission, we intoned:
Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations. As the conscience of the government, it is the Court’s sworn duty to
ensure that none trifles with labor rights.36
We awarded moral damages in the amount of ₱ 10,000.00 and likewise awarded ₱ 5,000.00 as exemplary damages
for each dismissed employee.
In the recent case of Purefoods Corporation v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-
File,37 we awarded the aggregate amount of ₱ 500,000.00 as moral and exemplary damages to the illegally dismissed
union member-employees which exact number was undetermined.
In the case at hand, with the Union’s manifestation that only 13 employees remain as respondents, as most had already
accepted separation pay, and consistent with our finding that Digitel committed an unfair labor practice in violation of
the employees’ constitutional right to self-organization, we deem it proper to award each of the illegally dismissed union
member-employees the amount of ₱ 10,000.00 and ₱ 5,000.00 as moral and exemplary damages, respectively.
COLEGIO DEL SANTISIMO ROSARIO V. ROJO

September 4, 2013
FACTS: Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary
basis for the school years 1992-1993, 1993-19947 and 1994-1995.8
On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew respondent’s
services.9
Thus, on July 13, 1995, respondent filed a Complaint10 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."
ISSUE: WON Respondent teacher is considered as a Regular Employee
HELD: yes. That teachers on probationary employment also enjoy the protection afforded by Article 281 of the Labor
Code is supported by Section 93 of the 1992 Manual which provides:
Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made regular or
permanent. Full-time teachers who have satisfactorily completed their probationary period shall be considered regular
or permanent.
48
The above provision clearly provides that full-time teachers become regular or permanent employees once they have
satisfactorily completed the probationary period of three school years.37 The use of the term satisfactorily necessarily
connotes the requirement for schools to set reasonable standards to be followed by teachers on probationary
employment. For how else can one determine if probationary teachers have satisfactorily completed the probationary
period if standards therefor are not provided?
As such, "no vested right to a permanent appointment shall accrue until the employee has completed the prerequisite
three-year period necessary for the acquisition of a permanent status. [However, it must be emphasized that] mere
rendition of service for three consecutive years does not automatically ripen into a permanent appointment. It is also
necessary that the employee be a full-time teacher, and that the services he rendered are satisfactory
The fixed-term character of employment essentially refers to the period agreed upon between the employer and the
employee; employment exists only for the duration of the term and ends on its own when the term expires. In a sense,
employment on probationary status also refers to a period because of the technical meaning "probation" carries in
Philippine labor law – a maximum period of six months, or in the academe, a period of three years for those engaged
in teaching jobs. Their similarity ends there, however, because of the overriding meaning that being "on probation"
connotes, i.e., a process of testing and observing the character or abilities of a person who is new to a role or job.
Understood in the above sense, the essentially protective character of probationary status for management can readily
be appreciated. But this same protective character gives rise to the countervailing but equally protective rule that the
probationary period can only last for a specific maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the probation, any employer move based on the
probationary standards and affecting the continuity of the employment must strictly conform to the probationary rules.
In the same case, this Court has definitively pronounced that "in a situation where the probationary status overlaps with
a fixed-term contract not specifically used for the fixed term it offers, Article 281 should assume primacy and the fixed-
period character of the contract must give way
In this case, glaringly absent from petitioners’ 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
Contract44 could such standards be found.45 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 responden
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.48
Mofada would also have us believe that respondent chose to resign as he feared for his life, thus, the school’s decision
not to renew his contract. However, no resignation letter was presented. Besides, this is contrary to respondent’s act
of immediately filing the instant case against petitioners
VINOYA V. NLRC
GR No. 126586, February 2, 2000
FACTS: Private respondent Regent Food Corporation is a domestic corporation principally engaged in the manufacture
and sale of various food products. Private respondent Ricky See, on the other hand, is the president of RFC and is
being sued in that capacity.
49
Petitioner Alexander Vinoya, the complainant, worked with RFC as sales representative until his services were
terminated on 25 November 1991.
Petitioner Alexander Vinoya claims that he applied and was accepted by RFC as sales representative on 26 May 1990.
On the same date, a company identification card3 was issued to him by RFC. Petitioner alleges that he reported daily
to the office of RFC, in Pasig City, to take the latter's van for the delivery of its products. According to petitioner, during
his employ, he was assigned to various supermarkets and grocery stores where he booked sales orders and collected
payments for RFC. For this task, he was required by RFC to put up a monthly bond of P200.00 as security deposit to
guarantee the performance of his obligation as sales representative. Petitioner contends that he was under the direct
control and supervision of Mr. Dante So and Mr. Sadi Lim, plant manager and senior salesman of RFC, respectively.
He avers that on 1 July 1991, he was transferred by RFC to Peninsula Manpower Company, Inc. ("PMCI"), an agency
which provides RFC with additional contractual workers pursuant to a contract for the supply of manpower services
(hereinafter referred to as the "Contract of Service").4 After his transfer to PMCI, petitioner was allegedly reassigned to
RFC as sales representative. Subsequently, on 25 November 1991, he was informed by Ms. Susan Chua, personnel
manager of RFC, that his services were terminated and he was asked to surrender his ID card. Petitioner was told that
his dismissal was due to the expiration of the Contract of Service between RFC and PMCI. Petitioner claims that he
was dismissed from employment despite the absence of any notice or investigation. Consequently, on 3 December
1991, petitioner filed a case against RFC before the Labor Arbiter for illegal dismissal and non-payment of 13th month
pay.
ISSUE: WON it is a labor-only contractor or an independent contractor
HELD: 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
On the other hand, permissible job 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
PMCI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work
premises, among others, to qualify as an independent contractor. While it has an authorized capital stock of
P1,000,000.00, only P75,000.00 is actually paid-in, which, to our mind, cannot be considered as substantial
capitalization
PMCI did not carry on an independent business nor did it undertake the performance of its contract according to its
own manner and method, free from the control and supervision of its principal, RFC. The evidence at hand shows that
the workers assigned by PMCI to RFC were under the control and supervision of the latter
PMCI was not engaged to perform a specific and special job or service, which is one of the strong indicators that an
entity is an independent contractor as explained by the Court in the cases of Neri and Fuji
in labor-only contracting, the employees recruited, supplied or placed by the contractor perform activities which are
directly related to the main business of its principal. In this case, the work of petitioner as sales representative is directly
related to the business of RFC. Being in the business of food manufacturing and sales, it is necessary for RFC to hire
a sales representative like petitioner to take charge of booking its sales orders and collecting payments for such. Thus,
the work of petitioner as sales representative in RFC can only be categorized as clearly related to, and in the pursuit of
the latter's business. Logically, when petitioner was assigned by PMCI to RFC, PMCI acted merely as a labor-only
contractor
50
Based on the foregoing, PMCI can only be classified as a labor-only contractor and, as such, cannot be considered as
the employer of petitioner.
FONTERRA BRANDS V. LARGADO

G.R. No. 205300, March 18, 2015
FACTS: Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing and Promotions Corp.
(Z)rtron) for the marketing and promotion of its milk and dairy products. Pursuant to the contract, Zytron provided
Fonterra with trade merchandising representatives (TMRs), including respondents Leonardo Largado (Largado) and
Teotimo Estrellado (Estrellado). The engagement of their services began on September 15, 2003 and May 27, 2002,
respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract, effective June 5, 2006. Fonterra then
entered into an agreement for manpower supply with A.C. Sicat Marketing and Promotional Services (A.C. Sicat).
Desirous of continuing their work as TMRs, respondents submitted their job applications with A.C. Sicat, which hired
them for a term of five (5) months, beginning June 7, 2006 up to November 6, 2006.
When respondents’ 5-month contracts with A.C. Sicat were about to expire, they allegedly sought renewal thereof, but
were allegedly refused. This prompted respondents to file complaints for illegal dismissal, regularization, non-payment
of service incentive leave and 13th month pay, and actual and moral damages, against petitioner, Zytron, and A.C.
Sicat.
ISSUE: whether or not Zytron and A.C. Sicat are labor-only contractors, making Fonterra the employer of herein
respondents
HELD: NO. LEGITIMATE JOB-CONTRACTING.
the termination of respondents’ employment with Zytron was brought about by the cessation of their contracts with the
latter. We give credence to the Labor Arbiter’s conclusion that respondents were the ones who refused to renew their
contracts with Zytron, and the NLRC’s finding that they themselves acquiesced to their transfer to A.C. Sicat
By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is the
voluntary act of employees who are compelled by personal reasons to dissociate themselves from their employment,
done with the intention of relinquishing an office, accompanied by the act of abandonment
Here, it is obvious that respondents were no longer interested in continuing their employment with Zytron. Their
voluntary refusal to renew their contracts was brought about by their desire to continue their assignment in Fonterra
which could not happen in view of the conclusion of Zytron’s contract with Fonterra. Hence, to be able to continue with
their assignment, they applied for work with A.C. Sicat with the hope that they will be able to continue rendering services
as TMRs at Fonterra since A.C. Sicat is Fonterra’s new manpower supplier.
In short, respondents voluntarily terminated their employment with Zytron by refusing to renew their employment
contracts with the latter, applying with A.C. Sicat, and working as the latter’s employees, thereby abandoning their
previous employment with Zytron
Hence, A.C. Sicat is engaged in legitimate job contracting
Furthermore, A.C. Sicat has substantial capital, having assets totaling 5,926,155.76 as of December 31, 2006. Too, its
Agreement with Fonterra clearly sets forth that A.C. Sicat shall be liable for the wages and salaries of its employees or
workers, including benefits, premiums, and protection due them, as well as remittance to the proper government entities
of all withholding taxes, Social Security Service, and Medicare premiums, in accordance with relevant laws.
Additional ruling (for study prurposes): the termination of respondents’ employment with the latter was simply brought
about by the expiration of their employment contracts.
51
Foremost, respondents were fixed-term employees. As previously held by this Court, fixed-term employment contracts
are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with
predetermined dates of completion; they also include those to which the parties by free choice have assigned a specific
date of termination.11 The determining factor of such contracts 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.12
In the case at bar, it is clear that respondents were employed by A.C. Sicat as project employees. In their employment
contract with the latter, it is clearly stated that "[A.C. Sicat is] temporarily employing [respondents] as TMR[s] effective
June 6[, 2006] under the following terms and conditions: The need for your service being only for a specific project,
your temporary employment will be for the duration only of said project of our client, namely to promote FONTERRA
BRANDS products x x x which is expected to be finished on or before Nov. 06, 2006."13
Respondents, by accepting the conditions of the contract with A.C. Sicat, were well aware of and even acceded to the
condition that their employment thereat will end on said pre-determined date of termination. They cannot now argue
that they were illegally dismissed by the latter when it refused to renew their contracts after its expiration. This is so
since the non-renewal of their contracts by A.C. 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. The expiration of
their contract with A.C. Sicat simply caused the natural cessation of their fixed-term employment thereat. We, thus, see
no reason to disturb the ruling of the CA in this respect.
INTEL TECHNOLOGY PHILIPPINES, INC. vs. NATIONAL LABOR RELATIONS COMMISSION AND JEREMIAS
CABILES
February 5, 2014
This case concerns the eligibility of Cabiles to receive retirement benefits from Intel Phil. granted to employees who
had complied with the ten (10)-year service period requirement of the company.
Cabiles was initially hired by Intel Phil. on April 16, 1997
In 2006, Cabiles was offered the position of Finance Manager by Intel HK. Before accepting the offer, he inquired from
Intel Phil., through an email, the consequences of accepting the newly presented opportunity in Hong Kong. Intel Phil.,
through Penny Gabronino (Gabronino), replied Jerry – you are not eligible to receive your retirement benefit given that
you have not reached 10 years of service at the time you moved to Hong Kong. We do not round up the years of
service. Cabiles signed the job offer.
Cabiles executed a Release, Waiver and Quitclaim (Waiver) 9 in favor of Intel Phil. acknowledging receipt of
₱165,857.62 as full and complete settlement of all benefits due him by reason of his separation from Intel Phil.
September 8, 2007, after seven (7) months of employment, Cabiles resigned from Intel HK.
About two years thereafter, or on August 18, 2009, Cabiles filed a complaint for non-payment of retirement benefits
and for moral and exemplary damages with the NLRC Regional Arbitration Branch-IV. He insisted that he was employed
by Intel for 10 years and 5 months from April 1997 to September 2007 – a period which included his seven (7) month
stint with Intel HK. Thus, he believed he was qualified to avail of the benefits under the company’s retirement policy
allowing an employee who served for 10 years or more to receive retirement benefits.
Can the acts of Cabiles be considered as resignation as contemplated by the Labor Code? Yes.
Cabiles Resigned from Intel Philippines
Resignation is the formal relinquishment of an office,24 the overt act of which is coupled with an intent to renounce. This
intent could be inferred from the acts of the employee before and after the alleged resignation.25
Despite a non-favorable reply as to his retirement concerns, Cabiles still accepted the offer of Intel HK.
52
His acceptance of the offer meant letting go of the retirement benefits he now claims as he was informed through email
correspondence that his 9.5 years of service with Intel Phil. would not be rounded off in his favor. He, thus, placed
himself in this position, as he chose to be employed in a company that would pay him more than what he could earn in
Chengdu or in the Philippines.
All these are indicative of the clearest intent of Cabiles to sever ties with Intel Phil. He chose to forego his tenure with
Intel Phil., with all its associated benefits, in favor of a more lucrative job for him and his family with Intel HK.
Intel HK became the new employer. It provided Cabiles his compensation. Cabiles then became subject to Hong Kong
labor laws, and necessarily, the rights appurtenant thereto, including the right of Intel HK to fire him on available
grounds. Lastly, Intel HK had control and supervision over him as its new Finance Manager. Evidently, Intel Phil. no
longer had any control over him.
Although in various instances, his move to Hong Kong was referred to as an "assignment," it bears stressing that it was
categorized as a "permanent transfer." In Sta. Maria v. Lopez, 29 the Court held that "no permanent transfer can take
place unless the officer or employee is first removed from the position held, and then appointed to another position."
Undoubtedly, Cabiles’ decision to move to Hong Kong required the abandonment of his permanent position with Intel
Phil. in order for him to assume a position in an entirely different company. Clearly, the "transfer" was more than just
an assignment. It constituted a severance of Cabiles’ relationship with Intel Phil., for the assumption of a position with
a different employer, rank, compensation and benefits.
SAN MIGUEL CORPORATION vs.MAERC INTEGRATED SERVICES, INC

July 10, 2003
TWO HUNDRED NINETY-ONE (291) workers filed their complaints (nine [9] complaints in all) against San Miguel
Corporation and Maerc Integrated Services, Inc for illegal dismissal, underpayment of wages, non-payment of service
incentive leave pays and other labor standards benefits.
Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been
working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the
latter were terminated on 31 January 1988.
SMC denied liability for the claims and averred that the complainants were not its employees but of MAERC, an
independent contractor whose primary corporate purpose was to engage in the business of cleaning, receiving, sorting,
classifying, etc., glass and metal containers.
Whether the complainants are employees of petitioner SMC or of respondent MAERC?, or whether there is
labor only contracting?
Court has invariably held that in ascertaining an employer-employee relationship, the following factors are considered:
(a) the selection and engagement of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power
to control an employee's conduct, the last being the most important.
SMC played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the
complainants had already been working for SMC long before the signing of the service contract between SMC and
MAERC in 1988. MAERC admitted having supplied and recruited workers for SMC even before MAERC was created,
upon the instruction of SMC through its supervisors to make it appear that complainants were hired by MAERC.
In deciding the question of control, the language of the contract is not determinative of the parties' relationship; rather,
it is the totality of the facts and surrounding circumstances. SMC maintained a constant presence in the workplace
53
through its own checkers. Control of the premises in which the contractor's work was performed was also viewed as
another phase of control over the work, and this strongly tended to disprove the independence of the contractor, the
building along with the machinery and equipment in the facility was actually being rented by SMC.
MAERC, as earlier discussed, displayed the characteristics of a labor-only contractor. Moreover, while MAERC's
investments in the form of buildings, tools and equipment amounted to more than P4 Million, we cannot disregard the
fact that it was the SMC which required MAERC to undertake such investments under the understanding that the
business relationship between petitioner and MAERC would be on a long term basis. Nor do we believe MAERC to
have an independent business. Not only was it set up to specifically meet the pressing needs of SMC which was then
having labor problems in its segregation division, none of its workers was also ever assigned to any other establishment,
thus convincing us that it was created solely to service the needs of SMC. Naturally, with the severance of relationship
between MAERC and SMC followed MAERC's cessation of operations, the loss of jobs for the whole MAERC workforce
and the resulting actions instituted by the workers.
In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure
that the employees are paid their wages.34 The principal employer becomes jointly and severally liable with the job
contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. Other than
that, the principal employer is not responsible for any claim made by the employees.
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 therefore becomes solidarily liable with the
labor-only contractor for all the rightful claims of the employees.
This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the
separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case,
petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.
MANOLO A. PEÑAFLOR vs. OUTDOOR CLOTHING MANUFACTURING CORPORATION January 21, 2010
Peñaflor was hired on September 2, 1999 as probationary Human Resource Department (HRD) Manager of respondent
Outdoor Clothing Manufacturing Corporation
When Outdoor Clothing began undertaking its alleged downsizing program due to negative business returns, Peñaflor
alleged that his department had been singled out. On the pretext of retrenchment, Peñaflor’s two staff members were
dismissed, leaving him as the only member of Outdoor Clothing’s HRD and compelling him to perform all personnel-
related work. He worked as a one-man department, carrying out all clerical, administrative and liaison work; he
personally went to various government offices to process the company’s papers.
When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing incident, the company
required Peñaflor to attend to her hospitalization needs; he had to work outside office premises to undertake this task.
As he was acting on the company’s orders, Peñaflor considered himself to be on official business, but was surprised
when the company deducted six days’ salary corresponding to the time he assisted Padilla.
After Peñaflor returned from his field work on March 13, 2000, his officemates informed him that while he was away,
Syfu had appointed Nathaniel Buenaobra (Buenaobra) as the new HRD Manager. This information was confirmed by
Syfu’s memorandum of March 10, 2000 to the entire office stating that Buenaobra was the concurrent HRD and
Accounting Manager.
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Peñaflor claimed that under these circumstances, he had no option but to resign. He submitted a letter to Syfu declaring
his irrevocable resignation from his employment with Outdoor Clothing effective at the close of office hours on March
15, 2000.
Peñaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming that he had been constructively
dismissed. He included in his complaint a prayer for reinstatement and payment of backwages, illegally deducted
salaries, damages, attorney’s fees, and other monetary claims.
Outdoor Clothing claims that Peñaflor voluntarily resigned from his work and his contrary allegations were all
unsubstantiated. The HRD was not singled out for retrenchment, but was simply the first to lose its staff members
because the company had to downsize. Thus, all HRD work had to be performed by Peñaflor. Instead of being grateful
that he was not among those immediately dismissed due to the company’s retrenchment program, Peñaflor
unreasonably felt humiliated in performing work that logically fell under his department; insisted on having a full staff
complement; absented himself from work without official leave; and demanded payment for his unauthorized absences.
Whether there is constructive dismissal?
A critical fact necessary in resolving this issue is whether Peñaflor filed his letter of resignation before or after the
appointment of Buenaobra as the new/concurrent HRD manager. This question also gives rise to the side issue of
when Buenaobra’s appointment was made. If the resignation letter was submitted before Syfu’s appointment of
Buenaobra as new HRD manager, little support exists for Peñaflor’s allegation that he had been forced to resign due
to the prevailing abusive and hostile working environment. Buenaobra’s appointment would then be simply intended to
cover the vacancy created by Peñaflor’s resignation. On the other hand, if the resignation letter was submitted after the
appointment of Buenaobra, then factual basis exists indicating that Peñaflor had been constructively dismissed as his
resignation was a response to the unacceptable appointment of another person to a position he still occupied.
The question of when Peñaflor submitted his resignation letter arises because this letter – undisputably made – was
undated. Despite Peñaflor’s claim of having impressive intellectual and academic credentials, 19 his resignation letter,
for some reason, was undated.
Peñaflor was never informed about these memoranda when they directly concerned him, particularly the turnover of
responsibilities to Buenaobra if indeed Peñaflor had resigned on March 1, 2000 and a smooth turnover to Buenaobra
was intended.
These pieces of evidence pointing to a March 1, 2000 resignation – specifically, Syfu’s March 1, 2000 memorandum to
Buenaobra about Penaflor’s resignation and Buenaobra’s own acknowledgment and acceptance – were only presented
to the NLRC on appeal, not before the labor arbiter.
The circumstances and other evidence surrounding Peñaflor’s resignation support his claim that he was practically
compelled to resign from the company.
The first is the settled rule that in employee termination disputes, the employer bears the burden of proving that the
employee’s dismissal was for just and valid cause.
Another basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the interpretation and
implementation of the Labor Code should be interpreted in favor of the workingman. This principle has been extended
by jurisprudence to cover doubts in the evidence presented by the employer and the employee.
Last but not the least, we have repeatedly given significance in abandonment and constructive dismissal cases to the
employee’s reaction to the termination of his employment and have asked the question: is the complaint against the
employer merely a convenient afterthought subsequent to an abandonment or a voluntary resignation? We find from
the records that Peñaflor sought almost immediate official recourse to contest his separation from service through a
55
complaint for illegal dismissal.30 This is not the act of one who voluntarily resigned; his immediate complaints
characterize him as one who deeply felt that he had been wronged.
PHILIPPINE GLOBAL COMMUNICATIONS, INC. vs. RICARDO DE VERA

June 7, 2005
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of
communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom
petitioner enlisted to attend to the medical needs of its employees.
At the crux of the controversy is Dr. De Vera’s status vis a vis petitioner when the latter terminated his engagement.
It appears that on 15 May 1981, De Vera, via a letter agreed and formalized respondent’s proposal in a document
denominated as RETAINERSHIP CONTRACT. Said contract was renewed yearly.
The turning point in the parties’ relationship surfaced in December 1996 when Philcom, thru a letter 6 bearing on the
subject boldly written as "TERMINATION – RETAINERSHIP CONTRACT", informed De Vera of its decision to
discontinue the latter’s "retainer’s contract with the Company effective at the close of business hours of December 31,
1996" because management has decided that it would be more practical to provide medical services to its employees
through accredited hospitals near the company premises.
De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that
that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due
process. He averred that he was designated as a "company physician on retainer basis" for reasons allegedly known
only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention
to the designation as anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits,
like any other regular employees of Philcom.
Whether De Vera is an employee? NO.
ART. 157. Emergency medical and dental services.xxxx

(last paragraph) In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist
who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-
time basis, and not less than eight (8) hours in the case of those employed on full-time basis. Where the undertaking
is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as
the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance
in case of emergency.
Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in
non-hazardous workplaces, the employer may engage the services of a physician "on retained basis." As
correctly observed by the petitioner, while it is true that the provision requires employers to engage the services of
medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law
which says that medical practitioners so engaged be actually hired as employees, 24 adding that the law, as written, only
requires the employer "to retain", not employ, a part-time physician who needed to stay in the premises of the non-
hazardous workplace for two (2) hours.
Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where
the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see
to it that the mandate is obeyed
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Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage
"on retained basis" the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so
engaged thereby becomes a regular employee. The very phrase that they may be engaged "on retained basis", revolts
against the idea that this engagement gives rise to an employer-employee relationship.
PGCI consistently engaged the services of De Vera on a retainer basis, as shown by their various "retainership
contracts", so can petitioner put an end, with or without cause, to their retainership agreement as therein provided.
RUBEN SERRANO vs NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE
January 27, 2000
Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters
and prevent pilferage of merchandise.1 Initially hired on October 4, 1984 on contractual basis, petitioner eventually
became a regular employee on April 4, 1985. In 1988, he became head of the Security Checkers Section of private
respondent.
Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section and
engage the services of an independent security agency.
The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal dismissal, illegal
layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay.
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS
CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED
UNDER THE LATTER? YES.
Petitioner Laid Off for Cause
Art. 283 Closure of establishment and reduction of personnel. — 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 this 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. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1)
month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.
The "[management of a company] cannot be denied the faculty of promoting efficiency and attaining economy by a
study of what units are essential for its operation. To it belongs the ultimate determination of whether services should
be performed by its personnel or contracted to outside agencies . . . [While there] should be mutual consultation,
eventually deference is to be paid to what management decides."11 Consequently, absent proof that management acted
in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.
In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private
respondent's real purpose was to avoid payment to the security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990.13 Such an assertion is not sufficient basis for concluding that the
termination of petitioner's employment was not a bona fide decision of management to obtain reasonable return from
its investment, which is a right guaranteed to employers under the Constitution. 14 Indeed, that the phase-out of the
security section constituted a "legitimate business decision" is a factual finding of an administrative agency which must
57
be accorded respect and even finality by this Court since nothing can be found in the record which fairly detracts from
such finding.15
Accordingly, we hold that the termination of petitioner's services was for an authorized cause, i.e., redundancy. Hence,
pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the rate of one month pay for every
year of service.
Validity of Petitioner's Layoff Not Affected by Lack of Notice

We do not agree, however, that disregard of this requirement by an employer renders the dismissal or termination of
employment null and void. Such a stance is actually a reversion to the discredited pre-Wenphil rule of ordering an
employee to be reinstated and paid backwages when it is shown that he has not been given notice and hearing although
his dismissal or layoff is later found to be for a just or authorized cause. Such rule was abandoned in Wenphil because
it is really unjust to require an employer to keep in his service one who is guilty, for example, of an attempt on the life
of the employer or the latter's family, or when the employer is precisely retrenching in order to prevent losses.
The need is for a rule which, while recognizing the employee's right to notice before he is dismissed or laid off, at the
same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to
terminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine
on an employer who is found to have dismissed an employee for cause without prior notice is deemed ineffective in
deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are just
or valid grounds for such dismissal or if the termination is for an authorized cause. That would be to uphold the right of
the employee but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the payment to
the employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a just
cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is
ineffectual.
Violation of Notice Requirement Not a Denial of Due Process

The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply to
the exercise of private power, such as the termination of employment under the Labor Code.
The second reason is that notice and hearing are required under the Due Process Clause before the power of organized
society are brought to bear upon the individual. This is obviously not the case of termination of employment under Art.
283. Here the employee is not faced with an aspect of the adversary system. The purpose for requiring a 30-day written
notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him, for there
is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity
to determine whether economic causes do exist justifying the termination of his employment.
The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process
Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This is also
the case in termination of employment for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience
by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful breach of
trust of the employer, commission of crime against the employer or the latter's immediate family or duly authorized
representatives, or other analogous cases).
Lack of Notice Only Makes Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed before
a right granted to a party can be exercised. Others are simply an application of the Justinian precept, embodied in the
Civil Code,33 to act with justice, give everyone his due, and observe honesty and good faith toward one's fellowmen.
Such is the notice requirement in Arts. 282-283. The consequence of the failure either of the employer or the employee
to live up to this precept is to make him liable in damages, not to render his act (dismissal or resignation, as the case
may be) void.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employer's failure to comply with the notice
requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination
of employment which makes the termination of employment merely ineffectual.
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment
was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is
58
failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with
Art. 283, to wit:
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one
month for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one (1)
whole year.
Isetann Department Store, Inc. to pay petitioner separation pay equivalent to one (1) month pay for every year of
service, his unpaid salary, and his proportionate 13th month pay and, in addition, full backwages from the time his
employment was terminated on October 11, 1991 up to the time the decision herein becomes final. For this purpose,
this case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary
awards to petitioner.
PEOPLE OF THE PHILIPPINES VS. DOMINGO PANIS

GR NO. L–58674–77, JULY 11, 1990
Facts:
Four separate criminal complaints were filed against Abug for operating a fee-charging employment agency
without first securing a license. But Abug argued that the complaints did not charge an offense as he was charged with
illegally recruiting only one person in each of the four informations. Abug claimed that under Article 13(b) there would
be illegal recruitment only when two or more persons in any manner were promised or offered any employment for a
fee.
Issue:
Should the crime of illegal recruit be committed against two or more persons?
Ruling:
The Court ruled that the number of persons is not an essential ingredient of the act of recruitment and
placement of workers. — “As we see it, the proviso was intended neither to impose a condition on the basic rule nor to
provide an exception thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration
of a fee, an offer or promise of employment is made in the course of the “canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring (of) workers.” The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of
evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective
workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and
placement. The words ‘shall be deemed’ create that presumption.”
THE PEOPLE OF THE PHILIPPINES v JULIA REGALADO ESTRADA

G.R. No. 225730, February 28, 2018
FACTS:
Estrada was indicted for the crime of Illegal Recruitment in Large Scale and Estafa under four (4) separate
Informations. Private complainants separately met Estrada on various dates from February to April 2009. Sevillena was
59
encouraged by his father to seek the help of Estrada as he knew her to be recruiting for overseas work; Cortez met
Estrada through his aunt who also knew Estrada to be a recruiter for overseas work; and Jacinto came to know Estrada
after she chanced upon a tarpaulin advertisement for overseas work on which Estrada's number and address were
posted.
During their respective meetings, Estrada represented herself as having power and authority to deploy
persons abroad for overseas employment. Cortez recalled that in their initial meeting, Estrada told him that she works
for Worldview International Corporation (Worldview), a private recruitment agency for overseas employment. She later
told him, however, that she changed agency because Worldview's license had expired.
The private complainants transacted only with Estrada to whom they submitted all the documents necessary
for their overseas placement and to whom they paid processing, placement, and other fees. Estrada further required
private complainants, with the exception of Antonio, to undergo the Pre-Departure Orientation Seminar (PDOS).
However, even after undergoing PDOS, payment of the fees required, and submission of the documentary
requirements, Estrada still failed to deploy them abroad. Estrada repeatedly promised them that their plane tickets were
still being processed. Estrada, however, failed to deliver on her promised deployment of the private complainants; thus,
they were prompted to file criminal cases against Estrada.
ISSUE:
Whether the trial and appellate courts erred in finding Estrada guilty of illegal recruitment in large scale. (NO)
RULING:
Under Section 6 of R.A. No. 8042, illegal recruitment, when undertaken by a non-licensee or nonholder of
authority as contemplated under Article 13(f) of the Labor Code, shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, procuring workers, and including referring, contract services, promising or
advertising for employment abroad, whether for profit or not.
Further, to sustain a conviction for illegal recruitment under R.A. No. 8042 in relation to the Labor Code, the
prosecution must establish two (2) elements: first, the offender has no valid license or authority required by law to
enable one to lawfully engage in the recruitment and placement of workers; and second, the offender undertakes any
of the activities within the meaning of recruitment and placement defined in Article 13(b) of the Labor Code, or any of
the prohibited practices enumerated under Section 6 of R.A. No. 8042. Further, in case the illegal recruitment was
committed in large scale, a third element must be established, that is, the offender commits the illegal recruitment
activities against three or more persons, individually or as a group.
The Court is convinced that the prosecution was able to establish the essential elements of the crime of illegal
recruitment in large scale.
First, it is not disputed that Estrada is not licensed or authorized to recruit workers for overseas placement.
During the trial, the defense admitted the POEA Certification which stated that Estrada is not included among the list
of employees submitted by ABCA for POEA acknowledgment. Therefore, Estrada is not authorized to recruit workers
for overseas employment. This fact was not denied by Estrada in her defense anchored only on the allegation that she
did not recruit the private complainants but merely mentioned ABCA and Worldview to them.
Second, the prosecution was able to establish that Estrada unlawfully engaged in activities which refer to
recruitment and placement under Article 13(b) of the Labor Code and Section 6 of R.A. No. 8042. Specifically, the
prosecution was able to sufficiently demonstrate that Estrada promised and recruited private complainants for
employment abroad for a fee.
This is amply supported by the testimonies of the private complainants who categorically testified that Estrada
promised them employment and placement in Dubai as baker, waiter, and cashier. More particularly, the private
complainants positively identified Estrada as the person with whom they transacted relative to their alleged deployment
60
to Dubai; the person who instructed them to complete the documents necessary for their deployment and to undergo
medical examination; the person to whom they submitted these documents; and the person to whom they directly paid
the processing, placement, medical examination, and other fees.
It is a settled rule that factual findings of the trial courts, including their assessment of the witnesses' credibility,
especially when the CA affirmed such findings, are entitled to great weight and respect by this Court. Further, in the
absence of any evidence that the prosecution witnesses were motivated by improper motives, the trial court's
assessment with respect to their credibility shall not be interfered with by this Court. Thus, between the positive
identification and categorical testimony by the private complainants and Estrada's unsubstantiated and uncorroborated
denial, the Court finds the former more credible.
Finally, it is clear that Estrada committed illegal recruitment activities against the three (3) private
complainants. Thus, the trial and appellate courts properly convicted Estrada of the crime of illegal recruitment in large
scale.
PEOPLE OF THE PHILIPPINES vs. ERLINDA A. SISON

