ETPI v ETEU GR 18556

(ETPI) plans to defer payment of the 2003,14th, 15th and 16th month bonuses sometime in April 2004. The company's main
ground in postponing the payment of bonuses is due to allege continuing deterioration of company's financial position, which
started in the year 2000. ETEU opposed stating that such is included in CBA and has developed into a company practice.
Court finds that its act of granting the same has become an established company practice such that it has virtually become
part of the employees salary or wage. A bonus may be granted on equitable consideration when the giving of such bonus has
been the companys long and regular practice.
To be considered a "regular practice," however, the giving of the bonus should have been done over a long period of time,
and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an
indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not
covered by the law requiring payment thereof.
VERGARA v COCA COLA GR 176985
Petitioner, a retired employee claiming his entitlement to unpaid additional Sales Management Incentives (SMI).
Whether the SMI should be included in the computation of petitioners retirement benefits on the ground of consistent
company practice.
The principle against diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has
ripened into a practice over a long period of time which is consistent and deliberate; it presupposes that a company practice,
policy and tradition favorable to the employees has been clearly established; and that the payments made by the company
pursuant to it have ripened into benefits enjoyed by them. Company practice, just like any other fact, habits, customs, usage
or patterns of conduct, must be proven by the offering party who must allege and establish specific, repetitive conduct that
might constitute evidence of habit or company practice. Certainly, a practice or custom is, as a general rule, not a source of a
legally demandable or enforceable right.
PLDT v NLRC GR L-80609
Marilyn Abucay, a traffic operator of the PLDT was found guilty for having demanded and received money inconsideration
of her promise to facilitate approval of their applications for telephone installation.
She was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay for his 11 years of service
with the company.
Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid
dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations
with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice. Financial Assistance disallowed.
Manila Water Comp. v Del Rosario GR 188747
Del Roasario was dismissed from service for allegedly stealing and selling the water meter of the company.
NLRC held company to pay month salary for every year of service as separation pay.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of social justice.
If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal, such gesture
will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of undesirables.
TESORO v METRO MANILA RETREADERS GR 171482
Bandag developed a franchising scheme that would enable others to operate tire and retreading businesses using its trade
name and service system.
Petitioner entered into separate Service Franchise Agreements (SFAs) with Bandag for the operation of their respective
franchises. Under this SFA, Bandag would provide funding with the petitioners subject to regular liquidation of revolving
funds. The expenses of these funds will be deducted from their sale in order to determine their income. After some time,
petitioners began to default on their obligations to submit periodic liquidations of their operational expenses in relation to the
revolving funds Bandag provided them. Bandag terminated their SFA.
No, petitioners were no longer employees of Bandag the moment they entered into the SFA. Franchising is a business
method of expansion that allows an individual or group of individuals to market a product or a service and to use of the
patent, trademark, trade name and the systems prescribed by the owner.
The tests for determining employeremployee relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee with respect to the
means and methods by which the work is to be accomplished.
Control in such relationships addresses the details of day to day work like assigning the particular task that has to be done,
monitoring the way tasks are done and their results, and determining the time during which the employee must report for
work or accomplish his assigned task.
Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employeremployee relationship with
Bandag.
ATOK BIG WEDGE COMPANY INC v GISON GR 16095
Respondent was engaged as part-time consultant on retainer basis by petitioner. Petitioner did not require respondent to
report to its office on a regular basis, except when occasionally requested by the management to discuss matters needing his
expertise as a consultant. The said arrangement continued for the next eleven years.
Petitioner terminated the retainer contract with the company since respondents services are no longer necessary.
Respondent filed a complaint for illegal dismissal.
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to
wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee's conduct, or the so-called "control test." Of these four, the last one is the most important.
The so-called control test is commonly regarded as the most crucial and determinative indicator of the presence or absence
of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be
used in reaching that end.

Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other
things, respondent was not required to report everyday during regular office hours of petitioner. Respondent's monthly
retainer fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the
manner in which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed;
respondent was left alone and given the freedom to accomplish the tasks using his own means and method. Respondent was
assigned tasks to perform, but petitioner did not control the manner and methods by which respondent performed these tasks.
Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee
of the petitioner.
COCA COLA BOTTLERS INC v CLIMACO GR 146881
Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers Phil.(petitioner) by virtue of a Retainer
Agreement. Among the terms and conditions under their retainer agreement are:
1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either party may terminate the contract
upon giving a 30-day written notice to the other;
2. That petitioner shall compensate respondent a retainer fee of P3,800/month. The DOCTOR may charge professional fee
for hospital services rendered in line with his specialization;
3. That in consideration of the retainers fee, the DOCTOR agrees to perform the duties and obligations in the
COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer agreement;
4. That the DOCTOR shall observe clinic hours at the companys premises from Monday to Saturday of a minimum of two
(2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m and 3:00pm to
4:00pm. It is further understood that the DOCTOR shall be on call at all times during the other workshifts to attend to
emergency case(s);
5. That no employee-employer relationship shall exist between the company and the DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of the agreement, respondent continued to
perform his functions as company doctor to petitioner until he received a letter dated march 9, 1995 from the company
ending their retainership agreement. Respondent filed another complaint for illegal dismissal against petitioner.
The Court ruled that petitioner company lacked the power of control over the performance by respondent of his duties.
The Supreme Court further held that, an employee is required to stay in the employers workplace or proximately close
thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here.
The respondent does not dispute that fact that outside of the two (2) hours that he is required to be at petitioner companys
premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable
him from using such hours for his own benefit and advantage. In fact, respondent maintains his own private clinic attending
his private practice in the city, where he services his patients and bills them accordingly.
The Court finds that the requirement to be on call for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement. The Supreme Court also notes that the Agreement granted to both parties the power
to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of
dismissal or termination.
OROZCO v CA GR 155207
In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. She religiously
submitted her articles every week. She received compensation for every column published.
On November 7, 1992, petitioners column appeared in the PDI for the last time. Petitioner claims that her then editor, told
her that respondent PDI Editor in Chief, wanted to stop publishing her column for no reason at all and informed her that the
Lifestyle section already had many columnists.
Petitioner filed a complaint for illegal dismissal.
Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her articles each week.
The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to control,
but was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the
preference of the readers of that section.
Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit,
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.
Aside from the control test, this Court has also used the ECONOMIC REALITY TEST. The economic realities
prevailing within the activity or between the parties are examined, taking into consideration the totality of the
circumstances surrounding the true nature of the relationship between the parties.
Orozco's main occupation is not as a columnist for respondent but as a women's rights advocate working in various womens'
organizations. She also contributes articles to other publications. Thus, it cannot be said that Orozco was dependent on PDI
for her continued employment in PDI's line of business.
The inevitable conclusion is that Orozco was not PDI's employee but an INDEPENDENT CONTRACTOR, engaged to do
independent work.
FRANCISCO v NLRC GR17008
In 1995, petitioner was hired by Kasei Corporation as Accountant and Corporate Secretary, and as Liaison Officer to the City
of Makati. In 1996, petitioner was designated as Acting Manager while her old position as accountant was accorded to Gerry
Nino, and she did so for five years.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager and was allegedly required to sign a prepared
resolution for the replacement but was assured that she will still be connected with Kasei Corporation as Technical Assistant
to Seiji Kamura and in charge of all BIR matters. Thereafter, Kasei Corporation reduced her salary. Petitioner made repeated
follow-ups with the company cashier but she was advised that the company was not earning well.
On October 15, 2001, petitioner asked for her salary but she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal
before the labor arbiter.
Petitioner was illegally dismissed. The court held that the better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employers power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
Hence, determination of such a relationship depends upon the circumstances of the whole economic activity. The proper
standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment
in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the
direct control and supervision of Seiji Kamura, the corporations Technical Consultant. It is therefore apparent that petitioner
is economically dependent on the respondent corporation for her continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. More importantly,
Respondent Corporation had the power to control petitioner with the means and methods by which the work is to be
accomplished.
The court stated where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable
situation arises which creates an adverse working environment rendering it impossible for such employee to continue
working for her employer (Inc. v. Florendo-Flores). Hence, her severance from the company was not of her own making and
therefore amounted to an illegal termination of employment.

