G.R. No.

216635, June 03, 2019

DR. MARY JEAN P. LORECHE-AMIT, PETITIONER, v. CAGAYAN DE ORO MEDICAL CENTER, INC. (CDMC), DR.
FRANCISCO OH AND DR. HERNANDO EMANO, RESPONDENTS.
J. REYES, JR., J.:
Before us is a Petition for Review on Certiorari,1 which seeks to assail the Decision2 dated August 3, 2012 and
Resolution3 dated April 12, 2013 of the Court of Appeals (CA)-Cagayan de Oro City, in CA-G.R. SP No. 03067-MIN
which affirmed the decision of the National Labor Relations Commission (NLRC).
The Relevant Antecedents
Dr. Mary Jean P. Loreche-Amit (petitioner) started working with Cagayan De Oro Medical Center, Inc. (CDMC),
sometime in May 1996, when she was engaged by the late Dr. Jose N. Gaerlan (Dr. Gaerlan) as Associate
Pathologist in the Department of Laboratories. Upon the demise of Dr. Gaerlan, CDMC's Board of Directors
formally appointed petitioner as Chief Pathologist for five years or until May 15, 2011. 4
On June 13, 2007, (CDMC's) Board of Directors passed a resolution, recalling petitioner's appointment as Chief
Pathologist. This prompted petitioner to file a complaint for illegal dismissal, contending that she was dismissed
by CDMC from her work without just cause and due process. 5
In her complaint, petitioner narrated the circumstances which surrounded the recall of her appointment. She
averred that Dr. Hernando Emano (Dr. Emano) asked her to help his daughter Dr. Helga Emano-Bleza (Dr.
Emano-Bleza) to qualify as a pathologist considering that petitioner is one of the six members of the Board of
Governors accredited by the Professional Regulation Commission. However, petitioner refused to assist Dr.
Emano-Bleza because the latter failed to qualify in the clinical pathology examination. Such refusal, according to
petitioner, started the subtle attempt of Dr. Emano to oust her from her job. 6
Soon thereafter, Dr. Francisco Oh (Dr. Oh) issued an Inter-Office Memorandum addressed to all laboratory
personnel stating that working in and out of the building without proper permission is to be treated as absence
without official leave and payment for printing of duplicate copies not endorsed to the hospital is a form of
stealing. As petitioner slammed the Memorandum against the wall and tagged the name of Dr. Oh as an
irrational man, she received an Inter-Office Memorandum from Dr. Oh for alleged conduct
unbecoming/insubordination, and to explain why her appointment should not be revoked due to such
behavior. 7 Finally, a Memorandum recalling her appointment was issued. 8
For their part, Dr. Emano, Dr. Oh, and CDMC (collectively referred to as respondents) averred that petitioner
was not hired by them as she merely assisted Dr. Gaerlan in operating the hospital's laboratory. Respondents
maintained that petitioner worked at the same time as pathologist in Capitol College Hospital and J.R. Borja
Memorial Hospital as she was not prohibited to do so. 9
In dismissing the complaint for lack of jurisdiction, the Labor Arbiter rendered a Decision 10 dated March 31,
2008. The Labor Arbiter found that petitioner is a corporate officer of the hospital because of her appointment
by the Board of Directors through a resolution; thus, matters relating to the propriety of her dismissal is under
the jurisdiction of the Regional Trial Court (RTC) under Section 5.2 of Republic Act (R.A.) No. 8799 (The Securities
Regulation Code of the Philippines). The dispositive portion of the Decision reads:
WHEREFORE, foregoing premises considered, the above-entitled case is DISMISSED for lack of jurisdiction.
SO ORDERED.11
On appeal, the NLRC in a Resolution 12 dated March 31, 2009, affirmed the ruling of the Labor Arbiter and
reiterated that petitioner is a corporate officer and that there was no employer-employee relationship between
CDMC and her. As it is, the issue is an intra-corporate matter, the jurisdiction of which belongs to the regular
courts, viz.:
WHEREFORE, in view of all the foregoing considerations, the instant appeal is hereby DISMISSED for lack of
merit. The assailed Decision dated March 31, 2008 is AFFIRMED.
SO ORDERED.13
Petitioner filed a Petition for Certiorari before the CA.

1
In a Decision14 dated August 3, 2012, the CA dismissed the petition and echoed the rulings of the Labor Arbiter
and NLRC, thus:
WHEREFORE, the petition is DISMISSED.
SO ORDERED.15
The motion for reconsideration filed by petitioner was likewise dismissed in a Resolution 16 dated April 12, 2013.
The Issue
Whether or not the labor tribunals have jurisdiction over the complaint for illegal dismissal filed by petitioner.
The Court's Ruling
The determination of whether petitioner was indeed an employee of CDMC is necessary before we proceed to
rule on the propriety of her dismissal.
Petitioner argues that she is not a corporate officer because her position as Pathologist is not among those
included in the by-laws of CDMC.
This Court agrees.
To be considered as a corporate officer, the designation must be either provided by the Corporation Code or the
by-laws of the corporation, to wit:
Corporate officers are given such character either by the Corporation Code or by the corporation's by-laws.
Under Section 25 of the Corporation Code, the corporate officers are the president, secretary, treasurer and
such other officers as may be provided in the by-laws. Other officers are sometimes created by the charter or
by-laws of a corporation, or the board of directors may be empowered under the by-laws of a corporation to
create additional offices as may be necessary. 17 (Citation omitted)
In this case, nowhere in the records could the by-laws of CDMC be found. An appointment through the issuance
of a resolution by the Board of Directors does not make the appointee a corporate officer. It is necessary that
the position is provided in the Corporation Code or in the by-laws. In the absence of the by-laws of CDMC, there
is no reason to conclude that petitioner, as Pathologist, is considered as a corporate officer. In the cases of WPP
Marketing Communications, Inc. v. Galera 18 and Marc II Marketing, Inc. v. Joson,19 this Court declared that
respondents are not corporate officers because neither the Corporation Code nor the by-laws of the respective
corporations provided so. In the latter case, this Court treated as employee the respondent whose position was
not expressly mentioned in the Corporation Code or the by-laws. 20
Thus, the RTC does not have jurisdiction over the case as there was no intra-corporate controversy, the latter
being operative in vesting jurisdiction upon Regional Trial Courts over all controversies in the election or
appointment of directors, trustees, officers or managers of corporations, partnerships or associations.
However, this is not an automatic declaration that petitioner is an employee of CDMC. The four-fold test, to wit:
1) the selection and engagement of the employees; 2) the payment of wages; 3) the power of dismissal; and 4)
the power to control the employee's conduct, must be applied to determine the existence of an employer-
employee relationship.21
In this case, it is apparent that CDMC, through the Board of Directors, exercised the power to select and
supervise petitioner as the Pathologist. It must be emphasized that petitioner was appointed as Pathologist with
a term of five years from May 2006 to May 2011. She was likewise paid compensation which is at 4% of the
gross receipts of the Clinical Section of the laboratory.
However, based on the records, CDMC does not exercise the power of control over petitioner.
The power to control the work of the employee is considered the most significant determinant of the existence
of an employer-employee relationship. This test is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and the manner and means used to achieve that
end.22
As the Labor Arbiter, NLRC, and the CA aptly observed, petitioner was working for two other hospitals aside
from CDMC, not to mention those other hospitals which she caters to when her services are needed. Such fact

2
evinces that petitioner controls her working hours. On this note, relevant is the economic reality test which this
Court has adopted in determining the existence of employer-employee relationship. Under this test, the
economic realities prevailing within the activity or between the parties are examined, taking into consideration
the totality of circumstances surrounding the true nature of the relationship between the parties, to wit:
x x x. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships
for purposes of applying the Labor Code ought to be the economic dependence of the worker on his
employer.23
Thus, the fact that petitioner continued to work for other hospitals strengthens the proposition that petitioner
was not wholly dependent on CDMC.
Petitioner likewise admitted that she receives in full her 4% share in the Clinical Section of the hospital
regardless of the number of hours she worked therein. Alternatively put, petitioner manages her method and
hours of work.
The rule is that where a person who works for another performs his job more or less at his own pleasure, in the
manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the
result of his efforts and not the amount thereof, no employer-employee relationship exists. 24
Moreover, the Memorandum, pertaining to petitioner's behavior, issued by Dr. Oh does not sufficiently
establish the element of control. The Memorandum merely states that intolerable behavior in the hospital
cannot be countenanced. It is administrative in character which does not, in any way, pertains to the manner
and method of petitioner's work.
In sum, this Court finds no reason to overturn the finding of the LA, NLRC, and the CA that there was no illegal
dismissal in this case as it was not sufficiently proven that petitioner is indeed an employee of CDMC.
WHEREFORE, premises considered, the instant petition is PARTLY GRANTED in that petitioner is not a corporate
officer. The Decision dated August 3, 2012 and the Resolution dated April 12, 2013 of the Court of Appeals-
Cagayan de Oro City in CA-G.R. SP No. 03067-MIN are AFFIRMED.
SO ORDERED.

PETITIONER Dr. Mary Jean Loreche-Amit started working with respondent Cagayan De Oro Medical
Center Inc. (CDMC) sometime in May 1996 when she was engaged by the late Dr. Jose Gaerlan as
associate pathologist in the Department of Laboratories. Upon the demise of Dr. Gaerlan, CDMC’s
board of directors formally appointed her as chief pathologist for five years.
On June 13, 2007, CDMC’s board of directors passed a resolution recalling petitioner’s appointment as
chief pathologist. Petitioner filed a complaint for illegal dismissal against CDMC.
In defense, respondents CDMC, Dr. Francisco Oh and Dr. Hernando Emano averred that petitioner was
not hired by them as she merely assisted Dr. Gaerlan in operating the hospital’s laboratory. They
maintained that petitioner worked at the same time as pathologist in Capitol College Hospital and J.R.
Borja Memorial Hospital as she was not prohibited to do so.
Is there merit to this defense?
Ruling: Yes.
The power to control the work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship. This test is premised on whether the person for whom
the services are performed reserves the right to control both the end achieved and the manner and means
used to achieve that end.
As the labor arbiter, National Labor Relations Commission and the Court of Appeals aptly observed,
petitioner was working for two other hospitals aside from CDMC, not to mention those other hospitals
which she caters to when her services are needed. Such fact evinces that petitioner controls her working
hours. On this note, relevant is the economic reality test which this Court has adopted in determining the
existence of employer-employee relationship.

3
Under this test, the economic realities prevailing within the activity or between the parties are examined,
taking into consideration the totality of circumstances surrounding the true nature of the relationship
between the parties.
Thus, the fact that petitioner continued to work for other hospitals strengthens the proposition that
petitioner was not wholly dependent on CDMC.
Petitioner likewise admitted that she receives in full her four percent share in the clinical section of the
hospital regardless of the number of hours she worked therein. Alternatively put, petitioner manages her
method and hours of work.
The rule is that where a person who works for another performs his job more or less at his own pleasure,
in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated
according to the result of his efforts and not the amount thereof, no employer-employee relationship
exists. (Dr. Mary Jean Loreche-Amit vs. Cagayan De Oro Medical Center Inc. (CDMC) et al., G.R.
216635, June 3, 2019).

