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G.R. No. 138051 June 10, 2004
The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less
control the hirer exercises, the more likely the worker is considered an independent contractor. To perform his work, SONZA only needed his skills and talent. How SONZA
delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely
reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows and their standing
in the ratings.
Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonzas work. A radio broadcast specialist who works under minimal supervision is an
independent contractor. Sonzas work as television and radio program host required special skills and talent, which SONZA admittedly possesses.
Lazaro vs. Social Security Commission (social security act)
435 SCRA 472 (2004)
Issue: Whether or not respondent is an employee, bringing her under the coverage of the Social Security Act.
Ruling: Ladauto is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee
relationship warrants the application of the control test, that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the
work done, but also as to the means and methods by which the same is accomplished.
Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. A supervisor is exempt from the observance of normal hours of
work for his compensation is measured by the number of sales he makes. Laudato oversaw and supervised the sales agents of the company, and thus was subject to the
control of management as to how she implements its policies and its end results.
Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work.
Phil. Global Communication vs. De Vera (physician)
459 SCRA 260 (2005)
Facts: Philippine Global Communications inc. is a corporation engaged in the business of communication services and allied activities while Ricardo de Vera is a physician by
profession whom petitioner enlisted to attend to the medical needs of its employees. The controversy rose when petitioner terminated his engagement.
Ruling: The elements of an employer-employee relationship is wanting in this case. The record are replete with evidence showing that respondent had to bill petitioner for his
monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.
Remarkably absent is the element of control whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the
means and methods by which the same is to be accomplished.
Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. In fine, the parties themselves practically
agreed on every terms and conditions of the engagement, which thereby negates the element of control in their relationship.
ABS- CBN vs. Nazareno (cameraman etc)
G.R. No. 164156 September 26, 2006
Ruling: The respondents are regular employees of ABS-CBN. It was held that where a person has rendered at least one year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is
not indispensable before one may be formally declared as having attained regular status. The test is whether the activity is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its
entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but
only with respect to such activity and while such activity exists.
As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA . Besides, only talent-artists were excluded
from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the New Civil Code: In case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer.
Francisco v NLRC (salary was reduced= resign)
500 SCRA 690 (2006)
Ruling: The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the
so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in
reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of an employer-employee relationship. 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.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the
services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. 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.
Nogales vs Capitol Medical Center et al. (Hospital vicariously liable)
G.R. No 142625
December 19, 2006
In the present case, the Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed
that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during her delivery, it was Dr.
Estrada, assisted by Dr. Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnosing Corazon's condition. While Dr. Estrada enjoyed staff privileges
at CMC, such fact alone did not make him an employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon was about to give birth, which CMC considered
an emergency. Considering these circumstances, Dr. Estrada is not an employee of CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the
physician is the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority."


Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a physician providing care at the hospital, regardless of whether the
physician is an independent contractor, unless the patient knows, or should have known, that the physician is an independent contractor.

The doctrine of apparent authority essentially involves two factors to determine the liability of an independent-contractor physician.

The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a reasonable
person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not make express
representations to the patient that the treating physician is an employee of the hospital; rather a representation may be general and implied. In the instant
case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses
Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority.

The second factor focuses on the patient's reliance. It is sometimes characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital or
its agent, consistent with ordinary care and prudence.
The records show that the Spouses Nogales relied upon a perceived employment relationship with CMC in accepting Dr. Estrada's services. Rogelio testified that he and his wife
specifically chose Dr. Estrada to handle Corazon's delivery not only because of their friend's recommendation, but more importantly because of Dr. Estrada's "connection with a
reputable hospital, the [CMC]." In other words, Dr. Estrada's relationship with CMC played a significant role in the Spouses Nogales' decision in accepting Dr. Estrada's. Moreover,
as earlier stated, there is no showing that before and during Corazon's confinement at CMC, the Spouses Nogales knew or should have known that Dr. Estrada was not an
employee of CMC.

Coca- cola Bottlers Phils. Vs. Dr. Climaco (Dr asked to be a regular employee)
G.R. No. 146881 February 15, 2007
Ruling: The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (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 employees conduct, or the so-called "control test," considered to be the most
important element. No employer-employee relationship exists between the parties. Thecompany lacked the power of control over the performance by respondent of his duties.
TheComprehensive Medical Plan, which contains the respondents objectives, duties and obligations, does not tell respondent "how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of [petitioner] company, in each case."
Through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks.
Calamba Medical Center vs. NLRC et al. (Sps. Drs. BONGGA!)
G.R. No. 176484 November 25, 2008
The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and
withheld tax from them.

Ruling: Drs. Lanzanas are declared employee by the petitioner hospital.

Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the
physician is to accomplish his task.

That petitioner exercised control over respondents gains light from the undisputed fact that without the approval or consent of petitioner or its medical director, no operations
can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough
that it has the right to wield the power.

Escasinas et al. vs Shangri-la Mactan Island Resort et al. (nurses claim to be regular employees)
G.R. No. 178827 March 4, 2009
In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift
differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its
employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that
the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and
supervise the work of nurses under her.
Ruling: Art. 157 does not require the engagement of full-time nurses as regular employees of a company employing not less than 50 workers. Thus, the Article provides:
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish its employees with the services of a full-time registered nurse, a parttime physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its employees, not necessarily to
hire or employ a service provider. As held in Philippine Global Communications vs. De Vera:
x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their
employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the
employer to retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.