G.R. No. 187160, August 9, 2017
Facts:
Sometime in November or December 1999, Darvy M. Castuera (Castuera) was introduced to Sison by her
husband, a certain Col. Alex Sison (Col. Sison), a police officer assigned at Camp Crame, Quezon City. Castuera's
aunt, Edna Magalona, was then teaching police officers at Camp Crame and Col. Sison was one of her students. Col.
Sison happened to mention that his wife can facilitate papers for workers in Australia. Castuera and Magalona then
proceeded to Col. Sison's home in Las Pinas. There, they met Sison and she briefed Castuera on the requirements for
working as a fruit picker in Australia.
During that meeting, Sison introduced Castuera to another man who related that he was able to go to Australia
with Sison's help. She also showed Castuera pictures of other people she had supposedly helped to get employment
in Australia. Sison further narrated that a couple she had helped had given her their car as payment. Because of Sison's
representations, Castuera believed in her promise that she could send him to Australia.
Sison asked Castuera for P180,000 for processing his papers. After some negotiations, Sison agreed to lower
the fee to P160,000. Castuera was to pay half before he leaves the Philippines and the other half will be taken from his
salary in Australia.
On 16 June 2000, Castuera met Sison at McDonald's in SM Megamall to give the P80,000 down payment.
Sison issued a signed document as proof of payment. Castuera's companions, his aunt Edna Magalona and cousin
Mark Magalona, also signed the document as witnesses. Sison promised Castuera that she would personally process
his visa application.
Sison, however, failed to secure an Australian visa for Castuera. She told him that it was difficult to get an
Australian visa in the Philippines so they had to go to Malaysia to get one. She also said that Castuera's Australian visa
was already in Malaysia and his personal appearance was required there.
On 28 June 2008, Sison and Castuera left Manila for Zamboanga City by plane and from there, rode a boat
to Sandakan, Malaysia. Sison told Castuera that he only needed to stay in Malaysia for a week then he would proceed
to Australia.
Twice, they nearly overstayed in Malaysia. Each time, Sison and Castuera would leave for Brunei, stay there
for three days, and then go back to Malaysia. The second time they returned to Malaysia, they met several of Sison's
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other recruits - other Filipinos who have come in through Thailand - as well as Sison's co-accused, Rea Dedales
(Dedales) and Leonardo Bacomo (Bacomo). Castuera was told that the group would be proceeding to Indonesia to
process their Australian visas there. The group then left for Indonesia. However, the day after arriving in Indonesia,
Sison went back to the Philippines, leaving Castuera and the other recruits with Dedales and Bacomo.
Subsequently, Castuera's application for an Australian visa in Indonesia was denied. Dedales said it was
harder to get an Australian visa from Indonesia and told Castuera to apply for a U.S. visa instead. Dedales asked for
US$1,000 for the processing of his U.S. visa, which he paid. However, when his U.S. visa came, Castuera saw that it
was in an Indonesian passport bearing an Indonesian name. Because of this, Castuera decided to just return to the
Philippines. He asked for his US$1,000 back but Dedales would not return it. His Philippine passport was also not
returned immediately causing him to overstay in Indonesia. He found out then that the extension papers that Dedales
and Bacomo procured for him were fake.
Castuera sought the help of the Philippine Embassy in Indonesia and was able to return to the Philippines
using his own funds.
Upon returning to the Philippines, Castuera filed a complaint against Sison, Dedales, and Bacomo at the
Philippine Overseas Employment Administration (POEA). The agency verified that Sison, Dedales, and Bacomo did
not have any license or permit to hire and recruit for overseas employment.
ISSUE:
Is the accused guilty of illegal recruitment and placement via a syndicate?
RULING:
The appeal has no merit. The assailed decision of the Court of Appeals is affirmed, with modification as to the
penalty imposed in the estafa case.
Illegal Recruitment by a Syndicate - Economic Sabotage. Under Article 13(b) of Presidential Decree No. 442, as
amended, also known as the Labor Code of the Philippines, recruitment and placement refers to "any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contact services,
promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement."
Illegal recruitment, on the other hand, is defined in Article 38:
Article 38. ILLEGAL RECRUITMENT. - (a) Any recruitment activities, including the prohibited practices
enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be
deemed illegal and punishable under Article 39 of this Code. The Department of Labor and Employment or any law
enforcement officer may initiate complaints under this Article. x x x x
RA 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, approved on 7 June 1995, further
strengthened the protection extended to those seeking overseas employment. Section 6, in particular, extended the
activities covered under the term illegal recruitment:
Sec. 6. DEFINITIONS. - For purposes of this Act, illegal recruitment [shall xxx] include the following acts:
(m) Failure to reimburse expenses incurred by the workers in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place without the
worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense
involving economic sabotage.
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Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or
more persons individually or as a group.
Simply put, illegal recruitment is "committed by persons who, without authority from the government, give the
impression that they have the power to send workers abroad for employment purposes." To prove illegal recruitment,
it must be shown that "the accused gave the complainants the distinct impression that she had the power or ability to
deploy the complainants abroad in a manner that they were convinced to part with their money for that end."
Illegal recruitment may be undertaken by either non-license or license holders. Non-license holders are liable
by the simple act of engaging in recruitment and placement activities, while license holders may also be held liable for
committing the acts prohibited under Section 6 of RA 8042.
Under RA 8042, a non-licensee or non-holder of authority commits illegal recruitment for overseas
employment in two ways: (1) by any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers, and includes referring, contract services, promising or advertising for employment abroad, whether for profit
or not; or (2) by undertaking any of the acts enumerated under Section 6 of RA 8042.
In this case, Sison herself admits that she has no license or authority to undertake recruitment and placement
activities. The Court has held in several cases that an accused who represents to others that he or she could send
workers abroad for employment, even without the authority or license to do so, commits illegal recruitment.
Illegal recruitment committed by a syndicate, as in the present case, has the following elements: (a) the
offender does not have the valid license or authority required by law to engage in recruitment and placement of workers;
(b) the offender undertakes any of the "recruitment and placement" activities defined in Article 13(b) of the Labor Code,
or engages in any of the prohibited practices enumerated under now Section 6 of RA 8042; and (c) the illegal
recruitment is "carried out by a group of three or more persons conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction, enterprise or scheme." In the third element, it "is not essential that there
be actual proof that all the conspirators took a direct part in every act. It is sufficient that they acted in concert pursuant
to the same objective."
The acts of Sison, Dedales, and Bacomo show a common purpose and and each undertook a part to reach
their objective. Their concerted action is evident in that either Sison or Dedales was receiving payments from the
recruits; that Dedales signed the acknowledgment receipt from Sison; and that the three accompanied their recruits
together in seeking out their visas in Malaysia and Indonesia. Further, the impression given to Castuera and other
recruits was that the three were indeed working together.
Since it was proven that the three accused were acting in concert and conspired with one another, their illegal
recruitment activity is considered done by a syndicate, making the offense illegal recruitment involving economic
sabotage.
PRINCESS JOY PLACEMENT AND GENERAL SERVICES, INC. VS. GERMAN A. BINALLA
G.R. NO. 197005 JUNE 4, 2014
FACTS:
Respondent German A. Binalla, signed a four-year contract of employment with Al Adwani as a staff nurse
through a representative of petitioner Princess Joy Placement and General Services, inc. It was only after boarding a
plane that he discovered that CBM was his deploying agency under the contract certified by the POEA for only two
years with higher salary than those he already signed.
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He worked under his contract for 2 years and returned to the Phils. after posting a bond to guarantee that he
would come back to finish his 4 year contract. Binalla then opted not to return to Saudi Arabia to complete his 4 year
contract and filed a case against Princess Joy & CBM on the ground of “reprocessing scheme” and contract substitution
and violation the terms of his 4 year contract as follows:
1. Withholding his initial salary as a bond to ensure completion of the 4 year contract
2. Deduction of Placement fee from his salary
3. Non-payment of overtime pay
4. Refusal to allow him to avail his vacation and sick leave
5. Deduction of board and lodging and food allowance which were supposed to be free
6. Requiring him to post a bond to guarantee that he would return when he applied for a vacation leave after two
years of work.
Princess Joy denied that the alleged representative who process Binalla’s employment were among its employees.
Binalla showed as evidence the ticket telegram/advise handed to him by the supposed representative and carried with
it the names of Princess Joy and the representative.
ISSUE:
Whether or not Princess Joy and CBM is guilty of reprocessing scheme and contract substitution.
HELD:
Princess Joy is as liable as CBM and Al Adwani for the contract substitution. Binalla worked under an
employment contract whose terms were inferior to the terms certified by the POEA. The ticket telegram/advise is proof
enough that Princess Joy recruited Binalla. Evidence submitted by the latter also showed that Princess Joy entered
into recruitment contracts, hired and placed Filipino workers for Al Adwani through its President.
Under Article 34 (i) of the Labor Code on prohibited practices, “it shall be unlawful for any individual, entity,
licensee, or holder of authority to substitute or alter 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 periods of expiration of the same without the approval of the Secretary of
Labor.” Further, contract substitution constitutes “illegal recruitment” under Article 38 (I) of the Code.
Princess joy and CBM are ordered to pay jointly and severally respondents claims.
PHIL. EMPLOY SERVICES AND RESOURCES, INC., v. JOSEPH PARAMIO

G.R. No. 144786, April 15, 2004
FACTS:
Respondents Joseph Paramio, Ronald Navarra, Romel Sarmiento, Recto Guillermo, Ferdinand Bautista and
Apolinario Curameng, Jr. applied for employment in Taiwan2 with petitioner, Phil. Employ Services and Resources,
Inc. (PSRI for brevity), a domestic corporation engaged in the recruitment and deployment of Filipino Workers
Overseas. They executed in the Philippines separate one-year contracts of employment with their employer in Taiwan,
Kuan Yuan Fiber Co., Ltd. Hsei- Chang.
They encountered worse problems in the course of their employment, viz.:
a). Irregular and deliberate charging of deductions which were not fully accounted such as the blankets issued,
charging of penalties amounting to 400 NT to all employees for a littering violation attributable only to one employee;
b). Mandatory imposition of overtime work exceeding 10 hours without just overtime compensation and night shift
differentials; c). Failure to comply with some stipulations stated in the Employment Contract particularly those relating
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to the accommodation and lodging of the contracted workers; d). Lack of observance of safety precautions at work
area.
In March of 1997, Fabian Chua, local manager of the petitioner PSRI, made a surprise visit to Kuan Yuan in
Taiwan and was apprised of the said complaints. However, Chua cautioned the respondents not to air their.
Disappointed, the respondents contacted the Overseas Workers Welfare Administration (OWWA) but their requests
were not favourably acted upon.
On May 10, 1997, respondent Navarra and, Pio Gabito, were repatriated, without specifying the ground or
cause therefor. Upon respondent Navarra’s arrival in Manila, the petitioner sought to settle his complaints. After the
negotiations, the petitioner agreed to pay P49,000 to the said respondent but, in consideration thereof, the latter
executed a quitclaim releasing the petitioner from any or all liabilities for his repatriation.
Meanwhile, when the other respondents learned that Navarra and Gabito were repatriated, they were
disheartened at their fate. The respondents also decided to go home, but they were unable to pay NT$30,000, therefore,
respondents failed to return to the Philippines.
On May 14, 1997, respondent Paramio got ill as a result of the employer's failure to give breakfast on the said
date and dinner the night before.. His manager still ordered him to work. Paramio was made to carry a container
weighing around 30 kilograms. Due to his condition, the container slipped from his hands and he injured his thumb.
Instead of giving him financial assistance for his hospital bills, his employer told that it would be better for him to go
home to the Philippines to recuperate. An official from the Taiwanese Labor Department intervened and his employer
was told that it had no right to repatriate the respondent because the accident happened while the latter was at work.
Respondent Paramio was made to report for work while he was still on sick leave. On June 5, 1997,
respondent Paramio received his paycheck, but he discovered that his employer had deducted NT$4,300 representing
his plane ticket back to the Philippines. Furthermore, his sick leave from May 14 to June 5 were not included in his
check. On July 1, 1997, he was assigned to do the second hardest job in the company, carrying containers weighing
about 30 kilograms in the dyeing department.
After a week, he was transferred to the hardest job in the factory, when he could no longer bear the pain in
his thumb, he took a break. When the manager saw him resting, he was ordered to return to work. Respondent Paramio
refused and contended that he could not resume work because of his thumb injury.
On September 23, 1997, he was given his paycheck and a plane ticket to the Philippines. He was told that the
amount of NT$3,700 was deducted from his paycheck because he neglected his duty. At around eight o’clock that
evening, respondent Paramio was repatriated to the Philippines.
In October 1997, the remaining employees decided to go home. Their employer agreed to have them
repatriated and to return their respective bonds, but required them to write letters of resignation.
On October 22, 1997, respondents Sarmiento, Guillermo, Curameng, Jr. and Bautista, together with
respondents Paramio and Navarra, filed separate complaints before the NLRC Arbitration Branch against Bayani
Fontanilla for illegal dismissal, non-payment of overtime pay, refund of placement fee, tax refund, refund of plane fares,
attorney’s fees and litigation expenses.
On October 29, 1998, Labor Arbiter Felipe P. Pati rendered a decision declaring that the dismissal of the
respondents was illegal.
In declaring respondent Navarra’s dismissal illegal, the labor arbiter held that the petitioner failed to
substantiate its claim that the said respondent had an altercation with his supervisor. As such, respondent Navarra was
entitled to the payment of the salaries due him for the unexpired portion of his contract. The labor arbiter likewise ruled
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that the dismissal of complainant Paramio was illegal. Considering that he had a thumb injury, his employer should
have given him a lighter job instead of repatriating him. The dismissal of the remaining complainants was also adjudged
illegal.
Aggrieved, the petitioner appealed before the National Labor Relations Commission (NLRC) insisting that the
dismissal of the complainants was anchored on valid and legal grounds.
On March 29, 1999, the NLRC issued a resolution finding that the respondents were legally dismissed and
set aside the decision of the labor arbiter. Dissatisfied, the respondents filed a motion for reconsideration of the
resolution, but the NLRC denied the motion.
The respondents filed a petition for certiorari under Rule 65 of the Rules of Court against the petitioner before
the Court of Appeals. On May 29, 2000, the CA rendered a decision partly granting the petition in that it nullified the
NLRC and reinstated the decision of the labor arbiter with modification. The CA held that respondents Curameng,
Bautista, Sarmiento and Guillermo were constructively dismissed, as the petitioner failed to substantiate its claim that
the aforesaid petitioners voluntarily resigned from work. The CA also ruled that the repatriation of respondent Paramio
was in violation of his employment contract.
The petitioner PSRI filed a motion for reconsideration but the appellate court denied the said motion. Hence,
this petition.
ISSUE:
Whether the respondents were illegally dismissed. (Yes)
RULING:
Preliminarily, it bears stressing that the respondents who filed complaints for illegal dismissal against the
petitioner were overseas Filipino workers whose employment contracts were approved by the Philippine and Overseas
Employment Administration (POEA) and were entered into and perfected here in the Philippines. As such, the rule lex
loci contractus (the law of the place where the contract is made) governs. Therefore, the Labor Code, its implementing
rules and regulations, and other laws affecting labor, apply in this case.
The petitioner contends that the termination of respondent Paramio’s employment was sanctioned by
paragraph 8.2, Nos. 5 and 6, Article VIII of the employment contract, to wit:
8.2 In the event the Employee is found offend (sic) one of the following prohibitions during his/her employment,
Employer may terminate this Employment contract and repatriate him/her to his/her country of origin. Employee shall
comply immediately without objection and assume the cost of round-trip transportation by air to and from R.O.C.
unconditionally. In the event Employer or any other person pay the airfare for the Employee, Employee shall reimburse
the fare to the person who paid it.
(5) During the period of employment, being found out suffering HIV positive anti-body or other disease, heavily
wounded or stool parasite, which cannot be cured within one month.
(6) Being found losing ability to work.
The foregoing provision is akin to Article 284 of the Labor Code, which provides:
Art. 284. Disease as a ground for termination – An employer may terminate the services of an employee who
has been found to be suffering from any disease and whose continued employment is prohibited by law or prejudicial
to his health as well as the health of his co-employees: …
Furthermore, Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code provides, thus:
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Sec. 8. Disease as a ground for dismissal - Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his coemployees, the employer shall not
terminate his employment unless there is a certification by competent public authority that the disease is of such nature
or at such a stage that it cannot be cured within a period of six (6) months with proper medical treatment. If the disease
or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to
take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his
normal health.
Applying the law and the rule, the employer is burdened to prove that the employee was suffering from a
disease which prevented his continued employment, or that the employee’s wound prevented his continued
employment. Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code requires a certification
from competent public authority that the employee was heavily wounded and had lost the ability to work.
In the case at bar, the petitioner did not adduce in evidence a certification from a public authority to the effect
that respondent Paramio had been heavily wounded. It also failed to show that by reason of his thumb injury, he lost
the ability to work. Respondent Paramio was not, for a time, able to perform the backbreaking tasks required by his
manager. However, despite his injury, he managed to perform the other tasks assigned to him, including carrying of
30-kilogram containers with the exception of the work in the Lupo Department. The fact that respondent Paramio was
assigned to perform the second hardest and heaviest task in the company shows the heartlessness of the company’s
manager. Despite his wound, the respondent tried to accomplish the work assigned to him.
The least the manager should have done was to assign the respondent to a lighter task, until such time that
the latter’s wound had completely healed. It must be stressed where there is no showing of a clear, valid and legal
cause for the termination of employment, the law considers the matter a case of illegal dismissal.
Consequently, respondent Paramio is entitled to the full reimbursement of his placement fee with interest at
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract for three months
for every year of the unexpired term, whichever is less under paragraph 5, Section 10 of Rep. Act No. 8042.
In Skippers Pacific, Inc. v. Mira, we ruled that an overseas Filipino worker who is illegally terminated shall be
entitled to his salary equivalent to the unexpired portion of his employment contract if such contract is less than one
year. However, if his contract is for a period of at least one year, he is entitled to receive his salaries equivalent to the
unexpired portion of his contract, or three months' salary for every year of the unexpired term, whichever is lower.
Respondent Paramio was deployed on December 6, 1996. His contract was for a period of twelve months or
one year. He was repatriated on September 23, 1997, approximately two months from the expiration of his contract.
Since the termination of his employment was not based on any valid or legal ground, he is entitled to the payment of
his salary equivalent to the unexpired portion of his contract. He is likewise entitled to full reimbursement of his
placement fee. Based on the record, respondent Paramio paid a placement fee of P19,000. Thus, he should be
reimbursed the amount of P19,000 with 12% interest per annum.
Similarly, the petitioner failed to substantiate its claim that respondent Navarra's repatriation was based on a
valid, legal and just cause. Respondent Navarra was deployed on November 6, 1996. He was repatriated on May 10,
1997, approximately five months prior to the expiration of his one-year contract. Consequently, he shall be entitled to
an amount equivalent to three months' salary, or NT$46,080. Similarly, having admitted that he paid a placement fee
of P19,000 only, he is entitled to be fully reimbursed therefore, plus 12% interest per annum.
As to the other respondents, the petitioner alleges that they refused to go to work and, in fact, voluntarily
resigned. However, the Court does not agree. The records reveal that the three respondents agreed to execute the
resignation letter because they could no longer bear the working conditions in their place of employment. Thus, the
Court ruled that there was constructive dismissal because their continued employment is rendered impossible,
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unreasonable or unlikely. In sum, there can be no other conclusion than that the aforementioned respondents were
illegally dismissed, and their employment contract illegally terminated.
Under Section 10, paragraph 5 of Rep. Act No. 8042, respondents Sarmiento, Bautista, Curameng and
Guillermo are entitled to the full reimbursement of their placement fees. Since each of the respondents remitted only
P19,000 to the petitioner, each of them is entitled to P19,000, plus 12% interest per annum.
According to Section 10, paragraph 2 of Rep. Act No. 8042, the agency which deployed the employees whose
employment contract were adjudged illegally terminated, shall be jointly and solidarily liable with the principal for the
money claims awarded to the aforesaid employees. Consequently, the petitioner, as the agency of the respondents, is
solidarily liable with its principal Kuan Yuan for the payment of the salaries due to the respondents corresponding to
the unexpired portion of their contract, as well as the reimbursement of their placement fees.
Under Section 15 of the same Act, the repatriation of the worker and the transport of his personal belongings
shall be the primary responsibility of the agency which recruited or deployed the overseas contract worker. All the costs
attendant thereto shall be borne by the agency concerned and/or its principal. Consequently, the petitioner is obliged
to refund P4,300 to each of the respondents, representing their airfare.
ALILIN V. PETRON CORPORATION

G.R. 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. Romualdo D. Gindang (Romualdo), started recruiting laborers for fielding
to Petron’s Mandaue Bulk Plant. When Romualdo died in1989, his son Romeo D. Gindang (Romeo), through Romeo
D. Gindang Services(RDG), took over the business and continued to provide manpower services to Petron. Petitioners
were among those recruited by Romualdo D. Gindang Contractor and RDG to work in the premises of the said bulk
plant. Petron and RDG entered into a Contract for Services. Petitioners filed a Complaint for illegal dismissal,
underpayment of wages, damages and attorney’s fees against Petron and RDG. Petitioners did not deny that RDG
hired them and paid their salaries. They, however, claimed that the latter is a labor-only contractor, which merely acted
as an agent of Petron, their true employer. They asseverated that their jobs, which are directly related to Petron’s
business, entailed them to work inside the premises of Petron using the required equipment and tools furnished by it
and that they were subject to Petron’s supervision. Claiming to be regular employees, petitioners thus asserted that
their dismissal allegedly in view of the expiration of the service contract between Petron and RDG is illegal.
RDG corroborated petitioners’ claim that they are regular employees of Petron. It alleged that Petron directly supervised
their activities; they performed jobs necessary and desirable to Petron’s business; Petron provided petitioners with
supplies, tools and equipment used in their jobs; and that petitioners’ workplace since the start of their employment
was at Petron’s bulk plant in Mandaue City. RDG denied liability over petitioners’ claim of illegal dismissal and further
argued that Petron cannot capitalize on the service contract to escape liability.
Petron, on the other hand, maintained that RDG is an independent contractor and the real employer of the petitioners.
It was RDG which hired and selected petitioners, paid their salaries and wages, and directly supervised their work.
Labor Arbiter ruled that petitioners are regular employees of Petron. It found that their jobs were directly related to
Petron’s business operations; they worked under the supervision of Petron’s foreman and supervisor; and they were
using Petron’s tools and equipment in the performance of their works.
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Labor Arbiter ruled that petitioners are regular employees of Petron. It found that their jobs were directly related to
Petron’s business operations; they worked under the supervision of Petron’s foreman and supervisor; and they were
using Petron’s tools and equipment in the performance of their works.
Petron continued to insist that there is no employer-employee relationship between it and petitioners. The NLRC,
however, was not convinced.
Issue: Whether or not RDG is a legitimate job contractor.
Held: No. Here, the audited financial statements and other financial documents of RDG for the years 1999 to 2001
establish that it does have sufficient working capital to meet the requirements of its service contract.Petron was able to
establish RDG’s sufficient capitalization when it entered into the service contract in 2000. The Court stresses though
that this determination of RDG’s status as an independent contractor is only with respect to its financial capability for
the period covered by the financial and other documents presented. In other words, the evidence adduced merely
proves that RDG was financially qualified as a legitimate contractor but only with respect to its last service contract with
Petron in the year 2000.As may be recalled, petitioners have rendered work for Petron for a long period of time even
before the service contract was executed in 2000. Hence, while 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.
The Court also finds, as will be discussed below, that the works performed by petitioners were directly related to
Petron’s business, another factor which negates Petron’s claim that RDG is an independent contractor.Of these 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.Hence, the facts 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. One manifestation of the power
of control is the power to transfer employees from one work assignment to another.
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. Petron therefore, being the principal employer and RDG, being the labor-only
contractor, are solidarily liable for petitioners' illegal dismissal and monetary claims.
MANILA MEMORIAL PARK V. LLUZ

G.R. No. 208451, February 3, 2016
Facts:
Petitioner Manila Memorial Park Cemetery, Inc. (Manila Memorial) entered into a Contract of Services with respondent
Ward Trading and Services (Ward Trading). The Contract of Services provided that Ward Trading, as an independent
contractor, will render interment and exhumation services and other related work to Manila Memorial in order to
supplement operations at Manila Memorial Park, Paranaque City.
Among those assigned by Ward Trading to perform services at the Manila Memorial Park were respondents Ezard
Lluz, Norman Corral, Erwm Fugaban, Valdimar Balisi, Emilio Fabon, John Mark Aplicador, Michael Curioso, Junlin
Espares, and Gavino Farinas (respondents). They worked six days a week for eight hours daily and were paid P250
per day.
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Subsequently, respondents files a complaint for regularization and Collective Bargaining Agreement benefits against
Manila Memorial.
Respondents alleged that they asked Manila Memorial to consider them as regular workers within the appropriate
bargaining unit established in the collective bargaining agreement by Manila Memorial and its union, the Manila
Memorial Park Free Workers Union (MMP Union). Manila Memorial refused the request since respondents were
employed by Ward Trading, an independent labor contractor.
Issue: Whether or not there exists an employer-employee relationship between Manila Memorial and respondents.
Held: Yes. In the present case, Manila Memorial entered into a Contract of Services with Ward Trading, a single
proprietorship owned by Emmanuel Mayor Ward with business address in Las Piñas City on 23 February 2006. In the
Contract of Services, it was provided that Ward Trading, as the contractor, had adequate workers and substantial
capital or investment in the form of tools, equipment, machinery, work premises and other materials which were
necessary in the conduct of its business.
However, a closer look at the Contract of Services reveals that Ward Trading does not have substantial capital or
investment in the form of tools, equipment, machinery, work premises and other materials since it is Manila Memorial
which owns the equipment used in the performance of work needed for interment and exhumation services.
For failing to register as a contractor, a presumption arises that one is engaged in labor-only contracting unless the
contractor overcomes the burden of proving that it has substantial capital, investment, tools and the like. In this case,
however, Manila Memorial failed to adduce evidence to prove that Ward Trading had any substantial capital, investment
or assets to perform the work contracted for. Thus, the presumption that Ward Trading is a labor-only contractor stands.
Consequently, Manila Memorial is deemed the employer of respondents. As regular employees of Manila Memorial,
respondents are entitled to their claims for wages and other benefits as awarded by the NLRC and affirmed by the CA.
APQ Shipmanagement v. Casenas, G.R. No. 197303, June 4, 2014
Respondent Angelito L. Caseñas (Caseñas) was seeking disability and other benefits against petitioner APQ
Shipmanagement Co., Ltd. (APQ) and petitioner-principal APQ Crew Management USA, Inc. (Crew Management). It
appears from the records that in June 2004, Casenas was hired by APQ, acting for and in behalf of its principal, Crew
Management, as Chief Mate for vessel MV Perseverance for a period of eight (8) months. Casenas further alleged that
on June 16, 2004, he left Manila to join his assigned vessel in Miami, Florida, USA, though the vessel could not leave
the Florida port because of its incomplete documents for operation; that consequently, he was transferred to another
vessel, MV HAITIEN PRIDE, which was in Haiti, although again because of incomplete documents, the vessel could
not leave the port and remained at Cap Haitien; that together with the rest of the vessel's officers and crew, he was left
to fend for himself, among others which lead him to be diagnosed him with Ischemic Heart Disease; that a certain Dr.
Ariel G. Domingo likewise examined him, confirming and certifying that he was suffering from Essential Hypertension
and Ischemic Heart Disease; that he was declared "unfit for sea service." APQ still refused to pay their salaries; that
demands for payment were also made to the president of APQ, but the same were refused; and that ultimately, he was
compelled to seek redress and filed a complaint for permanent total disability benefits, reimbursement of medical
expenses, sickness allowance, non-payment of salaries representing the extended portion of the employment contract,
damages, and attorney's fees. APQ, on the other hand, alleged in its Position Paper5 that upon expiration of the
contract, Caseñas refused to return to the Philippines until he finally did on August 30, 2006;6 that thereafter, Caseñas
demanded payment of his wages, overtime and vacation pay for the alleged extended portion of the contract; that it
could not be held liable for claims pertaining to the extended portion of the contract for it did not consent to it. Caseñas,
however, disputed the position of APQ, claiming that his contract of employment was duly extended. He denied that
APQ had been making arrangements for his repatriation as early as January 2005.
Issue: Whether or not the employment contract of Caseñas was extended with the consent of APQ/Crew Management.
70
Held: Yes. In this case, Casenas immediately reported to APQ for the required post-employment medical examination
upon his return to the Philippines. He was referred to the company-designated physician, who diagnosed him to be
suffering from lschemic Heart Disease, which was a manifestation of organ damage.33 Caseñas likewise consulted
two (2) other physicians who certified him to be suffering from Essential Hypertension aside from Ischemic Heart
Disease.34 From the time of Caseñas' diagnosis by the company-designated physician, he was under the state of
temporary total disability, which lasted for at least 120 days as provided by law. Such period could be extended up to
240 days, if further medical attention was required.
There was, however, no showing of any justification to extend said period. As the law requires, within 120 days from
the time he was diagnosed of his illness, the company-designated physician must make a declaration as to the fitness
or unfitness of Caseñas As correctly observed by the CA, however, the 120 day period lapsed without such a declaration
being made.35 Caseñas is now deemed to be in a state of permanent total disability and, thus, clearly entitled to the
total disability benefits provided by law.
People v. Ochoa, G.R. No. 173792, August 31, 2011
Facts: In the second week of February 1998, Ochoa was introduced to Robert Gubat, a licensed electrical engineer
and a resident of Pulang Lupa, Las Pis, through a certain Nila, Gubats neighbor, who had a pending application for
work abroad with Ochoa. Ochoa talked to Gubat on the telephone, and during their conversation, Ochoa told Gubat
that one of her applicants was already leaving for Taiwan. Per Ochoas instruction, Gubat met with Francisco Pascual,
who accompanied him to Ochoas house in San Bartolome, Novaliches, Quezon City, and personally introduced Gubat
to Ochoa. Gubat submitted his rumto Ochoa, which Ochoa would bring to Axil International Agency where Ochoa was
working as a recruiter. Right after browsing through Gubats rum Ochoa informed Gubat that as an engineer, Gubat
was qualified to work as a factory supervisor and could leave for Taiwan in two weeks or in March 1998. Ochoa also
told Gubat that the total application expenses would amount to ₱100,000.00, and the downpayment was ₱50,000.00.
Gubat was able to actually pay Ochoa ₱18,800.00 as reservation fee at the agency; processing fee for Gubats papers
at the Department of Foreign Affairs (DFA), Malacanang, and Embassy of Taiwan; and medical examination fee.
Ochoa, however, only issued to Gubat three receipts, dated March 3, March 31, and April 6, all in the year 1998, in the
amount of P5,000.00 each or a total of P15,000.00. Gubat started to worry when he was not able to leave for abroad
as Ochoa promised and when she failed to show up at their arranged meetings. When Gubat was finally able to talk to
Ochoa, Ochoa again promised him that he would be leaving for abroad soon. Despite Ochoa's renewed promise, Gubat
was still not able to leave the country. Gubat then demanded that Ochoa return his documents and money. When
Ochoa failed to comply with his demand, Gubat filed a report against Ochoa at Barangay (Brgy.) San Bartolome,
Novaliches, Quezon City. On May 21, 1998, he met the other private complainants who had similar complaints against
Ochoa. When nothing came out of the confrontation with Ochoa at Brgy. San Bartolome, Gubat and the other private
complainants filed a joint complaint against Ochoa before the National Bureau of Investigation (NBI). Ochoa was also
accused of illegal recruitment of other individuals.
Cory C. Aquino of the POEA authenticated the Certification dated June 3, 1998, issued by Hermogenes C. Mateo
(Mateo), Director, Licensing Branch of the POEA, that Ochoa, in her personal capacity, is neither licensed nor
authorized by the POEA to recruit workers for overseas employment. Cory identified Director Mateos signature on the
Certification, being familiar with the same. The Certification was issued after a check of the POEA records pursuant to
a request for certification from the NBI. Cory, however, admitted that she did not participate in the preparation of the
Certification, as the NBIs request for certification was through a counter transaction, and another person was in charge
of verification of counter transactions.
On April 17, 2000, the RTC rendered a Decision finding Ochoa guilty beyond reasonable doubt of the crimes of illegal
recruitment in large scale and three counts of estafa.
Saturday, June 09, 2018
PEOPLE V. OCHOA
71
G.R. No. 173792: August 31, 2011
FACTS:
In the second week of February 1998, Ochoa was introduced to Robert Gubat, a licensed electrical engineer and a
resident of Pulang Lupa, Las Pis, through a certain Nila, Gubats neighbor, who had a pending application for work
abroad with Ochoa. Ochoa talked to Gubat on the telephone, and during their conversation, Ochoa told Gubat that one
of her applicants was already leaving for Taiwan. Per Ochoas instruction, Gubat met with Francisco Pascual, who
accompanied him to Ochoas house in San Bartolome, Novaliches, Quezon City, and personally introduced Gubat to
Ochoa. Gubat submitted his rumto Ochoa, which Ochoa would bring to Axil International Agency where Ochoa was
working as a recruiter. Right after browsing through Gubats rum Ochoa informed Gubat that as an engineer, Gubat
was qualified to work as a factory supervisor and could leave for Taiwan in two weeks or in March 1998. Ochoa also
told Gubat that the total application expenses would amount to ₱100,000.00, and the downpayment was ₱50,000.00.
Gubat was able to actually pay Ochoa ₱18,800.00 as reservation fee at the agency; processing fee for Gubats papers
at the Department of Foreign Affairs (DFA), Malacanang, and Embassy of Taiwan; and medical examination fee.
Ochoa, however, only issued to Gubat three receipts, dated March 3, March 31, and April 6, all in the year 1998, in the
amount of P5,000.00 each or a total of P15,000.00. Gubat started to worry when he was not able to leave for abroad
as Ochoa promised and when she failed to show up at their arranged meetings. When Gubat was finally able to talk to
Ochoa, Ochoa again promised him that he would be leaving for abroad soon. Despite Ochoa's renewed promise, Gubat
was still not able to leave the country. Gubat then demanded that Ochoa return his documents and money. When
Ochoa failed to comply with his demand, Gubat filed a report against Ochoa at Barangay (Brgy.) San Bartolome,
Novaliches, Quezon City. On May 21, 1998, he met the other private complainants who had similar complaints against
Ochoa. When nothing came out of the confrontation with Ochoa at Brgy. San Bartolome, Gubat and the other private
complainants filed a joint complaint against Ochoa before the National Bureau of Investigation (NBI). Ochoa was also
accused of illegal recruitment of other individuals.
Cory C. Aquino of the POEA authenticated the Certification dated June 3, 1998, issued by Hermogenes C. Mateo
(Mateo), Director, Licensing Branch of the POEA, that Ochoa, in her personal capacity, is neither licensed nor
authorized by the POEA to recruit workers for overseas employment. Cory identified Director Mateos signature on the
Certification, being familiar with the same. The Certification was issued after a check of the POEA records pursuant to
a request for certification from the NBI. Cory, however, admitted that she did not participate in the preparation of the
Certification, as the NBIs request for certification was through a counter transaction, and another person was in charge
of verification of counter transactions.
On April 17, 2000, the RTC rendered a Decision finding Ochoa guilty beyond reasonable doubt of the crimes of illegal
recruitment in large scale and three counts of estafa.
Ochoa filed a Notice of Appealin which she stated her intention to appeal the RTC judgment of conviction and prayed
that the records of her case be forwarded to the Court of Appeals.
The Special Fourteenth Division of the Court of Appeals promulgated its Decisiondated June 17, 2002 affirming the
appealed RTC decision dated April 17, 2000. Ochoa filed a Motion for Reconsideration,which the People opposed for
being bereft of merit.
In its Resolutiondated August 6, 2003, the Court of Appeals declared that it had no jurisdiction over Ochoas appeal.
ISSUE: Whether or not Ochoa was guilty of illegal recruitment in large scale?
HELD: Yes. Ochoa was charged with violation of Section 6 of Republic Act No. 8042. Said provision broadens the
concept of illegal recruitment under the Labor Codeand provides stiffer penalties, especially for those that constitute
economic sabotage, i.e., illegal recruitment in large scale and illegal recruitment committed by a syndicate.
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Section 6 of Republic Act No. 8042 defines illegal recruitment as follows:
SEC. 6.Definition. - For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of
the Philippines:Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts,
whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:
(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for
purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring
or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons
individually or as a group.
It is well-settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct
impression that she had the power or ability to send complainants abroad for work such that the latter were convinced
to part with their money in order to be employed.All eight private complainants herein consistently declared that Ochoa
offered and promised them employment overseas. Ochoa required private complainants to submit their bio-data, birth
certificates, and passports, which private complainants did. Private complainants also gave various amounts to Ochoa
as payment for placement and medical fees as evidenced by the receipts Ochoa issued to Gubat, Cesar,and
Agustin.Despite private complainants compliance with all the requirements Ochoa specified, they were not able to leave
for work abroad. Private complainants pleaded that Ochoa return their hard-earned money, but Ochoa failed to do so.
Ochoa contends that Exhibit "A," the POEA certification which states that Ochoa, in her personal capacity, is neither
licensed nor authorized to recruit workers for overseas employment was already rejected by the RTC during the
hearings on bail for being hearsay, and should not have been admitted by the RTC after the trial on the merits of the
criminal cases. Inadmissible evidence during bail hearings do not become admissible evidence after formal offer.
Without the POEA certification, the prosecution had no proof that Ochoa is unlicensed to recruit and, thus, she should
be acquitted.
Ochoa's contention is without merit.
More importantly, Ochoa could still be convicted of illegal recruitment even if we disregard the POEA certification, for
regardless of whether or not Ochoa was a licensee or holder of authority, she could still have committed illegal
recruitment. Section 6 of Republic Act No. 8042 clearly provides that any person, whether a non-licensee, non-holder,
licensee or holder of authority may be held liable for illegal recruitment for certain acts as enumerated in paragraphs
(a) to (m) thereof. Among such acts, under Section 6(m) of Republic Act No. 8042, is the "[f]ailure to reimburse expenses
incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the workers fault." Ochoa committed illegal recruitment as
described in the said provision by receiving placement and medical fees from private complainants, evidenced by the
receipts issued by her, and failing to reimburse the private complainants the amounts they had paid when they were
not able to leave for Taiwan and Saudi Arabia, through no fault of their own.
Ochoa further argues in her defense that she should not be found personally and criminally liable for illegal recruitment
because she was a mere employee of AXIL and that she had turned over the money she received from private
complainants to AXIL.
73
We are not convinced. Ochoa's claim was not supported by any corroborating evidence. The POEA verification dated
September 23, 1998, also signed by Dir. Mateo, and presented by Ochoa during trial, pertains only to the status of
AXIL as a placement agency with a "limited temporary authority" which had already expired. Said verification did not
show whether or not Ochoa was employed by AXIL. Strangely, for an alleged employee of AXIL, Ochoa was not able
to present the most basic evidence of employment, such as appointment papers, identification card (ID), and/or
payslips. The receipts presented by some of the private complainants were issued and signed by Ochoa herself, and
did not contain any indication that Ochoa issued and signed the same on behalf of AXIL. Also, Ochoa was not able to
present any proof that private complainants money were actually turned over to or received by AXIL.
There is no reason for us to disturb the weight and credence accorded by the RTC to the evidence of the prosecution,
over that of the defense. As is well-settled in this jurisdiction, greater weight is given to the positive identification of the
accused by the prosecution witnesses than the accuseds denial and explanation concerning the commission of the
crime.Likewise, factual findings of the trial courts, including their assessment of the witnesses credibility, are entitled to
great weight and respect by the Supreme Court, particularly when the Court of Appeals affirmed such findings. After
all, the trial court is in the best position to determine the value and weight of the testimonies of witnesses. The absence
of any showing that the trial court plainly overlooked certain facts of substance and value that, if considered, might
affect the result of the case, or that its assessment was arbitrary, impels the Court to defer to the trial courts
determination according credibility to the prosecution evidence. Moreover, in the absence of any evidence that the
prosecution witnesses were motivated by improper motives, the trial courts assessment of the credibility of the
witnesses shall not be interfered with by this Court.
Under the last paragraph of Section 6 of Republic Act No. 8042, illegal recruitment shall be considered an offense
involving economic sabotage if committed in a large scale, that is, committed against three or more persons individually
or as a group. Here, there are eight private complainants who convincingly testified on Ochoas acts of illegal
recruitment.In view of the overwhelming evidence presented by the prosecution, we uphold the verdict of the RTC, as
affirmed by the Court of Appeals, that Ochoa is guilty of illegal recruitment constituting economic sabotage.
STO. TOMAS V. SALAC,