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5
G.R. No. 200712, July 04, 2018
MARIO A. ABUDA, RODOLFO DEL REMEDIOS, EDWARDO DEL REMEDIOS, RODOLFO L. ZAMORA, DIONISIO
ADLAWAN, ELPIDIO GARCIA, JR., ROGELIO ZAMORA, SR., JIMMY TORRES, POLICARPIO OBANEL, JOSE
FERNANDO, JOHNNY BETACHE, JAYSON GARCIA, EDWIN ESPE, NEMENCIO CRUZ, LARRY ABANES, ROLANDO
SALEN, JOSEPH TORRES, FRANCISCO LIM, ARNALDO GARCIA, WILFREDO BRONOLA, GLENN MORAN, JOSE
GONZALES, ROGER MARTINEZ, JAIME CAPELLAN, RICHARD ORING, JEREMIAS CAPELLAN, ARNEL CAPELLAN,
MELCHOR CAPELLAN, ROLLY PUGOY, JOEY GADONES, ARIES CATIANG, LEONEL LATUGA,
CAPILLAN, Petitioners, v. L. NATIVIDAD POULTRY FARMS, JULIANA NATIVIDAD, AND MERLINDA
NATIVIDAD, Respondents.
DECISION
LEONEN, J.:
The necessity or desirability of the work performed by an employee can be inferred from the length of time that
an employee has been performing this work. If an employee has been employed for at least one (1) year, he or
she is considered a regular employee by operation of law.
This resolves the Petition for Review1 filed by Mario A. Abuda, Rodolfo Del Remedios, Edwardo Del Remedios,
Rodolfo L. Zamora, Dionisio Adlawan, Elpidio Garcia, Jr., Rogelio Zamora, Sr., Jimmy Torres, Policarpio Obanel,
Jose Fernando, Johnny Betache, Jayson Garcia, Edwin Espe, Nemencio Cruz, Larry Abañes, Rolando Salen, Joseph
Torres, Francisco Lim, Arnaldo Garcia, Wilfredo Broñola, Glenn Moran, Jose Gonzales, Roger Martinez, Jaime
Capellan, Richard Oring, Jeremias Capellan, Arnel Capellan, Melchor Capellan, Rolly Pugoy, Joey Gadones, Aries
Catiang, Leonel Latuga, Vicente Go, Temmie C. Nawal, and Eduardo A. Capillan (collectively, workers), assailing
the October 11, 2011 Decision2 and February 8, 2012 Resolution3 of the Court of Appeals in CA-G.R. SP No.
117681.
The workers of L. Natividad Poultry Farms (L. Natividad) filed complaints for "illegal dismissal, unfair labor
practice, overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
thirteenth month pay, and moral and exemplary damages" 4 against it and its owner, Juliana Natividad (Juliana),
and manager, Merlinda Natividad (Merlinda). 5
The workers claimed that L. Natividad employed and terminated their employment after several years of
employment. The dates they were hired and terminated are as follows:
NAME Jeremias Capellan Security Guard
POSITION Temmie C. Nawal Poultry Helper
June 2005
DATE OF HIRING
November 2005
DATE OF TERMINATION Maintenance Personnel
May 1997 April 2005
Arnaldo Garcia Maintenance Personnel
January 1991 April 2006
Dionisio Adlawan Maintenance Personnel
1990 February 2006
Edwardo Del Remedios Maintenance Personnel
January 1997 March 2007
Edwin Espe Maintenance Personnel
March 1990 June 2005
Elpidio Garcia, Jr. Maintenance Personnel
May 1997 November 2006
Francisco Lim Maintenance Personnel
March 1998 March 2005
Jayson Garcia Maintenance Personnel
May 1990 March 2007
Jimmy Torres Maintenance Personnel
May 1990 April 2005
Johnny Betache Maintenance Personnel
February 1999 January 2007
Jose Fernando Maintenance Personnel
April 1997 May 2006
Larry Abañe[s] Maintenance Personnel
September 2004 September 2005
Mario A. Abuda Maintenance Personnel
April 1990 March 2007
Nemencio Cruz Maintenance Personnel
January 1991 March 2005
Policarpio Obanel Maintenance Personnel
March 1990 September 2005
Rodolfo Del Remedios Maintenance Personnel
January 1999 2005
Rodolfo L. Zamora Maintenance Personnel
March 1995 May 2007
Rogelio Zamora, Sr. Maintenance Personnel
1997 May 2007
Rolando Salen Poultry & Livestock Feed
Mixers 1989 May 2007
Jose Gonzales
Poultry & Livestock Feed July 2002 January 2006
Roger Martinez
Mixers April 1995 November 2006
Wilfredo Broñola
Poultry & Livestock Feed December 2004 December 2006
Arnel Capellan
Mixers March 1989 August 20006
Eduardo A. Cap[i]llan Delivery Helper February 2003
Checker April 2000

6
On May 13, 2009, Labor Arbiter Robert A. Jerez (Labor Arbiter Jerez) dismissed the complaint due to lack of
employer-employee relationship between the workers and L. Natividad. He ruled that San Mateo General
Services (San Mateo), Wilfredo Broñola (Broñola), and Rodolfo Del Remedios (Del Remedios) were the real
employers as they were the ones who employed the workers, not L. Natividad. 7
The workers appealed Labor Arbiter Jerez's Decision, and on August 31, 2010, the National Labor Relations
Commission modified the assailed Decision.8
The National Labor Relations Commission found that the workers were hired as maintenance personnel by San
Mateo and Del Remedios on pakyaw basis to perform specific services for L. Natividad. Furthermore, it ruled
that Jose Gonzales (Gonzales) and Roger Martinez (Martinez) could not be considered as regular employees
because their jobs as poultry livestock mixers were not necessary in L. Natividad's line of business. However, it
found Broñola, Jeremias Capellan (Jeremias), Arnel Capellan (Arnel), Temmie Nawal (Nawal), and Eduardo
Capillan (Eduardo) to be regular employees and ordered L. Natividad to reinstate them and pay their thirteenth
month pay and service incentive leave pay. 9
The dispositive portion of the National Labor Relations Commission August 31, 2010 Decision read:
WHEREFORE, the Decision dated May 13, 2009 is hereby MODIFIED. Complainants Wilfreda Bronola, Jeremias
Capellan, Arnel Capellan, Temmie Nawal, and Eduardo Capellan, are hereby declared regular employees of
respondent L. Natividad Poultry Farms. However, considering that the above-named complainants were not
illegally dismissed by the respondents and the former's intention to be reinstated to work, respondents L.
Natividad Poultry Farms through respondents Juliana Natividad and Merlinda Natividad are hereby directed to
reinstate the above-named complainants to their former position or substantially equivalent position without
backwages. Respondent [L. Natividad] is also directed to pay their respective 13 th month pays and service
incentive leave pays as follows:
th
 Month Pay Service Incentive
Leave Pay (SILP) Total Amount Wilfredo Bronola P20,690.77 Not Entitled/Supervisor P20,690.77 Jeremias
Capellan P14,952.60 P2,875.50 P17,828.10 Arnel Capellan P5,687.05 P1,093.66 P6,780.71 Temmie Nawal
P9,143.90 P1,758.44 P10,902.34 Eduardo Capellan P15,274.53 P2,937.41 P18,211.94     TOTAL
AWARDS P74,413.86
For failure to comply with the requisites of Article 106 of the Labor Code on permissible job contracting, third
party respondents San Mateo General Services and Rodolfo Del Remedios are hereby declared to be engaged
in labor-only contracting. No employer-employee relationship existed, however, between respondent [L.
Natividad] and the following complainants: Rodolfo Del Remedios, Edward Del Remedios, Dionisio Adlawan,
Elpidio Garcia, Jr., Rogelio Zamora, Sr., Jimmy Torres, Policarpio Obanel, Jose Fernando, Johnny Betache,
Jayson Garcia, Edwin Espe, Nemencio Cruz, Larry Aba[ñ]es, Rolando Salen, Francisco Lim, Arnold Garcia,
Mario Abuda, Rodolfo Zamora, Jose Gonzales and Roger Martinez, as they performed tasks not usually
necessary or desirable in the business of respondent [L. Natividad]. Thus, it is hereby declared that the
above-named complainants were engaged on pakyaw basis and not regular employees of the latter.
All other claims of the complainants are hereby dismissed for lack of merit.
SO ORDERED.10
The workers moved to reconsider the National Labor Relations Commission August 31, 2010 Decision, but this
was denied by the National Labor Relations Commission in its October 26, 2010 Resolution. 11
The workers filed a Petition for Review on Certiorari 12 before the Court of Appeals.
On October 11, 2011, the Court of Appeals 13 modified the National Labor Relations Commission's assailed
Decision and ruled that San Mateo and Del Remedios were labor-only contractors, and as such, they must be
considered as L. Natividad's agents.14
The Court of Appeals also reversed the National Labor Relations Commission's ruling on Gonzales' and
Martinez's employment status since as poultry and livestock feed mixers, they performed tasks which were
necessary and desirable to L. Natividad's business and were not mere helpers. It deemed them to be L.
Natividad's regular employees.15
However, the Court of Appeals upheld the National Labor Relations Commission's finding that the maintenance
personnel were only hired on a pakyaw basis to perform necessary repairs or construction within the farm as
the need arose.16

7
As for the issue of illegal dismissal, the Court of Appeals also affirmed the National Labor Relations Commission's
finding that the workers failed to substantiate their bare allegation that L. Natividad verbally notified them of
their dismissal.17
The dispositive portion of the Court of Appeals October 11, 2011 Decision read:
ACCORDINGLY, the petition is PARTLY GRANTED and the Decision dated August 31, 2010, MODIFIED.
Petitioners Jose Gonzales and Roger Martinez are DECLARED regular employees of respondent L. Natividad
Poultry Farms; and the latter, DIRECTED to reinstate Jose Gonzales and Roger Martinez without backwages
and to pay their 13th month and service incentive leave pay.
No costs.
SO ORDERED.18
On October 24, 2011, the workers moved for the reconsideration of the Court of Appeals Decision, but their
motion was denied in the Court of Appeals February 8, 2012 Resolution. 19
On March 27, 2012, the workers filed their Petition for Review on Certiorari before this Court. 20
In their Petition, petitioners claim that as maintenance personnel assigned to respondent L. Natividad's farms
and sales outlets, they performed functions that were necessary and desirable to L. Natividad's usual
business.21 They assert that they have been continuously employed by L. Natividad for a period ranging from
more than one (1) year to 17 years.22
Petitioners also state that as maintenance personnel, they repaired and maintained L. Natividad's livestock and
poultry houses, facilities, and sales outlets. 23 They worked from Monday to Saturday, from 7:15 a.m. to 5:15
p.m., with their attendance checked by the guard on duty. 24
Petitioners stress that L. Natividad provided all the tools, equipment, and materials they used as maintenance
personnel. Respondents Juliana and Merlinda then gave them specific tasks and supervised their work. 25
Petitioners argue that even if they were mere project employees as respondents claim, respondents failed to
present any service contract executed between them. 26
Petitioners point out that respondents used the supposed contracting arrangement with petitioner Del
Remedios to prevent them from becoming L. Natividad's regular employees. They also highlight that the Court
of Appeals ruled that petitioner Del Remedios was engaged in labor-only contracting. Thus, they declare that
this should have already been equivalent to a finding of an employer-employee relationship between them and
L. Natividad27 and that they were illegally dismissed.28
In their Comment,29 respondents claim to be engaged in the business of livestock and poultry production. 30 They
also aver to have engaged San Mateo's services to clean-up the poultry farm, and to repair and maintain their
chicken pens.31
Respondents likewise state that they engaged petitioner Del Remedios to provide carpentry services. They
assert that petitioners who claim to be maintenance personnel were actually carpenters or masons deployed by
petitioner Del Remedios for his own account. 32
Respondents refer to the statements of petitioners Rolando Salen and Larry Abañes as proof that the
maintenance personnel were employees of Del Remedios:
4.1.17. It must be also be (sic) pointed out that two (2) of the named petitioners, namely: ROLANDO SALEN
and LARRY ABA[Ñ]E[S], who were supposed to be among the "Maintenance Personnel" after re-thinking their
stance in the present controversy, in their own handwriting submitted their statements, narrated and
admitted that they were indeed the former employees of Rodolfo Del Remedios and from whom they drew
their respective salaries. And, that when they signed the complaint, they were only forced by Rodolfo Del
Remedios to do so. These two supposed petitioners are apologetic to Respondent and that they were
withdrawing their respective complaints as indicated in their written statements. They should therefore be
taken out from the list of the petitioners. The written retraction of Rolando Salen is reproduced as follows:
"Ako po si Rolando A. Salen, dating tauhan ni Rody Del Remedios kusang loob na pumunta ditto (sic) sa opisina ng L.
Natividad Poultry Farms Corporation upang kami ay humingi ng tawad sa aming ginawa sa pagsama sa pagrereklamo
nila sa Labor. Ako po ay sumama lamang sa kadahilanang ako ay pinilit lamang na sumama sa kanila.
Alam ko po naman na si Rody Del Remedios an[g] siyang tumangap at humanap sa amin upang magtrabaho at siya
rin ang nagpapasahod sa amin, hindi ang L. Natividad Poultry Farms Corporation.