The phrase services of a full-time registered nurse should thus be taken to refer to the kind of services that the nurse will render in the companys premises and to its
employees, not the manner of his engagement.
Tongko v. Manufacturer Life Insurance Co. (MANULIFE) Inc., et al., (agent turned manager)
G.R. No 167622
January 25, 2011
Ruling: Rules regarding the desired results (e.g., the required volume to continue to qualify as a company agent & legal/ ethical rules to be followed) are built-in elements of
control specific to an insurance agency and should not and cannot be read as elements of control that attend an employment relationship governed by the Labor Code.
There was, indeed, lack of evidence on record showing that Manulife ever exercised means-and-manner control, even to a limited extent, over Tongko during his ascent in
Manulifes sales ladder. The reality is, prior to the directives sent by De Dios, Manulife had practically left Tongko alone not only in doing the business of selling insurance, but also
in guiding the agents under his wing. In addition, the mere presentation of codes or of rules and regulations is not per se indicative of labor law control. The codes of conduct do
not intrude into the insurance agents means and manner of conducting their sales and only control them as to the desired results.
Guidelines indicative of labor law "control," based on the case of Insular Life, should not merely relate to the mutually desirable result intended by the contractual relationship;
they must have the nature of dictating the means or methods to be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to
the use of these means.
Hence, the failure of Tongko to comply with the guidelines & directives of Manulife is recruiting more agents, as a ground for termination of Tongkos agency, is a matter that the
labor tribunals cannot rule upon in the absence of an employer-employee relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency
and contracts.
Semblante vs. CA (cockfight mehehe)
G.R. No. 196426, August 15, 2011
Ruling: Respondents had no part in petitioners' selection and management; petitioners' compensation was paid out of the arriba (which is a percentage deducted from the total
bets), not by petitioners; and petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents. In the conduct of their work,
petitioners relied mainly on their "expertise that is characteristic of the cockfight gambling," and were never given by respondents any tool needed for the performance of their

work. Respondents, not being petitioners' employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or prerogative to do so in
the first place. The rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be free from an unwarranted burden of answering for an illegal
dismissal for which they were never responsible.
Bernarte vs. Philippine Basketball Association (referees)
G.R. No. 192084
September 14, 2011
We agree with respondents that once in the playing court, the referees exercise their own independent judgment, based on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an infraction was committed, and the PBA cannot overrule them once the decision is made on the playing court. The referees
are the only, absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make and
cannot control the referee when he blows the whistle because such authority exclusively belongs to the referees. The very nature of petitioner's job of officiating a professional
basketball game undoubtedly calls for freedom of control by respondents.
In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner is required to report for work only when PBA games are
scheduled or three times a week at two hours per game. In addition, there are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the
usual deductions from employees' salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents.
Lirio vs. Genovia (composer)
G.R. No. 169757
November 23, 2011
It is settled that no particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.
In this case, the documentary evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a document denominated as "payroll" (dated
July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and
another P3,500.00 every 30th of the month) with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers, showing the
amounts he received and signed for in the payrolls.
The said documents showed that petitioner hired respondent as an employee and he was paid monthly wages of P7,000.00. Petitioner wielded the power to dismiss as
respondent stated that he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against petitioner. The power of control refers
merely to the existence of the power. It is not essential for the employer to actually supervise the performance of duties of the employee, as it is sufficient that the former has a
right to wield the power. Nevertheless, petitioner stated in his Position Paper that it was agreed that he would help and teach respondent how to use the studio equipment. In
such case, petitioner certainly had the power to check on the progress and work of respondent.
The Court agrees with the Court of Appeals that the evidence presented by the parties showed that an employer-employee relationship existed between petitioner and
Jao vs. BCC Product Sales Inc.
G.R. No. 163700