Areno, Jr. v. Skycable PCC-Baguio February 5, 2010 G.R. No. 180302 611 SCRA 721
Disciplinary action against an erring employee is a management prerogative which, generally, is not a subject to judicial
interference. However, this policy can be justified only if the disciplinary action is dictated by legitimate business reasons
and is not oppressive.
Petitioner was employed as a cable technician by respondent Skycable PCC-Baguio.
Petitioner was suspended for 3 days without pay, after having been found guilty of making malicious statement against a coworker, however, petitioner still reported for work where he was refused entry to the company premises.
Petitioner was dismissed from service on the ground of insubordination or wilful disobedience in complying with the
suspension order.

Petitioner filed a complaint against the respondent assailing the legality of his suspension and eventual dismissal. He
claimed that his suspension and dismissal were effected without any basis, and that he was denied in his right to due process.
No. The decision to suspend petitioner was rendered after investigation and a finding by respondent that petitioner has indeed
made malicious statements against a co-employee. The suspension was imposed due to a repeated infraction within a
deactivation period set by the company relating to previous similar offense committed. It is axiomatic that
appropriate disciplinary sanction is within the purview of management imposition.
What should not be overlooked is the prerogative of an employer company to prescribe reasonable rules and regulations
necessary for the proper conduct of its business and to provide certain disciplinary measures in order to implement said rules
to assure that the same would be complied with. Respondent then acted within its rights as an employer when it decided to
exercise its management prerogative to impose disciplinary measure on its erring employee.

As a just cause for dismissal of an employee under Article 282 of the Labor Code, wilful disobedience of the
employers lawful orders requires the concurrence of two elements: 1) the employees assailed conduct must have been
wilful; and 2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the
duties which he had been engaged to discharge. Both requisites are present in the instant case.
THE COCA-COLA EXPORT CORP vs GACAYAN G.R. No. 149433
Gacayan is a Senior Financial Accountant of Coca-Cola. Under Coca- Colas policy, one of thebenefits enjoyed by its
employees was the reimbursement of meal and transportation expensesincurred while rendering overtime work.
Coca-Cola dismissed respondent for fraudulently submitting tampered and/or altered McDonalds and Shakeys receipts in
support of her reimbursements in gross violation of the companys rules and regulations.
Gacayan filed a complaint for illegal dismissal, with prayer for reinstatement. The Labor Arbiter (LA) andNLRC ruled in
favor of Coca-cola. However, the CA reversed their decisions. The CA ruled that thepenalty of dismissal imposed on
respondent was too harsh.
The employers right to conduct the affairs of its business, according to its own discretion and judgment, is well-recognized.
An employer has a free reign and enjoys wide latitude of discretion to regulate allaspects of employment, including the
prerogative to instill discipline in its employees and to imposepenalties, including dismissal, upon erring employees.
This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose takes
form. The only criterionto guide the exercise of its management prerogative is that the policies, rules and regulations on
work-related activities of the employees must always be fair and reasonable and the corresponding penalties,when
prescribed, commensurate to the offense involved and to the degree of the infraction.
In the instant case, petitioner alleged that under its rules and regulations, respondents submission of fraudulent items of
expense is punishable by dismissal.
However, petitioners rules cannot preclude theState from inquiring whether the strict and rigid application or interpretation
thereof would be harsh to the employee.
Even when an employee is found to have transgressed the employers rules, in the actual imposition of penalties upon the
erring employee, due consideration must still be given to his length of service and the number of violations committed during
his employ.