8
 Hindi na po ako sasama sa kanilang paghahabla o pagrereklamo sa Labor. Kusang loob po akong bumibitiw sa
kagustuhan ni Rody Del Remedios na magreklamo laban sa kanila.
SGD. ROLANDO A. SALEN"
(underscoring supplied)
Larry Aba[ñ]es' written retraction is similar with that of Rolando Salen. 33
Respondents further assert that carpentry and masonry cannot be considered as necessary or desirable in their
business of livestock and poultry production. They point out that petitioners, through petitioner Del Remedios,
were only occasionally deployed as needed to repair and maintain their farm and sales outlets as needed. 34
Respondents then state that they engaged the services of petitioner Broñola to mix feeds for a specific number
of tons or on a pakyaw system. They assert that petitioners Gonzales and Martinez were Broñola's employees,
whom he hired specifically to help him mix feeds. 35
Respondents deny that petitioners were illegally dismissed and contend that their contracts were merely not
renewed.36
Nonetheless, respondents state that pursuant to the National Labor Relations Commission August 31, 2010
Decision, they sent return to work notices to petitioners Jeremias, Arnel, Nawal, Eduardo, and Broñola;
however, they failed to return to work. 37
In their Reply,38 petitioners who claim to be maintenance personnel deny lodging their applications with
petitioner Del Remedios, who was then employed as L. Natividad's supervisor. They point out that petitioner Del
Remedios was included in the employees' payroll, therefore, disputing L. Natividad's assertion that he was
engaged as a contractor.39
Petitioners then reiterate that they were illegally dismissed and are entitled to damages. 40
The primary issue for the resolution of this Court is whether or not the maintenance personnel in L. Natividad
Poultry Farms can be considered as its regular employees.
When a decision of the Court of Appeals decided under Rule 65 is brought to this Court through a petition for
review under Rule 45, the general rule is that this Court may only pass upon questions of law. Meralco Industrial
Engineering Services Corp. v. National Labor Relations Commission 41 emphasized as follows:
This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this Court in a petition for
review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law,
not of fact, unless the factual findings complained of are completely devoid of support from the evidence
on record, or the assailed judgment is based on a gross misapprehension of facts. Besides, factual findings
of quasi-judicial agencies like the [National Labor Relations Commission], when affirmed by the Court of
Appeals, are conclusive upon the parties and binding on this Court. 42
Furthermore, judicial review under Rule 45 is confined to the question of whether or not the Court of Appeals
correctly "determined the presence or absence of grave abuse of discretion in the [National Labor Relations
Commission] decision before it and not on the basis of whether the [National Labor Relations Commission]
decision on the merits of the case was correct." 43
Respondents deny that the petitioners, who claim to be maintenance personnel are their employees and
declare that they were hired by independent contractors, who exercised control over them and paid their
wages.
Respondents fail to convince.
Permissible contracting or subcontracting, and labor-only contracting is provided for under Article 106 of the
Labor Code:
Article 106. Contractor or subcontractor. — Whenever an employer enters into a contract with another
person for the performance of the former's work, the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.

9
 The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
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.
Labor-only contracting is prohibited as it is seen as a circumvention of labor laws; thus, the labor-only contractor
is treated as a mere agent or intermediary of its principal. 44
The Court of Appeals found that San Mateo and petitioner Del Remedios were not independent contractors but
labor-only contractors since they did not have substantial investment in the form of tools, equipment, or work
premises.45 As labor-only contractors, they were considered to be agents of respondent L. Natividad:
The fact, however, that neither of the contractors [San Mateo] and Rodolfo Del Remedios had substantial
investment in the form of tools, equipment and even work premises, nor were the services performed by
their workers, i.e. carpentry and masonry works, directly related to and usually necessary and desirable in
[L. Natividad]'s main business of livestock and poultry production showed that they were merely engaged in
"labor-only" contracting. As "labor-only" contractors, [San Mateo] and Rodolfo Del Remedios are
considered as agents of the employer, [L. Natividad]. Liability, therefore, if any, must be shouldered by
either one or shared by both. As it was, however, petitioners failed to prove any unpaid claims against [L.
Natividad].46
However, the Court of Appeals ruled that even if petitioners were L. Natividad's employees, they still cannot be
considered as regular employees because there was no reasonable connection between the nature of their
carpentry and masonry work and respondents' usual business in poultry and livestock production, sale, and
distribution. It also found that the maintenance personnel were hired on a piece rate or  pakyaw basis about
once or thrice a year, to perform repair or maintenance works; thus, they could not be considered as regular
employees.47
The Court of Appeals is mistaken.
A pakyaw or task basis arrangement defines the manner of payment of wages and not the relationship between
the parties.48 Payment through pakyaw or task basis is provided for in Articles 97(f) and 101 of the Labor Code:
Article 97. Definitions. — As used in this Title:
....
(f) "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, or 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 and
Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee.
"Fair and reasonable value" shall not include any profit to the employer, or to any person affiliated with the
employer.
....
Article 101. Payment by results. — (a) The Secretary of Labor and Employment shall regulate the payment
of wages by results, including pakyao, piecework, and other non-time work, in order to ensure the payment
of fair and reasonable wage rates, preferably through time and motion studies or in consultation with
representatives of workers' and employers' organizations.
Both the National Labor Relations Commission and the Court of Appeals found respondent L. Natividad to be
petitioners' real employer, in light of the labor-only contracting arrangement between respondents, San Mateo,
and petitioner Del Remedios. This Court sees no reason to disturb their findings since their findings are
supported by substantial evidence.

10
Furthermore, a resort to the four (4)-fold test of "(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" 49 also
strengthens the finding that respondent L. Natividad is petitioners' employer.
Respondents hired petitioners directly or through petitioner Del Remedios, a supervisor at respondents'
farm.50 They likewise paid petitioners' wages, as seen by the vouchers 51 issued to Del Remedios and San Mateo.
They also had the power of dismissal inherent in their power to select and engage their employees. Most
importantly though, they controlled petitioners and their work output by maintaining an attendance sheet and
by giving them specific tasks and assignments. 52
With an employer-employee relationship between respondent L. Natividad and petitioners duly established, the
next question for resolution is whether petitioners can be considered to be regular employees.
A regular employee is an employee who is:
1) engaged to perform tasks usually necessary or desirable in the usual business or trade of the employer,
unless the employment is one for a specific project or undertaking or where the work is seasonal and for the
duration of a season; or 2) has rendered at least 1 year of service, whether such service is continuous or
broken, with respect to the activity for which he is employed and his employment continues as long as such
activity exists.
This finds basis in Article 280 of the Labor Code which provides:
Article 295. [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 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 activity exists.
De Leon v. National Labor Relations Commission 54 instructs that "[t]he primary standard, therefore, of
determining a regular employment is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer." 55 The connection is determined by
considering the nature of the work performed vis-a-vis the entirety of the business or trade. Likewise, if an
employee has been on the job for at least one (1) year, even if the performance of the job is intermittent, the
repeated and continuous need for the employee's services is sufficient evidence of the indispensability of his or
her services to the employer's business.56
Respondents did not refute petitioners' claims that they continuously worked for respondents for a period
ranging from three (3) years to 17 years. 57 Thus, even if the Court of Appeals is of the opinion that carpentry and
masonry are not necessary or desirable to the business of livestock and poultry production, 58 the nature of their
employment could have been characterized as being under the second paragraph of Article 280. Thus,
petitioners' service of more than one (1) year to respondents has made them regular employees for so long as
the activities they were required to do subsist.
Nonetheless, a careful review of petitioners' activity as maintenance personnel and of the entirety of
respondents' business convinces this Court that they performed activities which were necessary and desirable to
respondents' business of poultry and livestock production.
As maintenance personnel, petitioners performed "repair works and maintenance services such as fixing
livestock and poultry houses and facilities as well as doing construction activities within the premises of [L.
Natividad's] farms and other sales outlets for an uninterrupted period of three (3) to seventeen (17)
years."59 Respondents had several farms and offices in Quezon City and Montalban, including Patiis Farm, where
petitioners were regularly deployed to perform repair and maintenance work. 60
At first glance it may appear that maintenance personnel are not necessary to a poultry and livestock business.
However, in this case, respondents kept several farms, offices, and sales outlets, meaning that they had animal

11
houses and other related structures necessary to their business that needed constant repair and maintenance.
In petitioner Del Remedios' sworn affidavit:
1. RODOLFO DEL REMEDIOS — Noong Marso 1990, ako ay direktang tinanggap at nagtrabaho sa malawak na farm ng L.
Natividad Poultry Farms sa San Mateo Rizal na pagmamay-ari ni Gng. Juliana Natividad at pinamamahalaan ng kanyang
anak nasi Merlinda Natividad. Ako ang nangangasiwa sa pagkukumpuni sa mga sirang bahay ng mga manok, baboy
atbp., gumawa at tumulong sa construction ng mga ito at magmentina ng mga pasilidad sa loob ng farm at maging sa
mga sales outlets nito sa iba’t ibang Iugar. Ako ay isa lamang empleyado ng L. Natividad Poultry Farms at kasamang
sumasahod ng iba pang mga trabahador. Ang lahat ng gamit o materyales sa paggawa at pagkukumpuni ng mga bahay ng
mga manok, baboy atbp. ay nanggagaling sa L. Natividad Poultry Farms.
Gapayao v. Fulo62 likewise categorically stated that pakyaw workers may be considered as regular employees
provided that their employers exercised control over them. Thus, while petitioners may have been paid
on pakyaw or task basis, their mode of compensation did not preclude them from being regular employees.
Being regular employees, petitioners, who were maintenance personnel, enjoyed security of tenure 63 and the
termination of their services without just cause entitles them to reinstatement and full backwages, inclusive of
allowances and other benefits.
Nonetheless, the prayer for moral and exemplary damages must be denied. The termination of employment
without just cause or due process does not immediately justify the award of moral and exemplary
damages. Philippine School of Business Administration v. National Labor Relations Commission 64 stated:
This Court however cannot sustain the award of moral and exemplary damages in favor of private
respondents. Such an award cannot be justified solely upon the premise that the employer fired his
employee without just cause or due process. Additional facts must be pleaded and proved to warrant the
grant of moral damages under the Civil Code. The act of dismissal must be attended with bad faith, or fraud
or was oppressive to labor or done in a manner contrary to morals, good customs or public policy and, of
course, that social humiliation, wounded feelings, or grave anxiety resulted therefrom. Similarly, exemplary
damages are recoverable only when the dismissal was effected in a wanton, oppressive or malevolent
manner.65 (Citations omitted)
Petitioners maintain that their employments were terminated by respondents in an "oppressive, malicious and
unjustified manner,"66 yet they failed to explain or illustrate how their dismissal was oppressive, malicious, or
unjustified. It is not enough that they were dismissed without due process. Additional acts of the employers
must also be pleaded and proved to show that their dismissal was tainted with bad faith or fraud, was
oppressive to labor, or was done in a manner contrary to morals, good customs, or public policy. Petitioners
failed to allege any acts by respondents which would justify the award of moral or exemplary damages.
As for petitioners Broñola, Gonzales, Martinez, Jeremias, Arnel, Nawal, and Eduardo, although the Court of
Appeals reversed the labor tribunals' decisions and held them to be regular employees, it nonetheless upheld
the findings of both Labor Arbiter Jerez and the National Labor Relations Commission that they failed to support
their allegation that they were illegally dismissed, thus:
In illegal dismissal cases, it is incumbent upon the employees to first establish the fact of their dismissal
before the burden is shifted to the employer to prove that the dismissal was legal. Here, [the National Labor
Relations Commission] found no dismissal, much less, an illegal one as petitioners failed to substantiate their
bare allegation that [L. Natividad] verbally notified them of their dismissal. It is settled that in the absence of
proof of dismissal, the remedy is reinstatement without backwages. 67
Illegal dismissal is essentially a factual issue, 68 and therefore, not proper in a Rule 45 petition. This Court does
not try facts.69 Moreover, the labor tribunals and the Court of Appeals unanimously held that petitioners were
not illegally dismissed. This Court sees no reason to overturn their findings as it is settled that:
[T]he findings of facts and conclusion of the [National Labor Relations Commission] are generally accorded
not only great weight and respect but even clothed with finality and deemed binding on this Court as long as
they are supported by substantial evidence. This Court finds no basis for deviating from said doctrine without
any clear showing that the findings of the Labor Arbiter, as affirmed by the [National Labor Relations
Commission], are bereft of substantiation. Particularly when passed upon and upheld by the Court of
Appeals, they are binding and conclusive upon the Supreme Court and will not normally be
disturbed.70 (Citations omitted)
WHEREFORE, this Court resolves to PARTIALLY GRANT the petition. The assailed October 11, 2011 Decision and February 8,
2012 Resolution of the Court of Appeals in CA-G.R. SP No. 117681 are  AFFIRMED with MODIFICATION. The following
petitioners are DECLARED to be regular employees of L. Natividad Poultry Farms and are ORDERED to be REINSTATED to

12
their former positions and to be PAID their backwages, allowances, and other benefits from the time of their illegal
dismissal up to the time of their actual reinstatement:
a) Rodolfo Del Remedios
b) Edwardo Del Remedios
c) Dionisio Adlawan
d) Elpidio Garcia, Jr.
e) Rogelio Zamora, Sr.
f) Jimmy Torres
g) Policarpio Obanel
h) Jose Fernando
i) Johnny Betache
j) Jayson Garcia
k) Edwin Espe
l) Nemencio Cruz
m) Larry Abañes
n) Rolando Salen
o) Francisco Lim
p) Arnaldo Garcia
q) Mario Abuda
r) Rodolfo Zamora71

The monetary awards shall bear the legal interest rate of

six percent (6%) per annum to be computed from the
finality of this Decision until full payment.
The case is REMANDED to the Labor Arbiter for the
computation of backwages and other monetary awards
due to petitioners.
SO ORDERED.