G.R. No. 152642, November 13, 2012
On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of
1995 that, for among other purposes, 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.
On January 8, 2002 respondents filed a petition for certiorari, prohibition and mandamus with application for temporary
restraining order (TRO) and preliminary injunction against petitioners, the DOLE Secretary, the POEA Administrator,
and the Technical Education and Skills Development Authority (TESDA) Secretary-General before the Regional Trial
Court (RTC) of Quezon City, Branch 96. respondents sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10)
and POEA Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA, and TESDA from implementing the
same and from further issuing rules and regulations that would regulate the recruitment and placement of overseas
Filipino workers (OFWs); and 3) also enjoin them to comply with the policy of deregulation mandated under Sections
29 and 30 of Republic Act 8042. The Manila RTC 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. As an example, said the trial court, the mere failure to render a
report under Section 6(h) or obstructing the inspection by the Labor Department under Section 6(g) are penalized by
imprisonment for six years and one day and a minimum fine of ₱200,000.00 but which could unreasonably go even as
high as life imprisonment if committed by at least three persons. Apparently, the Manila RTC did not agree that the law
can impose such grave penalties upon what it believed were specific acts that were not as condemnable as the others
in the lists. The Manila RTC also invalidated Section 9 of R.A. 8042 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. Venue, said the RTC, is jurisdictional in penal
74
laws and, allowing the filing of criminal actions at the place of residence of the offended parties violates their right to
due process. Section 9 provides:
Issue:
Whether Sections 6, 7, and 9 of Republic Act 8042 valid and constitutional
Held:
1) Section 6 is valid and constitutional. “illegal recruitment” as defined in Section 6 is clear and unambiguous and,
contrary to the RTC’s finding, actually makes a distinction between licensed and non-licensed recruiters. 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 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.
2) Section 7 is valid and constitutional. the RTC did not agree that the law can impose such grave penalties upon what
it believed were specific acts that were not as condemnable as the others in the lists. But, in fixing uniform penalties for
each of the enumerated acts under Section 6, Congress was within its prerogative to determine what individual acts
are equally reprehensible, consistent with the State policy of according full protection to labor, and deserving of the
same penalties. It is not within the power of the Court to question the wisdom of this kind of choice. Notably, this
legislative policy has been further stressed in July 2010 with the enactment of R.A. 10022 which increased even more
the duration of the penalties of imprisonment and the amounts of fine for the commission of the acts listed under Section
7. 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. The State under its police power
“may prescribe such regulations as in its judgment will secure or tend to secure the general welfare of the people, to
protect them against the consequence of ignorance and incapacity as well as of deception and fraud.” Police power is
“that inherent and plenary power of the State which enables it to prohibit all things hurtful to the comfort, safety, and
welfare of society.”
3) Section 9 is valid and constitutional. SEC. 9. states that Venue. – A criminal action arising from illegal recruitment
as defined herein shall be filed with the Regional Trial Court 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: Provided, That the court
where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however, That
the aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time of
the effectivity of this Act. There is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for
violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed,
Section 15(a), Rule 110 of the latter Rules allows exceptions provided by laws. Thus: SEC. 15. Place where action is
to be instituted.— (a) 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. (Emphasis
supplied). Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that law’s
declared policy15 of providing a criminal justice system that protects and serves the best interests of the victims of
illegal recruitment.
JAMIAS V. NLRC
March 9, 2016
75
FACTS: Respondent Innodata Philippines, Inc. (Innodata), a domestic corporation engaged in the business of data
processing and conversion for foreign clients,2 hired the following individuals on various dates and under the following
terms, to wit:
Name Position Duration of Contract
Alumamay Jamias Manual Editor August 7, 1995 to August 7, 19963
Marietha V. Delos Santos Manual Editor August 7, 1995 to August 7, 19964
Lilian R. Guamil Manual Editor August 16, 1995 to August 16, 19965
Rina C. Duque Manual Editor August 7, 1995 to August 7, 19966
Marilen Agabayani Manual Editor August 23, 1995 to August 23, 19967
Alvin V. Patnon Production Personnel September 1, 1995 to September 1, 19968
Analyn I. Beter Type Reader September 18, 1995 to September 18, 19969
Jerry O. Soldevilla Production Personnel September 18, 1995 to September 18, 199610
Ma. Concepcion A. Dela Cruz Production Personnel September 18, 1995 to September 18, 199611
Jennifer Cruz Data Encoder November 20, 1995 to November 20, 199612
Jennifer Matuguinas Data Encoder November 20, 1995 to November 20, 199613
After their respective contracts expired, the aforenamed individuals filed a complaint for illegal dismissal claiming that
Innodata had made it appear that they had been hired as project employees in order to prevent them from becoming
regular employees.
ISSUE: Were the petitioners regular or project employees of Innodata?
Held: Fixed term or Project employees.

I
Stare decisis does not apply where the facts are essentially different
Contrary to the petitioners' insistence, the doctrine of stare decisis, by which the pronouncements
in Villanueva and Servidad would control the resolution of this case, had no application herein.
The doctrine of stare decisis enjoins adherence to judicial precedents.33 When a court has laid down a principle of law
as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts
are substantially the same; but when the facts are essentially different, stare decisis does not apply because a perfectly
sound principle as applied to one set of facts might be entirely inappropriate when a factual variance is introduced
It ought to be underscored that unlike in the Servidad and Villanueva cases, the written contracts governing the
relations of the respondent company and the petitioners herein do not embody such illicit
stipulation.35ChanRoblesVirtualawlibrary
In other words, the terms of the petitioners' contracts did not subject them to a probationary period similar to that
indicated in the contracts struck down in Innodata, Villanueva and Servidad.
II
A fixed period in a contract of employment does not by itself signify an intention to circumvent Article 280 of
the Labor Code
Article 280 of the Labor Code provides:

76
Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or service
to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed casual if it is not covered by the preceding paragraph: Provided, That, any employee
who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his employment shall continue while such
actuallv exists.
A fixed term agreement, to be valid, must strictly conform with the requirements and conditions provided in Article 280
of the Labor Code. The test to determine whether a particular employee is engaged as a project or regular employee
is whether or not the employee is assigned to carry out a specific project or undertaking, the duration or scope of which
was specified at the time of his engagement
The contracts of the petitioners indicated the one-year duration of their engagement as well as their respective project
assignments (i.e., Jamias being assigned to the CD-ROM project; Cruz and Matuguinas to the TSET project). 45 There
is no indication that the petitioners were made to sign the contracts against their will. Neither did they refute Innodata's
assertion that it did not employ force, intimidate or fraudulently manipulate the petitioners into signing their contracts,
and that the terms thereof had been explained and made known to them.46 Hence, the petitioners knowingly agreed to
the terms of and voluntarily signed their respective contracts.
Lastly, the petitioners posit that they should be accorded regular status because their work as editors and proofreaders
were usually necessary to Innodata's business of data processing.
We reject this position. For one, it would be unusual for a company like Innodata to undertake a project that had no
relationship to its usual business.49 Also, the necessity and desirability of the work performed by the employees are not
the determinants in term employment, but rather the "day certain" voluntarily agreed upon by the parties.
NESTLE PHILIPPINES, INC. VS. PUEDAN

G.R. No. 220617, Jan. 30, 2017
FACTS: The instant case arose from an amended6 complaint7 dated July 6, 2012 for illegal dismissal, damages, and
attorney's fees filed by respondents against, inter alia, ODSI and NPI. Respondents alleged that on various dates, ODSI
and NPI hired them to sell various NPI products in the assigned covered area. After some time, respondents demanded
that they be considered regular employees of NPI, but they were directed to sign contracts of employment with ODSI
instead. When respondents refused to comply with such directives, NPI and ODSI terminated them from their
position. 8 Thus, they were constrained to file the complaint, claiming that: (a) ODSI is a labor-only contractor and, thus,
they should be deemed regular employees of NPI; and (b) there was no just or authorized cause for their dismissal.9
For its part, ODSI averred that it is a company engaged in the business of buying, selling, distributing, and marketing
of goods and commodities of every kind and it enters into all kinds of contracts for the acquisition thereof. ODSI admitted
that on various dates, it hired respondents as its employees and assigned them to execute the Distributorship
Agreement10 it entered with NPI
ISSUE: WON ODSI is a labor-only contractor of NPI, and consequently, NPI is respondents' true employer and, thus,
deemed jointly and severally liable with ODSI for respondents' monetary claims.
HELD: NO. a closer examination of the Distributorship Agreement reveals that the relationship of NPI and ODSI is not
that of a principal and a contractor (regardless of whether labor-only or independent), but that of a seller and a buyer/re-
77
seller. As stipulated in the Distributorship Agreement, NPI agreed to sell its products to ODSI at discounted
prices,52 which in turn will be re-sold to identified customers, ensuring in the process the integrity and quality of the said
products based on the standards agreed upon by the parties. 53 As aptly explained by NPI, the goods it manufactures
are distributed to the market through various distributors, e.g., ODSI, that in turn, re-sell the same to designated outlets
through its own employees such as the respondents. Therefore, the reselling activities allegedly performed by the
respondents properly pertain to ODSI, whose principal business consists of the "buying, selling, distributing, and
marketing goods and commodities of every kind" and "[entering] into all kinds of contracts for the acquisition of such
goods [and commodities]."54
Thus, contrary to the CA's findings, the aforementioned stipulations in the Distributorship Agreement hardly
demonstrate control on the part of NPI over the means and methods by which ODSI performs its business, nor were
they intended to dictate how ODSI shall conduct its business as a distributor. Otherwise stated, the stipulations in the
Distributorship Agreement do not operate to control or fix the methodology on how ODSI should do its business as a
distributor of NPI products, but merely provide rules of conduct or guidelines towards the achievement of a mutually
desired result55 - which in this case is the sale of NPI products to the end consumer.
The imposition of minimum standards concerning sales, marketing, finance and operations is nothing more
than an exercise of sound business practice to increase sales and maximize profits for the benefit of both
Steelcase and its distributors. For as long as these requirements do not impinge on a distributor's
independence, then there is nothing wrong with placing reasonable expectations on them
Verily, it was only reasonable for NPI - it being a local arm of one of the largest manufacturers of foods and grocery
products worldwide - to require its distributors, such as ODSI, to meet various conditions for the grant and continuation
of a distributorship agreement for as long as these conditions do not control the means and methods on how ODSI
does its distributorship business, as shown in this case.1âwphi1 This is to ensure the integrity and quality of the
products which will ultimately fall into the hands of the end consumer.
Thus, the foregoing circumstances show that ODSI was not a labor-only contractor of NPI; hence, the latter cannot be
deemed the true employer of respondents. As a consequence, NPI cannot be held jointly and severally liable to ODSI's
monetary obligations towards respondents.
SAMEER VS. CABILES

G.R. No. 170139, Aug. 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.
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 three months’ worth of salary, the reimbursement
of the cost of her repatriation, and attorney’s fees
ISSUE:
Whether or not Cabiles was entitled to the unexpired portion of her salary due to illegal dismissal.
HELD:
YES. The Court 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.
78
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.96 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.
SUNACE INTERNATIONAL V. NLRC

G.R. No. 161757, January 25, 2006
FACTS: Petitioner, Sunace International Management Services (Sunace), a corporation duly organized and existing
under the laws of the Philippines, deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic helper under a
12-month contract effective February 1, 1997.1 The deployment was with the assistance of a Taiwanese broker,
Edmund Wang, President of Jet Crown International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working for her Taiwanese employer, Hang
Rui Xiong, for two more years, after which she returned to the Philippines on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint2 before the National Labor Relations
Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-foreign principal
alleging that she was jailed for three months and that she was underpaid.
ISSUE: WON is entitled for refund of her 24 months savings and for her 14 months tax and payment of
attorney’s fees.
Held: As can be seen from that letter communication, it was just an information given to the petitioner that the private
respondent had t[aken] already her savings from her foreign employer and that no deduction was made on her salary.
It contains nothing about the extension or the petitioner’s consent thereto.21
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was sent to enlighten
Sunace who had been directed, by Summons issued on February 15, 2000, to appear on February 28, 2000 for a
mandatory conference following Divina’s filing of the complaint on February 14, 2000.
79
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, not
the other way around.23 The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent
Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment
contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot be held solidarily liable for
any of Divina’s claims arising from the 2-year employment extension. As the New Civil Code provides,
Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and obligations
arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.24
Furthermore, as Sunace correctly points out, there was an implied revocation of its agency relationship with its foreign
principal when, after the termination of the original employment contract, the foreign principal directly negotiated with
Divina and entered into a new and separate employment contract in Taiwan. Article 1924 of the New Civil Code reading
The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third
persons.
ELBURG SHIPMANAGEMENT V. QUIOGUE

G.R. No. 211882, July 29, 2015
FACTS: Respondent Ernesto S. Quiogue Jr. (Quiogue) was hired by Elburg Shipmanagement Philippines, Inc., for and
on behalf of its principal Enterprise Shipping Agency SRL (petitioners), to work as Able Bodied Seaman on board the
vessel MT Filicudi M with a basic salary of US$363.00. The employment contract was governed by the Philippine
Overseas Employment Administration Standard Employment Contract (POEA-SEC) and the International Transport
Workers Federation Total Crew Cost Collective Bargaining Agreement (ITF TCC CBA), providing for higher benefits in
the event of disability or death of a worker.
On November 11, 2010, while Quiogue was on duty transferring the fire wire, his co-worker accidentally dropped it on
his left foot. He was immediately given first aid and thereafter sent to a hospital in Tarragona, Spain. The x-ray
examination on his injured foot showed that one of his metatarsal bones was fractured. On November 19, 2010, as his
injury prevented him from performing his duties on board, he was repatriated and immediately referred to the
Metropolitan Medical Center where he was diagnosed to have sustained "non-displaced Fracture of the Cuneiform
Bone, Left Foot."
Quiogue underwent treatment and therapy with the company-designated physician from November 2010 to April 2011.
On April 13, 2011, he was certified as "fit to work" by the company-designated physician
He is given a PERMANENT DISABILITY. He is UNFIT FOR SEADUTY in whatever capacity as a SEAMAN." 3
Quiogue sought compensation based on total permanent disability from petitioners, but the latter refused, insisting that
he was not entitled to total permanent disability benefits because he was declared as fit to work by the company-
designated physician. This prompted Quiogue to file a complaint before the NLRC.
ISSUE: WON he is entitled to total disability benefits.
HELD: YES. An analysis of the cited jurisprudence reveals that the first set of cases did not award permanent and total
disability benefits to seafarers whose medical treatment lasted for more than 120 days, but not exceeding 240 days,
because (1) the company-designated physician opined that the seafarer required further medical treatment or (2) the
seafarer was uncooperative with the treatment. Hence, in those cases, despite exceeding 120 days, the seafarer was
still not entitled to permanent and total disability benefits. In such instance, Rule X, Section 2 of the IRR gave the
company-designated physician additional time, up to 240 days, to continue treatment and make an assessment on the
disability of the seafarer.
80
The second set of cases, on the other hand, awarded permanent and total disability benefits to seafarers whose medical
treatment lasted for more than 120 days, but not exceeding 240 days, because the company-designated physician did
not give a justification for extending the period of diagnosis and treatment. Necessarily, there was no need anymore to
extend the period because the disability suffered by the seafarer was permanent. In other words, there was no indication
that further medical treatment, up to 240 days, would address his total disability.
If the treatment of 120 days is extended to 240 days, but still no medical assessment is given, the finding of permanent
and total disability becomes conclusive.
The above-stated analysis indubitably gives life to the provisions of the law as enunciated by Vergara. Under this
interpretation, both the 120-day period under Article 192 (2) of the Labor Code and the extended 240-day period
under Rule X, Section 2 of its IRR are given full force and effect
Certainly, the company-designated physician must perform some significant act before he can invoke the exceptional
240-day period under the IRR. It is only fitting that the company-designated physician must provide a sufficient
justification to extend the original 120-day period. Otherwise, under the law, the seafarer must be granted the relief of
permanent and total disability benefits due to such non-compliance.
On the contrary, if we completely ignore the general 120-day period under the Labor Code and POEA-Contract and
apply the exceptional 240-day period under the IRR unconditionally, then the IRR becomes absolute and it will render
the law forever inoperable. Such interpretation is contrary to the tenets of statutory construction.
In summary, if there is a claim for total and permanent disability benefits by a seafarer, the following rules (rules) shall
govern:LawlibraryofCRAlaw
1. The company-designated physician must issue a final medical assessment on the seafarer's disability grading
within a period of 120 days from the time the seafarer reported to him;chanRoblesvirtualLawlibrary
2. If the company-designated physician fails to give his assessment within the period of 120 days, without any
justifiable reason, then the seafarer's disability becomes permanent and total;chanRoblesvirtualLawlibrary
3. If the company-designated physician fails to give his assessment within the period of 120 days with a sufficient
justification (e.g. seafarer required further medical treatment or seafarer was uncooperative), then the period
of diagnosis and treatment shall be extended to 240 days. The employer has the burden to prove that the
company-designated physician has sufficient justification to extend the period; and
4. If the company-designated physician still fails to give his assessment within the extended period of 240 days,
then the seafarer's disability becomes permanent and total, regardless of any justification.
Thus, to strike a balance between the two conflicting interests of the seafarer and its employer, the rules methodically
took in consideration the applicability of both the 120-day period under the Labor Code and the 240-day period under
the IRR. The medical assessment of the company-designated physician is not the alpha and the omega of the seafarer's
claim for permanent and total disability. To become effective, such assessment must be issued within the bounds of
the authorized 120-day period or the properly extended 240-day period.
SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME SERVICES, INC., LTD. v. NATHANIEL DOZA,
NAPOLEON DE GRACIA, ISIDRO L. LATA, and CHARLIE APROSTA
February 8, 2012
Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata, and Aprosta to work on board the vessel
MV Wisdom Star. De Gracia, et al. claimed that Skippers failed to remit their respective allotments for almost five
months, compelling them to air their grievances with the Romanian Seafarers Free Union
81
De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated.21 Upon arrival
in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4 April 1999 and
prayed for payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their
contracts.
Skippers, on the other hand, claims that De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek,
Master of MV Wisdom Stars, and was rude, shouting noisily to the master. Skippers also claims four Filipino seafarers,
namely Aprosta, De Gracia, Lata and Doza, 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. 27 This is evidenced by a telex of Cosmoship MV Wisdom to
Skippers, which however bears conflicting dates of 22 January 1998 and 22 January 1999.
Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other seafarers disembarked under
abnormal circumstsances.29 For this reason, it was suggested that Polish seafarers be utilized instead of Filipino
seamen.30 This is again evidenced by a fax of Cosmoship MV Wisdom to Skippers, which bears conflicting dates of 24
January 1998 and 24 January 1999
Whether the employer complied with the twin requirements of notice and hearing? No.
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. 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.
Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written
notice on the employer at least one (1) month in advance." Given that provision, the law contemplates the requirement
of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer
terminated the seafarers.
The telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22
January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al. were
not even employed yet by the foreign principal. For these reasons, the dismissal of De Gracia, et al. was illegal.
PEOPLE OF THE PHILIPPINES v ANGEL MATEO Y JACINTO AND VICENTA LAPIZ Y MEDINA
April 22, 2015
Five private complainants, namely, Abel E. Balane (Abel), Emilio A. Cariaga (Emilio), Victorio D. Flordeliza (Victorio),
Manuel Oledan (Manuel) and Virgiiio N. Concepcion (Virgiiio), met Mateo and Lapiz to apply for overseas employment.
82
Mateo, representing himself to have a tie-up with some Japanese firms, promised them employment in Japan as
conversion mechanics, welders, or fitters for a fee. Mateo and Lapiz also promised that they could facilitate private
complainants' employment as direct hires and assured their departure within three week, appellants failed to secure
any overseas employment for them, likewise failed to return private complainants' money (fees ranging from
P18,555.00 to P25,000.00)
This prompted Manuel to go to the Philippine Overseas Employment Administration (POEA) where he was issued a
Certification3 stating that appellants are not licensed to recruit applicants for overseas employment. Thereupon, the
private complainants filed their Complaint and executed their respective affidavits with the National Bureau of
Investigation (NBI). The NBI referred the charges to the Department of Justice which subsequently found probable
cause against appellants for large scale illegal recruitment and estafa 4 and accordingly filed the corresponding
Informations5 for the same before the RTC of Manila.
Mateo claimed that he is a legitimate car importer and not a recruiter. Lapiz, on the other hand, denied knowing any of
the private complainants whom she claimed to have met for the first time at the Prosecutor's Office.
Whether they are engage in a large scale illegal recruitment? Yes
The offense of illegal recruitment in large scale has the following elements: (1) the person charged undertook any
recruitment activity as defined under Section 6 of RA 8042; (2) accused did not have the license or the authority to
lawfully engage in the recruitment of workers; and, (3) accused committed the same against three or more persons
individually or as a group.13 These elements are obtaining in this case.
Appellants to have undertaken a recruitment activity when they promised private complainants employment in Japan
for a fee. Suffice it to say that money is not material to a prosecution for illegal recruitment considering that the definition
of "illegal recruitment" under the law includes the phrase "whether for profit or not."
"[w]ell-settled is the rule that a person convicted for illegal recruitment under the [law] may, for the same acts, be
separately convicted for estafa under Article 315, par. 2(a) of the [Revised Penal Code]. The elements of estafa are:
(1) the accused defrauded another by abuse of confidence or by means of deceit; and (2) the offended party or a third
party suffered damage or prejudice capable of pecuniary estimation."
LINGNAM RESTAURANT v. SKILLS & TALENT EMPLOYMENT POOL, INC., AND JESSIE COLASTE
December 03, 2018
Respondent Skills & Talent Employment Pool, Inc. (STEP) is a domestic corporation engaged in manpower
management and technical services, and one of its clients is petitioner Lingnam Restaurant, a business enterprise
owned and operated by Liberty C. Nacion. In a contract2 of employment, respondent Jessie Colaste is a project
employee of respondent STEP assigned to work with petitioner Lingnam Restaurant as assistant cook.
Jessie Colaste filed with the Labor Arbiter an Amended Complaint3 for illegal dismissal against Lingnam Restaurant
and STEP.
When he reported for work at Lingnam Restaurant at Greenhills Manila. However, the Chief Cook told him not to punch
in his time card because he was already terminated from work.
Lingnam Restaurant denied that it is the employer of complainant Jessie Colaste and alleged that STEP is Colaste's
real employer. Hence, it is not liable for the claims and causes of action of Colaste, and that the complaint should be
dismissed insofar as it is concerned.
83
Whether STEP is engaged in labor-only contracting; hence, petitioner Lingnam Restaurant is the employer of
complainant-respondent Jessie Colaste and it is liable for Colaste's illegal dismissal? Yes respondent STEP
was engaged in labor-only contracting.
Article 106 of the Labor Code describes labor-only contracting, thus:
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 legitimate job contractor provides services, while the labor-only contractor provides only manpower. The legitimate
job contractor undertakes to perform a specific job for the principal employer, while the labor-only contractor merely
provides the personnel to work for the principal employer.
STEP, in its Cautionary Pleading26 filed before the Labor Arbiter, stated that it entered into an agreement with petitioner
Lingnam Restaurant in 2002, wherein it agreed to provide Lingnam Restaurant with manpower to perform activities
related to the operation of its restaurant business. The service rendered by STEP in favor of Lingnam Restaurant was
not the performance of a specific job, but the supply of personnel to work at Lingnam Restaurant. In this case, STEP
provided petitioner with an assistant cook in the person of Jessie Colaste.
The three employment contracts state that Jessie Colaste's "work result performance shall be under the Strict
Supervision, Control and make sure that the end result is in accordance with the standard specified by client to STEP
Inc." Hence, the Court agrees with the Court of Appeals that the work performance of Colaste is under the strict
supervision and control of the client (petitioner Lingnam Restaurant) as well as the end result thereof. This falls under
the definition of labor-only contracting.
As respondent STEP is engaged in labor-only contracting, the principal, petitioner Lingnam Restaurant, shall be
deemed the employer of respondent Jessie Colaste, in accordance with Section 7, Rule VIII-A, Book III of the Amended
Rules To Implement The Labor Code.
FIRST PHILIPPINE INDUSTRIAL CORPORATION, v. RAQUEL M. CALIMBAS AND LUISA P. MAHILOM

July 10, 2013
Private respondent First Philippine Industrial Corporation (FPIC) is a domestic corporation primarily engaged in the
transportation of petroleum products by pipeline. Upon the other hand, petitioners Raquel Calimbas and Luisa Mahilom
were engaged by De Guzman Manpower Services (“DGMS”) to perform secretarial and clerical jobs for FPIC. [DGMS]
is engaged in the business of supplying manpower to render general clerical, building and grounds maintenance, and
janitorial and utility services.
Eustaquio Generoso, Jr. entered into a Contract of Special Services with DGMS, wherein the latter agreed to undertake
some aspects of building and grounds maintenance at FPIC’s premises, offices and facilities, as well as to provide
clerical and other utility services as may be required from time to time by FPIC.
Pursuant to the said Contract, petitioner Raquel Calimbas and Luisa Mahilom were engaged by the DGMS to render
services to FPIC.
June 21, 2001, FPIC, through its Human Resources Manager, Lorna Young, informed the petitioners that their services
to the company would no longer be needed by July 31, 2001 as a result of the “Pace-Setting” Study conducted by an
outside consultant.
84
On August 3, 2001, petitioners Calimbas and Mahilom signed quitclaims, releasing and discharging DGMS from
whatever claims that they might have against it by virtue of their past employment
Despite having executed the said quitclaims, the petitioners still filed on August 16, 2001 a Complaint against FPIC for
illegal dismissal and for the collection of monetary benefits, damages and attorney’s fees, alleging that they were regular
employees of FPIC after serving almost five (5) years, and that they were dismissed without cause.
Whether there is an employer-employee relationship?
We sustain the findings of the CA that respondents are petitioner’s employees and that DGMS is engaged in labor-only
contracting.
First, in Vinoya v. National Labor Relations Commission,12 this Court categorically stated that the actual paid-in capital
of P75,000.00 could not be considered as substantial capital. Thus, DGMS’s actual paid-in capital in the amount of
P75,000.00 does not constitute substantial capital essential to carry out its business as an independent job
contractor. Records likewise reveal that DGMS has no substantial equipment in the form of tools, equipment and
machinery. As a matter of fact, respondents were using office equipment and materials owned by petitioner while they
were rendering their services at its offices.
Second, petitioner exercised the power of control and supervision over the respondents. As aptly observed by the CA,
“the daily time records of respondents even had to be countersigned by the officials of petitioner to check whether they
had worked during the hours declared therein. Furthermore, the fact that DGMS did not assign representatives to
supervise over respondents’ work in petitioner’s company tends to disprove the independence of DGMS. Obviously,
on this score alone, petitioner cannot rightly claim that DGMS was an independent job contractor inasmuch as
respondents were subjected to the control and supervision of petitioner while they were performing their jobs.”
Third, also worth stressing are the points highlighted by respondents: (1) Respondents worked only at petitioner’s
offices for an uninterrupted period of five years, occupying the same position at the same department under the
supervision of company officials; (2) Three weeks ahead of the termination letters issued by DGMS, petitioner’s HR
Manager Lorna Young notified respondents, in a closed-door meeting, that their services to the company would be
terminated by July 31, 2001; (3) In the termination letters prepared by DGMS, it was even stressed that the said
termination letters will formalize the verbal notice given by petitioner’s HR Administration personnel; (4) The direct
superiors of respondents were managerial employees of petitioner, and had direct control over all the work-related
activities of the latter.
All told, an employer-employee relationship exists between petitioner and respondents. And having served for almost
five years at petitioner’s company, respondents had already attained the status of regular employees.
PEOPLE OF THE PHILIPPINES vs. MERCEDITAS MATHEUS DELOS REYES

June 7, 2017
Accused-appellant was charged with six counts of Estafa under Article 315 (2) (a) of the Revised Penal Code (RPC)
and one count of Large Scale Illegal Recruitment under RA 8042, based on the affidavit-complaints made by the
following: Thelma N. Suratos (Suratos); Glenda R. Guillarte (Guillarte); Merly 0. Alayon (Alayon); Celso J. Bagay, Jr.
(Bagay, Jr.); Rogelio Duldulao (Duldulao); and Doriza P. Gloria (Gloria).
Suratos, Alayon, Duldulao, Bagay, Jr., and Guillarte went to an office in Cubao, Quezon City where she met the
accused-appellant, who promised her a job in Cyprus as a caretaker, laundry staff, promised a tourist visa, job as a
85
dentist, and a hotel staff member respectively. They returned to the accused-appellant's office a month later. The
accused-appellant gave her a machine copy of her visa to prove that there was a good job waiting for her in Cyprus
and that she would leave in three months upon payment. Suratos et.al gave the accused-appellant an amount totaling
to PhP55,000, inclusive of her passport and medical examination report. After three months, Suratos et.al became
suspicious. They demanded the return of her money, but the accused-appellant simply told her to wait. A month later,
Suratos et. Al learned that the accused-appellant was already detained and could no longer deploy her abroad.
The accused-appellant admitted that she was the Overseas Marketing Director of All Care Travel & Consultancy
(Hongkong), with All Care Travel & Consultancy (Philippines) as its affiliate. She said that sometime in 1990, she was
issued a professional license as an Electronics Communication Engineer. She left the country in 2003 and was not in
the Philippines from January 2003 to February 2003. She returned to the country on June 4, 2003 and left the country
in the same month. She claimed that she did not know Suratos, Guillarte, Alayon, Bagay, Jr., and Gloria. Although she
knew Duldulao, she did not promise him any job. She likewise claimed that she neither signed nor issued any receipt
using the name "Manzie delos Reyes" in favor of the complainants. She further claimed that she was not engaged in
any recruitment and placement activities. During the pre-trial, she admitted that she had no license to recruit workers
for overseas employment.
Whether there is large scale illegal recruitment? Yes
The offense of illegal recruitment in large scale has the following elements: 15 (l} the person charged undertook any
recruitment activity as defined under Section 6 of RA 8042; 16 (2) accused did not have the license or the authority to
lawfully engage in the recruitment of workers; and, (3) accused committed the same against three or more persons
individually or as a group.
These elements are obtaining in this case.
First, the RTC found accused-appellant to have undertaken recruitment activity when she promised the private
complainants overseas employment for a fee.1a
Second, the March 1, 2004 Certification issued by the Philippine Overseas Employment Administration unmistakably
reveals that the accused-appellant neither had a license nor authority to recruit workers for overseas
employment.22 Notably, instead of assailing the certification, she admitted during the pre-trial that she did not have a
license or authority to lawfully engage in recruitment and placement of workers.
Third, it was established that there were five complainants, i.e., Suratos, Guillarte, Alayon, Bagay, Jr., and Duldulao.
Indeed, the existence of the offense of illegal recruitment in large scale was duly proved by the prosecution.
MONTIERRO VS. RICKMERS MARINE AGENCY