April 18, 2012

Facts: Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Terrance Ty (Ty), employed him as comptroller starting from September
1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCC's business; that on October 19, 1995, the security guards of BCC, acting upon the instruction of Ty,
barred him from entering the premises of BCC where he then worked; that his attempts to report to work in November and December 12, 1995 were frustrated because he
continued to be barred from entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal dismissal, reinstatement with full backwages, nonpayment of wages, damages and attorney's fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had
posted him as its comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's interests or investments in BCC.; that their issuance of the ID to
petitioner was only for the purpose of facilitating his entry into the BCC premises in relation to his work of overseeing the financial operations of BCC for SFC; that the ID should
not be considered as evidence of petitioner's employment in BCC; that petitioner executed an affidavit in March 1996, 20 stating, among others, as follows:
1.I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed by, Sobien Food Corporation with the same business address as
2.In the course of my association with, or employment by, Sobien Food Corporation (SFC, for short), I have been entrusted by my employer to oversee and supervise
collections on account of receivables due SFC from its customers or clients; for instance, certain checks due and turned over by one of SFC's customers is BCC Product Sales, Inc.,
operated or run by one Terrance L. Ty, (President and General manager).
Petitioner counters, however, that the affidavit did not establish the absence of an employer-employee relationship between him and respondents because it had been executed
in March 1996, or after his employment with respondents had been terminated on December 12, 1995; and that the affidavit referred to his subsequent employment by SFC
following the termination of his employment by BCC.
Issue: The sole issue is whether or not an employer-employee relationship existed between petitioner and BCC. A finding on the existence of an employer-employee relationship
will automatically warrant a finding of illegal dismissal, considering that respondents did not state any valid grounds to dismiss petitioner.
In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means and methods by
which the work is accomplished. The last element, the so-called control test, is the most important element.
Petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such agreement on terms of employment may be understandable and
expected if he was a common or ordinary laborer who would not jeopardize his employment by demanding such document from the employer, but may not square well with his
actual status as a highly educated professional.
Petitioner's admission that he did not receive his salary for the three months of his employment by BCC, as his complaint for illegal dismissal and non-payment of wages and the
criminal case for estafa he later filed against the respondents for non-payment of wages indicated, further raised grave doubts about his assertion of employment by BCC. If the
assertion was true, we are puzzled how he could have remained in BCC's employ in that period of time despite not being paid the first salary of P20,000.00/month. Moreover, his
name did not appear in the payroll of BCC despite him having approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the insincerity of petitioner's assertion of employment by BCC. In the petition for
review on certiorari, he averred that he had been barred from entering the premises of BCC on October 19, 1995, 27 and thus was illegally dismissed. Yet, his complaint for illegal
dismissal stated that he had been illegally dismissed on December 12, 1995 when respondents' security guards barred him from entering the premises of BCC, 28 causing him to
bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint against him. The wide gap between October 19, 1995 and December 12,
1995 cannot be dismissed as a trivial inconsistency considering that the several incidents affecting the veracity of his assertion of employment by BCC earlier noted herein
transpired in that interval.
With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the other proofs he presented, like the affidavits of some of the employees of BCC,
the ID, and the signed checks, bills and receipts. Suffice it to be stated that such other proofs were easily explainable by respondents and by the aforestated circumstances
showing him to be the employee of SFC, not of BCC.
Legend Hotel (Manila) vs. Realuyo
G.R. No. 153511
July 18, 2012
Facts: This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. In August 9, 1999, Realuyo, whose stage name was Joey R. Roa,
filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service
incentive leave pay, and 13th month pay. He prayed for attorneys fees, moral damages of P100,000.00 and exemplary damages for P100,000.00. Roa averred that he had worked
as a pianist at the Legend Hotels Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night; and that it had increased to P750.00/night. During his
employment, he could not choose the time of performance, which had been fixed from 7:00PM to 10:00pm for three to six times a week.
In July 9, 1999 the management had notified him that as a cost-cutting measure, his services as a pianist would no longer be required effective July 30, 1999. In its defense,
petitioner denied the existence of an employer-employee relationship with Roa, insisting that he had been only a talent engaged to provide live music at Legend Hotels Madison
Coffee Shop for three hours/day on two days each week; and stated that the economic crisis that had hit the country constrained management to dispense with his services.

In December 29,1999 the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that the parties had no employer-employee relationship, because Roa was
receiving talent fee and not salary, which was reinforced by the fact that Roa received his talent fee nightly, unlike the regular employees of the hotel who are paid monthly.
NLRC affirmed the LAs decision on May 31, 2001.
CA set aside the decision of the NLRC, saying CA failed to take into consideration that in Roas line of work, he was supervised and controlled by the hotels restaurant manager
who at certain times would require him to perform only tagalong songs or music, or wear barong tagalong to conform with the Filipinana motif of the place and the time of his
performance is fixed. As to the status of Roa, he is considered a regular employee of the hotel since his job was in furtherance of the restaurant business of the hotel. Granting
that Roa was initially a contractual employee, by the sheer length of service he had rendered for the company, he had been converted into a regular employee. CA held that the
dismissal was due to retrenchment in order to avoid or minimize business losses, which is recognized by law under Art. 283 of the Labor Code.

Whether there was employer-employee relationship between the two, and if so,
Whether Roa was validly terminated

YES. Employer-employee relationship existed between the parties.

Roa was undeniably employed as a pianist of the restaurant. The hotel wielded the power of selection at the time it entered into the service contract dated Sept. 1, 1992 with Roa.
The hotel could not seek refuge behind the service contract entered into with Roa. It is the law that defines and governs an employment relationship, whose terms are not
restricted to those fixed in the written contract, for other factors, like the nature of the work the employee has been called upon to perform, are also considered.
The law affords protection to an employee, and does not countenance any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer
utilizes the stipulation to deprive the employee of his security of tenure. The inequality that characterizes employer-employee relationship generally tips the scales in favor of the
employer, such that the employee is often scarcely provided real and better options.
The argument that Roa was receiving talent fee and not salary is baseless. There is no denying that the remuneration denominated as talent fees was fixed on the basis of his
talent, skill, and the quality of music he played during the hours of his performance. Roas remuneration, albeit denominated as talent fees, was still considered as included in the
term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration, as per Article 97(f) of the Labor Code.
The power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This is the
so-called control test, and 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.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject to its Code of Discipline, and that the power to terminate the working
relationship was mutually vested in the parties, in that either party might terminate at will, with or without cause. This claim is contrary to the records. Indeed, the memorandum
informing respondent of the discountinuance of his service because of the financial condition of petitioner showed the latter had the power to dismiss him from employment.