13
14
ABUDA, ET AL., VS. L. NATIVIDAD POULTRY FARMS
[GR No. 200712, July 4, 2018]
FACTS:
The workers of L. Natividad Poultry Farms (L. Natividad) led complaints for "illegal dismissal, unfair labor
practice, overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
thirteenth month pay, and moral and exemplary damages" against it and its owner, Juliana Natividad (Juliana),
and manager, Merlinda Natividad (Merlinda).
The workers claimed that L. Natividad employed and terminated their employment after several years of
employment.
On May 13, 2009, Labor Arbiter Robert A. Jerez (Labor Arbiter Jerez) dismissed the complaint due to lack of
employer-employee relationship between the workers and L. Natividad. He ruled that San Mateo General
Services (San Mateo), Wilfredo Broñola (Broñola), and Rodolfo Del Remedios (Del Remedios) were the real
employers as they were the ones who employed the workers, not L. Natividad.
The workers appealed Labor Arbiter Jerez's Decision, and on August 31, 2010, the National Labor Relations
Commission modified the assailed Decision. The National Labor Relations Commission found that the workers
were hired as maintenance personnel by San Mateo and Del Remedios on pakyaw basis to perform specific
services for L. Natividad.
On October 11, 2011, the Court of Appeals modified the National Labor Relations Commission's assailed
Decision and ruled that San Mateo and Del Remedios were labor-only contractors, and as such, they must be
considered as L. Natividad's agents. The Court of Appeals upheld the National Labor Relations Commission's
finding that the maintenance personnel were only hired on a pakyaw basis to perform necessary repairs or
construction within the farm as the need arose.

ISSUE:
Whether or not the maintenance personnel in L. Natividad Poultry Farms can be considered as its regular
employees.
RULING
Yes, the maintenance personnel in L. Natividad Poultry Farms can be considered as its regular employees.
Both the National Labor Relations Commission and the Court of Appeals found respondent L. Natividad to be
petitioners' real employer, in light of the labor-only contracting arrangement between respondents, San Mateo,
and petitioner Del Remedios. This Court sees no reason to disturb their findings since their findings are supported by
substantial evidence.
Furthermore, a resort to the four (4)-fold test of "(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" also strengthens the finding that
respondent L. Natividad is petitioners' employer. Respondents hired petitioners directly or through petitioner Del
Remedios, a supervisor at respondents' farm. They likewise paid petitioners' wages, as seen by the vouchers issued to Del
Remedios and San Mateo. They also had the power of dismissal inherent in their power to select and engage their
employees. Most importantly though, they controlled petitioners and their work output by maintaining an attendance
sheet and by giving them specific tasks and assignments.
With an employer-employee relationship between respondent L. Natividad and petitioners duly established, the next
question for resolution is whether petitioners can be considered to be regular employees. A careful review of petitioners'
activity as maintenance personnel and of the entirety of respondents' business convinces this Court that they performed
activities which were necessary and desirable to respondents' business of poultry and livestock production.
As maintenance personnel, petitioners performed "repair works and maintenance services such as fixing livestock and
poultry houses and facilities as well as doing construction activities within the premises of [L. Natividad's] farms and other
sales outlets for an uninterrupted period of three (3) to seventeen (17) years." Respondents had several farms and offices
in Quezon City and Montalban, including Patiis Farm, where petitioners were regularly deployed to perform repair and
maintenance work.
At first glance it may appear that maintenance personnel are not necessary to a poultry and livestock business. However, in
this case, respondents kept several farms, offices, and sales outlets, meaning that they had animal houses and other related
structures necessary to their business that needed constant repair and maintenance.
Being regular employees, petitioners, who were maintenance personnel, enjoyed security of tenure and the termination of
their services without just cause entitles them to reinstatement and full backwages, inclusive of allowances and other
benefits.

15
INNODATA KNOWLEDGE SERVICES, INC vs. SOCORRO D'MARIE T. INTING, et. al.
G.R. No. 211892, 6 December 2017

Facts of the case:

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 and was hired by a company based in the US to review various litigation documents. For this
purpose, IKSI engaged the services of respondents with a contract duration of five (5) years.
IKSI argued that based on the contract, respondents’ employment was fixed for a specific project or
undertaking, with its completion or termination clearly determined at the time of the employee’s engagement.
However, sometime in November 2008, IKSI required respondents to work on another project called
"Bloomberg," which was not included in the original contracts that they signed and without entering into a new
project employment contract. Respondents initially opposed working on said project but eventually agreed, in
fear of losing their employment altogether. Months later, they were again required to work on their assigned
project and reverted to their previous designation.
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.
The Labor Arbiter declared that there was no illegal dismissal. The NLRC affirmed the decision of LA but with
modification. On appeal to the CA, the petition was granted declaring that petitioners were illegally dismissed by
Innodata.

Issues:
1. Whether or not respondents are project employees.
2. Whether or not the respondents were constructively dismissed when petitioner put them under floating
status.

Ruling of the Court:

1. The respondents are not project employees.
IKSI failed to show that respondents worked for a specific project and the duration of the same as stated in their
contract. The fact is IKSI actually hired respondents to work, not only on the ACT Project, but on other similar
projects such as the Bloomberg. When respondents were required to work on the Bloomberg project, without
signing a new contract for that purpose, it was already outside of the scope of the particular undertaking for
which they were hired; it was beyond the scope of their employment contracts. The fact that the same
happened only once is inconsequential. What matters is that IKSI required respondents to work on a project
which was separate and distinct from the one they had signed up for.
With regard to the duration, it can be gleaned in their respective contract that the 5-year period is not actually
the duration of the project but merely that of the employment contract. Naturally, therefore, not all of
respondents' employment would end on the same date, as the completion of the 5-year period would depend
on when each employee was employed. This is precisely the reason why IKSI originally left a blank for the
termination date because it varied for each employee. If respondents were truly project employees, then the
termination date would have been uniform for all of them. In effect, respondents entered into fixed-term
employment contracts with IKSI with a fixed period of 5 years.
In other words, IKSI 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. The utter
disregard of public policy by the subject contracts negates any argument that the agreement is the law between
the parties and that the fixed period was knowingly and voluntarily agreed upon by the parties. Considering that

16
there were no valid fixed-term or project contracts, they are considered as regular employees who could not be
dismissed except for just or authorized causes.

2. Respondents were constructively dismissed when petitioner put them under floating status.
Requiring employees on forced leave is one of the cost-saving measures adopted by the management in order
to prevent further losses but IKSI failed to discharge the burden of proof vested upon it. The records are bereft
of any evidence of actual suspension of IKSI's business operations or even of the ACT Project alone. In fact, while
IKSI cited Article 301 to support the temporary lay-off of its employees, it never alleged that it had actually
suspended the subject undertaking to justify such lay-off.
In light of the well-entrenched rule that the burden to prove the validity and legality of the termination of
employment falls on the employer, IKSI should have established the bona fide suspension of its business
operations or undertaking that could legitimately lead to the temporary layoff of its employees for a period not
exceeding six (6) months, in accordance with Article 301. IKSI’s paramount consideration should be the dire
exigency of its business that compelled it to put some of its employees temporarily out of work. This means that
it should be able to prove that it faced a clear and compelling economic reason which reasonably constrained it
to temporarily shut down its business operations or that of the ACT Project, incidentally resulting in the
temporary lay-off of its employees assigned to said particular undertaking. IKSI must likewise bear the burden of
proving that there were no other available posts to which the employees temporarily put out of work could be
possibly assigned. Unfortunately, IKSI was not able to fulfill any of the aforementioned duties.
In fact, IKSI still continued its operations and retained several employees who were also working on the ACT
Project even after the implementation of the January 2010 forced leave. Much worse, it continued to hire new
employees, with the same qualifications as some of respondents. The placing of an employee on floating status
presupposes, among others, that there is less work than there are employees. Hence, placing respondents on
floating status was unnecessary. If any, respondents - with their experience, knowledge, and familiarity with the
workings of the company - should be preferred to be given new projects and not new hires who have little or no
experience working for IKSI. And even assuming, without admitting, that there was indeed suspension of
operations, IKSI did not recall the employees back to work or place them on valid permanent retrenchment after
the period of 6 months, as required of them by law.
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.
Inasmuch as IKSI failed to adduce clear and convincing evidence to support the legality of respondents'
dismissal, the latter is entitled to reinstatement without loss of seniority rights and backwages computed from
the time compensation was withheld up to the date of actual reinstatement, as a necessary consequence.
However, reinstatement is no longer feasible in this case because of the palpable strained relations between the
parties and the possibility that the positions previously held by respondents are already being occupied by new
hires. Thus, separation pay equivalent to 1-month salary for every year of service should be awarded in lieu of
reinstatement.
Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had
been harassed and arbitrarily terminated by the employer. Moral damages may be awarded to compensate one
for diverse injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation
occasioned by the unreasonable dismissal. The Court has consistently accorded the working class a right to
recover damages for unjust dismissals tainted with bad faith, where the motive of the employer in dismissing
the employee is far from noble. The award of such damages is based, not on the Labor Code, but on Article 2220
of the Civil Code. In line with recent jurisprudence, the Court finds the amount of ₱50,000.00 for each of moral
and exemplary damages adequate.
The award of attorney's fees is likewise due and appropriate since respondents incurred legal expenses after
they were forced to file an action to protect their rights. The rate of interest, however, has been changed to 6%
starting July 1, 2013, pursuant to the BSP Circular No. 799, Series of 2013.

Good notes on this case:

Employment status is defined by law

17
- 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.
- Based on Article 295, the law determines the nature of the employment, regardless of any agreement
expressing otherwise. The supremacy of the law over the nomenclature of the contract and its pacts and
conditions is to bring life to the policy enshrined in the Constitution to afford full protection to labor. Thus, labor
contracts are placed on a higher plane than ordinary contracts since these are imbued with public interest and,
therefore, subject to the police power of the State.

Employment contracts
- In the interpretation of contracts, obscure words and provisions shall not favor the party that caused the
obscurity. Consequently, the terms of the employment contract should be construed strictly against the
employer, for being the party who prepared it. Verily, the private agreement of the parties can never prevail over
Article 1700 of the Civil Code, which states: Art. 1700. The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to special laws on labor unions, collective bargaining, strikes and lockouts,
closed shops, wages, working conditions, hours of labor and similar subjects.

Project employment
- 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. 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.

Fixed-term employment
- 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." The decisive determinant in fixed-term employment is not the activity that the employee is
called upon to perform but the day certain agreed upon by the parties for the commencement and termination
of the employment relationship.
- The Court has previously recognized the validity of fixed-term employment contracts, but it has consistently
held that this is more of an exception rather than the general rule. Aware of the possibility of abuse in the
utilization of fixed-term employment contracts, the Court has declared that where from the circumstances it is
apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down as contrary to public policy or morals.

Retrenchment
- Considering the grave consequences occasioned by retrenchment, whether permanent or temporary, on the
livelihood of the employees to be dismissed, and the avowed policy of the State to afford full protection to labor
and to assure the employee's right to enjoy security of tenure, the Court stresses that not every loss incurred or

18
expected to be incurred by a company will justify retrenchment. The losses must be substantial and the
retrenchment must be reasonably necessary to avert such losses. The employer bears the burden of proving this
allegation of the existence or imminence of substantial losses, which by its nature is an affirmative defense. It is
the employer’s duty to prove with clear and satisfactory evidence that legitimate business reasons exist in
actuality to justify any retrenchment. Failure to do so would inevitably result in a finding that the dismissal is
unjustified. Otherwise, such ground for termination would be susceptible to abuse by scheming employers who
might be merely feigning business losses or reverses in their business ventures to dispose of their employees.
- 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.
- 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. Notably, in both permanent and temporary lay-offs, the
employer must act in good faith - that is, one which is intended for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the rights of the employees under the law or under valid
agreements.
- Employees cannot forever be temporarily laid-off. Hence, in order to remedy this situation or fill the hiatus,
Article 301 may be applied to set a specific period wherein employees may remain temporarily laid-off or in
floating status. Elsewise stated, an employer may validly put its employees on forced leave or floating status
upon bona fide suspension of the operation of its business for a period not exceeding 6 months. In such a case,
there is no termination of the employment of the employees, but only a temporary displacement. When the
suspension of the business operations, however, exceeds 6 months, then the employment of the employees
would be deemed terminated, and the employer would be held liable for the same.
- Withal, in both permanent and temporary lay-offs, jurisprudence dictates that the one (1)-month notice rule to
both the DOLE and the employee under Article 298 is mandatory.
- Under the Labor Code, separation pay is payable to an employee whose services are validly terminated as a
result of retrenchment, suspension, closure of business or disease.

Requisites for a valid dismissal from employment

- Dismissal 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, meaning, he is notified of the cause of his dismissal and given an adequate
opportunity to be heard and to defend himself. Our rules require that the employer be able to prove that said
requisites for a valid dismissal have been duly complied with.