GR No. 210634 January 14, 2015
Facts:
Rickmers Marine Agency Phils., Inc., on behalf of its foreign principal, Global Management Limited, hired
Noriel Montierro as Ordinary Seaman. While on board the vessel and going down from a crane ladder, Montierro lost
his balance and twisted his legs, injuring his right knee. On 4 June 2010, two days after his repatriation, Montierro
reported to Dr. Natalio G. Alegre II, the company- designated physician, upon whose recommendation Montierro
underwent arthroscopic partial medical meniscectomy of his right knee. On the 91st day of Montierro’s treatment, Dr.
Alegre issued an interim Disability Grade of 10 for “stretching leg of ligaments of a knee resulting in instability of the
joint.” On 3 January 2011, the 213th day of Montierro’s treatment, Dr. Alegre issued a final assessment of Disability
Grade of 10 based on Section 32 of the POEA contract. Meanwhile, one month before Dr. Alegre’s issuance of the final
disability grading, Montierro filed with the LA a complaint for recovery of permanent disability compensation.
The LA held that Montierro was entitled to permanent total disability benefits under the Philippine Overseas
Employment Agency Standard Employment Contract (POEA-SEC). The LA relied on the 120-day rule introduced by
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Crystal Shipping, Inc. v. Natividad (510 Phil. 332 (2005)). The NLRC affirmed the Decision of the LA. The CA however,
downgraded the claim of Montierro to “Grade 10” permanent partial disability benefits only, the CA ruled that his
disability could not be deemed total and permanent under the 240-day rule established by Vergara v. Hammonia
Maritime Services, Inc. (588 Phil. 895 (2008)). Vergara extends the period to 240 days when, within the first 120-day
period (reckoned from the first day of treatment), a final assessment cannot be made because the seafarer requires
further medical attention, provided a declaration has been made to this effect.
Issue:
1. Whether the 240-day rule applies?
2. Whether the company doctor’s opinion should prevail?
Ruling:
1. Yes. The Court has already delineated the effectivity of the Crystal Shipping and Vergara rulings in the 2013
case Kestrel Shipping Co. Inc. v. Munar, by explaining as follows:
Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years from the time Munar
filed his complaint and observance of the principle of prospectivity dictates that Vergara should not operate to
strip Munar of his cause of action for total and permanent disability that had already accrued as a result of his
continued inability to perform his customary work and the failure of the company-designated physician to issue
a final assessment.
Thus, based on Kestrel, if the maritime compensation complaint was filed prior to 6 October 2008, the 120-
day rule applies; if, on the other hand, the complaint was filed from 6 October 2008 onwards, the 240-day rule
applies. In this case, Montierro filed his Complaint on 3 December 2010, which was after the promulgation of
Vergara on 6 October 2008. Hence, it is the 240-day rule that applies to this case, and not the 120- day rule.
Moreover, Montierro cannot rely on the cases that he cited, a survey of which reveals that all of them involved
Complaints filed before 6 October 2008. Wallem Maritime Services involved a Complaint for disability benefits
filed on 26 November 1998. In Maersk Filipinas Crewing, while the Decision did not mention the date the
Complaint was filed, the LA's Decision was rendered on 14 April 2008. Lastly, in Valenzona, the Complaint
was filed sometime before 31 January 2003. It thus comes as no surprise that the cases Montierro banks on
followed the 120-day rule.
Applying the 240-day rule to this case, we arrive at the same conclusion reached by the CA. Montierro's
treatment by the company doctor began on 4 June 2010. It ended on 3 January 2011, when the company
doctor issued a "Grade 10" final disability assessment. Counting the days from 4 June 2010 to 3 January
2011, the assessment by the company doctor was made on the 213th day, well within the 240-day period.
The extension of the period to 240 days is justified by the fact that Dr. Alegre issued an interim disability grade
of "10" on 3 September 2010, the 91st day of Montierro's treatment, which was within the 120-day period.
Thus, the CA correctly ruled that Montierro's condition cannot be deemed a permanent total disability.
2. Yes. Vergara also definitively settled the question how a conflict between two disability assessments the
assessment of the company-designated physician and that of the seafarer's chosen physician should be
resolved. In that case, the Court held that there is a procedure to be followed regarding the determination of
liability for work-related death, illness or injury in the case of overseas Filipino seafarers. The procedure is
spelled out in the 2000 POOEA-SEC, the execution of which is a sine qua non requirement in deployments
for overseas work.
The procedure is as follows: when a seafarer sustains a work-related illness or injury while on board the
vessel, his fitness for work shall be determined by the company-designated physician. The physician has 120
days, or 240 days, if validly extended, to make the assessment. If the physician appointed by the seafarer
disagrees with the assessment of the company-designated physician, the opinion of a third doctor may be
agreed jointly between the employer and the seafarer, whose decision shall be final and binding on them.
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Vergara ruled that the procedure in the 2000 POEA-SEC must be strictly followed; otherwise, if not availed of
or followed strictly by the seafarer, the assessment of the company-designated physician stands. In this case,
Montierro and Rickmers are covered by the provisions of the same 2000 POEA-SEC. It is the law between
them. Hence, they are bound by the mechanism for determining liability for a disability benefits claim.
Montierro, however, preempted the procedure when he filed on 3 December 2010 a Complaint for permanent
disability benefits based on his chosen physician's assessment, which was made one month before the
company-designated doctor issued the final disability grading on 3 January 2011, the 213th day of Montierro's
treatment.
Hence, for failure of Montierro to observe the procedure provided by the POEA-SEC, the assessment of the
company doctor should prevail.
GENERATO M. HERNANDEZ v. MAGSAYSAY MARITIME CORPORATION

G.R. No. 226103 January 24, 2018
FACTS:
Generato Hernandez, Petitioner, alleged that he has been under the employ of Magsaysay Maritime Corp.,
the respondent agency, since 1991 and was rehired consistently by the said agency. On February 28, 2012, he was
hired by respondent agency to work on board "MV Saga Sapphire" as Head Wine Waiter for a period of six (6) months
with a basic monthly salary of US$623.00. He underwent a thorough pre employment medical examination by the
company’s designated doctors and was declared "fit for sea duty".
On March 3, 2012, petitioner departed, joined his assigned vessel and everything went well without any trouble
until on November 16, 2012 when he had an accident. He was then lifting a box of wine when the vessel suddenly
rolled causing him to lose his balance. He fell on the floor with his back hitting the steel pavement and he felt a sharp
snap on his lower back accompanied by extreme pain radiating down to his lower extremities. The ship doctor gave
him a pain reliever and recommended his medical repatriation with a view to physiotherapy. Then, on December 22,
2012, he was repatriated and upon arrival he reported to respondents' office for post-employment medical examination.
He was referred to the company-designated physicians at the Manila Doctors Hospital where he underwent MRI. The
results of the MRI revealed Lumbar Spondylosis, Disc Protrusion, and Disc Bulges. He underwent extensive physical
therapy from January 8, 2013 until his latest medical evaluation on March 11, 2013 and considered for disability
assessment of slight rigidity or one-third loss of lifting power. He then sought consult from Dr. Rogelio P. Catapang, Jr.,
Orthopaedic Surgeon and Traumatology expert and in his medical report. Petitioner further avers that despite the
conclusive findings of physical disabilities, his plea for assistance from the respondents was denied alleging that they
have no liability whatsoever. His request for sickness allowance was likewise denied. Hence, this present complaint.
Respondents, on the other hand, admitted the fact of petitioner's employment on board the vessel "MV Saga
Sapphire" and that petitioner complained of lumbar back pain and was given ibuprofen gel and paracetamol for relief,
that the x-ray on his pelvis or lumbar spine showed no abnormality, that he was later on disembarked for medical
treatment and that after his repatriation, petitioner was referred to the company physician, Dr. Benigno A. Agbayani of
the Manila Doctors Hospital who recommended MRI. The MRI results showed petitioner was suffering Mild Disc
Herniation and that on March 8, 2013, petitioner was assessed a partial permanent disability grade 11 – slight rigidity
or one-third loss of lifting power.
The LA ruled that petitioner is entitled to permanent total disability benefits because the very nature of the
grading of the company-designated physician is a minimum grading based on a purely medical schedule that does not
consider the loss of earning capacity. For the LA, the fact that petitioner can no longer be employed as a seaman is
essentially a total and permanent disability since the principle is that disability is measured by the loss of earning
capacity and not on its medical significance.
On appeal, the NLRC deleted the award of sickness allowance. In sustaining petitioner's entitlement to
permanent total disability benefits, the NLRC agreed that disability should be interpreted more in relation to the loss of
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earning capacity. In this case, the certification of petitioner's physician appears to reflect his actual physical condition
vis-a-vis his work as a seafarer. Since the time he was medically repatriated, he was not able to and could not land a
gainful occupation in a job that he was trained or accustomed to do. His true condition is that he has not completely
and fully healed. It was noted that medical reports issued by the company-designated doctor do not necessarily bind
the NLRC. Even so, respondents' physician refrained from issuing a fit-to-work certification.
For the NLRC, the case of Splash Philippines, Inc., et al. v. Ruizo, cited by respondents, finds no application
on the following grounds: (1) petitioner was medically repatriated for a work-related illness; (2) a disability grading was
issued not by petitioner's own doctor but by the company-designated physician; and (3) petitioner is not guilty of willful
refusal to undergo treatment in order to claim disability benefits; hence, there is no need to refer to a third doctor for
final assessment. In any case, the NLRC opined that Section 20 (B) (3) of the Philippine Overseas Employment
Administration – Standard Employment Contract (POEA-SEC), on the appointment of a third physician, is merely a
directory provision. With regard to respondents' claim that petitioner is guilty of concealment or misrepresentation of a
pre-existing illness, the NLRC ruled that there is no evidence presented of a pre-existing medical condition in 2003
even if petitioner recalled that he suffered a particular pain in the lumbar area that year. More importantly, there is no
evidence that he knew of any back problem in 2003 or even at the time his pre-employment medical examination
(PEME) was conducted on January 27, 2012. Lastly, the claim of concealment of a preexisting illness is futile, since
the medical condition suffered by petitioner is established to be caused by his work and not merely aggravated by it.
When the case was elevated to the CA, the appellate court agreed that petitioner is not guilty of fraudulent
misrepresentation, considering that lumbar or lower back pain is not one of the preexisting illness or condition that he
was required to disclose. Nonetheless, the CA held that the referral to a third doctor is mandatory in case of conflicting
findings between the company-designated physician and the seafarer's chosen doctor. Finally, according to the
appellate court, there is no permanent total disability to speak of because petitioner disembarked from the vessel on
December 18, 2012, while the company-designated doctor arrived at an assessment that his disability rating was Grade
11 on March 8, 2013, which is evidently prior to the expiration of the 120-day or 240-day treatment period.
Hence, petitioner filed a petition for review on certiorari under Rule 45 of the Rules of Court. It is contended
that the third-doctor-referral rule should not be applied in this case since the company-designated physician's reports
are biased and doubtful. In issuing a Disability Grade 11, there is failure to explain if petitioner can still resume his
previous functions as a seafarer given the fact that he was continuously suffering from persistent low back pain. Further,
petitioner asserts that the determination of disability benefits of seamen should be based not only on the disability
grading issued by the company-designated doctor or the schedule under Section 32 of the POEA-SEC but also on the
provisions of the Labor Code and the Amended Rules on Employees' Compensation. It is emphasized that disability
should be viewed on the seafarer's loss of earning capacity and that what is being compensated is not the illness or
injury but the incapacity to work.
ISSUE:
Whether the petitioner is entitled to the payment of permanent total disability benefits or to that which
corresponds to Disability Grade 11 of the POEA-SEC?
RULING:
Under Section 20(A)(3) of the 2010 POEA-SEC, "if a doctor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor’s decision
shall be final and binding on both parties." The provision refers to the declaration of fitness to work or the degree of
disability. It presupposes that the company-designated physician came up with a valid, final and definite assessment
as to the seafarer's fitness or unfitness to work before the expiration of the 120-day or 240-day period. The company
can insist on its disability rating even against a contrary opinion by another doctor, unless the seafarer signifies his
intent to submit the disputed assessment to a third physician. The duty to secure the opinion of a third doctor belongs
to the employee asking for disability benefits. He must actively or expressly request for it.
In INC Navigation Co. Philippines, Inc., et al. v. Rosales, We opined:
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To definitively clarify how a conflict situation should be handled, upon notification that the seafarer disagrees
with the company doctor's assessment based on the duly and fully disclosed contrary assessment from the seafarer's
own doctor, the seafarer shall then signify his intention to resolve the conflict by the referral of the conflicting
assessments to a third doctor whose ruling, under the POEA-SEC, shall be final and binding on the parties. Upon
notification, the company carries the burden of initiating the process for the referral to a third doctor commonly agreed
between the parties.
Here, the Court is bound by the Grade 11 disability grading and assessment by the company-designated
physician that was timely rendered within the 120-day period. Petitioner neither questioned such diagnosis in
accordance with the procedure set forth under the POEA-SEC nor contested the company-designated doctor's
competence. To reiterate what has already been settled, the referral to a third physician is mandatory and non-
compliance with the procedure may militate against the claim for permanent total disability in cases where the company-
designated doctor declared otherwise. This is especially so if the seafarer failed to explain why recourse to the said
remedy was not made.
Petitioner's filing of his claim before the labor arbiter was premature. In view of the fact that he did not observe
the relevant provisions of the POEA-SEC after he received a definitive disability assessment from the company-
designated physician, the Court is left without a choice but to uphold the certification issued with respect thereto. Failure
to follow the procedure is fatal and renders conclusive the disability rating issued by the company designated doctor.
We stress that the reason behind our favorable rulings on the findings of company designated physicians is
not due to their infallibility; rather, it is assumed that they have "closely monitored and actually treated the seafarer"
and, therefore, are in a better position to form an accurate diagnosis and evaluation of the seafarers' degree of disability.
General Milling Corp. v. Torres, April 22, 1991
Facts: On 1 May 1989, the National Capital Region of the Department of Labor and Employment issued Alien
Employment Permit No. M-0689-3-535 in favor of petitioner Earl Timothy Cone, a United States citizen, as sports
consultant and assistant coach for petitioner General Milling Corporation ("GMC").
On 27 December 1989, petitioners GMC and Cone entered into a contract of employment whereby the latter undertook
to coach GMC's basketball team.
On 15 January 1990, the Board of Special Inquiry of the Commission on Immigration and Deportation approved
petitioner Cone's application for a change of admission status from temporary visitor to pre-arranged employee.
On 9 February 1990, petitioner GMC requested renewal of petitioner Cone's alien employment permit. GMC also
requested that it be allowed to employ Cone as full-fledged coach. The DOLE Regional Director, Luna Piezas, granted
the request on 15 February 1990.
On 18 February 1990, Alien Employment Permit No. M-02903-881, valid until 25 December 1990, was issued.
Private respondent Basketball Coaches Association of the Philippines ("BCAP") appealed the issuance of said alien
employment permit to the respondent Secretary of Labor who, on 23 April 1990, issued a decision ordering cancellation
of petitioner Cone's employment permit on the ground that there was no showing that there is no person in the
Philippines who is competent, able and willing to perform the services required nor that the hiring of petitioner Cone
would redound to the national interest.
ISSUE: Does the Secretary of Labor has the power to revoke an alien employment permit and does the labor code
empower the same to determine if the employment of an alien would redound to national interest.
Held: YES. Petitioner GMC's claim that hiring of a foreign coach is an employer's prerogative has no legal basis at all.
Under Article 40 of the Labor Code, an employer seeking employment of an alien must first obtain an employment
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permit from the Department of Labor. Petitioner GMC's right to choose whom to employ is, of course, limited by the
statutory requirement of an alien employment permit.
As pointed out by the Solicitor-General, no comparison can be made between petitioner Cone and Mr. Norman Black
as the latter is "a long time resident of the country," and thus, not subject to the provisions of Article 40 of the Labor
Code which apply only to "non-resident aliens." In any case, the term "non-resident alien" and its obverse "resident
alien," here must be given their technical connotation under our law on immigration.
The provisions of the Labor Code and its Implementing Rules and Regulations requiring alien employment permits
were in existence long before petitioners entered into their contract of employment. It is firmly settled that provisions of
applicable laws, especially provisions relating to matters affected with public policy, are deemed written into
contracts.2 Private parties cannot constitutionally contract away the otherwise applicable provisions of law.
The Labor Code itself specifically empowers respondent Secretary to make a determination as to the availability of the
services of a "person in the Philippines who is competent, able and willing at the time of application to perform the
services for which an alien is desired."3
In short, the Department of Labor is the agency vested with jurisdiction to determine the question of availability of local
workers. The constitutional validity of legal provisions granting such jurisdiction and authority and requiring proof of
non-availability of local nationals able to carry out the duties of the position involved, cannot be seriously questioned
Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not found in the Labor Code itself.
Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides as follows:
Section 6. Issuance of Employment Permit –– the Secretary of Labor may issue an employment permit to the applicant
based on:
a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;
b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is
competent and willing to do the job for which the services of the applicant are desired.
(c) His assessment as to whether or not the employment of the applicant will redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be
employed in preferred areas of investments or in accordance with the imperative of economic development;
Article 40 of the Labor Code reads as follows:
Art. 40. Employment per unit of non-resident aliens. –– Any alien seeking admission to the Philippines for employment
purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the
non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform
the services for which the alien is desired.
For an enterprise registered in preferred areas of investments, said employment permit may be issued upon
recommendation of the government agency charged with the supervision of said registered enterprise.
Petitioners apparently suggest that the Secretary of Labor is not authorized to take into account the question of whether
or not employment of an alien applicant would "redound to the national interest" because Article 40 does not explicitly
refer to such assessment. This argument (which seems impliedly to concede that the relationship of basketball coaching
and the national interest is tenuous and unreal) is not persuasive. In the first place, the second paragraph of Article 40
says: "[t]he employment permit may be issued to a non-resident alien or to the applicant employer after a determination
of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to
perform the services for which the alien is desired." The permissive language employed in the Labor Code indicates
that the authority granted involves the exercise of discretion on the part of the issuing authority. In the second place,
Article 12 of the Labor Code sets forth a statement of objectives that the Secretary of Labor should, and indeed must,
take into account in exercising his authority and jurisdiction granted by the Labor Code,
Thus, we find petitioners' arguments on the above points of constitutional law too insubstantial to require further
consideration.1avvphi1
Moreover, assuming that an alien employment permit has in fact been issued to petitioner Cone, the basis of the
reversal by the Secretary of Labor of his earlier decision does not appear in the record. If such reversal is based on
some view of constitutional law or labor law different from those here set out, then such employment permit, if one has
been issued, would appear open to serious legal objections.
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ISAE vs. Quisumbing

G.R. No. 128845 June 1, 2010
Facts: Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a
domestic educational institution established primarily for dependents of foreign diplomatic personnel and other
temporary residents. To enable the School to continue carrying out its educational program and improve its standard
of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management
personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt
from otherwise applicable laws and regulations attending their employment, except laws that have been or will be
enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of
its faculty, classifying the same into two:
(1) foreign-hires and (2) local-hires.
The School employs four tests in order to determine the classification to which they should belong:
a. What is one's domicile?
b. Where is one's home economy?
c. To which country does one owe economic allegiance?
d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that
individual to the Philippines?
If the answers to these questions point to the Philippines, then the faculty member shall be classified as local-hire,
otherwise one is deemed as foreign-hire. The controversy arose when the local-hires pointed our the difference in their
salary rates and benefits.
Meanwhile, the School justifies the difference on two "significant economic disadvantages" foreign-hires have to
endure, namely: (a) the "dislocation factor" and (b) limited tenure.
When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School
Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members" of
the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question
of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between
the parties.
Petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board to bring the parties to a
compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On
June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied
petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court.
Issue:
Whether or not foreign hires are also paid a salary rate twenty-five percent (25%) more than local-hires is an invalid
and unreasonable classification and violates the Equal Protection Clause. YES.
Held:
The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor
Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an
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affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and
ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of
employment.
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits
and penalizes the payment of lesser compensation to a female employee as against a male employee for work of equal
value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to
encourage or discourage membership in any labor organization.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-
hires. The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This presumption is borne by logic and human experience.
If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why
the others receive more. That would be adding insult to injury. The employer has discriminated against that employee;
it is for the employer to explain why the employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25%
more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they
perform under similar working conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary
rates without violating the principle of equal work for equal pay.
While the court recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement
to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid
the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-
hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their welfare," 25 "to afford labor full
protection." The State, therefore, has the right and duty to regulate the relations between labor and capital. 27 These
relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining
agreements included, must yield to the common good. 28 Should such contracts contain stipulations that are contrary
to public policy, courts will not hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the
salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between
the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to
foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.
WPP MARKETING COMMUNICATIONS, INC., JOHN STEEDMAN, MARK WEBSTER, and NOMINADA LANSANG
vs. JOCELYN M. GALERA, G.R. No. 169207 March 25, 2010
Petitioner is Jocelyn Galera (GALERA), a [sic] American citizen who was recruited to work in the Philippines for private
respondent WPP Marketing Communications, Inc. (WPP), a corporation registered and operating under the laws of
Philippines. GALERA accepted the offer and she signed an Employment Contract entitled "Confirmation of Appointment
and Statement of Terms and Conditions"
Four months had passed when private respondent WPP filed before the Bureau of Immigration an application for
petitioner GALERA to receive a working visa, wherein she was designated as Vice President of WPP. Petitioner alleged
that she was constrained to sign the application in order that she could remain in the Philippines and retain her
employment.
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Employment of GALERA with private respondent WPP became effective on September 1, 1999 solely on the
instruction of the CEO and upon signing of the contract, without any further action from the Board of Directors
Then, on December 14, 2000, petitioner GALERA alleged she was verbally notified by private respondent STEEDMAN
that her services had been terminated from private respondent WPP. A termination letter followed the next day.
Galera filed a complaint for illegal dismissal, holiday pay, service incentive leave pay, 13th month pay, incentive plan,
actual and moral damages, and attorney’s fees against WPP and/or John Steedman (Steedman), Mark Webster
(Webster) and Nominada Lansang (Lansang).
Galera, on the belief that she is an employee, filed her complaint before the Labor Arbiter.
WPP, Steedman, Webster and Lansang contend that Galera is a corporate officer; hence, any controversy regarding
her dismissal is under the jurisdiction of the Regional Trial Court.
Whether Galera is an employee? Galera was an employee and not a corporate officer by subjecting WPP and
Galera’s relationship to the four-fold test.
(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 with respect to the means and methods by which the work is to be
accomplished.
An examination of WPP’s by-laws resulted in a finding that Galera’s appointment as a corporate officer (Vice-
President with the operational title of Managing Director of Mindshare) during a special meeting of WPP’s Board of
Directors is an appointment to a non-existent corporate office. WPP’s by-laws provided for only one Vice-President.
At the time of Galera’s appointment on 31 December 1999, WPP already had one Vice-President in the person of
Webster. Galera cannot be said to be a director of WPP also because all five directorship positions provided in the by-
laws are already occupied. Finally, WPP cannot rely on its Amended By-Laws to support its argument that Galera is a
corporate officer. The Amended By-Laws provided for more than one Vice-President and for two additional directors.
Even though WPP’s stockholders voted for the amendment on 31 May 2000, the SEC approved the amendments only
on 16 February 2001. Galera was dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not
present any evidence that Galera’s dismissal took effect with the action of WPP’s Board of Directors.
Section 14 of the contract, which clearly states that she is a permanent employee — not a Vice-President or a member
of the Board of Directors.
The disciplinary procedure under Sections 10 and 11 of the Employment Contract, which states that her right of redress
is through Mindshare’s Chief Executive Officer for the Asia-Pacific. This implies that she was not under the disciplinary
control of private respondent WPP’s Board of Directors (BOD), which should have been the case if in fact she was a
corporate officer because only the Board of Directors could appoint and terminate such a corporate officer.
The Employment Contract was one of regular employment is Section 12, which states that the rights to any invention,
discovery, improvement in procedure, trademark, or copyright created or discovered by petitioner GALERA during her
employment shall automatically belong to private respondent WPP. Under Republic Act 8293, also known as the
Intellectual Property Code, this condition prevails if the creator of the work subject to the laws of patent or copyright is
an employee
Assurming arguendo that her appointment as Vice-President was a valid act, it must be noted that these appointments
occurred afater she was hired as a regular employee. After her appointments, there was no appreciable change in her
duties.
Whether WPP illegally dismissed Galera? WPP’s dismissal of Galera lacked both substantive and procedural due
process.
WPP failed to prove any just or authorized cause for Galera’s dismissal.
WPP, Steedman, Webster, and Lansang, however, failed to substantiate the allegations in Steedman’s letter. Galera,
on the other hand, presented documentary evidence 22 in the form of congratulatory letters, including one from
Steedman, which contents are opposed to the letter.
The law further requires that the employer must furnish the worker sought to be dismissed with two written notices
before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts
or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the
employer’s decision to dismiss him. Failure to comply with the requirements taints the dismissal with illegality.23 WPP’s
acts clearly show that Galera’s dismissal did not comply with the two-notice rule.
Whether Galera is entitled to the monetary award? Galera cannot come to this Court with unclean hands.
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Galera worked in the Philippines without a proper work permit but now wants to claim employee’s benefits under
Philippine labor laws.
The law and the rules are consistent in stating that the employment permit must be acquired prior to employment. The
Labor Code states: "Any alien seeking admission to the Philippines for employment purposes and any domestic or
foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit
from the Department of Labor."
To grant Galera’s prayer is to sanction the violation of the Philippine labor laws requiring aliens to secure work
permits before their employment. We hold that the status quo must prevail in the present case and we leave the parties
where they are. This ruling, however, does not bar Galera from seeking relief from other jurisdictions.
G.R. Nos. 178034 & 178117/G.R. Nos. 186984-85 : OCTOBER 17, 2013
ANDREW JAMES MCBURNIE, Petitioner, v. EULALIO GANZON, EGI-MANAGERS, INC. and E.

GANZON, INC., Respondents.
REYES, J.:
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
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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 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
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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 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.
LABOR LAW: rule on appeal bonds
The crucial issue in this case concerns the sufficiency of the appeal bond that was posted by the respondents. The
present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which was substantially the same
provision in effect at the time of the respondents appeal to the NLRC, and which reads: No motion to reduce bond shall
be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the
monetary award. The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal.
While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00 and then ordered the
case remand to the NLRC, this Court Decision dated September 18, 2009 provides otherwise, as it reads in part: While
the bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to reduce
the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is
posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to
perfect an appeal.The qualification effectively requires that unless the NLRC grants the reduction of the cash bond
within the 10-day reglementary period, the employer is still expected to post the cash or surety bond securing the full
amount within the said 10-day period.If the NLRC does eventually grant the motion for reduction after the reglementary
period has elapsed, the correct relief would be to reduce the cash or surety bond already posted by the employer within
the 10-day period.
To begin with, the Court rectifies its prior pronouncement the unqualified statement that even an appellant who seeks
a reduction of an appeal bond before the NLRC is expected to post a cash or surety bond securing the full amount of the
judgment award within the 10-day reglementary period to perfect the appeal.
LABOR LAW: suspension of the period to perfect the appeal upon the filing of a motion to reduce bond
To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce bond, coupled with
compliance with the two conditions emphasized in Garcia v. KJ Commercial for the grant of such motion, namely, (1) a
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meritorious ground, and (2) posting of a bond in a reasonable amount, shall suffice to suspend the running of the period
to perfect an appeal from the labor arbiter decision to the NLRC. To require the full amount of the bond within the 10-
day reglementary period would only render nugatory the legal provisions which allow an appellant to seek a reduction
of the bond.
The rule that the filing of a motion to reduce bond shall not stop the running of the period to perfect an appeal is not
absolute. The Court may relax the rule. In Intertranz Container Lines, Inc. v. Bautista, the Court held: Jurisprudence
tells us that in labor cases, an appeal from a decision involving a monetary award may be perfected only upon the
posting of cash or surety bond.The Court, however, has relaxed this requirement under certain exceptional
circumstances in order to resolve controversies on their merits.These circumstances include: (1) fundamental
consideration of substantial justice; (2) prevention of miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the amount and the issue involved.
A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even considering the
respondent's arguments and totally unmindful of the rules and jurisprudence that allow the bond reduction.Instead of
resolving the motion to reduce the bond on its merits, the NLRC insisted on an amount that was equivalent to the
monetary award.
When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion.It refused to at least
make a preliminary determination of the merits of the appeal.
LABOR LAW: allowance of the reduction of appeal bonds
Time and again, the Court has cautioned the NLRC to give Article 223 of the Labor Code, particularly the provisions
requiring bonds in appeals involving monetary awards, a liberal interpretation in line with the desired objective of
resolving controversies on the merits.
Although the general rule provides that an appeal in labor cases from a decision involving a monetary award may be
perfected only upon the posting of a cash or surety bond, the Court has relaxed this requirement under certain
exceptional circumstances in order to resolve controversies on their merits.These circumstances include: (1) the
fundamental consideration of substantial justice; (2) the prevention of miscarriage of justice or of unjust enrichment;
and (3) special circumstances of the case combined with its legal merits, and the amount and the issue involved.
Guidelines that are applicable in the reduction of appeal bonds were also explained in Nicol v. Footjoy Industrial
Corporation. The bond requirement in appeals involving monetary awards has been and may be relaxed in meritorious
cases, including 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.
It is in this light that the Court finds it necessary to set a parameter for the litigantsand the NLRC guidance on the
amount of bond that shall hereafter be filed with a motion for a bond reduction.To ensure 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 motion is pending resolution by the Commission.In
conformity with the NLRC Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall
exclude damages and attorney fees. Only after the posting of a bond in the required percentage shall an appellant period
to perfect an appeal under the NLRC Rules be deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the NLRC exercise of its discretion, given that the percentage
of bond that is set by this guideline shall be merely provisional. The NLRC retains its authority and duty to resolve the
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motion and determine the final amount of bond that shall be posted by the appellant, still in accordance with the
standards of meritorious grounds and reasonable amount Should the NLRC, after considering the motion merit,
determine that a greater amount or the full amount of the bond needs to be posted by the appellant, then the party shall
comply accordingly.The appellant shall be given a period of 10 days from notice of the NLRC order within which to
perfect the appeal by posting the required appeal bond.
LABOR LAW: employment permit for non-resident aliens; illegal dismissal
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our labor laws, it was
necessary for him to establish, first and foremost, that he was qualified and duly authorized to obtain employment
within our jurisdiction.A requirement for foreigners who intend to work within the country is an employment permit,
as provided under Article 40, Title II of the Labor Code.
In WPP Marketing Communications, Inc. v. Galera, we held that a foreign national failure to seek an employment
permit prior to employment poses a serious problem in seeking relief from the Court.
Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself, necessitates the
dismissal of his labor complaint.
McBurnie failed to present any employment permit which would have authorized him to obtain employment in the
Philippines.This circumstance negates McBurnie claim that he had been performing work for the respondents by virtue
of an employer-employee relationship.The absence of the employment permit instead bolsters the claim that the
supposed employment of McBurnie was merely simulated, or did not ensue due to the non-fulfillment of the conditions
that were set forth in the letter of May 11, 1999.
McBurnie failed to present other competent evidence to prove his claim of an employer-employee relationship. iven the
partiesconflicting claims on their true intention in executing the agreement, it was necessary to resort to the established
criteria for the determination of an employer-employee relationship, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee conduct.
The rule of thumb remains: the onus probandi falls on the claimant to establish or substantiate the claim by the requisite
quantum of evidence.Whoever claims entitlement to the benefits provided by law should establish his or her right
thereto. McBurnie failed in this regard.As previously observed by the NLRC, McBurnie even failed to show through any
document such as payslips or vouchers that his salaries during the time that he allegedly worked for the respondents
were paid by the company. In the absence of an employer-employee relationship between McBurnie and the
respondents, McBurnie could not successfully claim that he was dismissed, much less illegally dismissed, by the
latter.Even granting that there was such an employer-employee relationship, the records are barren of any document
showing that its termination was by the respondentsdismissal of McBurnie.
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ALDOVINO VS. GOLD AND GREEN MANPOWER MANAGEMENT AND DEVELOPMENT
SERVICES, INC.
G.R. No. 200811, June 19, 2019
FACTS:
Aldovino and her co-applicants applied for work at Gold and Green Manpower Management and
Development Services, Inc. (Gold and Green Manpower), a local manning agency whose foreign
principal is Sage International Development Company, Ltd. (Sage International). Eventually, they
were hired as sewers for Dipper Semi-Conductor Company, Ltd. (Dipper Semi-Conductor), a
Taiwan-based company. Their respective employment contracts provided an eight (8)-hour
working day, a fixed monthly salary, and entitlement to overtime pay, among others.
Before they could be deployed for work, Gold and Green Manpower required each applicant to
pay a P72,000.00 placement fee. But since the applicants were unable to produce the amount on
their own, Gold and Green Manpower referred them to E-Cash Paylite and Financing, Inc. (E-
Cash Paylite), where they loaned their placement fees. Once Aldovino and her co-workers arrived
in Taiwan, Gold and Green Manpower took all their travel documents, including their passports.
They were then made to sign another contract that provides that they would be paid on a piece-
rate basis instead of a fixed monthly salary. Eventually, they defaulted on their loan obligations
with E-Cash Paylite.
Adovino et al filed a case in Taiwan against Dipper Semi-Conductor. On March 26, 2009, the
parties met before the Bureau of Labor Affairs for a dialogue. There, Dipper Semi-Conductor
ordered Aldovino and her co-workers to return to the Philippines as it was no longer interested in
their services. They were then made to immediately pack their belongings, after which they were
dropped off at a train station in Taipei. They were asked to sign a Compromise agreement.
Based on the Compromise Agreement, Aldovino and her co-workers, except De Jesus, executed
an Affidavit of Quitclaim and Release. On July 28, 2009, all of them returned to the Philippines.
They eventually filed before the Labor Arbiter a case for illegal termination, underpayment of
salaries, human trafficking, illegal signing of papers, and other money claims such as overtime
pay, return of placement fees, and moral and exemplary damages.
Labor Arbiter dismissed the complaint but ordered Gold and Green Manpower and Sage
International to pay each of the workers P20,000.00 as financial assistance. NLRC affirmed LA
and deleted the award for financial assistance. CA reversed the NLRC. It not only ruled that
Aldovino and her co-workers had been illegally dismissed from service, but also declared that the
Compromise Agreement did not bar them from filing an illegal dismissal case.
ISSUES:
1. Whether he Compromise Agreement barred all other claims against respondents Gold
and Green Manpower Management and Development Services, Inc. and Sage
International Development Company, Ltd., and Alberto C. Alvina
2. Whether the petitioners were illegally dismissed and, consequently, entitled to the
reimbursement of their placement fees and payment of moral and exemplary damages
and attorney’s fees
The rule that lex loci contractus (the law of the place where the contract is made) governs in this
jurisdiction. There is no question that the contract of employment in this case was perfected here
in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other
laws affecting labor apply in this case. Furthermore, settled is the rule that the courts of the forum
will not enforce any foreign claim obnoxious to the forum's public policy. Here in the Philippines,
employment agreements are more than contractual in nature. The Constitution itself, in Article
XIII, Section 3, guarantees the special protection of workers
I.
Waivers and quitclaims executed by employees are generally frowned upon for being contrary to
public policy. This is based on the recognition that employers and employees do not stand on
equal footing. Quitclaims do not bar employees from filing labor complaints and demanding
benefits to which they are legally entitled. They are "ineffective in barring recovery of the full
measure of a worker's rights, and the acceptance of benefits therefrom does not amount to
estoppel." The law does not recognize agreements that result in compensation less than what is
mandated by law. These quitclaims do not prevent employees from subsequently claiming
benefits to which they are legally entitled.
II.
Under the Labor Code, employers may only terminate employment for a just or authorized cause
and after complying with procedural due process requirements. Articles 297 and 300 of the Labor
Code enumerate the causes of employment termination either by employers or employees.
In illegal dismissal cases, the burden of proof that employees were validly dismissed rests on the
employers. Failure to discharge this burden means that the dismissal is illegal.
A review of the records here shows that the termination of petitioners' employment was effected
merely because respondents no longer wanted their services. This is not an authorized or just
cause for dismissal under the Labor Code. Employment contracts cannot be terminated on a
whim. Moreover, petitioners did not voluntarily sever their employment when they signed the
Compromise Agreement, which, again, cannot be used to justify a dismissal.
Furthermore, petitioners were not accorded due process. A valid dismissal must comply with
substantive and procedural due process: there must be a valid cause and a valid procedure. The
employer must comply with the two (2)-notice requirement, while the employee must be given an
opportunity to be heard. Here, petitioners were only verbally dismissed, without any notice given
or having been informed of any just cause for their dismissal.
Conclusion: IMPORTANT (SC followed ruled according to Sameer and Serrano cases)
Hence, petitioners are entitled to the award of salaries based on the actual unexpired
portion of their employment contracts. The award of petitioners' salaries, in relation to the
three (3)-month cap, must be modified accordingly.
NATIONAL SUGAR REFINERIES CORPORATION VS. NLRC