NO. Roa was not validly terminated.

The conclusion that Roas termination was by reason of retrenchment due to an authorized cause under the labor Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code. It is a management prerogative resorted to by employers to avoid ro
to minimize business losses. On this matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
Justifications for retrenchment:
The expected losses should be substantial and not merely de minimis in extent;
The substantial losses apprehended must be reasonably imminent;
The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by sufficient and convincing
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. Here, petitioner did not submit evidence of the losses
to its business operations and the economic havoc it would thereby imminently sustain. It only claimed that Roas termination was due to its present business/financial
condition. This bare statement fell short of the norm to show a valid retrenchment. Hence, there was no valid cause for the retrenchment of respondent. Since the lapse of time
since the retrenchment might have rendered Roas reinstatement to his former job no longer feasible, Legend Hotel should pay him separation pay at the rate of one month pay
for every year of service computed from September 1992 until the finality of this decision, and full backwages from the time his compensation was withheld until the finality of
this decision.
Petition denied.
The New Philippine Skylanders, Inc. vs. Dakila
G.R. No. 199547
September 24, 2012
Facts: November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU)
September (PAFLU), won in the certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders
Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor.
In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLUs supposed deliberate and habitual dereliction of duty toward its members.
Attached to the notice was a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees Association -National Congress of Workers
(PSEA-NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the newlyforged PSEA-NCW.
On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered with the Department of Labor and Employment.
PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the request.
PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that
aside from PSIs refusal to bargain collectively with its workers, the company through its president and personnel manager, was also liable for interfering with its employees union
Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEAs organizational
meeting thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into the manipulative machinations
of PSI and were lured into endorsing a collective bargaining agreement which was detrimental to their interests.
PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario
Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo
Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner
Francisco Dakila.
Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA
was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint.

Labor Arbiter declared PSEAs disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice.
As PSEA-NCWs personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid.
PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC upheld the Decision of the Labor Arbiter.
Issue: Whether PSI, PSEA-PAFLU and their respective officers is guilty of unfair labor practice.
Ruling: Local unions have a right to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and
existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the
common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local
unions may find it hard, unaided by other support groups, to secure justice for themselves. Yet the local unions remain the basic units of association, free to serve their own
interests subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms laid down in the
agreement which brought such affiliation into existence.
There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions
imposed for a valid breakaway. As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid
disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union membership supported
the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf.
It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no
restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.
The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union.
Tesoro et al. vs. Metro Manila Retreaders Inc. et al.
G.R. No. 171482
March 12, 2014
Facts: On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents Metro Manila
Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister companies collectively called Bandag. Bandag offered repair and
retread services for used tires. In 1998, however, Bandag developed a franchising scheme that would enable others to operate tire and retreading businesses using its trade name
and service system. Petitioners quit their jobs as salesmen and 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.
Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of wages, incentive pay, 13th month pay and damages against Bandag with the National Labor
Relations Commission (NLRC). Petitioners contend that despite the SFA, they remained employees of Bandag. For its part, Bandag pointed out that petitioners freely resigned from
their employment and decided to avail themselves of the opportunity to be independent entrepreneurs under the franchise scheme that Bandag had. Thus, no employer
employee relationship existed between petitioners and Bandag.

Whether or not petitioners remained to be Bandags salesmen under the franchise scheme it entered into with them.

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. The last is called the control test, the most
important element.
When petitioners agreed to operate Bandags franchise branches in different parts of the country, they knew that this substantially changed their former relationships. They were
to cease working as Bandags salesmen, the positions they occupied before they ventured into running separate Bandag branches. They were to cease receiving salaries or
commissions. Their incomes were to depend on the profits they made. Yet, petitioners did not then complain of constructive dismissal. They took their chances, ran their
branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their belated claim of constructive
dismissal is quite hollow.
It is pointed out that Bandag continued, like an employer, to exercise control over petitioners work. It points out that Bandag: (a) retained the right to adjust the price rates of
products and services; (b) imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications; and (d) retained the power to suspend petitioners
services for failure to meet service standards. But uniformity in prices, quality of services, and good business practices are the essence of all franchises. A franchisee will damage
the franchisors business if he sells at different prices, renders different or inferior services, or engages in bad business practices. These business constraints are needed to
maintain collective responsibility for faultless and reliable service to the same class of customers for the same prices.
This is not the control contemplated in employeremployee relationships. 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
Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employeremployee relationship with Bandag. These funds do not represent wages. They are
more in the nature of capital advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners incomes depended on the profits they make,
controlled by their individual abilities to increase sales and reduce operating costs.
Royal Homes Marketing Corp. vs. Alcantara
G.R. No. 195190
July 28, 2014
Facts: Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its Marketing Director for a fixed period of one year. His work consisted mainly of
marketing Royale Homes' real estate inventories on an exclusive basis. Royale Homes reappointed him for several consecutive years.
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes alleging that he was dismissed from work without any valid or just cause and in
gross disregard of the proper procedure for dismissing employees. He prayed to be reinstated to his former position without loss of seniority rights and other privileges, as well as
to be paid backwages, moral and exemplary damages, and attorney's fees.
Royale Homes denied that Alcantara is its employee because: (1) it engaged his services as an independent sales contract for one year only; (2) he never received any salary,
13th month pay, overtime pay or holiday pay; (3) he was paid on commission basis; (4) it had no control on how Alcantara would accomplish his tasks.
Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale Homes.
NLRC rendered its Decision ruling that Alcantara is not an employee but a mere independent contractor of Royale Homes. It based its ruling mainly on the contract.
CA promulgated its Decision reversing the NLRC's Decision pointing out that Royale Homes exercised some degree of control over Alcantara since his jobis subject to company
rules, regulations, and periodic evaluations.
Issue: Whether Alcantara was an independent contractor or an employee of Royale Homes.