Rules of Court
- A distinction must be made between non-compliance with the requirement on or submission of defective
verification and noncompliance with the requirement on or submission of defective certification against forum
shopping:
1. As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading
fatally defective. The court may order its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of
justice may be served;
2. Verification is deemed substantially complied with when one who has ample knowledge to swear to the truth
of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition
have been made in good faith or are true and correct;

19
3. As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in verification,
is generally not curable by its subsequent submission or correction thereof, unless there is a need to relax the
Rule on the ground of substantial compliance or the presence of special circumstances or compelling reasons;
4. The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise,
those who did not sign will be dropped as parties to the case. Under reasonable or justifiable circumstances,
however, as when all the plaintiffs or petitioners share a common interest and invoke a common cause of action
or defense, the signature of only one of them in the certification against forum shopping substantially complies
with the Rule; and
5. Finally, the certification against forum shopping must be executed by the party-pleader, not by his counsel. If,
however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must execute a Special
Power of Attorney designating his counsel of record to sign on his behalf.
- In view of the circumstances of the case and the substantive issues raised therein, the Court may find
justification to liberally apply the rules of procedure to the case. Rules of procedure should be viewed as mere
tools designed to facilitate the attainment of justice; their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed.
The Court previously held that the signature of only one of the petitioners substantially complied with the Rules if
all the petitioners share a common interest and invoke a common cause of action or defense. In cases, therefore,
where it is highly impractical to require all the plaintiffs to sign the certificate of non-forum shopping, it is
sufficient, in order not to defeat the ends of justice, for one of the plaintiffs, acting as representative, to sign the
certificate, provided that the plaintiffs share a common interest in the subject matter of the case or filed the case
as a "collective" raising only one common cause of action or defense.
- Verification, like in most cases required by the rules of procedure, is a formal requirement, not jurisdictional.
Such requirement is simply a condition affecting the form of pleading, the non-compliance of which does not
necessarily render the pleading fatally defective. It is mainly intended to secure an assurance that matters which
are alleged are done in good faith or are true and correct and not of mere speculation.
- Indeed, the application of technical rules of procedure may be relaxed in labor cases to serve the demand of
substantial justice. Labor cases must be decided according to justice and equity and the substantial merits of the
controversy. After all, the policy of our judicial system is to encourage full adjudication of the merits of an
appeal. Procedural niceties should be avoided in labor cases in which the provisions of the Rules of Court are
applied only in suppletory manner. Indeed, rules of procedure may be relaxed to relieve a part of an injustice not
commensurate with the degree of non-compliance with the process required.

20
 G.R. No. 221356, March 14, 2018
MARIA CARMELA P. UMALI, Petitioner, v. HOBBYWING SOLUTIONS, INC., Respondent.
DECISION
REYES, JR., J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated May 29, 2015 and Resolution2 dated November 4, 2015 of the Court of Appeals (CA) in CA G.R.
SP No. 136194.
Antecedent Facts

The instant case stemmed from a complaint for illegal dismissal filed by Maria Carmela P. Umali (petitioner)
against Hobbywing Solutions, Inc. (respondent) and its general manager, Pate Tan (Tan).
In her position paper, the petitioner alleged that she started working for the respondent, an online casino
gaming establishment, on June 19, 2012, as a Pitboss Supervisor. Her main duties and responsibilities involve,
among others, supervising online casino dealers as well as the operations of the entire gaming area or studio of
the respondent company. She, however, never signed any employment contract before the commencement of
her service but regularly received her salary every month. 3
Sometime in January 2013, after seven (7) months since she started working for the respondent, the petitioner
was asked to sign two employment contracts. The first employment contract was for a period of five (5) months,
specifically from June 19,2012 to November 19,2012. On the other hand, the second contract was for a period
of three (3) months, running from November 19, 2012 to February 18, 2013. She signed both contracts as
directed.4
On February 18, 2013, however, the petitioner was informed by the respondent that her employment has
already ended and was told to just wait for advice whether she will be rehired or regularized. She was also
required to sign an exit clearance from the company apparently to clear her from accountabilities. She was no
longer allowed to work thereafter.5 Thus, the filing of a complaint for illegal dismissal against the respondent.
For its part, the respondent admitted that it hired the petitioner as Pitboss Supervisor on probationary basis
beginning June 19, 2012 to November 18, 2012. With the conformity of the petitioner, the probationary period
was extended for three (3) months from November 19, 2012 to February 18, 2013. 6 The respondent claimed
that the engagement of the petitioner's service as a probationary employee and the extension of the period of
probation were both covered by separate employment contracts duly signed by the parties. After receiving a
commendable rating by the end of the extended probationary period, the petitioner was advised that the
company will be retaining her services as Pitboss Supervisor. Surprisingly, the petitioner declined the offer for
the reason that a fellow employee, her best friend, will not be retained by the company. Thereafter, on February
18, 2013, she processed her exit clearance to clear herself of any accountability and for the purpose of
processing her remaining claims from the company. As a sign of good will, the company signed and issued a
Waiver of Non Competition Agreement in her favor and a Certificate of Employment, indicating that she
demonstrated a commendable performance during her stint. Thus, the respondent was surprised to receive the
summons pertaining to the complaint for illegal dismissal tiled by the petitioner. 7
Ruling of the Labor Arbiter (LA)
On October 7, 2013, the LA rendered a Decision, 8 dismissing the complaint for lack of merit, the dispositive
portion of which reads as follows:
ACCORDINGLY, the cause of action for illegal dismissal is DENIED for lack of merit.
Respondent Hobbywing Solutions, Inc. is ordered to pay complainant here NIGHT SHIFT DIFFERENTIALS of
[P]21,232.58 subject to 5% withholding tax upon execution whenever applicable. All other claims
are DENIED for lack of merit.
Respondent Pate Tan is EXONERATED from all liabilities.
SO ORDERED.9
The LA ruled that the petitioner failed to substantiate her claim that she was dismissed from employment. As it
is, she opted not to continue with her work out of her own volition. Further, it noted that the respondent did
not commit any overt act to sever employer-employee relations with the petitioner as, in fact, it even offered
the petitioner a regular employment but she turned it down. 10
Unyielding, the petitioner filed an appeal with the National Labor Relations Commission (NLRC), reiterating her
claim of illegal dismissal.

21
 Ruling of the NLRC
On January 15, 2014, the NLRC rendered a Decision, 11 holding that the petitioner was illegally dismissed,
disposing thus:
WHEREFORE, premises considered, the appeal of complainant is partly GRANTED. The assailed Decision of the
Labor Arbiter dated October 7, 2013 is hereby MODIFIED. It is hereby declared that complainant is a regular
employee of respondent Hobbywing Solutions, Inc. We also find complainant to have been illegally dismissed
from employment and respondent Hobbywing Solutions, Inc. is hereby ordered to:
1. reinstate complainant to her former position without loss of seniority rights and other
privileges;
2. pay complainant her full backwages, inclusive of allowances, and to her other benefits
or their monetary equivalent computed from the date of dismissal up to her actual
reinstatement; and
3. pay complainant an amount equivalent to 10% of the total judgment award as and for
attorney's fees.
All other awards of the Labor Arbiter STAND.
The Computation Division of this Office is hereby directed to make the necessary computation of the monetary
award granted to complainant, which computation shall form an integral part of this decision.
SO ORDERED.12
The NLRC held that the petitioner attained the status of a regular employee by operation of law when she was
allowed to work beyond the probationary period of employment. From that point, she enjoys security of tenure
and may not be terminated except on just or authorized causes. The respondent's claim that the petitioner's
probationary period of employment was extended cannot be given credence since the records are bereft of
proof that the latter's performance was ever evaluated based on reasonable standards during the probationary
period and that there was a need to extend the same. 13
The respondent filed a motion for reconsideration but the NLRC denied the same in its Resolution 14 dated April
30, 2014.
Dissatisfied, the respondent filed a petition for certiorari with the CA, imputing grave abuse of discretion on the
part of the NLRC for ruling that there was an illegal dismissal. It argued that the petitioner did not become a
regular employee by operation of Jaw since the probationary period of her employment was extended by
agreement of the parties so as to give her a chance to improve her performance. There was also no il1egal
dismissal since the petitioner was never terminated since she was the one who refused to accept the offer of
the company to retain her services. It pointed out that the petitioner even processed her Exit Clearance Form
and requested for a Certificate of Employment and Waiver of the Non-Competition Agreement. 15
Ruling of the CA
On May 29, 2015, the CA rendered a Decision,16 reversing the decision of the NLRC, the dispositive portion of
which reads, as follows:
WHEREFORE, based on the foregoing, the petition is GRANTED. The 15 January 2014 Decision and the 30 April
2014 Resolution of the NLRC in NLRC NCR Case No. (M) 04-06101-13 [NLRC LAC No. 10-003040-13]
are REVERSED and SET ASIDE. The 07 October 2013 Decision of the Labor Arbiter dismissing the Complaint for
lack of merit is REINSTATED.
SO ORDERED.17
The CA agreed with the LA that the petitioner failed to prove the fact of her dismissal. It held that aside from
bare allegations, no evidence was ever submitted by the petitioner that she was refused or was not allowed to
work after the period of extension. There was no letter of termination given to the petitioner but only an exit
clearance form which she personally processed, which therefore proved that the severance of her employment
was her choice.18
The petitioner filed a motion for reconsideration but the CA denied the same in Resolution 19 dated November 4,
2015, the dispositive portion of which reads, thus:
WHEREFORE, based on the foregoing, the Motion for Reconsideration is DENIED.
SO ORDERED.20
The petitioner filed the instant petition for review on certiorari, questioning the issuances of the CA. She claims
that she had already attained the status of regular employment after she was suffered to work for more than six
months of probationary employment. She also reiterates that she was only belatedly asked to sign two
employment contracts on January 19, 2013 after she had rendered seven (7) months of service. 21 She claims that

22
she was terminated without cause on February 18, 2013 when she was informed that the period of her
probationary employment had already ended and her services were no longer needed.

Ruling of the Court

The petition is meritorious.
Time and again, the Court has reiterated that, as a rule, it does not entertain questions of facts in a petition for
review on certiorari. In Pedro Angeles vs. Estelita B. Pascual,22 the Court emphasized, thus:
Section 1, Rule 45 of the Rules of Court explicitly states that the petition for review on certiorari shall raise
only questions of law, which must be distinctly set forth. In appeal by certiorari, therefore, only questions
of law may be raised, because the Supreme Court is not a trier of facts and does not normally undertake
the re-examination of the evidence presented by the contending parties during the trial. 23
There are, however, recognized exceptions to this rule, to wit:
(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of fads; (5) when the findings of facts are conflicting; (6) When in
making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court;
(8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record: and (11) when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would justify a different
conclusion.24
In the instant case, the Court finds that the CA misapprehended facts and overlooked details which are crucial
and significant that they can warrant a change in the outcome of the case.
In finding that there was no illegal dismissal, the CA echoed the ruling of the LA that the petitioner failed to
establish the fact of dismissal. It held that the petitioner failed to present evidence manifesting the intention of
the respondent to sever relations with her. Absent any overt act on the part of the respondent, it ruled that
there can be no dismissal to speak of. It also found credible the respondent's claim that it was the petitioner
who refused to accept the offer of continued employment with the company.
The CA missed the point that the respondent employed a scheme in order to obscure the fact of the petitioner's
dismissal. The CA would have recognized this ploy if it only delved deeper into the records and facts of the case.
It is beyond dispute that the petitioner started working for the respondent on June 19, 2012 as a probationary
employee and that there were two (2) employment contracts signed by the parties. The parties, however, held
conflicting claims with respect to the time when the contracts were signed. The petitioner is claiming that there
was no contract before the commencement of her employment and that she was only asked to sign two
employment contracts on January 19, 2013, after having rendered seven months of service. On the other hand,
the respondent maintains that there was a contract of probationary employment signed at the beginning of the
petitioner's service and another one signed on November 18, 2012, extending the probationary period
purportedly to give the petitioner a chance to improve her performance and qualify for regular employment.
The LA and the CA, however, opted to believe the respondent's claim that the contract of probationary
employment was signed and extended on time. Having taken this theory, it is easy to dispose the case by
concluding that no dismissal had taken place.
There was, however, a single detail which convinced this Court to take a second look at the facts of case.
Contradicting the respondent's claim, the petitioner consistently reiterates that she was made to sign two
contracts of probationary employment, one covering the period from June 19, 2012 to November 18, 2012, and
the other purportedly extending the probationary employment from November 19, 2012 to February 18, 2013,
only on January 19, 2013. To support her claim, she alleged that she was able to note the actual date when she
signed the contracts, right beside her signature. And indeed, attached with the position paper submitted by the
respondent itself, copies of the two contracts of employment signed by the petitioner clearly indicates the date
"01.19.13" beside her signature.25 This substantiates the petitioner's claim that the documents were signed on
the same day, that is, on January 19, 2013. Further, while the first contract was undated, 26 the Probation