G.R. No. 101761 March 24, 1993
FACTS:
Petitioner National Sugar Refineries Corporation (NASUREFCO) operates three sugar refineries
in Bukidnon, Iloilo and Batangas. Private respondent union represents the former supervisors of
the NASUREFCO Batangas Sugar Refinery.
In 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from
rank-- and-file to department heads. As a result, all positions were re-evaluated, and all
employees including the members of respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions.
With the implementation of the JE Program, the following, the members of respondent union were
re-classified under job levels which are considered managerial staff for purposes of compensation
and benefits, there was an increase in basic pay on the average of 50% of their basic pay prior to
the JE Program, longevity pay was increased on top of alignment adjustments; they were entitled
to increased company COLA of P225 per month, and there was a grant of P100 allowance for
rest day/holiday work.
In 1990, NASUREFCO recognized herein respondent union, which was organized pursuant to
RA 6715 allowing supervisory employees to form their own unions, as the bargaining
representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.
Two years after the implementation of the JE Program, the members of the union filed a complaint
with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly
in violation of Article 100 of the Labor Code.
In finding for the members of the union, the labor arbiter ruled that the long span of time during
which the benefits were being paid to the supervisors has caused the payment thereof to ripen
into a contractual obligation.
On appeal, the NLRC affirmed the decision of the labor arbiter on the ground that the members
of union are not managerial employees, as defined under Article 212(m) of the Labor Code and,
therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared
that these supervisory employees are merely exercising recommendatory powers subject to the
evaluation, review and final action by their department heads; their responsibilities do not require
the exercise of discretion and independent judgment; they do not participate in the formulation of
management policies nor in the hiring or firing of employees; and their main function is to carry
out the ready policies and plans of the corporation.
ISSUE:
Whether the union members, being supervisory employees as defined in Article 212(m), Book V
of the Labor Code, should be considered as officers or members of the managerial staff under
Article 82, Book III of the same Code, and hence are not entitled to overtime, rest day and holiday
pay. (YES)
RULING:
It is not disputed that the members of respondent union are supervisory employees, as defined
under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:
‘Managerial employee’ is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of
the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are considered
rank-and-file employees for purposes of this Book.
Respondent NLRC, in holding that the union members are entitled to overtime, rest day and
holiday pay, and in ruling that the latter are not managerial employees, adopted the definition
stated in the aforequoted statutory provision.
Petitioner, however, avers that for purposes of determining whether or not the members of
respondent union are entitled to overtime, rest day and holiday pay, said employees should be
considered as “officers or members of the managerial staff” as defined under Article 82, Book III
of the Labor Code on “Working Conditions and Rest Periods” and amplified in Section 2, Rule I,
Book III of the Rules to Implement the Labor Code.
It is the submission of petitioner that while the members of respondent union, as supervisors, may
not be occupying managerial positions, they are clearly officers or members of the managerial
staff because they meet all the conditions prescribed by law and, hence, they are not entitled to
overtime, rest day and holiday pay. It contends that the definition of managerial and supervisory
employees under Article 212(m) should be made to apply only to the provisions on Labor
Relations, while the right of said employees to the questioned benefits should be considered in
the light of the meaning of a managerial employee and of the officers or members of the
managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I, Book III of
the implementing rules. In other words, for purposes of forming and joining unions, certification
elections, collective bargaining, and so forth, the union members are supervisory employees. In
terms of working conditions and rest periods and entitlement to the questioned benefits, however,
they are officers or members of the managerial staff, hence they are not entitled thereto.
A cursory perusal of the Job Value Contribution Statements of the union members will readily
show that these supervisory employees are under the direct supervision of their respective
department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling, communicating and in making decisions in attaining the company’s
set goals and objectives. These supervisory employees are likewise responsible for the effective
and efficient operation of their respective departments.
The members of respondent union discharge duties and responsibilities which ineluctably qualify
them as officers or members of the managerial staff, as defined in Section 2, Rule I, Book III of
the Rules to Implement the Labor Code and are, therefore, exempt from the coverage of Article
82. Perforce, they are not entitled to overtime, rest day and holiday pay.
The distinction made by respondent NLRC on the basis of whether or not the union members are
managerial employees, to determine the latter’s entitlement to the questioned benefits, is
misplaced and inappropriate. It is admitted that these union members are supervisory employees
and this is one instance where the nomenclatures or titles of their jobs conform with the nature of
their functions. Hence, to distinguish them from a managerial employee, as defined either under
Articles 82 or 212(m) of the Labor Code, is puerile and inefficacious. The controversy actually
involved here seeks a determination of whether or not these supervisory employees ought to be
considered as officers or members of the managerial staff. The distinction, therefore, should have
been made along that line and its corresponding conceptual criteria.
PEÑARANDA VS. BAGANGA PLYWOOD CORPORATION

GR No. 159577, May 3, 2006
FACTS:
Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation (BPC)
to take charge of the operations and maintenance of its steam plant boiler. In 2001, Peñaranda
filed a Complaint for illegal dismissal with money claims against BPC before the NLRC.
Peñaranda alleged that he was employed by Baganga with a monthly salary of P5,000 as
Foreman/Boiler Head/Shift Engineer until he was illegally terminated. Furthermore, he was not
paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials.
Upon the other hand, BPC alleged that being a managerial employee, Peñaranda is not entitled
to overtime pay and if ever he rendered services beyond the normal hours of work and that there
was no office order/or authorization for him to do so. According to the labor arbiter, petitioner's
money claims for illegal dismissal was weakened by his quitclaim and admission during the
clarificatory conference that he accepted separation benefits, sick and vacation leave conversions
and thirteenth month pay. Nonetheless, the labor arbiter found petitioner entitled to overtime pay,
premium pay for working on rest days. Respondents filed an appeal to the NLRC, which deleted
the award of overtime pay and premium pay for working on rest days. According to the
Commission, petitioner was not entitled to these awards because he was a managerial employee.
ISSUE:
Whether Peñaranda is a regular, common employee entitled to monetary benefits under Art. 82
of the Labor Code. (NO)
RULING:
Article 82 of the Labor Code exempts managerial employees from the coverage of labor
standards. Labor standards provide the working conditions of employees, including entitlement to
overtime pay and premium pay for working on rest days. Under this provision, managerial
employees are "those whose primary duty consists of the management of the establishment in
which they are employed or of a department or subdivision."
The Implementing Rules of the Labor Code state that managerial employees are those who meet
the following conditions:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status
of other employees are given particular weight."
The SC disagrees with the NLRC's finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and members of the managerial staff are not
entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code
define members of a managerial staff as those with the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies
of the employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof;
or (ii) execute under general supervision work along specialized or technical lines requiring
special training, experience, or knowledge; or (iii) execute under general supervision special
assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs
(1), (2), and (3) above."
As shift engineer, petitioner's duties and responsibilities include supplying the required and
continuous steam to all consuming units at minimum cost, supervising, checking and monitoring
manpower workmanship as well as operation of boiler and accessories, evaluating the
performance of machinery and manpower, training new employees for effective and safety while
working, and recommending personnel actions such as: promotion, or disciplinary action.
The foregoing enumeration illustrates that petitioner was a member of the managerial staff. His
duties and responsibilities conform to the definition of a member of a managerial staff under the
Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the engineering
section. This work necessarily required the use of discretion and independent judgment to ensure
the proper functioning of the steam plant boiler.
As supervisor, petitioner is deemed a member of the managerial staff. On the basis of the
foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to
petitioner
SAN MIGUEL V. DEMOCRATIC LABOR ORGANIZATION

G.R. No. L-18353, July 31, 1963
FACTS:
On January 27, 1955, the Democratic Labor Association filed complaint against the San Miguel
Brewery, Inc. embodying 12 demands for the betterment of the conditions of employment of its
members. The company filed its answer to the complaint specifically denying its material
averments and answering the demands point by point. The company asked for the dismissal of
the complaint.
At the hearing held sometime in September, 1955, the union manifested its desire to confine its
claim to its demands for overtime, night-shift differential pay, and attorney's fees, although it was
allowed to present evidence on service rendered during Sundays and holidays, or on its claim for
additional separation pay and sick and vacation leave compensation.
After the case had been submitted for decision, Presiding Judge Bautista, who was commissioned
to receive the evidence, rendered decision expressing his disposition with regard to the points
embodied in the complaint on which evidence was presented.
The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis,
payment of accumulated vacation and sick leave and attorney's fees, as well as the award of
additional separation pay, were either dismissed, denied, or set aside.
Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect
that outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the
pertinent facts are as follows:
“After the morning roll call, the employees leave the plant of the company to go on their respective
sales routes. They do not have a daily time record. The company never require them to start their
work as outside sales personnel earlier than the above schedule.
The sales routes are so planned that they can be completed within 8 hours at most, or that the
employees could make their sales on their routes within such number of hours variable in the
sense that sometimes they can be completed in less than 8 hours.
The moment these outside or field employees leave the plant and while in their sales routes they
are on their own, and often times when the sales are completed, or when making short trip
deliveries only, they go back to the plant, load again, and make another round of sales. These
employees receive monthly salaries and sales commissions in variable amounts. The amount of
compensation they receive is uncertain depending upon their individual efforts or industry.
Besides the monthly salary, they are paid sales commission.
It is contended that since the employees concerned are paid a commission on the sales they
make outside of the required 8 hours besides the fixed salary that is paid to them, the Court of
Industrial Relations erred in ordering that they be paid an overtime compensation as required by
the EightHour Labor Law for the reason that the commission they are paid already takes the place
of such overtime compensation. His situation, the company contends, can be likened to an
employee who is paid on piece-work, "pakiao", or commission basis, which is expressly excluded
from the operation of the Eight-Hour Labor Law.
ISSUE:
Whether or not the workers are entitled to the benefits of the Eight-Hour Labor Law.
RULING:
We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application
where an employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily
compensation, in which case, if he is made to work beyond the requisite period of 8 hours, he
should be paid the additional compensation prescribed by law. This law has no application when
the employee or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the
time employed. The philosophy behind this exemption is that his earnings in the form of
commission based on the gross receipts of the day. His participation depends upon his industry
so that the more hours he employs in the work the greater are his gross returns and the higher
his commission.
The record shows that these employees during the period of their employment were paid sales
commission ranging from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a
month depending on the volume of their sales and their rate of commission per case. And so,
insofar is the extra work they perform, they can be considered as employees paid on piece work,
"pakiao", or commission basis. The Department of Labor, called upon to implement, the Eight-
Hour Labor Law, is of this opinion when on December 9, 1957 it made the ruling on a query
submitted to it, thru the Director of the Bureau of Labor Standards, to the effect that field sales
personnel receiving regular monthly salaries, plus commission, are not subject to the Eight-Hour
Labor Law.
We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor
Law applies to the employees composing the outside service force and in ordering that they be
paid the corresponding additional compensation.
The remaining point to be determined refers to the claim for pay for Sundays and holidays for
service performed by some claimants who were watchmen or security guards. It is contended that
these employees are not entitled to extra pay for work done during these days because they are
paid on a monthly basis and are given one day off which may take the place of the work they may
perform either on Sunday or any holiday.
We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No.
444 expressly provides that no person, firm or corporation may compel an employee or laborer to
work during Sundays and legal holidays unless he is paid an additional sum of 25% of his regular
compensation. This proviso is mandatory, regardless of the nature of compensation. The only
exception is with regard to public utilities who perform some public service.
AUTO BUS TRANSPORT SYSTEMS, INC. VS. BAUTISTA

GR No. 156367, May 16, 2005
FACTS:
Respondent Antonio Bautista was employed by petitioner Auto Bus Transport Systems, Inc.
(Autobus) as driver-conductor with travel routes Manila-Tuguegarao via Baguio,
BaguioTuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on
commission basis, 7% of the total gross income per travel, on a twice a month basis.
While respondent was driving along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally
bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp
curve without giving any warning. He was received a letter of termination from the management
of Autobus.
Respondent averred that the accident happened because he was compelled by the management
to go back to Roxas, Isabela, although he had not slept for almost twenty-four hours, as he had
just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to
work until he fully paid the cost of repair of the damaged buses and that despite respondent's
pleas for reconsideration, the same was ignored by management. After a month, management
sent him a letter of termination.
Thus, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment
of 13 month pay and service incentive leave pay against Autobus.
The labor arbiter dismissed the complaint for Illegal Dismissal but ordered Autobus to pay
respondent his 13th month pay and his service incentive leave pay for all the years he had been
in service with the respondent.
Autobus appealed the decision to the NLRC which deleted the award of 13th month pay to citing
Sec 3 of the Rules and Regulations Implementing PD 851 which provides:
Section 3. Employers covered. – The Decree shall apply to all employers except to:
e) employers of those who are paid on purely commission, boundary, or task basis,
performing a specific work, irrespective of the time consumed in the performance thereof.
xxx."
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought
a reconsideration of this aspect, which denied in a Resolution by the NLRC. Displeased with only
the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the
CA which was subsequently denied by the appellate court.
ISSUE:
Whether respondent is entitled to service incentive leave. (YES)
RULING:
Article 95 of the Labor Code and Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code provide:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. – This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by
the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that the grant of service
incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code
to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field
personnel." The phrase "other employees whose performance is unsupervised by the employer"
must not be understood as a separate classification of employees to which service incentive leave
shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of
field personnel under the Labor Code as those "whose actual hours of work in the field cannot be
determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis,
purely commission basis." Said phrase should be related with "field personnel," applying the rule
on ejusdem generis that general and unlimited terms are restrained and limited by the particular
terms that they follow. Hence, employees engaged on task or contract basis or paid on purely
commission basis are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.
Therefore, petitioner's contention that respondent is not entitled to the grant of service incentive
leave just because he was paid on purely commission basis is misplaced. What must be
ascertained in order to resolve the issue of propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions
(BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association
which states that:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away from the principal office of the
employee.
The definition of a "field personnel" is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employee's performance is
unsupervised by the employer. As discussed above, field personnel are those who regularly
perform their duties away from the principal place of business of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. Thus, in order to
conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours
of work in the field can be determined with reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employee's time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies, there are its
inspectors assigned at strategic places who board the bus and inspect the passengers, the
punched tickets, and the conductor's reports. There is also the mandatory once-a-week car barn
or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as reported by the driver and/or conductor.
They too, must be at specific place as [sic] specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In each and every depot,
there is always the Dispatcher whose function is precisely to see to it that the bus and its crew
leave the premises at specific times and arrive at the estimated proper time. These, are present
in the case at bar. The driver, the complainant herein, was therefore under constant supervision
while in the performance of this work. He cannot be considered a field personnel.
We agree in the above disquisition. Therefore, as correctly concluded by the appellate court,
respondent is not a field personnel but a regular employee who performs tasks usually necessary
and desirable to the usual trade of petitioner's business. Accordingly, respondent is entitled to the
grant of service incentive leave.
MERCIDAR FISHING CORP. V. NLRC

OCTOBER 8, 1998
FACTS:
Private respondent employed as a “bodegero” or ship’s quartermaster complained of being
constructively dismissed by petitioner corporation when the latter refused him assignments
aboard its boats after he had reported to work. The Larbor Arbiter rendered a decision ordering
petitioner corporation to reinstate complainant with back wages, pay him his 13th month pay and
incentive leave. Petitioner claims that it cannot be held liable for service incentive leave pay by
fishermen in its employ as the latter supposedly are “field personnel” and thus not entitled to such
pay under the Labor Code.
Article 82 of the Labor Code provides among others that “field personnel” shall refer to non-
agricultural employees who regularly perform their duties away from the principal place of
business or branch of office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.
ISSUE:
Whether fishermen are considered field personnel.
RULING:
The answer is No. Although fishermen perform non-agricultural work away from their employer’s
business offices, the fact remains that throughout the duration of their work they are under the
effective control and supervision of the employer through the vessel’s patron or master.
LABOR CONGRESS OF THE PHILIPPINES V. NLRC

G.R. No. 123938 MAY 21, 1998
FACTS:
Petitioners were rank-and-file employees of respondent Empire Food Products, which hired them
on various dates. Petitioners filed against private respondents a complaint for payment of money
claim[s] and for violation of labor standard[s] laws. They also filed a petition for direct certification
of petitioner Labor Congress of the Philippines as their bargaining representative.
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and
private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products,
Inc. entered into a Memorandum of Agreement. Mediator Arbiter Antonio Cortez approved the
memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among
the rank-and-file employee of Empire Food Products for purposes of collective bargaining with
respect to wages, hours of work and other terms and conditions of employment".
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-
91 against private respondents for Unfair Labor Practice, Union busting, violation of the
Memorandum of Agreement, Underpayment of Wages, and actual, moral and exemplary
damages.
Labor Arbiter absolved private respondents of the charges, but ordered the reinstatement of the
individual complainants. On appeal, the National Labor Relations Commission vacated the
Decision and remanded the case to the Labor Arbiter for further proceedings.
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
“Complainants failed to present with definiteness and clarity the particular act or acts constitutive
of unfair labor practice.
As regards the issue of harassments [sic], threats and interference with the rights of employees
to self-organization which is actually an ingredient of unfair labor practice, complainants failed to
specify what type of threats or intimidation was committed and who committed the same.
Anent the charge that there was underpayment of wages, the evidence points to the contrary.
Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad
faith or fraud was ever proven to have been perpetuated by respondents.” On appeal, the NLRC,
in its Resolution dated 29 March 1995, affirmed in toto the decision of Labor Arbiter Santos.
ISSUE:
Whether or not petitioners should be reinstated from the date of their dismissal up to the time of
their reinstatement, with backwages, statutory benefits, damages and attorney's fees.
RULING:
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under
the circumstances. Initially, we are unable to discern any compelling reason justifying the Labor
Arbiter's volte face from his 14 April 1992 decision reinstating petitioners to his diametrically
opposed 27 July 1994 decision, when in both instances, he had before him substantially the same
evidence. Neither do we find the 29 March 1995 NLRC resolution to have sufficiently discussed
the facts so as to comply with the standard of substantial evidence.
Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim
to this stinging rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter,
in concluding in his 27 July 1994 Decision that petitioners abandoned their work, was moved by,
at worst, spite, or at best, lackadaisically glossed over petitioner's evidence. On this score, we
find the following observations of the OSG most persuasive:
“In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied
on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused
to work. As a result of their failure to work, the cheese curls ready for repacking on said date were
spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not amount
to abandonment of work. In fact two (2) days after the reported abandonment of work or on
January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal
lockout and/or illegal dismissal.”
It may likewise be stressed that the burden of proving the existence of just cause for dismissing
an employee, such as abandonment, rests on the employer, a burden private respondents failed
to discharge. Private respondents, moreover, in considering petitioners' employment to have been
terminated by abandonment, violated their rights to security of tenure and constitutional right to
due process in not even serving them with a written notice of such termination.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of
the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking
into account the number of employees involved, the length of time that has lapsed since their
dismissal, and the perceptible resentment and enmity between petitioners and private
respondents which necessarily strained their relationship, reinstatement would be impractical and
hardly promotive of the best interests of the parties. In lieu of reinstatement then, separation pay
at the rate of one month for every year of service, with a fraction of at least six (6) months of
service considered as one (1) year, is in order.
That being said, the amount of back wages to which each petitioner is entitled, however, cannot
be fully settled at this time. Petitioners, as piece-rate workers having been paid by the piece, there
is need to determine the varying degrees of production and days worked by each worker. Clearly,
this issue is best left to the National Labor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive
leave which the Labor Arbiter failed to rule on but which petitioners prayed for in their complaint,
we hold that petitioners are so entitled to these benefits. Three (3) factors lead us to conclude
that petitioners, although piece-rate workers, were regular employees of private respondents.
First, as to the nature of petitioners' tasks, their job of repacking snack food was necessary or
desirable in the usual business of private respondents, who were engaged in the manufacture
and selling of such food products; second, petitioners worked for private respondents throughout
the year, their employment not having been dependent on a specific project or season; and third,
the length of time that petitioners worked for private respondents. Thus, while petitioners' mode
of compensation was on a "per piece basis," the status and nature of their employment was that
of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such
as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, "field
personnel and other employees whose time and performance is unsupervised by the employer,
including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As
mentioned earlier, not only did petitioners labor under the control of private respondents as their
employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as
supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote
hereunder, piece workers are specifically mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees. –
(b) Where a covered employee is paid by results or output, such as payment on piece
work, his holiday pay shall not be less than his average daily earnings for the last
seven (7) actual working days preceding the regular holiday: Provided, however, that
in no case shall the holiday pay be less than the applicable statutory minimum wage
rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of
the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer
of piece rate workers from those exempted from paying 13th month pay.
The Revised Guidelines as well as the Rules and Regulations identify those workers who fall
under the piece-rate category as those who are paid a standard amount for every piece or unit of
work produced that is more or less regularly replicated, without regard to the time spent in
producing the same.
As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of
the Implementing Rules, workers who are paid by results including those who are paid on
piecework, takay, pakiao, or task basis, if their output rates are in accordance with the standards
prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been
fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive
overtime pay. Here, private respondents did not allege adherence to the standards set forth in
Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond
the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the
National Labor Relations Commission would be in a better position to determine the exact
amounts owed petitioners, if any.
APEX MINING COMPANY, INC VS. NLRC

G.R. No. 94951, April 22, 1991
FACTS:
Private respondent Sinclitica Candido was employed by petitioner Apex Mining Company, Inc. in
1973 to perform laundry services at its staff house located in Davao del Norte.
In 1987, while she was attending to her assigned task and she was hanging her laundry, she
accidentally slipped and hit her back on a stone. She reported the accident to her immediate
supervisor to the personnel office. As a result of the accident she was not able to continue with
her work. She was offered the amount of P2,000 which was eventually increased to P5,000 to
persuade her to quit her job, but she refused the offer and preferred to return to work. Petitioner
did not allow her to return to work and dismissed.
Private respondent filed a request for assistance with the DOLE. After the parties submitted their
position papers as required by the labor arbiter, the latter rendered a decision ordering the Apex
Mining Company, Inc. to pay the complainant her salary differential, emergency living allowance,
13th month pay differential, and separation pay in the total amount of P55,161.
ISSUE:
Whether a house helper in the staff houses of an industrial company may be considered a
domestic helper. (NO)
RULING:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper"
or "domestic servant" are defined as follows:
The term 'househelper' 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 househelper 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 other similar househelps.
The definition cannot be interpreted to include househelp or laundrywomen working in staffhouses

of a company, like petitioner who attends to the needs of the company's guests and other persons
availing of said facilities. By the same token, it cannot be considered to extend to the driver,
houseboy, or gardener exclusively working in the company, the staffhouses and its premises.
They may not be considered as within the meaning of a "househelper" or "domestic servant" as
abovedefined by law.
The criteria is 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 househelper, domestic servant
or laundrywoman in a home or in a company staffhouse 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, whether it is a corporation or a single proprietorship engaged in business or
industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or
within the premises of the business of the employer. In such instance, they are employees of the
company or employer in the business concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is assigned to certain
aspects of the business of the employer that such househelper or domestic servant may be
considered as such an employee. The Court finds no merit in making any such distinction. The
mere fact that the househelper 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 staffhouses for its
guests or even for its officers and employees, warrants the conclusion that such househelper or
domestic servant is and should be considered as a regular employee of the employer and not as
a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1 (b), Book
3 of the Labor Code, as amended. Evidence shows that because of an accident which took place
while private respondent was performing her laundry services, she was not able to work and was
ultimately separated from the service. She is, therefore, entitled to appropriate relief as a regular
employee of petitioner. Inasmuch as private respondent appears not to be interested in returning
to her work for valid reasons, the payment of separation pay to her is in order.
Ultra Villa Food Haus v. Geniston, G.R. No. 120473, June 23, 1999
Facts:
Private respondent Geniston claims to have been an “all-around worker” of Ultra Villa Food Haus
Restaurant. He was employed from March 1, 1989 until May 13, 1992. As Geniston served acted
as NUCD Poll Watcher in the 1992 elections, he did not report for work on May 11-12, 1992. He
alleged that his employer told his mother that he was dismissed from work and his pleas for
reinstatement failed.
On the other, Petitioner Tio maintains that Geniston was her personal driver and not an employee
of Ultra Food Haus. Although May 12, 1992 was a holiday, she asked him to repport for work, but
was told that he was doing election duties. Hence, she had to hire a substitute driver. Respondent
only returned to work a week after and to collect his salary.
The Labor Arbiter ruled that Geniston was Tio’s personal driver and not entitled to monetary
benefits. However, Tio was ordered to indeminify Geniston for failure to observe procedural due
process. On appeal, the NLRC ordered Tio to reinstate Geniston and pay monetary benefits. On
motion for reconsideration, instead of reinstatement due to closure of the business, NLRC ordered
Tio to pay separation pay in lieu thereof.
Issues: (1) Was Geniston an employee of Ultra Villa Food Haus or a personal driver of Tio?
(2) Was respondent illegally dismissed?
Held:
(1) Geniston was the personal driver of Tio. The criterion of househelper under Art. 141 have been
met: “ Domestic or household service shall mean services in the employers home which is usually
necessary or desirable for the maintenance and enjoyment therefore and includes ministering to
the personal comfort and convenience of the members of the employers’ household, including
services of family drivers.” Book III, Title 1 of the Labor Code and Article 82, expressly excludes
domestic helpers from its coverage, and as such, petitioner is not required to grant OT, holiday
pay, premium pay and SIL. While PD851 excludes househelpers from the coverage of 13th month
pay, petitioner was required to pay such considering that it has been its practice to give its
employees 13th Month Pay.
(2) Yes. Respondent did not abandon his job, as the two requisites ( failure to report to work
without valid reason, and a clear intention to sever the employer-employee relationship) were not
met. Petitioner failed to prove abandonment. It is quite unbelievable that private respondent would
leave a stable and relatively well-paying job as petitioner’s family driver to work as an election
worker… the functions of which are seasonal and temporary in nature. He was unjustly dismissed
from work, and is entitled to indemnity as provided for under Art. 149 of the Labor Code. “….
compensation already earned plus that for fifteen days by way of indemnity.” Further, because of
failure to comply with die process in dismissing private respondent, petitioner was also ordered to
pay an additional indemnity of P 1,000.00.
David vs. Macasio GR. No. 195466 July 2, 2014
Facts: Macasio alleged that he had been working as a butcher for David since January 6, 1995.
acasio claimed that David exercised effective control and supervision over his work. David, on the
other hand, claimed that he started his hog dealer business in 2005 and that he only has ten
employees. He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis
who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the
provisions of the Implementing Rules and Regulations (IRR) of the Labor Code. LA dismissed
Macasio’s complaint for lack of merit. The LA gave credence to David’s claim that he engaged
Macasio on "pakyaw" or task basis. The LA noted the following facts to support this finding: (1)
Macasio received the fixed amount of ₱700.00 for every work done, regardless of the number of
hours that he spent in completing the task and of the volume or number of hogs that he had to
chop per engagement; (2) Macasio usually worked for only four hours, beginning from 10:00 p.m.
up to 2:00 a.m. of the following day; and (3) the ₱700.00 fixed wage far exceeds the then
prevailing daily minimum wage of ₱382.00. The LA added that the nature of David’s business as
hog dealer supports this "pakyaw" or task basis arrangement. The NLRC affirmed the LA ruling.
On appeal, the CA partly granted Macasio's petition and reversed the ruling of the NLRC. While the
CA agreed with the LA and NLRC that Macasio was a task basis employee, it nevertheless found
that Macasio is entitled to his monetary claims.
Issue: Whether or not a worker engaged on "pakyaw" or task basis entitled to labor standard
benefits.
Held: Yes. A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to