Ruling: Alcantara is not an employee of Royal Home but a mere independent contractor
The juridical relationship of the parties based on their written contract

The primary evidence of the nature of the parties' relationship in this case is the written contract that they signed. While the existence of employer-employee relationship is a
matter of law, the characterization made by the parties in their contract as to the nature of their juridical relationship cannot be simply ignored, particularly in this case where the
parties' written contract unequivocally states their intention at the time they entered into it.
In this case, the contract duly signed and not disputed by the parties, conspicuously provides that "no employer-employee relationship exists between" Royale Homes and
Alcantara, as well as his sales agents. It is clear that they did not want to be bound by employer-employee relationship at the time of the signing of the contract
Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations should control."No construction is
even needed as they already expressly state their intention.
The juridical relationship of the parties based on Control Test
In determining the existence of an employer-employee relationship, this Court has generally relied on 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 employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished. Among the four, the most determinative factor in ascertaining the existence of employer- employee relationship is the "right of control test".
In the case, the CA ratiocinatedthat since the performance of his tasks is subject to company rules, regulations, code of ethics, and periodic evaluation, the element of control is
The court disagrees. Not every form of control is indicative of employer-employee relationship.A person who performs work for another and is subjected to its rules, regulations,
and code of ethics does not necessarily become an employee. As long as the level of control does not interfere with the means and methods of accomplishing the assigned tasks,
the rules imposed by the hiring party on the hired party do not amount to the labor law concept of control that is indicative of employer-employee relationship
In this case, the rules, regulations, code of ethics, and periodic evaluation alluded to by Alcantara do not involve control over the means and methods by which he was to perform
his job. In Tongko Case, this Court held that guidelines or rules and regulations that do not pertain to the means or methods to be employed in attaining the result are not
indicative of control as understood in labor law
Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship. The continuous rehiring of Alcantara simply signifies the renewal of his
contract with Royale Homes, and highlights his satisfactory services warranting the renewal of such contract
Payment of Wages
The element of payment of wages is also absent in this case. Alcantara's remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and other
forms of company support. There is no proof that he received fixed monthly salary. No payslip or payroll was ever presented and there is no proof that Royale Homes deducted
from his supposed salary withholding tax or that it registered him with the Social Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund

Fuji Television Network Inc. vs. Espiritu

G.R. No. 204944-45 December 3, 2014
Facts: In 2005, Arlene was engaged by Fuji Television Network, Inc. (Fuji) as a news correspondent/producer. Her employment contract initially provided for a term of one (1) year
but was successively renewed on a yearly basis with salary adjustment upon every renewal
In 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene that the company
will have a problem renewing her contract since it would be difficult for her to perform her job.
Then Arlene and Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that her contract would no longer be renewed. The day after Arlene signed the nonrenewal contract, on May 6, 2009, she filed a complaint for illegal dismissal.
She alleged that she was forced to sign the non-renewal contract when Fuji came to know of her illness and that Fuji withheld her salaries and other benefits for March and April
2009 when she refused to sign. She further alleged that claimed that she was left with no other recourse but to sign the non-renewal contract, and it was only upon signing that
she was given her salaries and bonuses, in addition to separation pay equivalent to four (4) years.
Labor Arbiter Borbolla dismissed Arlene's complaint because applying the four-fold test Arlene was not Fuji's employee but an independent contractor.
National Labor Relations Commissionreversed the Labor Arbiter's decision and held that Arlene was a regular employee with respect to the activities for which she was employed
since she continuously rendered services that were deemed necessary and desirable to Fuji's business
Court of Appealsaffirmed the National Labor Relations Commission with the modification that Fuji immediately reinstate Arlene to her position as News Producer without loss of
seniority rights, and pay her backwages, 13th-month pay, mid-year and year-end bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary
damages, attorney's fees, and legal interest of 12% per annum of the total monetary awards
Fuji contends that Arlene was hired as an independent contractor; that Fuji had no control over her work; that there was no illegal dismissal because she freely agreed not to
renew her fixed-term contract as evidenced by her e-mail correspondences with Yoshiki Aoki
Issue: W/N Arlene was a regular employee, not an independent contractor
The Court has often used the four-fold test to determine the existence of an employer-employee relationship. Under the four-fold test, the "control test" is the most important. In
proving employer-employee relationship through evidence, the Court ruled that:
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidenceto prove the relationship may be admitted. Identification cards,
cash vouchers, social security registration, appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee status.
Arlene claims to be a regular employee. However Fuji insists that she was an independent employee. The burden of proving that she was an independent contractor lies with Fuji.
In labor cases, the quantum of proof required is substantial evidence.
Under Article 280, the provision classifies employees into regular, project, seasonal, and casual. It further classifies regular employees into two kinds:

Those "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer" (regular employees)


Casual employees who have "rendered at least one year of service, whether such service is continuous or broken."