23
Extension Letter was dated January 10, 2013,27 which was way beyond the end of the supposed probationary
period of employment on November 18, 2013, therefore validating the petitioner's claim that she had already
worked for more than six months when she was asked to sign an employment contract and its purported
extension. Surprisingly, the respondent never explained the disparity in the dates on the actual copies of the
contracts which were submitted as annexes and that alleged in its position paper as the time they were signed
by the petitioner.
This brings to the conclusion that the contracts were only made up to create a semblance of legality in the
employment and severance of the petitioner. Unfortunately for the respondent, the significant details left
unexplained only validated the petitioner's claim that she had served way beyond the allowable period for
probationary employment and therefore has attained the status of regular employment.
Article 281 of the Labor Code is pertinent. It provides:
ART. 281. Probationary Employment. - Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.
In this case, the petitioner commenced working fur the respondent on June 19, 2012 until February 18, 2013. By
that time, however, she has already become a regular employee, a status which accorded her protection from
arbitrary termination.
In Dusit Hotel vs. Gatbonton,28 the Court reiterated, thus:
It is an elementary rule in the law on labor relations that a probationary employee engaged to work beyond
the probationary period of six months, as provided under Article 281 of the Labor Code, or for any length of
time set forth by the employer (in this case, three months), shall be considered a regular employee. This is
clear in the last sentence of Article 281. Any circumvention of this provision would put to naught the State's
avowed protection for labor.29
The CA, however, believes that the probationary period of employment was validly extended citing  Mariwasa
vs. Leogardo.30 In the said case, the Court upheld as valid the extension of the probationary period for another
three (3) months in order to give the employee a chance to improve his performance and qualify for regular
employment, upon agreement of the parties. Upon conclusion of the period of extension, however, the
employee still failed to live up to the work standards of the company and was thereafter terminated.
The mentioned case, however, finds no application in the instant case for two reasons: (1) there was no
evaluation upon the expiration of the period of probationary employment; (2) the supposed extension of the
probationary period was made after the lapse of the original period agreed by the parties. Based on the
evidence on record, the respondent only evaluated the performance of the petitioner for the period of June
2012 to November 2013 on February 1, 2013, wherein she garnered a rating of 88.3%, which translates to a
satisfactory performance according to company standards. 31 At the time of the evaluation, the original period of
probationary employment had already lapsed on November 18, 2012 and the petitioner was allowed to
continuously render service without being advised that she failed to qualify for regular employment. Clearly
then, there is no reason to justify the extension since the petitioner had a commendable rating and, apart from
this, there is no more period to be extended since the probationary period had already lapsed.
It bears stressing that while in a few instances the Court recognized as valid the extension of the probationary
period, still the general rule remains that an employee who was suffered to work for more than the legal period
of six (6) months of probationary employment or less shall, by operation of law, become a regular employee.
In Buiser vs. Leogardo,32 the Court stated, thus:
Generally, the probationary period of employment is limited to six (6) months. The exception to this general
rule is when the parties to an employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature of work to be performed by the
employee.33
Since extension of the period is the exception, rather than the rule, the employer has the burden of proof to
show that the extension is warranted and not simply a stratagem to preclude the worker's attainment of regular
status. Without a valid ground, any extension of the probationary period shall be taken against the employer
especially since it thwarts the attainment of a fundamental right, that is, security of tenure.

24
In the instant case, there was no valid extension of the probationary period since the same had lapsed long
before the company thought of extending the same. More significantly, there is no justifiable reason for the
extension since, on the basis of the Performance Evaluation dated February 1, 2013, the petitioner had a
commendable performance all throughout the probationary period.
Having rendered service even after the lapse of the probationary period, the petitioner had attained regular
employment, with all the rights and privileges pertaining thereto. Clothed with security of tenure, she may not
be terminated from employment without just or authorized cause and without the benefit of procedural due
process. Since the petitioner's case lacks both, she is entitled to reinstatement with payment of full backwages,
as correctly held by the NLRC.
The well-settled rule in this regard was reiterated in Peak Ventures Corporation vs. Heirs of Villareal,34 to wit:
Under Article 279 of the Labor Code, as amended by Republic Act No. 6715, an employee who is unjustly
dismissed shall be entitled to (1) reinstatement without loss of seniority rights and other privileges; and, (2)
full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from
the time his compensation was withheld up to the time of actual reinstatement. If reinstatement is no longer
viable, separation pay is granted.35
The Court therefore finds it proper to reinstate the decision of the NLRC which ruled that the petitioner was
illegally dismissed and held her entitled to the twin relief of reinstatement and backwages.
WHEREFORE, the Decision dated May 29, 2015 and Resolution dated November 4, 2015 of the Court of Appeals
(CA) in CA-G.R. SP No. 136194 are REVERSED and SET ASIDE. The Decision dated January 15, 2014 of the
National Labor Relations Commission in NLRC NCR Case No. 04-06101-13 is REINSTATED.
SO ORDERED.

25
26
LA CONSOLACION COLLEGE OF MANILA, SR. IMELDA A. MORA, OSA, ALBERT D. MANALILI, AND ALICIA
MANABAT,
PETITIONERS, vs. VIRGINIA PASCUA, M.D., RESPONDENT.
G.R. No. 214744, March 14, 2018 Third Division Decision, Justice Leonen
FACTS:
On January 10, 2000, La Consolacion College (La Consolocion) engaged Virginia Pascua’s services as school
physician. She started working part-time before serving full-time from 2008.
On September 29, 2011, Pascua was handed an Inter-Office Memo from Albert Manalili (Manalili), La
Consolacion’s Human Resources Division Director, inviting her to a meeting concerning her “working condition.”
In that meeting, Pascua was handed a termination of employment letter, stating that due to the current
financial situation of La Consolacion College Manila caused by the decrease in enrollment in our institution, the
Board of Trustees in its last meeting of September 24, 2011 has advised the [La Consolacion College] to
downsize the health services staff at the end of this 1st Semester of School Year 2011-2012.
Not satisfied, Pascua wrote to Sr. Imelda A. Mora (Sr. Mora), La Consolocion’s President, pointing out that the
part-time school
physician, Dr. Venus Dimagmaliw (Dr. Dimagmaliw), should have been considered for dismissal first. She also
noted that rather than dismissing her outright, La Consolacion could have asked her to revert to part-time status
instead.
In the meantime, Pascua underwent La Consolacion’s clearance procedures and completed them on November
3, 2011. However, Pascua made a handwritten note on her Exit Clearance, stating that she was reserving the
right “to question the validity/legality of [her] termination . . . before any agency/court with appropriate
jurisdiction over the case.” Following this, Pascua proceeded to file a complaint for illegal dismissal against La
Consolacion, Sr. Mora, Manalili, and Manabat.
On November 28, 2011, Sr. Mora replied to Pascua’s letter. She explained that Pascua in particular was
retrenched because her position, the highest paid in the health services division, was dispensable.
L.A. Ruling
On January 8, 2013, Labor Arbiter Roque rendered a Decision holding that Pascua’s employment was illegally
terminated and noting that “[La Consolacion, Sr. Mora, Manalili, and Manabat] failed to justify the criteria used
in terminating the employment of [Pascua].”
NLRC Ruling
On appeal, the National Labor Relations Commission reversed Labor Arbiter Roque’s Decision stating that the
primary criterion used in selecting complainant-appellee for termination was valid considering that they faced a
substantial drop in income.
CA Ruling
In its assailed June 2, 2014 Decision, the Court of Appeals reinstated Labor Arbiter Roque’s January 8, 2013
Decision.
ISSUE:
Whether or not an employee’s rate of salary is a valid criteria in instances of retrenchment during periods of
business reverses.
HELD:
No. Retrenchment is normally resorted to by management during periods of business reverses and economic
difficulties occasioned by such events as recession, industrial depression, or seasonal fluctuations. It is an act of
the employer of reducing the work force because of losses in the operation of the enterprise, lack of work, or
considerable reduction on the volume of business. Retrenchment is, in many ways, a measure of last resort
when other less drastic means have been tried and found to be inadequate. While a legitimate business option,
retrenchment may only be exercised in compliance with substantive and procedural requisites.
As to the substantive requisites, an employer must first show “that the retrenchment is reasonably necessary
and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith
by the employer.”

27
An employer must also show “that [it] 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.” Third,
an employer must demonstrate “that [it] used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status (i.e., whether they are temporary,
casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.”
Procedurally, employers must serve a “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.” Likewise, they must pay “the
retrenched employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of
service, whichever is higher.”
Jurisprudence requires that the necessity of retrenchment to stave off genuine and significant business losses or
reverses be demonstrated by an employer’s independently audited financial statements. Documents that have
not been the subject of an independent audit may very well be self-serving. Moreover, it is not enough that it
presents its audited financial statement for the year that retrenchment was undertaken for even as it may be
incurring losses for that year, its overall financial status may already be improving. Thus, it must “also show that
its losses increased through a period of time and that the condition of the company is not likely to improve in
the near future.”
The records indicate that La Consolacion suffered serious business reverses or an aberrant drop in its revenue
and income, thus, compelling it to retrench employees. In its Petition, it explained the backdrop of a “sharp
spike in enrollment of students in its College of Nursing” in 2008, only for “[t]he nursing bubble [to] burst.” It
further explained how its comprehensive income nosedived by 96%:
La Consolacion’s failure was non-compliance with the third substantive requisite of using fair and reasonable
criteria that considered the status and seniority of the retrenched employee.
As early as 1987, this Court in Asia World Publishing House, Inc. v. Ople considered seniority, along with
efficiency rating and less preferred status, as a crucial facet of a fair and reasonable criterion for effecting
retrenchment.
There is no dispute here about respondent’s seniority and preferred status. Petitioners acknowledge that she
had been employed by La Consolacion since January 2000, initially as a part-time physician then serving full-time
beginning 2008. It is also not disputed that while respondent was a full-time physician, La Consolacion had
another physician, Dr. Dimagmaliw, who served part-time. Precisely, respondent’s preeminence is a necessary
implication of the very criteria used by La Consolacion in retrenching her, i.e., that she was the highest paid
employee in health services division.
La Consolacion’s disregard of respondent’s seniority and preferred status relative to a part-time employee
indicates its resort to an unfair and unreasonable criterion for retrenchment.
Indeed, it may have made mathematical sense to dismiss the highest paid employee first. However, appraising
the propriety of retrenchment is not merely a matter of enabling an employer to augment financial prospects. It
is as much a matter of giving employees their just due. Employees who have earned their keep by
demonstrating exemplary performance and securing roles in their respective organizations cannot be summarily
disregarded by nakedly pecuniary considerations. The Labor Code’s permissiveness towards retrenchments aims
to strike a balance between legitimate management prerogatives and the demands of social justice. Concern for
the employer cannot mean a disregard for employees who have shown not only their capacity, but even loyalty.
La Consolacion’s pressing financial condition may invite commiseration, but its flawed standard for
retrenchment constrains this Court to maintain that respondent was illegally dismissed.
Besides, La Consolacion could have also modified respondent’s status from full-time to part-time. When retrenchment
becomes necessary, the employer may, in the exercise of its business judgment, implement cost-saving measures, but at
the same time, should respect labor rights.
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages. In certain cases, however, the Court has ordered the reinstatement of the employee without
backwages considering the fact that (1) the dismissal of the employee would be too harsh a penalty; and (2) the employer
was in good faith in terminating the employee. La Consolacion’s prohibitive financial condition and demonstrated, though
imperfect, attempt at devising a reasonable mechanism for retrenching employees impel this Court to temper its liability
for backwages. Accordingly, this Court upholds Labor Arbiter Roque’s order for respondent to be reinstated, but modifies
the amount of backwages. Respondent is deemed to be employed on a part-time basis from the effective date of her
wrongful termination and is entitled to backwages corresponding to such status and period.
WHEREFORE, the Petition for Review on Certiorari is PARTIALLY GRANTED with respect to the award of backwages and
proportionate thirteenth (13th) month pay. Labor Arbiter Luvina P. Roque’s January 8, 2013 Decision is MODIFIED by

28
awarding to respondent Virginia Pascua backwages corresponding to a part-time physician, reckoned from October 30,
2011.

29
Jamias et al. v. NLRC
G.R. No. 159350 March 9, 2016
Bersamin, J.:
Facts:
Respondent Innodata Philippines, Inc. (Innodata), a domestic corporation engaged in the business of data
processing and conversion for foreign clients, hired the petitioners on various dates and under a project based
contract for a period of one year.
After their respective contracts expired, petitioners 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.
The petitioners maintain that they should be accorded regular status to the employees because the work they
performed were necessary and desirable to the business of data encoding, processing and conversion.

Issue:
Whether or not the contract of employment signed by the petitioners were invalid.

Ruling:
In holding that their contract of employment were valid, the Court reiterated that a fixed period in a contract of
employment does not by itself signify an intention to circumvent Article 280 of the Labor Code.
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 fixed period of employment must
be knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or it must
satisfactorily appear that the employer and employee dealt with each other on more or less equal terms with no
moral dominance whatsoever being exercised by the former on the latter.
The fixing by Innodata of the period specified in the contracts of employment according to the duration of the
projects the company were engaged to perform did not indicate any ill-motive to circumvent the petitioners’
security of tenure. Furthermore, there is no indication that the petitioners were made to sign the contracts
against their will. Hence, they knowingly agreed to the terms of and voluntarily signed their respective
contracts.
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. It would be unusual for a
company like Innodata to undertake a project that had no relationship to its usual business.
In fine, the employment of the petitioners who were engaged as project employees for a fixed term legally
ended upon the expiration of their contract.