straight-hour wage payment, is the non-consideration of the time spent in working. In a task-basis
work, the emphasis is on the task itself, in the sense that payment is reckoned in terms of
completion of the work, not in terms of the number of time spent in the completion of work.45
Once the work or task is completed, the worker receives a fixed amount as wage, without regard
to the standard measurements of time generally used in pay computation.
In Macasio’s case, the established facts show that he would usually start his work at 10:00 p.m.
Thereafter, regardless of the total hours that he spent at the workplace or of the total number of
the hogs assigned to him for chopping, Macasio would receive the fixed amount of ₱700.00 once
he had completed his task. Clearly, these circumstances show a "pakyaw" or task basis
engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by applying
the "four-fold" test; engagement on "pakyaw" or task basis does not determine the parties’
relationship as it is simply a method of pay computation. Accordingly, Macasio is David’s employee,
albeit engaged on "pakyaw" or task basis. Under the IRR, exemption from the coverage of holiday
and SIL pay refer to "field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or contract basis[.]" Note
that unlike Article 82 of the Labor Code, the IRR on holiday and SIL pay do not exclude employees
"engaged on task basis" as a separate and distinct category from employees classified as "field
personnel." Rather, these employees are altogether merged into one classification of exempted
employees.
claim that private respondents are not entitled to the service incentive leave benefit cannot
therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one
from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore
validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82
from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the
determination of excluded workers who are paid by results from the coverage of Title I is
"determined by the Secretary of Labor in appropriate regulations."
Based on the definition of field personnel under Article 82, the Court agree with the CA that Macasio
does not fall under the definition of "field personnel." The CA’s finding in this regard is supported
by the established facts of this case: first, Macasio regularly performed his duties at David’s
principal place of business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot
be considered a "field personnel," then he is not exempted from the grant of holiday, SIL pay even
as he was engaged on "pakyaw" or task basis.
Not being a "field personnel," the Court find the CA to be legally correct when it reversed the
NLRC’s ruling dismissing Macasio’s complaint for holiday and SIL pay for having been rendered
with grave abuse of discretion.
Dasco v. Philtranco Service Enterprises, Inc., G.R. No. 211141, June 29, 2016
Facts: Petitioners were employed by the respondents as bus drivers and/or conductors with travel
routes of Manila (Pasay) to Bicol, Visayas and Mindanao, and vice versa. petitioners filed a case
against the respondents alleging that: (1) they were already qualified for regular employment
status since they have been working with the respondents for several years; (2) they were paid
only P404.00 per round trip, which lasts from two to five days, without overtime pay and below
the minimum wage rate; (3) they cannot be considered as field personnel because their working
hours are controlled by the respondents from dispatching to end point and their travel time is
monitored and measured by the distance because they are in the business of servicing passengers
where time is of the essence; and (4) they had not been given their yearly five-day SIL since the
time they were hired by the respondents.9
In response, the respondents asserted that: (1) the petitioners were paid on a fixed salary rate of
P0.49 centavos per kilometer run, or minimum wage, whichever is higher; (2) the petitioners are
seasonal employees since their contracts are for a fixed period and their employment was
dependent on the exigency of the extraordinary public demand for more buses during peak months
of the year; and (3) the petitioners are not entitled to overtime pay and SIL pay because they are
field personnel whose time outside the company premises cannot be determined with reasonable
certainty since they ply provincial routes and are left alone in the field unsupervised.
The LA rendered a decision in favor of the respondents but declared that petitioners were regular
employees of the respondents. The NLRC however granted the appeal of petitioners and modified
LA’s decision.
The NLRC held that the petitioners are not field personnel considering that they ply specific routes
with fixed time schedules determined by the respondents; thus, they are entitled to minimum
wage, SIL pay, and overtime benefits.
However, CA reversed the decision. In overturning the NLRC’s decision, the CA considered the
petitioners as field workers and, on that basis, denied their claim for benefits, such as overtime
pay and SIL pay.
Issue: Whether the petitioners as bus drivers and/ or conductors are field personnel, and thus
entitled to overtime pay and SIL pay.
Held: Yes. The Court agrees with the findings of the NLRC. Clearly, the petitioners, as bus drivers
and/or conductors, are left alone in the field with the duty to comply with the conditions of the
respondents’ franchise, as well as to take proper care and custody of the bus they are using. Since
the respondents are engaged in the public utility business, the petitioners, as bus drivers and/or
conductors, should be considered as regular employees of the respondents because they perform
tasks which are directly and necessarily connected with the respondents’ business. Thus, they are
consequently entitled to the benefits accorded to regular employees of the respondents, including
overtime pay and SIL pay.
Hisoler III v. Filipino Travel Center Corp., G.R. No. 232949, November 20, 2017
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated November 20, 2017,
which reads as follows: SDAaTC
"G.R. No. 232949 — Jose V. Hisoler III v. Filipino Travel Center Corporation/Johan Henk Van
Weerden, a.k.a. Hans Van Weerden
The Court hereby resolved to GRANT the Motion for Extension of Time filed by petitioner seeking
an additional period of 30 days from the expiration of the reglementary period on August 11, 2017
within which to file his Petition for Review on Certiorari.
Considering the allegations, issues, and arguments adduced in the instant Petition for Review on
Certiorari of the May 17, 2017 Decision and July 6, 2017 Resolution of the Court of Appeals (CA)
in CA G.R. SP No. 147604, the Court further resolved to DENY the Petition for failure to show that
the CA committed any reversible error in issuing the said assailed Decision and Resolution as to
warrant the exercise of this Court's discretionary appellate jurisdiction.
We find no compelling reason to depart from the uniform findings of the Labor Arbiter (LA), the
National Labor Relations Commission (NLRC), and the CA that petitioner was validly dismissed. As
long as their decision is supported by facts and the evidence, the matter of evaluating the merits
and demerits of the case is left to their sound discretion. 1 Petitioner, indeed, committed a serious
misconduct and violation of company rules when he allowed other persons to ride with paying
customers which compromised their safety. An employer cannot be compelled to retain an
employee who is guilty of acts inimical to the interests of the employer. The dismissal of petitioner
who is guilty of such a serious infraction is, therefore, reasonable.
We also agree with the finding of the NLRC and affirmed by the CA that petitioner is a field
personnel. Under Article 82 of the Labor Code, a field personnel is defined as "non-agricultural
employees who regularly perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty." Petitioner insists that he is not a field worker as his hours of work can be
determined with reasonable certainty, claiming that with the advent of modern technology such
as the global positioning system (GPS) and cellular phone, his work hours and performance as
driver were effectively monitored by his employer.
We are not persuaded. Certainly, with the help of petitioner's cellular phone and the company
vehicle's GPS, respondents can monitor the progress of petitioner's trip and location. However, the
definition of a "field personnel" is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employee's performance is
unsupervised by the employer. 2 As correctly observed by the NLRC, petitioner's activity remains
unsupervised as he was even able to let unauthorized persons join the tour without the knowledge
of respondents. The CA observed that the hours spent to the actual field work were left to the
control of petitioner. Obviously, petitioner is not under constant supervision of the company while
in the performance of his work. Consequently, being a field personnel, petitioner is not entitled to
overtime pay, holiday pay, rest day premium and service incentive leave pay. 3
ACCORDINGLY, the Court resolved to AFFIRM the assailed May 17, 2017 Decision and July 6, 2017
Resolution of the Court of Appeals in CA G.R. SP No. 147604.
The Court of Appeals is DROPPED as public respondent in this case pursuant to Section 4, Rule 45,
Rules of Court.
SO ORDERED."
Provincial Bus Operators v. DOLE; G.R. No. 202275. July 17, 2018
Facts:
To ensure road safety and address the risk-taking behavior of bus drivers as its declared objective,
the LTFRB issued Memorandum Circular No. 2012-001 1 on January 4, 2012, requiring "all Public
Utility Bus (PUB) operators . . . to secure Labor Standards Compliance Certificates" under pain of
revocation of their existing certificates of public convenience or denial of an application for a new
certificate. Five (5) days later or on January 9, 2012, the DOLE issued Department Order No. 118-
12, elaborating on the part-fixed-part-performance-based compensation system referred to in the
L TFRB Memorandum Circular No. 2012-001.2 Department Order No. 118-12, among others,
provides for the rule for computing the fixed and the performance-based component of a public
utility bus driver's or conductor's wage.
The Provincial Bus Operators Association, through Atty. Emmanuel Mahipus, wrote to then
Secretary of Labor requesting to defer the implementation of DO 118-12. However, such reuest
was not acted upon. Meanwhile, on February 27, 2012 and in compliance with Rule III, Section 3
of Department Order No. 118-12, the National Wages and Productivity Commission issued NWPC
Guidelines No. 1 to serve as Operational Guidelines on Department Order No. 118-12. NWPC
Guidelines No. 1 suggested formulae for computing the fixed-based and the performance-based
components of a bus driver's or conductor's wage. On July 4, 2012, petitioners filed before this
Court a Petition with Urgent Request for Immediate Issuance of a Temporary Restraining Order
and/or a Writ of Preliminary Injunction,4 impleading the DOLE and the LTFRB as respondents.
They pray that this Court enjoin the implementation of Department Order No. 118-12 and
Memorandum Circular No. 2012-001 for being violative of their right to due process, equal
protection, and non-impairment of obligation of contracts.
Petitioners assail the constitutionality of Department Order No. 118-12 and Memorandum Circular
No. 2012-001, arguing that these issuances violate petitioners' rights to non-impairment of
obligation of contracts, due process of law, and equal protection of the laws. Particularly with
respect to Department Order No. 118-12, its provisions on the payment of part-fixed-part-
performance-based wage allegedly impair petitioners' obligations under their existing collective
bargaining agreements where they agreed with their bus drivers and conductors on a commission
or boundary basis. They contend that Memorandum Circular No. 2012-001 further requires
compliance with Department Order No. 118-12 under threat of revocation of their franchises, which
allegedly deprive petitioners of the capital they invested in their businesses in violation of their
right to due process of law.
Issues:
(1) whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum Circular
No. 2012-001 deprive public utility bus operators of their right to due process of law. NO.
(2) whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum Circular
No. 2012-001 impair public utility bus operators' right to non-impairment of obligation of contracts.
NO.
Held:
(1) this Court finds that Department Order No. 118-12 and Memorandum Circular No. 2012-001
are not violative of due process, either procedural or substantive.
Department Order No. 118-12 and Memorandum Circular No. 2012- 001 were issued in the
exercise of quasi-legislative powers of the DOLE and the LTFRB, respectively. As such, notice and
hearing are not required for their validity.
Department Order No. 118-12 and Memorandum Circular No. 2012- 001 are reasonable and are
valid police power issuances. The pressing need for Department Order No. 118-12 is obvious
considering petitioners' admission that the payment schemes prior to the Order's promulgation
consisted of the "payment by results," the "commission basis," or the boundary system. These
payment schemes do not guarantee the payment of minimum wages to bus drivers and conductors.
There is also no mention of payment of social welfare benefits to bus drivers and conductors under
these payment schemes which have allegedly been in effect since "time immemorial."
There can be no meaningful implementation of Department Order No. 118-12 if violating it has no
consequence. As such, the LTFRB was not unreasonable when it required bus operators to comply
with the part-fixed-part- performance-based payment scheme under pain of revocation of their
certificates of public convenience. The L TFRB has required applicants or current holders of
franchises to comply with labor standards as regards their employees, and bus operators must be
reminded that certificates of public convenience are not property. Certificates of public convenience
are franchises always subject to amendment, repeal, or cancellation. Additional requirements may
be added for their issuance, and there can be no violation of due process when a franchise is
cancelled for non-compliance with the new requirement.
In sum, Department Order No. 118-12 and Memorandum Circular No. 2012-001 are in the nature
of social legislations to enhance the economic status of bus drivers and conductors, and to promote
the general welfare of the riding public. They are reasonable and are not violative of due process.
(2) Here, petitioners claim that Department Order No. 118-12 and Memorandum Circular No. 2012-
001 violate bus operators' right to non-impairment of obligation of contracts because these
issuances force them to abandon their "time-honored"182 employment contracts or arrangements
with their drivers and conductors. Further, these issuances violate the terms of the franchise of
bus operators by imposing additional requirements after the franchise has been validly issued.
Petitioners' arguments deserve scant consideration. For one, the relations between capital and
labor are not merely contractual as provided in Article 1700 of the Civil Code. 183 By statutory
declaration, labor contracts are impressed with public interest and, therefore, must yield to the
common good. Labor contracts are subject to special laws on wages, working conditions, hours of
labor, and similar subjects. In other words, labor contracts are subject to the police power of the
State.
As previously discussed on the part on due process, Department Order No. 118-12 was issued to
grant bus drivers and conductors minimum wages and social welfare benefits. Further, petitioners
repeatedly admitted that in paying their bus drivers and conductors, they employ the boundary
system or commission basis, payment schemes which cause drivers to drive recklessly. Not only
does Department Order No. 118-12 aim to uplift the economic status of bus drivers and
conductors; it also promotes road and traffic safety.
Union Carbide Labor Union v. Union Carbide Phils., Inc., 215 SCRA 554 (1992)
Facts:
Complainants Agapito Duro, Alfredo Torio, and Rustico Javillonar, were dismissed from their
employment after an application for clearance to terminate them was approved by the Secretary
of Labor on December 19, 1972. Respondent’s application for clearance was premised on "willful
violation of Company regulations, gross insubordination and refusal to submit to a Company
investigation.
It appears that the Company is operating on three (3) shifts namely: morning, afternoon and night
shifts. The workers in the third shift normally work from Monday to Saturday, the last working day
being Friday or forty (40) hours a week or from Monday to Friday. Sometime in July 1972 there
seems to be a change in the working schedule from Monday to Friday as contained in the collective
bargaining agreement aforecited to Sunday thru Thursday. The change became effective July 5,
1972. The third shift employees were required to start the new work schedule from Sunday thru
Thursday. the night shift employees filed a demand to maintain the old working schedule from
Monday thru Friday. it was arrived at that all night shift operating personnel were allowed to start
their work Monday and on Saturday. This excepted the employees in the maintenance and
preparation crews whose work schedule is presumed to be maintained from Sunday to Thursday.
The three respondents Duro, Torio, and Javillonar did not report for work on November 26, 1972
which was a Sunday since it was not a working day according to the provisions of the Collective
Bargaining Agreement.
The Labor Arbiter rendered a decision in favor of the complainants while the NLRC dismissed
respondent's appeal for having been filed out of time. Hence, this petition.
Issue:
Whether or not the complainants could be validly dismissed from their employment on the ground
of insubordination for refusing to comply with the new work schedule.
Held: Verily and wisely, management retained the prerogative, whenever exigencies of the service
so require, to change the working hours of its employees. And as long as such prerogative is
exercised in good faith for the advancement of the employer’s interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise.
Thus, in the case of Abbott Laboratories (Phil.), Inc. v. NLRC (154 SCRA 713 [1987]), We ruled:
". . . Even as the law is solicitous of the welfare of employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied."
Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 119205, April 15, 1998
Facts:
Sime Darby Pilipinas, Inc., Petitioner, is engaged in the manufacture of automotive tires, tubes
and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private
respondent, is an association of monthly salaried employees of petitioner at its Marikina factory.
Prior to the present controversy, all company factory workers in Marikina including members of
private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch
break.
Petitioner issued a memorandum to all factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance
Department working on shifts, a change in work schedule.
Private respondent felt affected adversely by the change in the work schedule and discontinuance
of the 30-minute paid on call lunch break which prompted them to file a complaint.
The Labor Arbiter dismissed the complaint on the ground that the change in the work schedule
and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid
exercise of management prerogative and that the new work schedule, break time and one-hour
lunch break did not have the effect of diminishing the benefits granted to factory workers as the
working time did not exceed eight (8) hours. The NLRC reversed the decision.
Issue:
Is the act of management in revising the work schedule of its employees and discarding their paid
lunch break constitutive of unfair labor practice?
Held: No. The right to fix the work schedules of the employees rests principally on their employer.
While the old work schedule included a 30-minute paid lunch break, the employees could be called
upon to do jobs during that period as they were on call. Even if denominated as lunch break, this
period could very well be considered as working time because the factory employees were required
to work if necessary and were paid accordingly for working. With the new work schedule, the
employees are now given a one-hour lunch break without any interruption from their employer.
For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour
not only for eating but also for their rest and comfort which are conducive to more efficiency and
better performance in their work.
Since the employees are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor Arbiter that the
new work schedule fully complies with the daily work period of eight (8) hours without violating
the Labor Code.Besides, the new schedule applies to all employees in the factory similarly situated
whether they are union members or not.
Realda v. New Age Graphics, Inc.; GR 192190, April 25, 2012
Facts:
Mirasol’s business is a printing press whose production schedule is sometimes flexible and varying.
It is only reasonable that workers are sometimes asked to render overtime work in order to meet
production deadlines.
Realda was asked to render overtime work but he refused to do so despite the "rush" orders of
customers and the need to meet its deadlines set by Mirasol. In fact, he reneged on his promise
to do the same, after being issued an Overtime Slip Form by Mylene Altovar, and instead went out
with another individual, as attested by his wife after calling the company to inform it of such
absence. He knew that he was going to be unavailable for work on the following day, but instead
of trying to finish his work before that date by rendering overtime, due to the "rush" in meeting
the deadlines, he opted to forego with the same, and thereby rejecting the order of Mirasol.
Mirasol further alleges habitual tardiness on the part of Realda for which he received a warning
notice in April and May 2004.
The LA rendered decision that petitioner was illegally dismissed, which the NLRC affirmed.
However, CA reversed such decision and ruled that the petitioner’s unjustified refusal to render
overtime work, unexplained failure to observe prescribed work standards, habitual tardiness and
chronic absenteeism despite warning and non-compliance with the directive for him to explain his
numerous unauthorized absences constitute sufficient grounds for his termination.
Issue:
Whether respondent’s refusal or failure to render overtime work was willful; that is, whether such
refusal or failure was characterized by a wrongful and perverse attitude.
Held:
Yes. The petitioner’s failure to observe Graphics, Inc.’s work standards constitutes inefficiency
that is a valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the alloted reasonable period, or by producing unsatisfactory results. As
the operator of Graphics, Inc.’s printer, he is mandated to check whether the colors that would be
printed are in accordance with the client’s specifications and for him to do so, he must consult the
General Manager and the color guide used by Graphics, Inc. before making a full run.
Unfortunately, he failed to observe this simple procedure and proceeded to print without making
sure that the colors were at par with the client’s demands. This resulted to delays in the delivery
of output, client dissatisfaction, and additional costs on Graphics, Inc.’s part.
This Court cannot likewise agree to the petitioner’s attempt to brush aside his refusal to render
overtime work as inconsequential when Graphics, Inc.’s order for him to do so is justified by
Graphics, Inc.’s contractual commitments to its clients. Such an order is legal under Article 89 of
the Labor Code and the petitioner’s unexplained refusal to obey is insubordination that merits
dismissal from service.
Undoubtedly, Graphics, Inc. complied with the substantive requirements of due process in effecting
employee dismissal. However, the same cannot be said insofar as the procedural requirements are
concerned.
17. BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President,

JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-AY,
petitioners, - versus- NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. RIVERA, respondents. G.R. No. 151309, THIRD
DIVISION, October 15, 2008, NACHURA, J. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied. This prerogative extends to the
management's right to regulate, according to its own discretion and judgment, all aspects
of employment, including the freedom to transfer and reassign employees according to
the requirements of its business. In the instant case, the transfer orders do not entail a
demotion in rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would cause
them great inconvenience since they are all residents of Metro Manila and they would
incur additional expenses to travel daily from Manila to Bulacan. The Court has previously
declared that mere incidental inconvenience is not sufficient to warrant a claim of
constructive dismissal.
FACTS: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and

its principal office is located in Caloocan City. Petitioners Joselito Lariño, Vivencio Barte,
Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions
of helper, shipment helper and factory workers, respectively, assigned to the Production
Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive
bargaining representative of the rank-andfile employees. Tryco and the petitioners signed
separate Memorand[a] of Agreement (MOA), providing for a compressed workweek
schedule to be implemented in the company effective May 20, 1996. Tryco issued a
Memorandumdated April 7, 1997 which directed petitioner Aya-ay to report to the
company's plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated
the order on April 18, 1997.[6] Subsequently, through a Memorandum dated May 9, 1997,
Tryco also directed petitioners Egera, Lariño and Barte to report to the company's plant
site in Bulacan.
ISSUE: Whether the transfer orders amount to a constructive dismissal? (NO) DEAN’S
CIRCLE 2019 – UST FACULTY OF CIVIL LAW 91
RULING: Tryco's decision to transfer its production activities to San Rafael, Bulacan,
regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry,
was within the scope of its inherent right to control and manage its enterprise effectively.
While the law is solicitous of the welfare of employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied.
This prerogative extends to the management's right to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to transfer
and reassign employees according to the requirements of its business. Management's
prerogative of transferring and reassigning employees from one area of operation to
another in order to meet the requirements of the business is, therefore, generally not
constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's personnel,
assigned to the Production Department was well within the scope of its management
prerogative. In the instant case, the transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the petitioners. Petitioners,
therefore, anchor their objection solely on the ground that it would cause them great
inconvenience since they are all residents of Metro Manila and they would incur additional
expenses to travel daily from Manila to Bulacan. The Court has previously declared that
mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal.
Objection to a transfer that is grounded solely upon the personal inconvenience or
hardship that will be caused to the employee by reason of the transfer is not a valid reason
to disobey an order of transfer.
18.Rada v. NLRC, January 9, 1992
FACTS: Petitioner’s initial employment with this Respondent was under a ‘Contract of
Employment for a Definite Period’ dated July 7, 1977, copy of which is hereto attached
and made an integral part hereof as Annex A whereby Petitioner was hired as ‘Driver’ for
the construction supervision phase of the Manila North Expressway Extension, Second
Stage (hereinafter referred to as MNEE Stage 2) for a term of ‘about 24 months effective
July 1, 1977.
It is hereby understood that the Employer does not have a continuing need for the
services of the Employee beyond the termination date of this contract and that the
Employee’s services shall automatically, and without notice, terminate upon the
completion of the above specified phase of the project; and that it is further understood
that the engagement of his/her services is coterminous with the same and not with the
whole project or other phases thereof wherein other employees of similar position as
he/she have been hired.
Petitioner’s first contract of employment expired on June 30, 1979. Meanwhile, the main
project, MNEE Stage 2, was not finished on account of various constraints, not the least
of which was inadequate funding, and the same was extended and remained in progress
beyond the original period of 2.3 years. Fortunately for the Petitioner, at the time the first
contract of employment expired, Respondent was in need of Driver for the extended
project. Since Petitioner had the necessary experience and his performance under the first
contract of employment was found satisfactory, the position of Driver was offered to
Petitioner, which he accepted. Hence a second Contract of Employment for a Definite
Period of 10 months, that is, from July 1, 1979 to April 30, 1980 was executed between
Petitioner and Respondent on July 7, 1979
In March 1980 some of the areas or phases of the project were completed, but the bulk
of the project was yet to be finished. By that time some of those project employees whose
contracts of employment expired or were about to expire because of the completion of
portions of the project were offered another employment in the remaining portion of the
project. Petitioner was among those whose contract was about to expire, and since his
service performance was satisfactory, respondent renewed his contract of employment in
April 1980, after Petitioner agreed to the offer. Accordingly, a third contract of
employment for a definite period was executed by and between the Petitioner and the
Respondent whereby the Petitioner was again employed as Driver for 19 months, from
May 1, 1980 to November 30, 1981
This last extension was confirmed by a notice on November 28, 1985 duly acknowledged
by the Petitioner the very next day,
"Sometime in the 2nd week of December 1985, Petitioner applied for ‘Personnel
Clearance’ with Respondent dated December 9, 1985 and acknowledged having received
the amount of P3,796.20 representing conversion to cash of unused leave credits and
financial assistance. Petitioner also released Respondent from all obligations and or
claims, etc. in a ‘Release, Waiver and Quitclaim’
ISSUE: WON LA has jurisdiction
WON Petitioners are entitled to backwages
RULING: (1) YES. While it is true that the payment of the supersedeas bond is an essential
requirement in the perfection of an appeal, however, where the fee had been paid
although payment was delayed, the broader interests of justice and the desired objective
of resolving controversies on the merits demands that the appeal be given due course.
Besides, it was within the inherent power of the NLRC to have allowed late payment of
the bond, considering that the aforesaid decision of the labor arbiter was received by
private respondent on October 3, 1989 and its appeal was duly filed on October 13, 1989.
However, said decision did not state the amount awarded as backwages and overtime
pay, hence the amount of the supersedeas bond could not be determined. It was only in
the order of the NLRC of February 16, 1990 that the amount of the supersedeas bond was
specified and which bond, after an extension granted by the NLRC, was timely filed by
private Respondent.
Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in Courts of law
or equity shall not be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively without regard to
technicalities of law or procedure, all in the interest of due process. 8 Finally, the issue of
timeliness of the appeal being an entirely new and unpleaded matter in the proceedings
below it may not now be raised for the first time before this Court.
(2) YES. Anent the claim for overtime compensation, we hold that petitioner is entitled to
the same. The fact that he picks up employees of Philnor at certain specified points along
EDSA in going to the project site and drops them off at the same points on his way back
from the field office going home to Marikina, Metro Manila is not merely incidental to
petitioner’s job as a driver. On the contrary, said transportation arrangement had been
adopted, not so much for the convenience of the employees, but primarily for the benefit
of the employer, herein private Respondent. This fact is inevitably deducible from the
Memorandum of respondent company:jgc:chanrobles.com.ph
"The herein Respondent resorted to the above transport arrangement because from its
previous project construction supervision experiences, Respondent found out that project
delays and inefficiencies resulted from employees’ tardiness; and that the problem of
tardiness, in turn, was aggravated by transportation problems, which varied in degrees in
proportion to the distance between the project site and the employees’ residence. In view
of this lesson from experience, and as a practical, if expensive, solution to employees’
tardiness and its concomitant problems, Respondent adopted the policy of allowing
certain employees — not necessarily project drivers — to bring home project vehicles, so
that employees could be afforded fast, convenient and free transportation to and from
the project field office . . ." 15
Private respondent does not hesitate to admit that it is usually the project driver who is
tasked with picking up or dropping off his fellow employees. Proof thereof is the
undisputed fact that when petitioner is absent, another driver is supposed to replace him
and drive the vehicle and likewise pick up and/or drop off the other employees at the
designated points on EDSA. If driving these employees to and from the project site is not
really part of petitioner’s job, then there would have been no need to find a replacement
driver to fetch these employees. But since the assigned task of fetching and delivering
employees is indispensable and consequently mandatory, then the time required of and
used by petitioner in going from his residence to the field office and back, that is, from
5:30 A.M. to 7:00 A.M. and from 4:00 P.M. to around 6:00 P.M., which the labor arbiter
rounded off as averaging three hours each working day, should be paid as overtime work.
Quintessentially, petitioner should be given overtime pay for the three excess hours of
work performed during working days from January, 1983 to December, 1985.
19.Katolec Philippines v. Katolec Philippines, G.R. No. 235667, August 13, 2018
FACTS: There was a NOTICE letter submitted to the Supreme court: “Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated
August 13, 2018 which reads as follows: HTcADC
"G.R. No. 235667 (Katolec Philippines Corporation Labor Union-
Philippine Metalworkers Alliance [KAPLU-PMA] v. Katolec Philippines
Corporation) . — After review, we resolve to DENY the petition for failure to sufficiently
show that the Court of Appeals (CA) committed any reversible error in its Decision
dated June 27, 2017 and Resolution dated November 16, 2017.
ISSUE: WON shortened meal period voluntarily agreed upon by respondent and its
employees is not compensable under the Labor Code and its Omnibus Rules and
Regulations.
RULING: YES. The SC agree with the CA in affirming the Department of Labor and
Employment
Decision that the shortened meal period voluntarily agreed upon by respondent and its
employees is not compensable under the Labor Code and its Omnibus Rules and
Regulations. The governing rule is Section 7, Rule I, Book III of the Omnibus Rules, which
states, to wit:
Sec. 7. Meal and Rest Periods. — Every employer shall give his
employees, regardless of sex, not less than one (1) hour time-off for regular
meals, except in the following cases when a meal period of not less than twenty
(20) minutes may be given by the employer provided that such shorter meal
period is credited as compensable hours worked of the employee:
(a) Where the work is non-manual work in nature or does not
involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than
sixteen (16) hours a day;
(c) In case of actual or impending emergencies or there is
urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the employer would
otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of
perishable goods.
Under this rule, the shortened meal period is compensable when one of the four
instances is present. In this case, however, there is no showing that any of these
instances obtains. The CA is correct in ruling that the rules do not bar the parties from
entering into a voluntary agreement which, when taken as a whole, complies with the
provisions of the Labor Code, as in this case. The reasoning is all the more sensible
considering that under the facts of this case, the CA made a 􀁆nding that the agreement
was even more favorable to the employees because the compensable 10-minute
CD Technologies Asia, Inc. © 2019 cdasiaonline.com
morning and afternoon breaks will give them more time to rest.
20. TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL
TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO
RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL,
JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS,
HEREIN REPRESENTED BY KORONADO B. APUZEN, petitioners vs. NATIONAL LABOR
RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON, HONORABLE CONRADO B.
MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and STANDARD (PHILIPPINES)
FRUIT CORPORATION, respondents. G.R. No. 78210, SECOND DIVISION, February 28,
1989, PARAS, J. The 30-minute assembly is a deeply-rooted, routinary practice of the
employees, and the proceedings attendant thereto are not infected with complexities as
to deprive the workers the time to attend to other personal pursuits. In short, they are not
subject to the absolute control of the company during this period, otherwise, their failure
to report in the assembly time would justify the company to impose disciplinary measures.
The evidence of the case demonstrates that the 30-minute assembly time was not
primarily intended for the interests of the employer, but ultimately for the employees to
indicate their availability or non-availability for work during every working day.
FACTS: This case stemmed from a complaint filed against private respondent Stanfilco for
assembly time, moral damages and attorney’s fees, with the Regional Arbitration- Davao
City. The Labor Arbiter rendered a decision in favor of private respondent STANFILCO,
holding that: “We cannot but agree with respondent that the pronouncement in that
earlier case, i.e. the thirtyminute assembly time long practiced cannot be considered
waiting time or work time and, therefore, DEAN’S CIRCLE 2019 – UST FACULTY OF CIVIL
LAW 73 not compensable, has become the law of the case which can no longer be
disturbed without doing violence to the time-honored principle of resjudicata.” NLRC
uphold the Labor Arbiters’ decision and declared that: “Surely, the customary functions
referred to in the above-quoted provision of the agreement includes the long-standing
practice and institutionalized non-compensable assembly time. This, in effect, estopped
complainants from pursuing this case. MR was denied hence this petition for review on
certiorari. Petitioners contend that the preliminary activities as workers of respondents
STANFILCO in the assembly area is compensable as working time (from 5:30am to 6:00
am) since these preliminary activities are necessarily and primarily for private respondent’s
benefit. These preliminary activities of the workers are as follows-. (a) First there is the roll
call. Followed by getting their individual work assignments from the foreman. (b) Then,
they are individually required to accomplish the Laborer’s Daily Accomplishment Report
during which they are often made to explain about their reported accomplishment the
following day. (c) Then they go to the stockroom to get the working materials, tools and
equipment. (d) Lastly, they travel to the field bringing with them their tools, equipment
and materials. All these activities take 30 minutes to accomplish. Respondent avers that
the instant complaint is not new because it is the very same claim they brought against
respondent by the same group of rank and file employees in the case of Arica vs. National
Labor Relations Commission which was filed before in a different case. The said case
involved a claim for “waiting time”, as the complainants purportedly were required to
assemble. In the previous case, the 30-minute assembly time long practiced and
institutionalized by mutual consent of the parties under their CBA cannot be considered
as ‘waiting time’ within the purview of Section 5, Rule 1, Book III of the Rules and
Regulations Implementing the Labor Code.
ISSUE: Whether or not the “assembly time” is compensable. (NO)
RULING: The 30-minute assembly is a deeply-rooted, routinary practice of the employees,

and the proceedings attendant thereto are not infected with complexities as to deprive
the workers the time to attend to other personal pursuits. They are not new employees as
to require the company to deliver long briefings regarding their respective work
assignments. Their houses are situated right on the area where the farms are located, such
that after the roll call, which does not necessarily require the personal presence, they can
go back to their houses to attend to some chores. DEAN’S CIRCLE 2019 – UST FACULTY
OF CIVIL LAW 74 In short, they are not subject to the absolute control of the company
during this period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The evidence of the case demonstrates that
the 30-minute assembly time was not primarily intended for the interests of the employer,
but ultimately for the employees to indicate their availability or non-availability for work
during every working day.
21.USPPE v. Team Sual Corp, G.R. No. 215188, March 16, 2016
FACTS: Petitioners Rey J. Bual (Bual) and Ernesto G. Cardona, Sr. (Cardona), represented
by petitioner Union of Sual Power Plant Employees (USPPE), were regular employees of
respondent Team Sual Corporation (TSC), a corporation engaged in the business of
providing electric power. They were both assigned as scaffolders in the Maintenance
Department under Supervisor Joseleo E. Vicaldo (Vicaldo).
On July 21, 2008, TSC issued its SSO-050 Station Standing Order on On-Call and
Call-Out Provisions. Section IV of its Implementing Guidelines states, among others,
that the Company shall compensate an employee accordingly for on-call and call-out
work rendered beyond regular work hours.
On December 20, 2011, Vicaldo entered into an agreement with Bual and
Cardona, specifying the following terms:
1. It was agreed that R. Bual and E. Cardona will alternate monthly during call
out, this will start on January 1, 2012. Rey will be on call out in the month
of January, March, May, July, September and November, while Erning will
be on call out in the month of February, April, June, August, October and
December. The meaning of Call out is that you are being called at night to
work without notifying you earlier in the day. (Unscheduled or Emergency
Call)
2. Supervisor will coordinate with transport to fetch the scaffolder at their
residence during call-out. (Incoming and Outgoing).
3. Inform co supervisor regarding our agreement during call out.
4. Scaffolder on duty for call out shall activate his cell phone 24 hours.
5. There shall be one regular scaffolder on duty during regular time when
there is a call out at night.
6. If ever that you have a commitment or sick and you are on assigned call
out for the month, inform supervisor and co scaffolder regarding this
before hand. Co scaffolder shall be the duty call out." 3
On July 9, 2013, Bual and Cardona brought the matter of their agreement to the
USPPE claiming that they should have been paid for their waiting time during their duty
for the call-out. They sought USPPE's assistance to 􀁆le a complaint against TSC for
non-compensation of on-call services for more than one and a half years.
USPPE then referred the complaint to the Grievance Machinery as provided for in
the Collective Bargaining Agreement for non-payment of overtime pay for allegedly
working "on-call" from January 1, 2012 until July 15, 2013. It claimed entitlement to
5,002 hours of overtime pay or P1,294,707.56 for Bual and 4,636 hours of overtime pay
or P1,132,561.86 for Cardona. 4
In the grievance meetings, the parties failed to reach an agreement.
Consequently, USPPE brought the case before the National Conciliation and Mediation
Board where the parties agreed to submit the same for Voluntary Arbitration. cSEDTC
ISSUE: whether Bual and Cardona were considered as "working while on call" and entitled
to on-call services
RULING: NO. In resolving this case, We shall now proceed to determine whether or not
individual complainants became entitled to "on-call" pay by virtue of the
Agreement they entered with Mr. Joseleo Vicaldo, their supervisor. The
Agreement of the parties contains the following:
Complainants maintain that the Agreement modi􀁆ed the on-call/call-out
policy. We disagree.
This Office noted with interest that the de􀁆nitions of "On-Call" and "Call-
Out" work in the Company are not foreign to complainants. This is supported by
the fact that individual complainants have rendered "on-call" and "call-out"
services which were duly paid by the Company. . . . .
Considering that individual complainants were the ones seeking payment
of overtime pay by claiming that they were on "on-call" they should have
supported their claim by substantial evidence. . . . . Notwithstanding their sworn
statements, however, individual complainants failed to prove their claim.
Perforce, this Of􀁆ce has no alternative but to dismiss their claim for lack of
merit." 14
The Court finds no cogent reason to weigh all over again the evidence in this case
and to reverse the findings of the OVA.
Waiting time spent by the employee shall be considered as working time if
waiting is an integral part of his work or the employee is required or engaged by the
employer to wait. 15 An employee who is required to remain on call in the employer's
premises or so close thereto that he cannot use the time effectively and gainfully for his
own purpose, shall be considered as working while on call. 16 Here, as aptly pointed out
by respondent, even if Bual and Cardona were on call, they were not deprived of the
time to attend to their personal pursuits; their physical presence were not required in
TSC's premises; and were not subjected to the absolute control of TSC during the
period they were on call, such that their failure to report would justify the TSC to impose
disciplinary measures. Thus, such time cannot be considered as compensable waiting
time, notwithstanding the fact that they were required to activate their mobile phones
24 hours.
22.Durabuilt Recapping Plant & Company v. NLRC, G.R. No. 76746, July 27, 1987
FACTS: On July 11, 1983, a complaint for illegal dismissal was 􀁆led by respondent
Reynaldo Bodegas, against petitioner Durabuilt, a tire recapping company.
In a decision rendered by the Labor Arbiter on February 13, 1984, the private
respondent was ordered reinstated to his former position with full backwages, from
the time he was terminated up to the time he is actually reinstated, without loss of
seniority rights and benefits accruing to him.
The petitioners failed to 􀁆le a seasonable appeal and entry of 􀁆nal judgment was
made on July 8, 1985.
On August 8, 1985, the Acting Chief of Research and Information and the
Corporation Auditing Examiner of the then Ministry of Labor and Employment
submitted a computation of backwages, ECOLA, 13th month pay, sick and vacation
leave benefits in favor of Reynaldo Bodegas in the total amount of P24,316.38.
The petitioner 􀁆led its opposition to the computation on the ground that it
contemplated a straight computation of twenty-six (26) working days in one month
when the period covered by the computation was intermittently interrupted due to
frequent brownouts and machine trouble and that respondent Bodegas had only a total
of 250.75 days of attendance in 1982 due to absences. According to the petitioner,
Bodegas is entitled only to the amount of P3,834.05 broken down as follows: salaries
— P1,993.00; ECOLA-P1,433.50, and 13th month pay — P407.55.
ISSUE: Was the Computation of the Petitioner correct
RULING: YES. Backwages, in general, are granted on grounds of equity for earnings which
a
worker or employee has lost due to his dismissal from work (New Manila Candy
Workers Union (NACONWA-PAFLU v. CIR, 86 SCRA 37).
The general principle is that an employee is entitled to receive as backwages all
the amounts he may have lost starting from the date of his dismissal up to the time of
his reinstatement (Capital Garment Corporation v. Ople, 117 SCRA 473; New Manila
Candy Workers' Union (NACONWA-PAFLU) v. CIR, supra).
In a line of cases, this Court has established a policy 􀁆xing the amount of
backwages to a just and reasonable level without quali􀁆cation or deduction (Insular
Life Assurance Co., Ltd. Employees' Association-NATU v. Insular Life Assurance Co.,
Ltd., 76 SCRA 501; Feati University Club v. Feati University, 58 SCRA 395; Mercury Drug
Co., Inc. v. CIR, 56 SCRA 694). The respondents center their attention on the above
underlined portion of this policy. Hence, their contention that the deductions cited by
the petitioners cannot be made.
In their bid to recover a greater amount of backwages, the rationale of the policy
has escaped the respondents' consideration. In Insular Life Assurance Employees'
Association-NATU v. Insular Life Assurance Co., Ltd. (76 SCRA 50) we held that to 􀁆x
the amount of backwages without quali􀁆cation or deduction simply means that the
workers are to be paid their backwages 􀁆xed as of the time of their dismissal or strike
without deduction for their earnings elsewhere during their lay-off and without
quali􀁆cation of their backwages as thus 􀁆xed; i.e. unquali􀁆ed by any wage increases or
other bene􀁆ts that may have been received by their co-workers who were not
dismissed or did not go on strike. The principle is justi􀁆ed "as a realistic, reasonable
and mutually bene􀁆cial solution for it relieves the employees from proving their
earnings during their lay-offs and the employer from submitting counterproofs. It was
meant to obviate the twin evils of idleness on the part of the employees and attrition
and undue delay in satisfying the award on the part of the employer" (New Manila Candy
Workers Union NACONWA-PAFLU v. CIR supra). The same was not to establish an
inflexible rule of computation of any backwages due an employee.
The age-old rule governing the relation between labor and capital, or
management and employee of a "fair day's wage for a fair day's labor" remains as the
basic factor in determining employees' wages, and for that matter backwages. If there
is no work performed by the employee there can be no wage or pay unless, of course,
the laborer was able, willing and ready to work but was illegally locked out, or
suspended (SSS v. SSS Supervisors' Union-CUGCO, 117 SCRA 746).
The illegal dismissal of the private respondent is conceded by the petitioner. It is
willing to pay backwages. However, the petitioner argues that for days where no work
was required and could be done by its employees, no wages could have been earned
and, thereafter, lost by said employees to justify an award of backwages
Thus, we have held that where the failure of workers to work was not due to the
employer's fault, the burden of economic loss suffered by the employees should not be
shifted to the employer. Each party must bear his own loss (SSS vs. SSS Supervisors'
Union-CUGCO, supra; Pan-American World Airways, Inc. v. CIR, 17 SCRA 813).
Indeed, it would neither be fair nor just to allow respondent to recover something
he has not earned and could not have earned and to further penalize the petitioner
company over and above the losses it had suffered due to lack of raw materials and the
energy-saving programs of the government. The private respondent cannot be allowed
to enrich himself at the expense of the petitioner company. The computation of
backwages should be based on daily rather than on monthly pay schedules where, as in
the case at bar, such basis is more realistic and accurate. (Compania Maritima v. United
Seamen's Union of the Philippines, 65 SCRA 393). Cdll
23.University of Pangasinan v. University of Pangasinan, February 20, 1984
FACTS: Petitioner is a labor union composed of faculty members of the respondent