The Court defines independent contractor as:

. . . one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under one's own responsibility according
to one's own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.
Moreover, no employer-employee relationship exists between independent contractors and their principals who engage the contractor's services, but there is an employeremployee relationship between the contractor and workers hired to accomplish the work for the principal. Thus, their contracts are governed by the Civil Code provisions on
contracts and other applicable laws.
In the facts of the case and using the four-fold test, Arlene was hired by Fuji as a news producer, but there was no showing that she was hired because of unique skills that would
distinguish her from ordinary employees. Neither was there any showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00 appears to be a
substantial sum. Fuji had the power to dismiss Arlene, as provided for in her professional employment contract. Even the mode of transportation in carrying out her functions was
controlled by Fuji. Therefore, Arlene is a regular employee and not an independent contractor.
There is also a test for determining regular employment where there is a reasonable connection between the employee's activities and the usual business of the employer. Article
280 provides that the nature of work must be "necessary or desirable in the usual business or trade of the employer" the test for determining regular employment. However,
there may also be a situation where an employee's work is necessary but is not always desirable in the usual course of business of the employer. In this situation, there
is no regular employment.
Fuji is engaged in the business of broadcasting, including news programming. It is based in Japan and has overseas offices to cover international news. Based on the record, Fuji's
Manila Bureau Office is a small unit and has a few employees. Arlene had to do all activities related to news gathering.
Arlene's tasks included "monitoring and getting news stories, reporting and interviewing subjects in front of a video camera, timely submission of news and current events reports
pertaining to the Philippines and going to Fuji's regional office in Thailand." She also had to report for work in Fuji's office in Manila from Mondays to Fridays, eight (8) hours per
day. She had no equipment and had to use the facilities of Fuji to accomplish her tasks. Therefore, the successive renewals of Arlene's contract indicated the necessity and
desirability of her work in the usual course of Fuji's business. Arlene had become a regular employee with the right to security of tenure.
Also, Arlene's contract indicating a fixed term did not automatically mean that she could never be a regular employee. An employee can be a regular employee with a fixed-term
contract. The law does not preclude the possibility that a regular employee may opt to have a fixed-term contract for valid reasons. In the case of Brent: for as long as it was the
employee who requested, or bargained, that the contract have a "definite date of termination," or that the fixed-term contract be freely entered into by the employer and the
employee, then the validity of the fixed-term contract will be upheld.
WHEREFORE, having established that Arlene is a regular employee and not an independent contractor, the petition is DENIED. The decision of the Court of Appeals
is AFFIRMED with the modification that backwages shall be computed from June 2009
Cabaobas et al. vs. Pepsi Cola (retrenchment)
G.R. No. 176908
March 25, 2015
Ruling: The petition has no merit.
Subsumed cases NLRC-RAB VIII Case Nos. 9-0432-99 to 9-0458-99 pertain to the dismissal of the complaints for illegal dismissal filed by Molon, et al., the 27 former co-employees
of petitioners in PCPPI. On the issue of whether the retrenchment of the petitioners' former co-employees was in accord with law, the Court ruled that PCPPI had validly
implemented its retrenchment program.
The Court rules in the affirmative.
There is no dispute that the issues, subject matters and causes of action between the parties in Pepsi-Cola Products Philippines, Inc. v. Molon26 and the present case are identical,
namely, the validity of PCPPI's retrenchment program, and the legality of its employees' termination. There is also substantial identity of parties because there is a community of
interest between the parties in the first case and the parties in the second case, even if the latter was not impleaded in the first case. 27The respondents in Pepsi-Cola Products
Philippines, Inc. v. Molon28 are petitioners' former co-employees and co-union members of LEPCEU-ALU who were also terminated pursuant to the PCPPI's retrenchment program.
The only difference between the two cases is the date of the employees' termination, i.e., Molon, et al. belong to the first batch of employees retrenched on July 31, 1999, while
petitioners belong to the second batch retrenched on February 15, 2000. That the validity of the same PCPPI retrenchment program had already been passed upon and,
thereafter, sustained in the related case of Pepsi-Cola Products Philippines, Inc. v. Molon,29 albeit involving different parties, impels the Court to accord a similar disposition and
uphold the legality of same program.
In their petition for review on certiorari, petitioners argue that PCPPI failed to prove that it was suffering from financial losses, and that its financial statements were perplexing.
Petitioners' arguments are untenable.
At any rate, the Court finds that the September 11, 2002 NLRC Decision has exhaustively discussed PCPPI's compliance with the requirement that for a retrenchment to be valid,
such must be reasonably necessary and likely to prevent business losses which, if already incurred, are not merelyde minimis, but substantial, serious, actual and real.
On petitioners' contention that the true motive of the retrenchment program was to prevent their union, LEPCEU-ALU, from becoming the certified bargaining agent of all the rankand-file employees of PCPPI, such issue of union-busting was duly resolved in the September 11, 2002 NLRC Decision
Begino et al. vs. ABS- CBN Corp
G.R. No. 199166
April 20, 2015
Forms and the terms and condition embodied therein, petitioners are regular employees of ABS-CBN. Time and again, it has been ruled that the test to determine whether
employment is regular or not is the reasonable connection between the activity performed by the employee in relation to the business or trade of the employer. As
cameramen/editors and reporters, petitioners were undoubtedly performing functions necessary and essential to ABS-CBNs business of broadcasting television and radio content.
It matters little that petitioners services were engaged for specified periods for TV Patrol Bicol and that they were paid according to the budget allocated therefor. Aside from the
fact that said program is a regular weekday fare of the ABS-CBNs Regional Network Group in Naga City, the record shows that, from their initial engagement in the aforesaid
capacities, petitioners were continuously re-hired by respondents over the years. To the mind of the Court, respondents repeated hiring of petitioners for its long-running news
program positively indicates that the latter were ABS-CBNs regular employees.
The nature of the employment depends, after all, on the nature of the activities to be performed by the employee, considering the nature of the employers business, the duration
and scope to be done, and, in some cases, even the length of time of the performance and its continued existence.
As cameramen/editors and reporters, it also appears that petitioners were subject to the control and supervision of respondents which, first and foremost, provided them with the
equipments essential for the discharge of their functions.
Social Security System vs. Ubana (no ER-EE= regular courts)
G.R. No. 200114
August 25, 2015
In Home Development Mutual Fund v. Commission on Audit,24 it was held that while they performed the work of regular government employees, DBP Service Corporation
personnel are not government personnel, but employees of DBP Service Corporation acting as an independent contractor. Applying the foregoing pronouncement to the present
case, it can be said that during respondent's stint with petitioner, she never became an SSS employee, as she remained an employee of DBP Service Corporation and SSS Retirees
Association - the two being independent contractors with legitimate service contracts with SSS.
In its pleadings, petitioner denied the existence of an employer-employee relationship between it and respondent; in fact, it insists on the validity of its service agreements with
DBP Service Corporation and SSS Retirees Association - meaning that the latter, and not SSS, are respondent's true employers. Since both parties admit that there is no
employment relation between them, then there is no dispute cognizable by the NLRC.