30
G.R. No. 202015, July 13, 2016
ANTONIO VALEROSO AND ALLAN LEGATONA, Petitioners, v. SKYCABLE CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
By this Petition for Review on Certiorari,1 Antonio Valeroso and Allan Legatona (petitioners) assail the November
11, 2011 Decision2 and May 18, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116296, which
reversed the May 24, 2010 Decision 4 of the National Labor Relations Commission (NLRC) and consequently
dismissed their Complaint for illegal dismissal and money claims against Skycable Corporation (respondent).
Antecedent Facts
This case arose from a Complaint 5 for illegal dismissal, non-payment of 13 th month pay, separation pay and
illegal deduction filed by petitioners against respondent on February 25, 2009 before the Labor Arbiter,
docketed as NLRC NCR Case No. 02-03439-09. The Complaint was subsequently amended to include
regularization and payment of moral and exemplary damages as additional causes of action.
Petitioners Valeroso and Legatona alleged that they started working on November 1, 1998 and July 13,1998,
respectively, as account executives tasked to solicit cable subscriptions for respondent, as evidenced by
Certifications7 issued by Michael T. De la Cuesta (De la Cuesta), respondent's Sales Territory Manager. As shown
in their payslips8 for the years 2001 to 2006, they received commissions ranging from P15,000.00 to 530,000.00
each upon reaching a specific quota every month and an allowance of P6,500.00 to P7,000.00 per month. From
being direct hires of respondent, they were transferred on January 1, 2007 to Skill Plus Manpower Services sans
any agreement for their transfer. In February 2009, they were informed that their commissions would be
reduced due to the introduction of prepaid cards sold to cable subscribers resulting in lower monthly cable
subscriptions. Dismayed, they notified their manager, Marlon Pasta (Pasta), of their intention to file a labor case
with the NLRC, which they did on February 25, 2009. Pasta then informed them that they will be dropped from
the roster of its account executives, which act, petitioners claimed, constitutes unfair labor practice.
Further, petitioners claimed that they did not receive 13 th month pay for 2006 and were underpaid of such
benefit for the years 2007 and 2008; and that in January 2008, petitioner Legatona signed a Release and
Quitclaim9 in consideration of the amount of P25,000.00 as loyalty bonus from respondent.
Respondent, on the other hand, claimed that it did not terminate the services of petitioners for there was never
an employer-employee relationship to begin with. It averred that in 1998, respondent (then Central CATV, Inc.)
engaged petitioners as independent contractors under a Sales Agency Agreement. 10 In 2007, respondents
decided to streamline its operations and instead of contracting with numerous independent account executives
such as petitioners, respondent engaged the services of an independent contractor, Armada Resources &
Marketing Solutions, Inc. (Armada, for brevity; formerly Skill Plus Manpower Services) under a Sales Agency
Agreement.11 As a result, petitioners' contracts were terminated but they, together with other sales account
executives, were referred for transfer to Armada. Petitioners then became employees of Armada. In 2009,
respondent and Armada again entered into a Sales Agency Agreement, 12 wherein petitioners were again tasked
to solicit accounts/ generate sales for respondent.
Respondent insisted that in hiring petitioners and Armada as independent contractors, it engaged in legitimate
job contracting where no employer-employee relation exists between them. In an affidavit, 13 De la Cuesta stated
that the certifications he issued are not employment certifications but are mere accommodations, requested by
petitioners themselves, for their credit card and loan applications. Moreover, Armada's President, Francisco
Navasa (Navasa), in his affidavit, 14 verified that Armada is an independent contractor which selected and
engaged the services of petitioners, paid their compensation, exercised the power to control their conduct and
discipline or dismiss them. Therefore, when petitioners filed their Complaint in February 2009, they were
employees of Armada and as such, had no cause of action against respondent.
Petitioners, however, assailed the allegation that they were employees of Armada, claiming that they were
directly hired, paid and dismissed by respondent. They cited the following as indicators that they are under the
direct control and supervision of respondent: 1) respondent's officers supervise their area of work, monitor
them daily, update them of new promos and installations they need to work on, inform them of meetings and
penalize them for non-attendance, ask them to train new agents/account executives, and inform them of new
prices and expiration dates of product promos; 2) respondent's supervisors delegate to them authority to
investigate, campaign against and legalize unlawful cable connections; 3) respondent's supervisors monitor their

31
quota production and impose guaranteed charges as penalty for failing to meet their quota; and 4) respondent
consistently gives trophies to award them of their outstanding performance.

Ruling of the Labor Arbiter

In a Decision15 dated August 26, 2009, the Labor Arbiter dismissed the Complaint since petitioners failed to
establish by substantial evidence that respondent was their employer. The Labor Arbiter observed that
petitioners failed to identify and specify the person who allegedly hired them, paid their wages and exercised
supervision and control over the manner and means of performing their work. There was neither any evidence
to prove that Pasta, who allegedly dismissed them, is an officer of respondent with an authority to dismiss them.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the complaint filed in the instant case is dismissed as discussed in the
body hereof.
SO ORDERED.16

Ruling of the National Labor Relations Commission

Petitioners filed an appeal with the NLRC attributing reversible error on the Labor Arbiter in dismissing their
Complaint on the ground of no employer-employee relationship.
In a Decision17 dated May 24, 2010, the NLRC reversed the Labor Arbiter's ruling. It found that petitioners are
regular employees of respondent having performed their job as account executives for more than one year,
even if not continuous and merely intermittent, and considering the indispensability and continuing need of
petitioners' tasks to the business. The NLRC observed that there was no evidence that petitioners have
substantial capitalization or investment to consider them as independent contractors. On the other hand, the
certifications and the payslips presented by petitioners constitute substantial evidence of employer-employee
relationship. The NLRC held that upon termination of the Sales Agency Agreement with Armada in 2009,
petitioners were considered dismissed without just cause and due process. The dispositive portion of the NLRC
Decision reads:
WHEREFORE, premises considered, the instant appeal is GRANTED and the assailed Decision of Labor Arbiter
Gaudencio P. Demaisip, Jr. dated August 26, 2009, is REVERSED and SET ASIDE, and a new one entered
declaring complainants to have been illegally dismissed. Accordingly, respondent Skycable Corporation/Central
CATV Inc. is hereby directed to immediately reinstate complainants to their former positionfs] and to pay each
of the complainants their full backwages reckoned from February 25,2009 up to the actual payroll
reinstatement, (tentatively computed at P607,200.00), in addition to the amount of P58,500.00 representing
13th month pay differentials and pro-ratal 3th month pay for 2009.
SO ORDERED.
With the NLRC s ruling in favor of petitioners, respondent filed a motion for reconsideration. This motion was,
however, denied by the NLRC in its Resolution 19 of July 27, 2010.
Riding of the Court of Appeals
Respondent filed a Petition for Certiorari20 with the CA, attributing grave abuse of discretion on the part of the
NLRC in holding it liable for the alleged illegal dismissal of petitioners.
The CA rendered a Decision21 on November 11, 2011 granting respondent's Petition for Certiorari and reversing
the NLRC Decision. The CA sustained the Labor Arbiter's finding that there was no evidence to substantiate the
bare allegation of employer-employee relationship between the parties. The dispositive portion of the CA
Decision reads:
WHEREFORE, premises considered, the instant petition is GRANTED and the Decision dated May 24, 2010 of
the National Labor Relations Commission in NLRC NCR Case No. 02-03439-09 is hereby REVERSED and SET
ASIDE.
SO ORDERED.
Petitioners moved for reconsideration which was denied by the CA in its Resolution 23 dated May 18, 2012.
Issues
Hence, this Petition raising the following issues:

32
I.
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RENDERING ITS DECISION DATED NOVEMBER 11, 2011.
II.
WHETHER THE PETITIONERS WERE RESPONDENT'S REGULAR EMPLOYEES, WHOSE DISMISSAL FROM
EMPLOYMENT WAS ILLEGAL.
Petitioners maintain that respondent failed to discharge the burden of disproving the employer-employee
relationship through competent evidence of independent contractorship. They assert that the nature of their
work and length of service with respondent made them regular employees as defined in Article 280 25 of the
Labor Code. Consequently, the CA gravely erred in dismissing their Complaint for illegal dismissal against
respondent.

Our Ruling
The Petition has no merit.
The pivotal issue to be resolved in this case is whether petitioners were employees of respondent.
Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a
question of fact and that the findings thereon by the Labor Arbiter and NLRC shall be accorded not only respect
but even finality when supported by substantial evidence. 26 However, considering the conflicting findings of fact
by the Labor Arbiter, the NLRC and the CA, the Court is impelled to re-examine the records and resolve this
factual issue.
To prove the claim of an employer-employee relationship, the following should be established by competent
evidence: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the employee with respect to the means and methods by
which the work is to be accomplished. 27 Among the four, the most determinative factor in ascertaining the
existence of employer-employee relationship is the "right of control test." 28 Under this control test, the person
for whom the services are performed reserves the right to control not only the end to be achieved, but also the
means by which such end is reached.
We rule that an employer-employee relationship is absent in this case. The evidence presented by petitioners
did not prove their claim that they were employees of respondent. The certifications issued by De la Cuesta are
not competent evidence of employer-employee relation as these merely certified that respondent had engaged
the services of petitioners without specifying the true nature of such engagement. These documents did not
certify that petitioners were employees but were only issued to accommodate petitioners' request for loan
applications, which fact was not refuted by petitioners. As for the payslips presented, it appears that only the
payslips for the years 2001 to 2006 were submitted. No payslips for the years material to this case (2007 to
2009) were submitted. It is undisputed that petitioners were transferred to Armada in 2007, thus, we cannot
give much credence to the payslips issued before this period.
We, further, find no merit in petitioners' assertion that respondent's control over them was demonstrated.
"[Guidelines indicative of labor law 'control' do not merely relate to the mutually desirable result intended by
the contractual relationship; they must have the nature of dictating the means and methods to be   employed in
attaining the result."30 Here, we find that respondent's act of regularly updating petitioners of new promos, new
price listings, meetings and trainings of new account executives; imposing quotas and penalties; and giving
commendations for meritorious performance do not pertain to the means and methods of how petitioners were
to perform and accomplish their task of soliciting cable subscriptions. At most, these indicate that respondent
regularly monitors the result of petitioners' work but in no way dictate upon them the manner in which they
should perform their duties. Absent any intrusion by respondent into the means and manner of conducting
petitioners' tasks, bare assertion that petitioners' work was supervised and monitored does not suffice to
establish employer-employee relationship.
Reliance by petitioners on the case of Francisco v. National Labor Relations Commission 31 is misplaced. In that
case, the Court adopted a two-tiered test in order to determine the true relationship between the employer and
employee. This two-tiered test, which involves: "(1) the putative employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship," has been made especially appropriate in cases where there is no written

33
agreement to base the relationship on and where the various tasks performed by the worker brings complexity
to the relationship with the employer. 32 Thus, in addition to the control test, the totality of the economic
circumstances of the worker is taken into light to determine the existence of employment relationship.
In the present case, there is a written contract, i.e., the Sales Agency Agreement, which served as the primary
evidence of the nature of the parties' relationship. In this duly executed and signed agreement, petitioners and
respondent unequivocally agreed that petitioners' services were to be engaged on an agency basis as sales
account executives and that no employer-employee relationship is created but an independent contractorship.
It is therefore clear that the intention at the time of the signing of the agreement is not to be bound by an
employer-employee relationship. At any rate, even if we are to apply the two-tiered test pronounced in
the Francisco  case, there can still be no employer-employee relationship since, as discussed, the element of
control is already absent.
Indeed, "[t]he presence of [the] power of control is indicative of an employment relationship while the absence
thereof is indicative of independent contractorship." 33 Moreover, evidence on record reveal the existence of
independent contractorship between the parties. As mentioned, the Sales Agency Agreement provided the
primary evidence of such relationship. "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"34 to be strictly bound by independent contractorship. Petitioner Legatona, in fact, in his Release and
Quitclaim, acknowledged that he was performing sales activities as sales agent/independent contractor and not
an employee of respondent. In the same token, De la Cuesta and Navasa, made sworn testimonies that
petitioners are employees of Armada which is an independent contractor engaged to provide marketing services
for respondent.
Neither can we subscribe to petitioners' contention that they are considered regular employees of respondent
for they perform functions necessary and desirable to the business operation of respondent in consonance with
Article 280 of the Labor Code. We have held that "Article 280 is not the yardstick for determining the existence
of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of determining [their rights] to certain benefits, [such as] to join
or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment
relationship is in dispute,"35 as in this case.
Evidently, the legal relation of petitioners as sales account executives to respondent can be that of an
independent contractor. There was no showing that respondent had control with respect to the details of how
petitioners must conduct their sales activity of soliciting cable subscriptions from the public. In the case
of Abante, Jr. v. Lamadrid Bearing & Parts Corporation,36 Empermaco Abante, Jr., a commission salesman who
pursued his selling activities without interference or supervision from respondent company and relied on his
own resources to perform his functions, was held to be an independent contractor. Similarly, in Sandigan
Savings & Loan Bank, Inc. v. National Labor Relations Commission,37 Anita Javier was also held to be an
independent contractor as the Court found that Sandigan Realty Development Corporation had no control over
her conduct as a realty sales agent since its only concern or interest was in the result of her work and not in how
it was achieved.
All told, we sustain the CA's factual findings and conclusion and accordingly, find no cogent reason to overturn
the dismissal of petitioners' Complaint against respondent.
WHEREFORE, the Petition is DENIED. The November 11, 2011 Decision and May 18, 2012 Resolution of the
Court of Appeals in CA-G.R. SP No. 116296 are AFFIRMED.
SO ORDERED.