University of Pangasinan, an educational institution duly organized and existing by virtue
of the laws of the Philippines.
On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a
complaint against the private respondent with the Arbitration Branch of the NLRC,
Dagupan District Office, Dagupan City. The complaint seeks: (a) the payment of
Emergency Cost of Living Allowances (ECOLA) for November 7 to December 5, 1981, a
semestral break; (b) salary increases from the sixty (60%) percent of the incremental
proceeds of increased tuition fees; and (c) payment of salaries for suspended extra loads.
The petitioner’s members are full-time professors, instructors, and teachers of respondent
University. The teachers in the college level teach for a normal duration of ten (10) months
a school year, divided into two (2) semesters of five (5) months each, excluding the two
(2) months summer vacation. These teachers are paid their salaries on a regular monthly
basis.
In November and December, 1981, the petitioner’s members were fully paid their regular
monthly salaries. However, from November 7 to December 5, during the semestral break,
they were not paid their ECOLA. The private respondent claims that the teachers are not
entitled thereto because the semestral break is not an integral part of the school year and
there being no actual services rendered by the teachers during said period, the principle
of "No work, no pay" applies.
During the same school year (1981-1982), the private respondent was authorized by the
Ministry of Education and Culture to collect, as it did collect, from its students a fifteen
(15%) percent increase of tuition fees. Petitioner’s members demanded a salary increase
effective the first semester of said schoolyear to be taken from the sixty (60%) percent
incremental proceeds of the increased tuition fees. Private respondent refused,
compelling the petitioner to include said demand in the complaint filed in the case at bar.
While the complaint was pending in the arbitration branch, the private respondent
granted an across-the-board salary increase of 5.86%. Nonetheless, the petitioner is still
pursuing full distribution of the 60% of the incremental proceeds as mandated by the
Presidential Decree No. 451.
Aside from their regular loads, some of petitioner’s members were given extra loads to
handle during the same 1981-1982 schoolyear. Some of them had extra loads to teach on
September 21, 1981, but they were unable to teach as classes in all levels throughout the
country were suspended, although said days was proclaimed by the President of the
Philippines as a working holiday. Those with extra loads to teach on said day claimed they
were not paid their salaries for those loads, but the private respondent claims otherwise.
ISSUE: WHETHER OR NOT PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING

THE SEMESTRAL BREAK FROM NOVEMBER 7 TO DECEMBER 5, 1981 OF THE 1981-82
SCHOOL YEAR.
RULING: YES. It is beyond dispute that the petitioner’s members are full-time employees
receiving their monthly salaries irrespective of the number of working days or teaching
hours in a month. However, they find themselves in a most peculiar situation whereby
they are forced to go on leave during semestral breaks. These semestral breaks are in the
nature of work interruptions beyond the employees’ control. The duration of the
semestral break varies from year to year dependent on a variety of circumstances affecting
at times only the private respondent but at other times all educational institutions in the
country. As such, these breaks cannot be considered as absences within the meaning of
the law for which deductions may be made from monthly allowances. The "No work, no
pay" principle does not apply in the instant case. The petitioner’s members received their
regular salaries during this period. It is clear from the aforequoted provision of law that it
contemplates a "no work" situation where the employees voluntarily absent themselves.
Petitioners, in the case at bar, certainly do not, ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained to take mandatory leave from work. For
this they cannot be faulted nor can they be begrudged that which is due them under the
law. To a certain extent, the private respondent can specify dates when no classes would
be held. Surely, it was not the intention of the framers of the law to allow employers to
withhold employee benefits by the simple expedient of unilaterally imposing "no work"
days and consequently avoiding compliance with the mandate of the law for those
days.chanrobles.com.ph : virtual law library
Respondent’s contention that "the fact of receiving a salary alone should not be the basis
of receiving ECOLA", is, likewise, without merit. Particular attention is brought to the
Implementing Rules and Regulations of Wage Order No. 1 to wit.
SECTION 5. Allowance for Unworked Days. —
"a) All covered employees whether paid on a monthly or daily basis shall be entitled to
their daily living allowance when they are paid their basic wage."cralaw virtua1aw library
This provision, at once refutes the above contention. It is evident that the intention of the
law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of
"No pay, no ECOLA" the converse of which finds application in the case at bar. Petitioners
cannot be considered to be on leave without pay so as not to be entitled to ECOLA, for,
as earlier stated, the petitioners were paid their wages in full for the months of November
and December of 1981, notwithstanding the intervening semestral break. This, in itself, is
a tacit recognition of the rather unusual state of affairs in which teachers find themselves.
Although said to be on forced leave, professors and teachers are, nevertheless, burdened
with the task of working during a period of time supposedly available for rest and private
matters. There are papers to correct, students to evaluate, deadlines to meet, and periods
within which to submit grading reports. Although they may be considered by the
respondent to be on leave, the semestral break could not be used effectively for the
teacher’s own purposes for the nature of a teacher’s job imposes upon him further duties
which must be done during the said period of time. Learning is a never ending process.
Teachers and professors must keep abreast of developments all the time. Teachers cannot
also wait for the opening of the next semester to begin their work. Arduous preparation
is necessary for the delicate task of educating our children. Teaching involves not only an
application of skill and an imparting of knowledge, but a responsibility which entails self
dedication and sacrifice. The task of teaching ends not with the perceptible efforts of the
petitioner’s members but goes beyond the classroom: a continuum where only the visible
labor is relieved by academic intermissions. It would be most unfair for the private
respondent to consider these teachers as employees on leave without pay to suit its
purposes and, yet, in the meantime, continue availing of their services as they prepare for
the next semester or complete all of the last semester’s requirements. Furthermore, we
may also by analogy apply the principle enunciated in the Omnibus Rules Implementing
the Labor Code to wit:chanrob1es virtual 1aw library
Sec. 4. Principles in Determining Hours Worked. — The following general principles shall
govern in determining whether the time spent by an employee is considered hours
worked for purposes of this Rule:chanrob1es virtual 1aw library
"(d) The time during which an employee is inactive by reason of interruptions in his work
beyond his control shall be considered time either if the imminence of the resumption of
work requires the employee’s presence at the place of work or if the interval is too brief
to be utilized effectively and gainfully in the employee’s own interest." (Emphasis
supplied).
The petitioner’s members in the case at bar, are exactly in such a situation. The semestral
break scheduled is an interruption beyond petitioner’s control and it cannot be used
"effectively nor gainfully in the employee’s interest’. Thus, the semestral break may also
be considered as "hours worked." For this, the teachers are paid regular salaries and, for
this, they should be entitled to ECOLA. Not only do the teachers continue to work during
this short recess but much less do they cease to live for which the cost of living allowance
is intended. The legal principles of "No work, no pay; No pay, no ECOLA" must necessarily
give way to the purpose of the law to augment the income of employees to enable them
to cope with the harsh living conditions brought about by inflation; and to protect
employees and their wages against the ravages brought by these conditions. Significantly,
it is the commitment of the State to protect labor and to provide means by which the
difficulties faced by the working force may best be alleviated. To submit to the
respondents’ interpretation of the no work, no pay policy is to defeat this noble purpose.
The Constitution and the law mandate otherwise.chanrobles.com:cralaw:red
24. NATIONAL SHIPYARDS AND STEEL CORPORATION vs. COURT OF INDUSTRIAL RELATIONS and DOMINADOR
MALONDRAS G.R. No. L-17068 December 30, 1961
Petition filed by the National Shipyards and Steel Corporation (otherwise known as the NASSCO) to review certain orders of
the respondent Court of Industrial Relations requiring it to pay its bargeman Dominador Malondras overtime service of 16
hours a day.
In order that its bargeman could immediately be called to duty whenever their services are needed, they are required to stay
in their respective barges, for which reason they are given living quarters therein as well as subsistence allowance of P1.50 per
day during the time they are on board. However, upon prior authority of their superior officers, they may leave their barges
when said barges are idle.
Dominador Malondras, filed with the Industrial Court a complaint for the payment of overtime compensation (Case No. 1059-
V). In the course of the proceeding, the parties entered into a stipulation of facts wherein the NASSCO recognized and
admitted.
the period from January 1 to December 31, 1957 were paid by the NASSCO. However, on April 30, 1958, the court examiner
submitted his second partial report covering the period from January 1, 1954 to December 31, 1956, again giving each crewman
an average of five (5) overtime hours each day. Respondent Malondras was not, however, included in this report as his daily
time sheets were not then available.
Dominador Malondras, on September 18, 1959, filed petitions in the same case asking for the compensation and payment of
his overtime compensation; and was opposed by the NASSCO upon the argument, among others, that its records do not
indicate the actual number of working hours rendered by Malondras.
on April 23, 1960, submitted an amended report giving Malondras an average of sixteen (16) overtime hours a day, on the
basis of his time sheets, and recommending the payment to him of the total amount of P15,242.15 as overtime compensation
during the periods covered by the report.
The only matter to be determined here is, therefore, the number of hours of overtime for which Malondras should be paid for;
NASSCO, argues that the mere fact that Malondras was required to be on board his barge all day so that he could immediately
be called to duty when his services were needed does not imply that he should be paid overtime for sixteen hours a day.
1st Issue: whether he should receive compensation only for the actual service in excess of eight hours that he can prove?
It could not have been the purpose of our law to require their employers to pay them overtime even when they are not actually
working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had
spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether
or not sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the
regular eight working hours a day, but whether they actually rendered service in excess of said number of hours.
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides:
"SEC. 1. The legal working day for any person employed by another shall be of not more than eight hours daily. When
the work is not continuous, the time during which the laborer is not working AND CAN LEAVE HIS WORKING PLACE
and can rest completely, shall not be counted."
For the purposes of this case, we do not need to set for seamen a criterion different from that applied to laborers on
land, for under the provisions of the above quoted section, the only thing to be done is to determine the meaning
and scope of the term "working place" used therein. As we understand this term, a laborer need not leave the premises
of the factory shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work",
may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere
else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the
period of such rest shall not be counted.
petitioner has already admitted in the Stipulation of Facts in this case that Malondras and his co-claimants did render service
beyond eight (8) hours a day when so required by the exigencies of the service; and in fact, Malondras was credited and already
paid for five (5) hours daily overtime work during the period from May 1 to December 31, 1957, under the examiner's first
report. Since Malondras has been at the same job since 1954, it can be reasonably inferred that the overtime service he put in
whenever he was required to be aboard his barge all day from 1954 to 1957 would be more or less consistent.
2nd Issue: whether the subsistence allowance received by Malondras for the periods covered by the report in question
should be deducted from his overtime compensation? No, allowance is independent of and has nothing to do with
whatever additional compensation for overtime work was due the petitioner NASSCO's bargemen. In this case, having already
paid Malondras and his companions overtime for 1957 without deduction of the subsistence allowances received by them
during this period, and Malondras' companions having been paid overtime for the other years also without deducting their
subsistence allowances, there is no valid reason why Malondras should be singled out now and his subsistence allowance
deducted from the overtime compensation still due him.
25. RAMON PRIETO, PACIFICO CANILLO, and WILFREDO AZUELA vs. NATIONAL LABOR RELATIONS COMMISSION, AR
and SONS INTERNATIONAL DEVELOPMENT CORP., SAUDI SERVICES and OPERATING COMPANY, LTD., and SAUDI
ARABIAN MORRISON September 10, 1993
A complaint filed by Ramon Prieto, Pacifico Canillo and Wilfredo Azuela against AR and Sons International Development
Corporation, Saudi Services and Operations Co. Ltd., and Saudi Arabian Morrison.1 Their claim was for non-payment of wages,
illegal dismissal, illegal exaction of placement fees, illegal imposition of performance bond, substitution of contract and
deployment of workers to an unaccredited principal.
Complainants alleged they were recruited by AR and Sons International Development Corporation (AR and Sons) for
employment for a period of 24 months with Saudi Services and Operating Co., Ltd. (SSOC) in Saudi Arabia.
Taking advantage of their need for employment, the respondent placement agency coerced them into signing another
employment contract with Saudi Arabia Morrison (SAM) without the knowledge and approval of the POEA. The second contract
gave all three of them the lower positions of assistant cook with a salary of only SR625.00 per month for a period of three
years.
When they reached Jeddah, Saudi Arabia, in November 1987, they were asked to sign still another employment contract by a
certain Muhammad Abbas, a representative of SAM, which would further lower their salaries to SR250.00 a month. When they
refused, they were not assigned any work but were confined in a small room in a villa and given spoiled food for their
sustenance. On December 22, 1987, they were summarily dismissed and repatriated to the Philippines.
Respondents denied the charges and said that the complainants entered into separate uniform Agency Worker Agreements
where it was stipulated that they would be employed by SSOC for 24 months upon departure from the Philippines. When the
petitioners arrived in Jeddah, it was discovered that Prieto and Azuela were not qualified as mechanics and that Canillo was
not qualified as clerk, so all three of them were rejected. The complainants then requested SSOC to help them secure
employment as assistant cooks with SAM, which at that time was also a foreign principal of AR and Sons. Taking pity on them,
SSOC referred them to the latter agency but they also failed to pass the trade tests for assistant cooks. It was for this reason
that they were finally repatriated to the Philippines at the expense of the latter agency.
Were the OFWs an employee of their employer? yes
The record shows that the petitioners became employees of Saudi Services and Operating Company, Ltd., and later of Saudi
Arabian Morrison, both entities being represented by AR and Sons International Development Corporation, which admitted in
its Comment that the petitioners were "hired and deployed abroadxxx" This relationship is even more firmly supported by the
Agency Worker Agreements between the petitioners and AR and Sons acting for SSOC which were approved by the POEA
under Accreditation Certificate No 8181, and by the second contract under which the petitioners were deployed to SAM, its
other principal, by AR and Sons.
Art. 279. Security of Tenure — In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this title. An employee who was unjustly
dismissed from work shall be entitled to reinstatement without lose of seniority rights and to his backwages
computed from the time his compensation was withheld from him up to the time of reinstatement.
Where the employer-employee relationship has been established, the burden of proof in termination cases lies with the
employer.9 This burden was not discharged by the private respondents. It is clear form the record that the petitioners were
hired as mechanics and clerk (or as assistant cooks under the second contract) after presumably having passed the
corresponding trade tests conducted by the recruiting agency prior to their deployment.
If AR and Sons felt they were not qualified for these positions, it should have rejected their applications outright instead of
accepting their recruitment fees just the same and assuring them that their employment had already been approved by the
foreign principal. It was the fault of AR and Sons for holding the petitioners to its foreign principal as qualified when they were
found later to be deficient. As a result of its negligence, if not its deliberate misrepresentation, the petitioners found themselves
stranded in a foreign land, without the employment and income that they hoped would give them a better life.
The principle of "no work, no pay" does not apply in this case for, as correctly pointed out by POEA, the fact that the
complainants had not worked at the jobsite was not of their own doing. If they were not able to work at all, it was because
they refused to sign the third contract providing for another lowering of their salaries in violation of their first agreement as
approved by the POEA. They had a right to insist on the higher salaries agreed upon in the original contract and to reject the
subsequent impositions of SAM, which obviously thought the petitioners would have to accept because they had no choice.
Omnibus Rules Implementing the Labor Code defines the duties and obligations of a duly licensed
placement and recruitment agency and it requires a private employment agency to assume all
responsibilities for the implementation of the contract of employment of an overseas worker. Further, the
law provides that a private employment agency can be sued jointly and severally with the principal or
foreign-based employer for any violation of the recruitment agreement or the contract of employment.
26. OUR HAUS REALTY DEVELOPMENT CORPORATION v. ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS,
BERNARD TENEDERO AND JERRY SABULAO
Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero were all laborers working for petitioner
Our Haus Realty Development Corporation (Our Haus), a company engaged in the construction business.
Our Haus experienced financial distress. To alleviate its condition, Our Haus suspended some of its construction projects and
asked the affected workers, including the respondents, to take vacation leaves.
When they were asked to report back to work but instead of doing so, they filed with the LA a complaint for underpayment of
their daily wages. They claimed that except for respondent Bernardo N. Tenedero, their wages were below the minimum rates
prescribed in the following wage orders.
Our Haus contends that it complied with the requirements for deductibility of the value of the facilities. Our Haus asks us to
believe that there is a substantial distinction between the deduction and the charging of a facility’s value to the wages.
Our Haus explains that in deduction, the amount of the wage (which may already be below the minimum) would still be
lessened by the facility’s value, thus needing the employee’s consent. On the other hand, in charging, there is no reduction of
the employee’s wage since the facility’s value will just be theoretically added to the wage for purposes of complying with the
minimum wage requirement.
Respondents answered that values of the board and lodging cannot be deducted from their wages for failure to comply with
the requirements set by law.
Whether there is reduction in wages? Yes
Our Haus’ argument is a vain attempt to circumvent the minimum wage law by trying to create a distinction where none exists.
In reality, deduction and charging both operate to lessen the actual take-home pay of an employee; they are two sides
of the same coin. In both, the employee receives a lessened amount because supposedly, the facility’s value, which is part of
his wage, had already been paid to him in kind. As there is no substantial distinction between the two, the requirements set
by law must apply to both.
Peculiar to the construction business are the occupational safety and health (OSH) services which the law itself mandates
employers to provide to their workers. This is to ensure the humane working conditions of construction employees despite
their constant exposure to hazardous working environments; employers engaged in the construction business are required
to provide the following welfare amenities: xxx
16.3 Suitable living accommodation for workers, and as may be applicable, for their families
16.4 Separate sanitary, washing and sleeping facilities for men and women workers.
Further under the DOLE DO it mandates that the cost of the implementation of the requirements for the construction safety
and health of workers, shall be integrated to the overall project cost. The rationale behind this is to ensure that the living
accommodation of the workers is not substandard and is strictly compliant with the DOLE’s OSH criteria.
As part of the project cost that construction companies already charge to their clients, the value of the housing of their workers
cannot be charged again to their employees’ salaries. Our Haus cannot pass the burden of the OSH costs of its construction
projects to its employees by deducting it as facilities. This is Our Haus’ obligation under the law.
Lastly, even if a benefit is customarily provided by the trade, it must still pass the purpose test set by jurisprudence. Under this
test, if a benefit or privilege granted to the employee is clearly for the employer’s convenience, it will not be considered as a
facility but a supplement. Here, careful consideration is given to the nature of the employer’s business in relation to the work
performed by the employee. This test is used to address inequitable situations wherein employers consider a benefit
deductible from the wages even if the factual circumstances show that it clearly redounds to the employers’ greater advantage.
Here, careful consideration is given to the nature of the employer’s business in relation to the work performed by the
employee. This test is used to address inequitable situations wherein employers consider a benefit deductible from the wages
even if the factual circumstances show that it clearly redounds to the employers’ greater advantage.
Under the law,46 only the value of the facilities may be deducted from the employees’ wages but not the value of supplements.
Facilities include articles or services for the benefit of the employee or his family but exclude tools of the trade or articles or
services primarily for the benefit of the employer or necessary to the conduct of the employer’s business. 47cralawred
The law also prescribes that the computation of wages shall exclude whatever benefits, supplements or allowances given to
employees. Supplements are paid to employees on top of their basic pay and are free of charge.48 Since it does not form part
of the wage, a supplement’s value may not be included in the determination of whether an employer complied with the
prescribed minimum wage rates.
In the present case, the board and lodging provided by Our Haus cannot be categorized as facilities but as supplements.
In SLL International Cables Specialist v. National Labor Relations Commission,49 this Court was confronted with the issue on the
proper characterization of the free board and lodging provided by the employer.
The Court, at this point, makes a distinction between “facilities” and “supplements”. It is of the view
that the food and lodging, or the electricity and water allegedly consumed by private respondents in this
case were not facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., the
two terms were distinguished from one another in this-wise:cralawlawlibrary
“Supplements”, therefore, constitute extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages. “Facilities”, on the other hand, are
items of expense necessary for the laborer's and his family's existence and subsistence so that by express
provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible
therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and
over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the
laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item
(food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at
bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and
health of its workers while they were working at their respective projects.
the real difference lies not on the kind of the benefit but on the purpose why it was given by the employer. If it is primarily
for the employee’s gain, then the benefit is a facility; if its provision is mainly for the employer’s advantage, then it is a
supplement. Again, this is to ensure that employees are protected in circumstances where the employer designates a benefit
as deductible from the wages even though it clearly works to the employer’s greater convenience or advantage.
We simply emphasize that in the construction business, bulk of the work performed are strenuous physical activities. The board
and lodging provision might have been a substantial consideration in their acceptance of employment in a place distant from
their provincial residences.
Based on these considerations, we conclude that even under the purpose test, the subsidized meals and free lodging provided
by Our Haus are actually supplements. Although they also work to benefit the respondents, an analysis of the nature of these
benefits in relation to Our Haus’ business shows that they were given primarily for Our Haus’ greater convenience and
advantage. If weighed on a scale, the balance tilts more towards Our Haus’ side. Accordingly, their values cannot be considered
in computing the total amount of the respondents’ wages.
27. WESLEYAN UNIVERSITY-PHILIPPINES vs WESLEYAN UNIVERSITY
Facts: On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya), issued a Memorandum
providing guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation.
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which petitioner advised respondent
to file a grievance complaint on the implementation of the vacation and sick leave policy. In the same meeting, petitioner
announced its plan of implementing a oneretirement policy, which was unacceptable to respondent.
Unable to settle their differences at the grievance level, the parties referred the matter to a Voluntary Arbitrator. During the
hearing, respondent submitted affidavits to prove that there is an established practice of giving two retirement benefits, one
from the Private Education Retirement Annuity Association (PERAA) Plan and another from the CBA Retirement Plan. Sections
1, 2, 3 and 4 of Article XVI of the CBA.
On November 2, 2006, the Voluntary Arbitrator rendered a decision declaring the one-retirement policy and the Memorandum
dated August 16, 2005 contrary to law. Aggrieved, petitioner appealed the case to the CA, which affirmed the VA.
ISSUE: Whether the one-retirement policy violates Art. 100 of the Labor Code. (YES)
RULING:
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing
the benefits received by their employees. This rule, however, applies only if the benefit is based on an express policy, a written
contract, or has ripened into a practice. To be considered a practice, it must be consistently and deliberately made by the
employer over a long period of time.
An exception to the rule is when "the practice is due to error in the construction or application of a doubtful or difficult question
of law." The error, however, must be corrected immediately after its discovery; otherwise, the rule on Non-Diminution of
Benefits would still apply.
In this case, respondent was able to present substantial evidence in the form of affidavits to support its claim that there are
two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early as 1997. Petitioner,
on the other hand, failed to present any evidence to refute the veracity of these affidavits. Petitioner’s contention that these
affidavits are self-serving holds no water. The retired employees of petitioner have nothing to lose or gain in this case as they
have already received their retirement benefits. Thus, they have no reason to perjure themselves. Obviously, the only reason
they executed those affidavits is to bring out the truth. As we see it then, their affidavits, corroborated by the affidavits of
incumbent employees, are more than sufficient to show that the granting of two retirement benefits to retiring employees had
already ripened into a consistent and deliberate practice.
Moreover, petitioner’s assertion that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one
and the same is not supported by any evidence. There is nothing in Article XVI of the CBA to indicate or even suggest that the
"Plan" referred to in the CBA is the PERAA Plan. Besides, any doubt in the interpretation of the provisions of the CBA should
be resolved in favor of respondent. In fact, petitioner’s assertion is negated by the announcement it made during the LMC
Meeting on February 8, 2006 regarding its plan of implementing a "one-retirement plan." For if it were true that petitioner was
already implementing a one-retirement policy, there would have been no need for such announcement. Equally damaging is
the letter-memorandum dated May 11, 2006, entitled "Suggestions on the defenses we can introduce to justify the abolition
of double retirement policy," prepared by the petitioner’s legal counsel.
These circumstances, taken together, bolster the finding that the two-retirement policy is a practice. Thus, petitioner cannot,
without the consent of respondent, eliminate the two-retirement policy and implement a one-retirement policy as this would
violate the rule on non-diminution of benefits.
28. PHILIPPINE NATIONAL BANK vs. PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) and COURT OF
INDUSTRIAL RELATIONS
This case started on January 28, 1965 in consequence of the certification of the President of the Philippines of an industrial
dispute between the Philippine National Bank Employees Association (PEMA, for short), on the one hand, and the Philippine
National Bank (PNB, for short), on the other, which arose from no more than the alleged failure of the PNB to comply with its
commitment of organizing a Committee on Personnel Affairs to take charge of screening and deliberating on the promotion
of employees covered by the collective bargaining agreement then in force.
Industrial Court issued an order that in order to settle the strike and for the employees to return to work immediately, the
Committee on Personnel Affairs is hereby created: xxx
f. That in return for this concession, an injunction against future strikes or lockouts shall be issued by the
Court to last for a period of six months but which shall terminate even before that period should all disputes
of the parties be already resolved;
First Cause of Action- the grant of the benefits in question, the employees of the Respondent, represented by the petitioner,
have always considered them to be a part of their salaries and/or fringe benefits; nevertheless, the Respondent, in 1963, without
just cause, withdrew said benefits and in spite of repeated demands refused, and still refuses to reinstate the same up to the
present.
Second Cause of Action- Petitioner has repeatedly requested Respondent that the cost of living allowance and longevity pay
be taken into account in the computation of overtime pay, effective as of the grant of said benefits
vital question is, what does "regular wage or salary" mean or connote in the light of the demand of PEMA?
the answer to such question lies in the basic rationale of overtime pay. Why is a laborer or employee who works beyond the
regular hours of work entitled to extra compensation called in this enlightened time, overtime pay? Verily, there can be no
other reason than that he is made to work longer than what is commensurate with his agreed compensation for the statutorily
fixed or voluntarily agreed hours of labor he is supposed to do. When he thus spends additional time to his work, the effect
upon him is multi-faceted: he puts in more effort, physical and/or mental; he is delayed in going home to his family to enjoy
the comforts thereof; he might have no time for relaxation, amusement or sports; he might miss important pre-arranged
engagements; etc., etc. It is thus the additional work, labor or service employed and the adverse effects just mentioned of his
longer stay in his place of work that justify and is the real reason for the extra compensation that he called overtime pay.
Overtime work is actually the lengthening of hours developed to the interests of the employer and the requirements of his
enterprise. It follows that the wage or salary to be received must likewise be increased, and more than that, a special additional
amount must be added to serve either as encouragement or inducement or to make up fop the things he loses which We have
already referred to. And on this score, it must always be borne in mind that wage is indisputably intended as payment for work
done or services rendered.
in the definition of wage for purposes of the Minimum Wage Law, Republic Act No. 602, it is stated:
'Wage' paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time task, piece, commission basis
or other method of calculating the same, which is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be done or for services rendered or to be
rendered and includes the fair and reasonable value as determined by the Secretary of Labor, of
board, lodging or other facilities customarily furnished by the employer to the employee. 'Fair and
reasonable value' shall not include a profit to the employer which reduces the wage received by the
employee below the minimum wage applicable to the employee under this Act, nor shall any transaction
between an employer or any person affiliated with the employer and the employee of the employer include
any profit to the employer or affiliated person which reduces the employee's wage below the wage
applicable to the employee under this Act.
for the purpose of avoiding any misunderstanding or misinterpretation of the word "wage" used in the law and to differentiate
it from "supplement", the Wage Administration Service to implement the Minimum Wage Law, defined the latter as:
extra remuneration or benefits received by wage earners from their employers and include but are not
restricted to pay for vacation and holidays not worked; paid sick leave or maternity leave; overtime rate in
excess of what is required by law; pension, retirement, and death benefits; profit-sharing, family allowances;
Christmas, war risk and cost-of-living bonuses; or other bonuses other than those paid as a reward for extra
output or time spent on the job.
In the case at bar, as already related earlier, the cost-of-living allowance began to be granted in 1958 and the longevity pay in
1981. In other words, they were granted by PNB upon realizing the difficult plight of its labor force in the face of the unusual
inflationary situation in the economy of the country. They were not intended to be regular, much less permanent additional
part of the compensation of the employees and workers. they were based on the needs of their families as the conditions
of the economy warranted; it was more of a gratuity for their loyalty, or their having been in the bank's employment
for consideration periods of time. Indeed, with particular reference to the longevity pay, the then existing collective
bargaining contract expressly provided: "... That this benefit shall not form part of the basic salaries of the officers so
affected."
We have already pointed out to start with, that as far as longevity pay is concerned, it is beyond question that the same cannot
be included in the computation of overtime pay for the very simple reason that the contrary is expressly stipulated in the
collective bargaining agreement and, as should be the case, it is settled that the terms and conditions of a collective bargaining
agreement constitute the law between the parties.
Doctrinally, We hold that, in the absence of any specific provision on the matter in a collective bargaining agreement, what are
decisive in determining the basis for the computation of overtime pay are two very germane considerations, namely, (1)
whether or not the additional pay is for extra work done or service rendered and (2) whether or not the same is intended to
be permanent and regular, not contingent nor temporary and given only to remedy a situation which can change any time.
We reiterate, overtime pay is for extra effort beyond that contemplated in the employment contract, hence when additional
pay is given for any other purpose, it is illogical to include the same in the basis for the computation of overtime pay. This
holding supersedes NAWASA.
29. INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA
MONTEJO, v. INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-and-file employees of
Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging pharmaceutical products.
In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to their normal work
schedule if the company would agree to their demands as to the effectivity and duration of the new CBA. Salazar again told
the union officers that the matter could be better discussed during the formal renegotiations of the CBA. Since the union was
apparently unsatisfied with the answer of the company, the overtime boycott continued. In addition, the employees started to
engage in a work slowdown campaign during the time they were working, thus substantially delaying the production of the
company.
The two union officers (Clemente and Ocampo) inquired about the stand of the company regarding the duration of the CBA
which was set to expire in a few months. Salazar told the union officers that the matter could be best discussed during the
formal negotiations which would start soon.
Petitioner union submitted with respondent company its CBA proposal; respondent company filed with the National Labor
Relations Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which,
according to respondent company, amounted to illegal strike.
the parties stipulated:
Section 1. Regular Working Hours A normal workday shall consist of not more than eight (8) hours. The regular working hours
for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company
may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All
employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working
hours.
It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, should
such change be necessary for its operations, and that the employees shall observe such rules as have been laid down by the
company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work
daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees
adhered to the said work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since they
followed, without any question or complaint, the two-shift schedule while their CBA was still in force and even prior thereto.
The two-shift schedule effectively changed the working hours stipulated in the CBA. As the employees assented by practice to
this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to
work beyond eight hours.
the issue: whether the respondents have engaged in "overtime boycott" and "work slowdown" from April 16, 1993 up to March
7, 1994, both amounting to illegal strike, the evidence presented is equally crystal clear that the "overtime boycott" and "work
slowdown" committed by the respondents amounted to illegal strike?
It is thus undisputed that members of the union by their own volition decided not to render overtime services in April
1993.20 Petitioner union even admitted this in its Memorandum, dated 12 April 1999, filed with the Court of Appeals, as well
as in the petition before this Court, which both stated that "(s)ometime in April 1993, members of herein petitioner, on their
own volition and in keeping with the regular working hours in the Company x x x decided not to render overtime". 21 Such
admission confirmed the allegation of respondent company that petitioner engaged in "overtime boycott" and "work
slowdown" which, to use the words of Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to
its unreasonable demands.
More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a violation of their CBA, which
prohibits the union or employee, during the existence of the CBA, to stage a strike or engage in slowdown or interruption of
work.
In Ilaw at Buklod ng Manggagawa vs. NLRC ,23 this Court ruled:
x x x (T)he concerted activity in question would still be illicit because contrary to the workers' explicit contractual commitment
"that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the
operations of the COMPANY during the term of x x x (their collective bargaining) agreement."
What has just been said makes unnecessary resolution of SMC's argument that the workers' concerted refusal to adhere to the
work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially illegal even in the
absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with
the petitioner's concept of a slowdown as a "strike on the installment plan;" as a willful reduction in the rate of work by
concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions
to compel management to grant their demands. The Court also agrees that such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while the employees "continue to work and remain at their positions and
accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform
of their own volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they
"work on their own terms." x x x24
Finally, the Court cannot agree with the proposition that respondent company, in extending substantial separation package to
some officers of petitioner union during the pendency of this case, in effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their separation benefits, they were
still considered employees of the company. Hence, the company was merely complying with its legal obligations.25 Respondent
company could have withheld these benefits pending the final resolution of this case. Yet, considering perhaps the financial
hardships experienced by its employees and the economic situation prevailing, respondent company chose to let its employees
avail of their separation benefits. The Court views the gesture of respondent company as an act of generosity for which it
should not be punished.
30. WILLIAM LINES, INC. and ESPIRITU TAN, as Manager, v. EUGENIO LOPEZ
On May 5, 1947, petitioner corporation, which is engaged in shipping business in the Philippines, employed claimant, now
respondent, Eugenio Lopez, as storekeeper of the M/V Luzon, with a monthly salary of P122.00. Later said claimant-respondent
was transferred to the M/V Edward, then to M/V Victoriano, and finally to M/V Davao.
Claimant-respondent’s services were terminated on October 13, 1962 when the M/V Davao was drydocked in Cebu. He
received the separation pay of P1,586.00.
March 17, 1964. approximately one (1) year, five (5) months and four (4) days after his services were terminated, claimant-
respondent, who was refused readmission to work by petitioners, filed a petition with the CIR, claiming salary differentials in
the amount of P2,816.00, premium pay for services rendered on Sundays and holidays, as well as daily overtime compensation,
with a request for reinstatement.
Petitioners maintained in their answer that the dismissal of claimant respondent was lawful because he had been paid his
separation pay; that he was not entitled to premium pay because petitioner was a public utility corporation; that the various
claims had already prescribed; and that claimant-respondent never rendered overtime service because the nature of his work
was without fixed time and did not require him to work for more than eight (8) hours a day.
Whether the employee needs to be reinstated and entitled to overtime pay?
The records sustain that the dismissal of claimant-respondent was not wrongful. It is not controverted that his employment
with petitioners was without a definite period. Under R.A. No. 1052 (otherwise known as the Termination Pay Law), an employee
may be dismissed by the employer without just cause by serving at least one month advance notice to the employee, or by
giving the said employee one-half month for every year of service of the employee, whichever is longer, a fraction of at least
six months being considered as one whole year. claimant-respondent was duly notified of the termination.
CIR also found that there was no substantial evidence to show that the dismissal was illegal. 17 Since the burden of proof of
illegal dismissal devolved upon claimant-respondent himself, his failure to discharge this burden defeats his allegation that he
was illegally dismissed. In the absence of such proof, there is no basis for the CIR to order the reinstatement of claimant-
respondent.
It is not true that there is no evidence to support the CIR’S finding that claimant-respondent worked at an average of "no less
than 10 hours a day, 2 hours more than the minimum requirement specified on the Eight-Hour Labor Law." 18 Claimant-
respondent’s testimony is to the effect that his main duties were — (a) to clean the storeroom and (b) to serve food to the
passengers; that although there was" (N)o exact number of hours" for either of these duties, he would "estimate" that 2 hours,
more or less, were spent each time in cleaning the storeroom, morning and afternoon, while 2 hours, more or less, were also
needed to serve food, which he did 3 times a day — at 4:30 a.m., 10:00 a.m., and 3 p.m. 19 This clearly averaged 10 hours a
day. On the basis of the foregoing testimony, the trial court’s finding that he had been working no less than 10 hours daily is
justified. At any rate, doubts should be resolved in his favor to pursue the ends of the Eight-Hour Labor Law (R.A. No. 444), as
amended, which is a social legislation.
since Sec. 7-A of the Eight-Hour Labor Law allows the enforcement of an action "within three years after the cause of action
accrued, otherwise, such action shall be forever barred", claimant-respondent can collect only the overtime compensation for
the 2 hours in excess of the regular 8 hours a day which accrued within 3 years immediately before the filing of the petition
on March 17, 1964. Similar claims which accrued prior to the 3-year period or before March 17, 1961 have already prescribed,
and can no longer be enforced in this action. However, since claimant-respondent’s services were terminated on October 13,
1962, the computation of the 2-hour daily overtime will cover the period from March 17, 1961 to October 13, 1962, or a period
of 1 year, 6 months and 26 days, from which shall be excluded Sundays and legal holidays based on the principle that being
on board the vessel on these days were "part and parcel of" and "inherent" in his work.
petitioners are directed to pay to claimant-respondent overtime compensation at the rate of 2 hours a day, based on the last
monthly salary rate, from March 17, 1961 to October 13, 1962, excluding Sundays and legal holidays, without right to
reinstatement.
CAGAMPAN V. NLRC
G.R. Nos. 85122-24 March 22, 1991
FACTS:
On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of
employment with the Golden Light Ocean Transport, Ltd., through its local agency,
private respondent ACE MARITIME AGENCIES, INC. with their respective ratings and monthly
salary rates. Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986.
Thereafter, petitioners collectively and/or individually filed complaints for non-payment of overtime
pay, vacation pay and terminal pay against private respondent. In addition, they claimed that they
were made to sign their contracts in blank; that although they agreed to render services on board
the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they actually
boarded was MV "SOIC I" managed by Columbus Navigation; and more so, petitioners de Castro
and de Jesus charged that although they were employed as ordinary seamen, they actually
performed the work and duties of Able Seamen.
Private respondent was furnished with copies of petitioners' complaints and summons, but
it failed to file its answer within the reglementary period. Thus, on January 12, 1987, an Order
was issued declaring that private respondent has waived its right to present evidence in its behalf
and that the cases are submitted for decision.
On August 5, 1987, the Philippine Overseas Employment Administration (POEA) rendered