For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire jurisdiction over a dispute, there must be an employer-employee relation between the
Since there is no employer-employee relationship between the parties herein, then there is no labor dispute cognizable by the Labor Arbiters or the NLRC.
There being no employer-employee relation or any other definite or direct contract between respondent and petitioner, the latter being responsible to the former only for the
proper payment of wages, respondent is thus justified in filing a case against petitioner, based on Articles 19 and 20 of the Civil Code, to recover the proper salary due her as SSS



272 SCRA 596 (1997)
Facts: Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity
leave. Under the Reliever Agreement which she signed with Petitioner Company, her employment was to be immediately terminated upon expiration of the agreed period.
Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondents services as reliever were again engaged by petitioner, this time in
replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.
It now appears that private respondent had made the a representation that she was single even though she contracted marriage months before, in the two successive reliever
agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor sent to private respondent a
memorandum requiring her to explain the discrepancy. In that memorandum, she was reminded about the companys policy of not accepting married women for employment.
Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed
down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the National Labor
Relations Commission (NLRC), said public respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of an unjust and unlawful
discrimination by her employer, PT&T.
Issue: Whether or not discrimination merely by reason of the marriage of a female employee is expressly prohibited by Article 136.
Ruling: SC ruled that the stipulation is violative of Art. 136 of the Labor Code.
An employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law. Petitioners policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs
afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution.
Respondents act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into
misrepresenting her civil status for fear of being disqualified from work.
The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:
ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate
or otherwise prejudice a woman employee merely by reason of marriage.
Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of an employee are categorized as a sex-plus
discrimination where it is imposed on one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group
which is protected by federal job discrimination laws.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege
that by all accounts inheres in the individual as an intangible and inalienable right.
Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to
law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of marriage.
Duncan Association of Detailman- PTGWO vs. Glaxo Wellcome Phils.
G.R. No. 162994
September 17, 2004