34
ALLIED BANKING CORPORATION, now merged with PHILIPPINE NATIONAL BANK vs. REYNOLD
CALUMPANG
G.R. No. 219435                |              January 17, 2018
 TOPIC: Contracting and Subcontracting of Labor
FACTS:
Petitioner Allied Banking Corporation and Race Cleaners, Inc. entered into a Service Agreement whereby RCI will
provide Allied with messengerial, janitorial, communication, and maintenance services.
On Sept. 28, 2003, respondent Reynold Calumpang was hired as a janitor by RCI and was assigned at the bank’s
Tanjay City Branch.
Petitioner observed that whenever respondent went out on errands, it takes a long time for him to return to the
branch. It was eventually discovered that during these times, respondent was also plying his pedicab and
ferrying passengers. The Bank Manager also found out that respondent has been borrowing money from several
clients of the branch. He was then told by the Bank Manager that his services was no longer needed.
Thereafter, respondent filed a complaint for illegal dismissal and underpayment of wages against petitioner
before the NLRC.
In his position paper, respondent asserted that the four-fold test of employer-employee relationship is present
between him and the bank. He averred that he was a regular employee of the Bank assigned as a janitor of the
branch with a salary P4,200 payable every 15 days each month, and assigned such other tasks essential and
necessary for the Bank’s business.
He alleged that petitioner engaged his services and exercised direct control and supervision over him, through
the Branch Head, not only as to the result of his work but also as to the means and methods by which the same
was to be accomplished. As regards the payment of salary, respondent claimed that it was the Branch that
directly paid his salaries and wages. As for the power of dismissal, respondent further alleged that it was
petitioner Bank, through its Branch Head, who terminated his services.
Pettitioner denied the existence of any employer-employee relationship between itself and respondent. It
asserted that respondent was clearly an employee of RCI by virtue of the Service Agreement which clearly
indicated in Article XI thereof that there would be no employer-employee relationship between RCI’s employees
and the Bank. It further averred that RCI is a qualified job contractor because of its capitalization and the fact
that it exercised control and supervision over its employees deployed at the branches of the petitioner in
accordance with Rule VIII-A, Sec. 4, pars. (d) & (e) of the Omnibus Rules Implementing the Labor Code.
ISSUE:
1.       Whether RCI is a labor-only contractor
2.       Whether there exists an employer-employee relationship between the Bank and the respondent
RULING:
Permissible job contracting or subcontracting has been distinguished from labor-only contracting such that
permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or
farm out to a contractor 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, while labor-only contracting, on the other hand, pertains to an
arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal.
As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor overcomes the
burden of proving that it has the substantial capital, investment, tools and the like.
In the present case, petitioner failed to establish that RCI is a legitimate labor contractor as contemplated under
the Labor Code. Except for the bare allegation of petitioner that RCI had substantial capitalization, it presented
no supporting evidence to show the same. Aside from this, petitioner’s claim that RCI exercised control and
supervision over respondent is belied by the fact that petitioner admitted that its own Branch Manager had
informed respondent that his services would no longer be required at the Branch. Moreover, respondent’s work
is related to petitioner’s business and is characterized as part of or in pursuit of its banking operations.
A finding that a contractor is a labor-only contractor, as opposed to permissible job contracting, is equivalent to
declaring that there is an employer-employee relationship between the principal and the employees of the

35
supposed contractor, and the labor-only contractor is considered as a mere agent of the principal, the real
employer.
In this case, petitioner bank is the principal employer and RCI is the labor-only contractor. Accordingly,
petitioner and RCI are solidarily liable for the rightful claims of respondent.
LUIS S. DOBLE, JR. vs. ABB INC/NITIN DESAL
G.R. No. 215627  June 5, 2017 
FACTS 
Petitioner Luis s. Doble, Jr., a duly licensed engineer, was hired by respondent ABB Inc. as Junior Design Engineer
on March 29, 1993. During almost 19 years of his employment with the respondent, prior to his disputed
termination, Doble rose through the ranks and was promoted up to Vice President and Local Division Manager
of Power System Division on March 2010. As a matter of policy, ABB Inc. conducts the yearly Performance and
Development Appraisal of all its employees. In all years prior to 2008, Doble was rated with grades 3 or 4, which
are equivalent to Strong Performance or Superior Results. 
On March 2, 2012, Doble was called by respondent Country Manager and President Nitin Desai, and was
informed that his performance rating for 2011 was 1, which is equivalent to unsatisfactory performance. On
March 13, 2012, at about 10:45 AM, a company Executive Assistant informed Doble that he has a meeting with
ABB Inc. President Desai and Country Human Resource (HR) Manager Marivic Miranda at 11:45 AM in the Luzon
Conference Room of ABB Inc. During the meeting, ABB Inc. Presdent Desai explained to Doble that the Global
and Regional Management have demanded for a change in leadership due to the extent of losses and level of
discontent among the ranks of the PS Division. Desai then raised the option for Doble to resign. 
Thereafter, HR manager Miranda told Doble that he would be paid separation pay equivalent to 75% of his
monthly salary for every year of service, provided he would submit a letter of resignation, and gave him until
12:45 PM within which to decide. Shocked by the abrupt decision of the management, Doble asked why he
should be the one made to resign. Miranda said that it was the decision of the management and left him alone
in the conference room to decide whether or not to resign. At this juncture, the parties gave contrasting
accounts on the ensuing events which led to the termination of Doble’s employment. 
On March 26, 2012, Doble filed a complaint for illegal dismissal with prayer for reinstatement and payment of
backwages, other monetary claims and damages. In a decision dated November 29, 2012, the labor Arbiter held
that Doble was illegally dismissed because his resignation was involuntary, and ordered ABB Inc. to pay his
backwages and separation pay, since reinstatement is no longer feasible. Aggrieved by the decision of the Labor
arbiter, ABB Inc. and Desai filed an appeal, whereas Doble filed a partial appeal from the dismissal of his
monetary claims. 
In a decision dated June 26, 2013, the two commissioners of the NLRC 6th division voted to grant the appeal
filed by ABB Inc. and Desai, and to dismiss the partial appeal of Doble. They found that the resignation of Doble
being voluntary, there can be no illegal dismissal and no basis for the award of other monetary claims, damages
and attorney’s fees. 
However, one NLRC Commissioner dissented. Doble filed for motion for reconsideration but was denied.
Dissatisfied with the NLRC decision and resolution, Doble filed a petition for certiorari before the Court of
Appeals (CA. The CA dismissed outright the petition for Certiorari because “the assailed NLRC Decision and
Resolution attached are mere certified photocopies and not duplicate originals or certified true copies”, and
petitioner’s counsel’s MCLE Compliance NO. III-0006542 does not appear to have complied with the 4th MCLE
compliance period. Disgruntled with the Resolutions of the CA, Doble filed this petition for review on certiorari. 

ISSUES 
1. Whether or not the CA erred in dismissing the petition on the ground that the assailed NLRC decision and
Resolution attached thereto are mere photocopies and not duplicate originals or true copies. 
2. Whether or not the CA erred in denying petitioner’s Motion for Reconsideration which dismissed the petition
for Certiorari on the ground that petitioner’s counsel had conceded his inability to comply with the MCLE
requirement. 
3. Whether or not the CA committed grave abuse of discretion for dismissing petitioner’s complaint for illegal
dismissal against respondent. 

36
HELD 
The petition is partly impressed with merit on procedural grounds, but still devoid of substantive merit. On
procedural aspect, the court rules that the CA gravely erred when it dismissed outright the Petition for Certiorari
and refused to reinstate the same, despite the fact that the two defects noted in the minute Resolution have
already been substantially rectified. 
First, the CA gravely erred in dismissing the petition on the ground that the assailed NLRC Decision and
Resolution attached thereto are mere “certified photocopies” and not duplicate originals or certified true
copies. The CA’s inordinate nitpicking on procedural requirements is contrary to the ruling in COCA Cola Bottlers
Phils Inc v. Cabalo: The problem presented is not novel. In fact, it is a fairly recurrent one in petitions for
certiorari of NLRC decisions as it seems to be the practice of the NLRC to issue certified “Xerox copies’ only
instead of certified “True copies”. We have, however, put an end to this issue in Quintano v. NLRC when we
declared that there is no substantial distinction between a photocopy or a “xerox copier” and a “true copy” for
as long as the photocopy is certified by the proper officer of the court, tribunal, agency or office involved or his
duly authorized representative and that the same is a faithful reproduction of the original. In this case, a perusal
of the attached NLRC Decision and Resolution shows that they are indeed certified photocopies of the said
decision and resolution. Each page has been certified by the NLRC 6th Division’s Deputy Clerk of Court who is
undisputedly the proper officer to make such certification. Moreover, the attached copies appear to be faithful
reproductions thereof. Thus, there is substantial compliance with Section 1, Rule 65 of the Rules of Court which
provides that any petition filed under Rule 65 should be accompanied by a certified true copy of the judgment,
order, or resolution subject thereof. 
Second, the CA also gravely erred in denying the Motion for Reconsideration of the Resolution which dismissed
the Petition for Certiorari on the ground that petitioner’s counsel had conceded his inability to comply with the
MCLE requirement. On point is People v. Arrojado where it was held that the failure of a lawyer to indicate in his
or her pleadings the number and date of issue of his or her MCLE Certificate of Compliance will no longer result
in the dismissal of the case. Granted that the petition for Certiorari was filed before the CA on October 29, 2013
even before the effectivity of En Banc Resolution dated January 14, 2014 which amended B.M. No. 1922, it bears
to stress that petitioner’s counsel later submitted Receipts of Attendance in the MCLE Lecture Series for his
MCLE Compliance IV on March 3, 2014 and the Certificate of Compliance albeit on January 26, 2015. Hence the
CA erred in issuing the November 28, 2014 Resolution denying Doble’s motion for reconsideration, there being
no more reason not to reinstate the petition for certiorari based on procedural defects which have already been
corrected. 
The Court agrees with the NLRC that ABB Inc. and Desai were able to prove by substantial evidence that Doble
voluntarily resigned, as shown by the following documents (1) the affidavit of ABB Inc.’s HR Manager Miranda;
(2) the resignation letter; (3) the Employee Clearance Sheet; (4) the Certificate of Employment; (5) photocopy of
BPI’s manager’s check representing the separation benefit; (6) Employee Final Pay Computation showing in the
payment of leave credits, rice subsidy and bonuses; and, (7) the Receipt, Release and Quitclaim. 
On the other hand, the Court disagrees with the findings of the Labor Arbiter that Doble’s resignation was not
voluntary. Even if the option to resign originated from the employer, what is important for resignation to be
deemed voluntary is that the employee’s intent to relinquish must concur with overt act of relinquishment.
There can be no doubt as to the drastic and shocking nature of the abrupt decision of ABB Inc. to let Doble
resign after almost 19 years of dedicated and satisfactory service, on account of the extent of losses, the level of
discontent among the ranks of PS Division, and the ABB Inc. Global and Regional management’s demand for a
change in leadership. 
It bears emphasis, however, that between the start of the conference at around 11 AM and about 8 hours later
in the evening when he left the company premises, Doble negotiated for a higher separation pay. In fact, Doble
tendered a resignation letter only after being offered a better separation benefit of 1 month pay for every year
of service, and even submitted a separate letter expressing his intent to buy his service vehicle. After considering
the acts of Doble before and after his resignation, the Court is convinced of Doble’s clear intention to sever his
employment with ABB Inc. Finally, since the Decision of the NLRC finding Doble to have voluntarily resigned is
supported by substantial evidence and in accord with law and prevailing jurisprudence, no grave abuse of
discretion, amounting to lack or excess of jurisdiction may be imputed against the NLRC for having dismissed his
complaint for illegal dismissal against ABB Inc. and Desai. 

37
The petition for Review on Certiorari is partly granted for being impressed with merit on the procedural issues
and partly denied for lacking merit on the substantial issues. The assailed resolution of the CA are reversed and
set aside, while the Decision and Resolution of the NLRC are affirmed.

38