a Decision DISMISSING petitioners' claim for terminal pay but GRANTED their prayer for leave
pay and overtime pay. Private respondent appealed from the POEA's Decision to the NLRC on
August 24, 1987. On March 16, 1988, the NLRC promulgated a Decision, REVERSING and
SETTING ASIDE and another one entered dismissing the cases for lack of merit.
On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of the NLRC's
Decision but the same was denied by the NLRC for lack of merit in its Resolution dated September
12, 1988. Hence, this appeal from the decision and resolution of the respondent NLRC.
Petitioners allege that respondent Commission, NLRC, gravely abused its

discretion or erred in reversing and setting aside the POEA decision and correspondingly
dismissing the appeal of petitioners, allegedly in contravention of law and jurisprudence.
Private respondent maritime company disclaims the aforesaid allegations of petitioners.
The Solicitor General, arguing for public respondent NLRC, contends that:
The NLRC did not abuse its discretion in the rendition of subject decision because the
evidence presented by petitioners in support of their complaint is by itself sufficient to back up
the decision. The issue of the disallowance of overtime pay stems from an interpretation of
particular provisions of the employment contract.
ISSUE:
WON respondent
decision of Commission NLRC gravely abused its discretion or erred in REVERSING the
POEA (in granting overtime pay to petitioners equivalent to 30% of their basic pay).
ISSUE:
WON respondent Commission NLRC gravely abused its discretion or erred in
REVERSING the decision of POEA (in granting overtime pay to petitioners equivalent to 30% of
their basic pay).
RULING:
No. The NLRC cannot be faulted for disallowing the payment of overtime pay because it
merely straightened out the distorted interpretation asserted by petitioners and defined the correct
interpretation of the provision on overtime pay embodied in the contract conformably with settled
doctrines on the matter. Notably, the NLRC ruling on the disallowance of overtime pay is ably
supported by the fact that petitioners never produced any proof of actual performance of overtime
work.
Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay
of 30% of the basic salary per month" embodied in their employment contract should be awarded
to them as part of a "package benefit." They have theorized that even without sufficient evidence
of actual rendition of overtime work, they would automatically be entitled to overtime pay. Their
theory is erroneous for being illogical and unrealistic. Their thinking even runs counter to the
intention behind the provision. The contract provision means that the fixed overtime pay of 30%
would be the basis for computing the overtime pay if and when overtime work would be rendered.
Simply, stated, the rendition of overtime work and the submission of sufficient proof that said
work was actually performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed on the basis of 30% of the basic monthly
salary. In short, the contract provision guarantees the right to overtime pay but the entitlement
to such benefit must first be established. Realistically speaking, a seaman, by the very nature of
his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the
employer to give him overtime pay for the extra hours when he might be sleeping or attending to
his personal chores or even just lulling away his time would be extremely unfair and unreasonable.
Reiterated in the case of National Shipyards and Steel Corporation v. CIR (3 SCRA 890),
the SC ruled:
We cannot agree with the Court below that respondent Malondras should be
paid overtime compensation for every hour in excess of the regular working hours that he was
on board his vessel or barge each day, irrespective of whether or not he actually put in work
during those hours. Seamen are required to stay on board their vessels by the very nature of their
duties, and it is for this reason that, in addition to their regular compensation, they are given free
living quarters and subsistence allowances when required to be on board. It could not have been
the purpose of our law to require their employers to pay them overtime even when they are not
actually working; otherwise, every sailor on board a vessel would be entitled to overtime for
sixteen hours each day, even if he spent all those hours resting or sleeping in his bunk, after his
regular tour of duty. The correct criterion in determining whether or not sailors are entitled to
overtime pay is not, therefore, whether they were on board and cannot leave ship beyond the
regular eight working hours a day, but whether they actually rendered service in excess of said
number of hours.
NAWASA V. NWSA CONSOLIDATED UNIONS

G.R. No. L-18939 August 31, 1964
FACTS:
Petitioner National Waterworks & Sewerage Authority is a government-owned and
controlled corporation created under Republic Act No. 1383, while respondent NWSA
Consolidated Unions are various labor organizations composed of laborers and employees of the
NAWASA. The other respondents are intervenors Jesus Centeno, et al., hereinafter referred to
as intervenors.
The Court of Industrial Relations (now NLRC) conducted a hearing on the controversy
then existing between petitioner and respondent unions specifically the implementation of the 40-
Hour Week Law (Republic Act No. 1880)
Respondent intervenors filed a petition in intervention on the issue of additional compensation for
night work.
The court ruled that “The NAWASA is an agency not performing governmental functions
and, therefore, is liable to pay additional compensation for work on Sundays and legal holidays
conformably to Commonwealth Act No. 444, known as the Eight-Hour Labor Law, even if said
days should be within the staggered five-work days authorized by the President; the intervenors
do not fall within the category of “managerial employees” as contemplated in Republic Act 2377
and so are not exempt from the coverage of the Eight-Hour Labor Law”
ISSUE:
Whether the intervenors are “managerial employees” within the meaning of Republic Act
2377 and, therefore, not entitled to the benefits of Commonwealth Act No. 444, as amended;
RULING:
No.
Section 2 of Republic Act 2377 provides.
“Sec. 2.This Act shall apply to all persons employed in any industry or occupation, whether
public or private, with the exception of farm laborers, laborers who prefer to be paid on piece work
basis, managerial employees outside sales personnel, domestic servants — persons in the
personal service of another and members of the family of the employer working for him.
“The term ‘managerial employee’ in this Act shall mean either (a) any person whose primary duty
consists of the management of the establishment in which he is employed or of a customarily
recognized department or subdivision thereof, or (b) any officer or member of the managerial
staff.”
One of the distinguishing characteristics by which a managerial employee may be known
as expressed in the explanatory note of Republic Act No. 2377 is that he is not subject to the rigid
observance of regular office hours. The true worth of his service does not depend so much on the
time he spends in office but more on the results he accomplishes. In fact, he is free to go out of
office anytime.
NON-MANAGERIAL EMPLOYEES COVERED BY COMMONWEALTH ACT NO. 444. —

Employees who have little freedom of action and whose main function is merely to carry out the
company’s orders, plans and policies, are not managerial employees and hence are covered by
Commonwealth Act No. 444.
The philosophy behind the exemption of managerial employees from the 8-Hour Labor
Law is that such workers are not usually employed for every hour of work but their compensation
is determined considering their special training, experience or knowledge which requires the
exercise of discretion and independent judgment, or perform work related to management policies
or general business operations along specialized or technical lines. For these workers it is not
feasible to provide a fixed hourly rate of pay or maximum hours of labor.
The intervenors herein are holding position of responsibility. One of them is the Secretary
of the Board of Directors. Another is the private secretary of the general manager. Another is a
public relations officer, and many chiefs of divisions or sections and others are supervisors and
overseers. Respondent court, however, after examining carefully their respective functions, duties
and responsibilities found that their primary duties do not bear any direct relation with the
management of the NAWASA, nor do they participate in the formulation of its policies nor in the
hiring and firing of its employees. The chiefs of divisions and sections are given ready policies to
execute and standard practices to observe for their execution. Hence, it concludes, they have
little freedom of action, as their main function is merely to carry out the company’s orders, plans
and policies.
ASIAN TRANSMISSION CORPORATION V. COURT OF APPEALS
G.R. No. 144664 March 15, 2004
FACTS:
The DOLE issued an Explanatory Bulletin wherein it clarified that employees are entitled
to 200% of their basic wage on April 9, 1993, whether unworked, which, apart from being Good
Friday (and, therefore, a legal holiday), is also Araw ng Kagitingan (which is also a legal holiday).
The bulletin reads:
On the correct payment of holiday compensation on April 9, 1993 which apart from being
Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on the same day, this
Department is of the view that the covered employees are entitled to at least two hundred percent
(200%) of their basic wage even if said holiday is unworked. The first 100% represents the
payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the payment of
holiday pay for the same date as Araw ng Kagitingan.
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy
Thursday and Araw ng Kagitingan. Despite the explanatory bulletin, petitioner Asian Transmission
Corporation opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998.
Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.
Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads:
(a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his regular rate; and
(c) As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday, Good
Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and thirtieth of December and the day designated by law for holding a
general election,
The same was amended by E.O. No. 203 issued on June 30, 1987, the regular holidays
are now:
1. New Year’s Day January 1

2. Maundy Thursday Movable Date
3. Good Friday Movable Date
4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)
5. Labor Day May 1
6. Independence Day June 12
7. National Heroes Day Last Sunday of August
8. Bonifacio Day November 30
9. Christmas Day December 25
10. Rizal Day December 30
The VA ruled in favor of the respondent BATLU, ruling that Article 94 provides for holiday
pay for every regular holiday, the computation of which is determined by a legal formula which is
not changed by the fact that there are two holidays falling on one day, like on April 9, 1998 when
it was Araw ng Kagitingan and at the same time was Maundy Thursday; and that that the law, as
amended, enumerates ten (10) regular holidays for every year should not be interpreted as
authorizing a reduction to nine the number of paid regular holidays just because April 9 (Araw ng
Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday or Maundy Thursday. The
CA upheld the findings of the VA.
ISSUE:
Whether the employees are entitled to be paid for two regular holidays which fall on the
same day.
RULING:
Yes. Holiday pay is a legislated benefit enacted as part of the Constitutional imperative
that the State shall afford protection to labor. Its purpose is not merely "to prevent diminution of
the monthly income of the workers on account of work interruptions. In other words, although the
worker is forced to take a rest, he earns what he should earn, that is, his holiday pay."
As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the
enjoyment of ten paid regular holidays. The provision is mandatory, regardless of whether an
employee is paid on a monthly or daily basis. Unlike a bonus, which is a management prerogative,
holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the
enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date should not
operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.
Petitioner’s assertion that Wellington v. Trajano has overruled the DOLE Explanatory
Bulletin does not lie. In Wellington, the issue was whether monthly-paid employees are entitled to
an additional day’s pay if a holiday falls on a Sunday. This Court, in answering the issue in the
negative, observed that in fixing the monthly salary of its employees, Wellington took into account
"every working day of the year including the holidays specified by law and excluding only Sunday."
In the instant case, the issue is whether daily-paid employees are entitled to be paid for two
regular holidays which fall on the same day.
JOSE RIZAL COLLEGE V. NLRC
G.R. No. L-65482 December 1, 1987
FACTS:
Petitioner Jose Rizal College has three groups of employees categorized as follows: (a)
personnel on monthly basis, who receive their monthly salary uniformly throughout the year,
irrespective of the actual number of working days in a month without deduction for holidays; (b)
personnel on daily basis who are paid on actual days worked and they receive unworked holiday
pay; and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start
of the semester, they sign contracts with the college undertaking to meet their classes as per
schedule.
Private respondent National Alliance of Teachers and Office Workers (NATOW), in behalf
of the faculty and personnel of Jose Rizal College, filed with the Ministry of Labor a complaint
against the college for said alleged non-payment of holiday pay.
The LA ruled that the faculty and personnel of the respondent Jose Rizal College, who are
paid their salary by the month uniformly in a school year, irrespective of the number of working
days in a month, without deduction for holidays, are presumed to be already paid the 10 paid legal
holidays and are no longer entitled to separate payment for the said regular holidays. The
personnel who are paid their wages daily are entitled to be paid the 10 unworked regular holidays.
The collegiate faculty, who by contract are paid compensation per student contract hour, are not
entitled to unworked regular holiday pay considering that these regular holidays have been
excluded in the programming of the student contact hours. The NLRC, however, ruled that
teaching personnel paid by the hour are declared to be entitled to holiday pay.
ISSUE:
Whether the school faculty, who according to their contracts are paid per lecture hour, are
entitled to unworked holiday pay.
RULING:
Yes. Holiday pay is provided for in the Labor Code (P.D. No. 442, as amended), which
reads:
Art. 94. Right to holiday pay —
(a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his regular rate; x x x
And in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty
members of colleges and universities, may not be paid for the regular holidays during semestral
vacations. They shall, however, be paid for the regular holidays during Christmas vacations. x x
x
Under the foregoing provisions, apparently, the petitioner, although a non-profit institution,
is under obligation to give pay even on unworked regular holidays to hourly paid faculty members
subject to the terms and conditions provided for therein.
We believe that the aforementioned implementing rule is not justified by the provisions of
the law which after all is silent with respect to faculty members paid by the hour who because of
their teaching contracts are obliged to work and consent to be paid only for work actually done
(except when an emergency or a fortuitous event or a national need calls for the declaration of
special holidays). Regular holidays specified as such by law are known to both school and faculty
members as no class days. Certainly, the latter do not expect payment for said unworked days,
and this was clearly in their minds when they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay are
silent as to payment on Special Public Holidays. It is readily apparent that the declared purpose
of the holiday pay which is the prevention of diminution of the monthly income of the employees
on account of work interruptions is defeated when a regular class day is cancelled on account of
a special public holiday and class hours are held on another working day to make up for time lost
in the school calendar. Otherwise stated, the faculty member, although forced to take a rest, does
not earn what he should earn on that day. Be it noted that when a special public holiday is
declared, the faculty member paid by the hour is deprived of expected income, and it does not
matter that the school calendar is extended in view of the days or hours lost, for their income that
could be earned from other sources is lost during the extended days. Similarly, when classes are
called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members
must likewise be paid, whether or not extensions are ordered.
UNION OF FILIPRO EMPLOYEES (UFE) V. NLRC
G.R. No. 79255 JANUARY 20, 1992
FACTS:
The dispute originated from the exclusion of sales personnel from the holiday pay award
and the change of the divisor in the computation of benefits from 251 to 261 days. On November
8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the NLRC a petition for
declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay in the light of the Court's decision in Chartered Bank Employees
Association v. Ople. Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the
case for voluntary arbitration and appointed respondent Vivar as voluntary arbitrator.
Vivar issued an order declaring that the effectivity of the holiday pay award shall retroact
to November 1, 1974 (effectivity of Labor Code). However the company's sales personnel are
field personnel not entitled to holiday pay. He also ruled that with the grant of 10 days holiday
pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor.
ISSUES:
1. Whether or not sales personnel are field personnel thus not entitled to holiday pay.
2. Whether or not the divisor should be changed from 251 to 261 days and whether or not
the previous use of 251 as divisor resulted in overpayment for overtime, night differential,
vacation and sick leave pay.
3. Whether or not the effectivity of the holiday pay shall retroact to the effectivity of the labor
code
RULING:
1. Yes, the controversy arises on the interpretation of the clause provided in Art. 82 of the
labor code "whose actual hours of work in the field cannot be determined with reasonable
certainty." Although sales personnel start their field work at 8:00 a.m. after having reported
to the office and come back to the office at 4:00 p.m. (4:30 p.m. if they are Makati-based)
the company has no way of determining whether or not these sales personnel, even if they
report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really
spend the hours in between in actual field work. The requirement of such hours is purely
management prerogative and providing administrative control over such personnel.
Consequently, they are excluded from the ten holidays with pay award.
Additionally, Art. 82 must be read in conjunction with Rule IV, Book III of the Implementing
Rules which provides that holidays with pay shall apply to all employees however there
are exceptions, one of which are those whose performance is unsupervised by the
employer. Such provision did not amplify but merely interpreted and expounded the clause
"whose actual hours of work in the field cannot be determined with reasonable certainty."
The former clause is still within the scope and purview of Article 82 which defines field
personnel. Hence, in deciding whether or not an employee's actual working hours in the
field can be determined with reasonable certainty, query must be made as to whether or
not such employee's time and performance is constantly supervised by the employer.
2. No, the divisor assumes an important role in determining whether or not holiday pay is
already included in the monthly paid employee's salary and in the computation of his daily
rate. In the Chartered Bank case, computing overtime compensation for its employees
employs a divisor of 251 days. The 251 working days divisor is the result of subtracting all
Saturdays (52), Sundays (52) and the 10 legal holidays from the total number of calendar
days in a year. Should the holidays be included, the divisor should be 261 not 251.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result
in a lower daily rate which is violative of the prohibition on non-diminution of benefits found
in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted
to 261 days, then the dividend, which represents the employee's annual salary, should
correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the
grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure
by 251 days, his daily rate is P100.00 After the payment of 10 days‟ holiday pay, his
annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing
this by 261 days, the daily rate is still P100.00.
3. No, the doctrine of operative fact applies in this case. In IBAAEU v. Inciong, the Court
declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction
No. 9, issued by the then Secretary of Labor in 1976, which excluded monthly paid
employees from holiday pay benefits, are null and void. However, prior to the delcaration,
the implementing rule and policy instruction enjoyed the presumption of validity and hence,
Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on
October 23, 1984 was in compliance with these presumably valid rule and policy
instruction.
DECISION MODIFIED. The divisor to be used in computing holiday pay shall be 251 days.
The holiday pay as above directed shall be computed from October 23, 1984
(promulgation of IBAA case).
WELLINGTON VS. TRAJANO
G.R. No. 114698 JULY 03, 1995
FACTS:
On 6 August 1991, a routine inspection was conducted by a Labor Enforcement Office on
Wellington Flour Mills, an establishment owned & operated by petitioner Wellington Investment
and Manufacturing Corporation. His report, with a copy “explained to and received by”
Wellington’s personnel manager, set forth the finding of “non-payment of regular holidays falling
on a Sunday for monthly-paid employees.” Petitioner Wellington sought reconsideration, arguing
that their monthly salaries already includes holiday pay for all regular holidays, hence there is no
legal basis for LEO’s finding. It pays its employees a fixed monthly compensation using the “314”
factor, which undeniably covers and already includes payment for all the working days in a month
as well as the 10 unworked regular holidays within a year.
The Regional Director ruled that “when a regular holiday falls on a Sunday, an extra or
additional working day is created and the employer has the obligation to pay the employees for
the extra day except the last Sunday of August since the payment for the said holiday is already
included in the 314 factor,” and accordingly directed Wellington to pay its employees
compensation corresponding to four (4) extra working days.
Petitioner filed an MR, pointing out that it was in effect being compelled to “shell out an
additional pay for an alleged extra working day” despite its complete payment of all compensation
lawfully due its workers, using the 314 factor. This was taken as an appeal, and acted on by
respondent Undersecretary Trajano. The latter held that the “divisor being used by Petitioner does
not reliably reflect the actual working days in a year,” and demanded Wellington to pay the six
additional working days resulting from regular holidays falling on Sundays in 1988, 1989 and
1990. Petitioner’s reconsideration was denied.
Petitioner instituted this special civil action of certiorari to nullify the above orders. SC
granted TRO enjoining respondent from enforcing the above orders.
ISSUE:
Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is
entitled to an additional pay aside from his usual holiday pay, whenever a regular holiday falls on
a Sunday.
RULING:
Yes. Every worker should, according to the Labor Code, "be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers;" this, of course, even if the worker does no work on these holidays. The regular
holidays include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of December,
and the day designated by law for holding a general election (or national referendum or plebiscite).
There is no question that petitioner complied with the minimum norm laid down by the law – by
paying its employees "a salary of not less than the statutory or established minimum wage," and
that the monthly salary thus paid was "not less than the statutory minimum wage multiplied by
365 days divided by twelve.” The monthly salary was fixed by Wellington to provide for
compensation for every working day of the year including the holidays specified by law — and
excluding only Sundays. The “314 factor” simply deducted 51 Sundays from the 365 days
normally comprising a year, and used the difference as basis for determining the monthly salary.
The monthly salary thus fixed actually covers payment for 314 days of the year, including regular
and special holidays, as well as days when no work is done by reason of fortuitous cause, as
above specified, or causes not attributable to the employees.
Based on the routine inspection, it was discovered that in certain years, two or three
regular holidays had fallen on Sundays. According to respondent Labor Undersecretary:
“By using said (314) factor, the respondent (Wellington) assumes that all the regular
holidays fell on ordinary days and never on a Sunday. Thus, the respondent failed to consider the
circumstance that whenever a regular holiday coincides with a Sunday, an additional working day
is created and left unpaid. In other words, while the said divisor may be utilized as proof
evidencing payment of 302 working days, 2 special days and the ten regular holidays in a calendar
year, the same does not cover or include payment of additional working days created as a result
of some regular holidays falling on Sundays.”
PHIL HOTELIERS INC., VS NUWHRAIN
G.R. 181972 AUGUST 25, 2009
FACTS:
Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board
(RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00
ECOLA to particular employees and workers of all private sectors, identified as follows in Section
1 thereof:
Section 1. Upon the effectivity of this Wage Order, all private sector workers and
employees in the National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY
PESOS (P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency
cost of living allowance in the amount of THIRTY PESOS (P30.00) per day payable in two
tranches as follows:
Amount of ECOLA Effectivity

P15.00 5 November 2001
P15.00 1 February 2002
On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied
Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing),
sent a letter 4 to Director Alex Maraan (Dir. Maraan) of the Department of Labor and Employment
National Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotel with WO No.
9, while there was an on-going compulsory arbitration before the National Labor Relations
Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel; and
requesting immediate assistance on this matter. On 24 May 2002, Rasing sent Dir. Maraan
another letter following-up his previous request for assistance.
Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita
Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. In
the first Inspection, the report showed that Dusit Hotel is exempt from complying with WO no. 9.
Due to the Second request for inspection, DOLE representative conducted another round of
inspection and the Labor Standards Officer noted the following in her inspection report:
* Non-presentation of records/payrolls
* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL
NIKKO Chapter, there are one hundred forty-four (144) affected in the implementation of Wage
Order No. NCR-09-> ECOLA covering the periods from Nov. 5/01 to present.
Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to
effect restitution and/or correction of the noted violations within five days from receipt of the
Notice, and to submit any question on the findings of the labor inspector within the same period,
otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly
received by Dusit Hotel Assistant Personnel Manager Rogelio Santos.
In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC NCR-
CC No. 000215-02 — the compulsory arbitration involving the Collective Bargaining Agreement
(CBA) deadlock between Dusit Hotel and the Union — granting the hotel employees the following
wage increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month

On 22 October 2002, based on the results of the second inspection of Dusit Hotel
premises, DOLENCR, through Dir. Maraan, issued the Order directing Dusit Hotel to pay 144 of
its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under
WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727,
as amended by Republic Act No. 8188.
Dusit Hotel filed a Motion for Reconsideration of the DOLE-NCR Order dated 22 October
2002, arguing that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock
between Dusit Hotel and the Union, and awarding salary increases under the CBA to hotel
employees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and
academic. With the increase in the salaries of the hotel employees ordered by the NLRC Decision
of 9 October 2002, along with the hotel employees' share in the service charges, the 144 hotel
employees, covered by the DOLE NCR Order of 22 October 2002, would already be receiving
salaries beyond the coverage of WO No. 9.
Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution
on 27 December 2002, setting aside its earlier Order dated 22 October 2002 for being moot and
academic, in consideration of the NLRC Decision dated 9 October 2002; and dismissing the
complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit.
ISSUES:
1. Whether the 144 hotel employees were still entitled to ECOLA granted by WO No.
9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by
NLRC in the latter's Decision dated 9 October 2002.
2. Whether Dusit Hotel is liable for the double indemnity for violation of the wage
order.
RULING:
The Court rules in the negative.
It must be noted that the hotel employees have a right to their share in the service charges
collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:
Article 96. Service charges. — All service charges collected by hotels, restaurants and
similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered
employees and fifteen percent (15%) for management. The share of employees shall be equally
distributed among them. In case the service charge is abolished, the share of the covered
employees shall be considered integrated in their wages.
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its
employees and management their respective shares in the service charges collected, the hotel
cannot claim that payment thereof to its 82 employees constitute substantial compliance with the
payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their shares in
the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA;
gratification by the hotel of one does not result in the satisfaction of the other.
The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under
Section 2 (m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of Inspection
Result "shall specify the violations discovered, if any, together with the officer's recommendation
and computation of the unpaid benefits due each worker with an advice that the employer shall
be liable for double indemnity in case of refusal or failure to correct the violation within five
calendar days from receipt of notice". A careful review of the Notice of Inspection Result dated 29
May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not
contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations
within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the
given period would already result in its liability for double indemnity. The lack of advice deprived
Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid
the penalty of double indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan,
already issued its Order directing Dusit Hotel to pay 144 of its employees the total amount of
P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus the penalty of double
indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No.
8188.
Although the Court is mindful of the fact that labor embraces individuals with a weaker and
unlettered position as against capital, it is equally mindful of the protection that the law accords to
capital. While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every labor dispute will be automatically decided in
favor of labor. Management also has its own rights which, as such, are entitled to respect and
enforcement in the interest of simple fair play

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LABOR 1 DIGESTED CASES

School year 2020-2021

PASEI VS. DRILON

INNODATA KNOWLEDGE SERVICES, INC. V. INTING

Nature of respondents’ employment contracts

Presence of Just or Authorized Causes

GUERRERO V. PHILIPPINE TRANSMARINE CARRIERS, INC.,

The petition is devoid of merit.

1. He is not capable of performing the duties of a Project Manager.

PEOPLE VS. NANGCAS

INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. V. DE VERA,

After three months, Arriola received a notice of pre-termination of employment.

Whether an overseas labor contract be governed by a foreign law? NO.

The petition lacks merit.

TONGKO VS. MANULIFE

Hence, this petition.

LEGEND HOTEL V. REALUYO

2. Whether or not Hernani was validly terminated.

Hernani was working less than 8 hours.

EXPEDITION VS. AFRICA ET. AL.

Facts: Expedition Construction Corporation (Expedition) is a domestic corporation engaged in garbage

Hence, this petition.

UNIVERSAL ROBINA SUGAR MILLING CORPORATION V. ACIBO

Whether the complainants are regular employees? NO.

We find the respondents to be regular seasonal employees of URSUMCO.

EXODUS INTERNATIONAL CONSTRUCTION CORPORATION V. BISCOCHO, ET AL.

Exodus hired respondents as painters on different dates.

Whether the painters were illegally dismissed? No.

D.M. CONSUNJI, INC. V. JAMIN

Whether or not the CA is correct in ruling that Jamin is a regular employee.

HERMA SHIPYARD, INC. VS. OLIVEROS, ET AL.,

Issue: Whether or not respondents were project-based employees

FVR SKILLS AND SERVICES EXPONENTS, INC. VS. SEVA

WILFREDO ARO VS. NLRC

G.R. No. 174792 March 7, 2012

Issue: Whether or not petitioners are project employees

WILLIAM UY CONSTRUCTION CORPORATION V. TRINIDAD

BRENT SCHOOL VS ZAMORA

Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

FUJI TELEVSION NETWORK, INC VS. ESPIRITU

FREYSSINET FILIPINAS V. LAPUZ

ABBOTT LABORATORIES PHIL. ET.AL. V. PEARLIE ANN F. ALCARAZ

She was given the following reason through a letter:

CA Affirmed the ruling of the NLRC.

ISSUE: Whether or not Teves was illegally dismissed

MERCADO V. AMA COMPUTER

ROYALE HOMES VS. ALCANTARA

ISSUE: Whether or not Alcantara is a regular employee of Royale Homes.

All of these indicate an independent contractual relationship.

W.M. MANUFACTURING VS. DALAG

MALICDEM V. MARULAS INDUSTRIAL

SAMONTE ET AL. V. LA SALLE GREENHILLS, INC.

CCBPI VS. AGITO

SONZA VS. ABS-CBN

ISSUE: WON SONZA is an Employee of ABS-CBN

HELD: NO. A. Selection and Engagement of Employee

ISSUE: whether Digiserv is a legitimate contractor

HELD: Digiserv is a labor-only contractor.

Additional ruling (for study purposes): The affected employees were

For a valid retrenchment, the following elements must be present:

COLEGIO DEL SANTISIMO ROSARIO V. ROJO

ISSUE: WON Respondent teacher is considered as a Regular Employee

ISSUE: WON it is a labor-only contractor or an independent contractor

HELD: LABOR ONLY CONTRACTOR