Facts: Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines(glaxo) as medical representative on Oct.24,1994 thereafter signed a contract of employment
which stipulates among others that he agrees to study and abide existing company rules; to disclose to management any existing of future relationship by consanguinity or
affinity with co-employees or employees of competing drug companies and if ever that such management find such conflict of interest,he must resign. The Employee Code of
Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or
employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employees employment with
the company, the management and the employee will explore the possibility of a transfer to another department in a non-counterchecking position or preparation for
employment outside the company after six months.
Reminders from Tecsons district manager did not stop him from marrying.Tecson married Bettsy, an Astras Branch Coordinatior in Albay. She supervised the district managers
and medical representatives of her company and prepared marketing strategies for Astra in that area.
Tecson was reassigned to another place and was not given products that the Astra company has and he was not included in products seminars and training.
Tecson requested for time in complying said policy by asking for a transfer in the Glaxos milk division in which the other company had no counterpart. Thereafter, he bought the
matter to Grievance Committee but the parties failed to resolve such issue, Glaxo offered Tecson a separation pay of one-half () month pay for every year of service, or a total
of P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy on
relationships between its employees and persons employed with competitor companies, and affirming Glaxos right to transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not err in rendering its decision. A recon was filed in appellate court but it was denied,
hence this petition for certiorari. Petitioners contention it was violative of constitutional law which is the equal protection clause and he was constructively dismissed while the
respondents contention that it is a valid exercise of it s management prerogatives.
Issue: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of another pharmaceutical company is valid?
Ruling: This petition was denied. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a
policy to protect its right to reasonable returns on investments and to expansion and growth.
The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a settled principle that the commands of
the equal protection clause are addressed only to the state or those acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company
merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships.
There was no merit in Tecsons contention that he was constructively dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan CitySurigao City-Agusan del Sur sales area, and when he was excluded from attending the companys seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. The
record does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer.
Star Paper Corp. vs. Simbol
G.R. No. 164774
April 12, 2006
Facts: Petitioner was the employer of the respondents. Under the policy of Star Paper the employees are:
1. New applicants will not be allowed to be hired if in case he/she has a relative, up to the 3rd degree of relationship, already employed by the company.
2. In case of two of our employees (singles, one male and another female) developed a friendly relationship during the course of their employment and then decided to get
married, one of them should resign to preserve the policy stated above.
Respondents Comia and Simbol both got married to their fellow employees. Estrella on the other hand had a relationship with a co-employee resulting to her pregnancy on the
belief that such was separated. The respondents allege that they were forced to resign as a result of the implementation of the said assailed company policy.
The Labor Arbiter and the NLRC ruled in favor of petitioner. The decision was appealed to the Court of Appeals which reversed the decision.
Issue: Whether the prohibition to marry in the contract of employment is valid
Held: It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee.
Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its
business operations. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who
married Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the
questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employees right to
security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry persons other than co-employees. The questioned
policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing
the questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast
and extensive that we cannot prudently draw inferences from the legislatures silence that married persons are not protected under our Constitution and declare valid a policy
based on a prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid
exercise of management prerogative. Corollary, the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic.
In the case of Estrella, the petitioner failed to adduce proof to justify her dismissal. Hence, the Court ruled that it was illegal.
Petition was denied.
Del Monte Phils. Vs. Velasco
G.R. No. 153477
March 6, 2007
Facts: Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized by Del Monte. On June 1987, petitioner warned Velasco of its absences and
was repeatedly reminded that her absence without permission may result to forfeiture of her vacation leave.
Another warning was sent due to her absences without permission which eventually led to the forfeiture of her vacation entitlement. On September 1994, a notice of hearing was
sent to Velasco informing her of the charges filed against her for violating the Absence without leave rule. On January 1995, after the hearing, Del Monte terminated the services
of Velasco due to excessive absence without leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted that she was absent since she was suffering urinary
tract infection and she was pregnant.
She sent an application for leave to the supervisor. Upon check up of the company doctor, Velasco was advised to rest. On the following check-ups, she was again advised to rest
where this time, she was not able to get secure a leave.
The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that
respondent was illegally dismissed and was entitled to reinstatement. Petitioner appealed to CA where it dismissed its claim and affirmed NLRC, thus, this petition.
Issue: Whether or not the dismissal was illegal?
Ruling: Yes. In this case, by the measure of substantial evidence, what is controlling is the finding of the NLRC and the CA that respondent was pregnant and suffered from related
ailments. It would be unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate or the Discharge Summary. It can be safely assumed that the
absences that are not covered by, but which nonetheless approximate, the dates stated in the Discharge Summary and Medical Certificate, are due to the continuing condition of
pregnancy and related illnesses, and, hence, are justified absences.
The termination was illegal since it comes within the purview of the prohibited acts provided in Article 137 of the Labor Code. Based on Article 137, it shall be unlawful for any
employer (1) to deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying
any of the benefits provided under this Code; (2) to discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; and (3) to
discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant.
The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act of the employer is unlawful, it being contrary to law.
Yrasuegui vs. Philippine Air Lines
G.R. No. 168081
October 17, 2008
Facts: This case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.
Petitioner was a former international flight steward of PAL. He had problems meeting the required weight standards for cabin and crew. He was advised to go on leave without
pay several times to address his weight concerns, to no avail. PAL had him grounded until such time he satisfactorily complies with the weight standards and he was directed to
report every two weeks for weight checks.
On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On June 15, 1993, petitioner was formally informed by PAL that due to his inability to
attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered
terminated effective immediately
The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner. [15]
However, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties. [16] Assuming that it did,
petitioner could be transferred to other positions where his weight would not be a negative factor. NLRC affirmed the decision of the Labor Arbiter, with modifications.

The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employees position. The failure
to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful
disobedience as the NLRC seemed to suggest.
Issue: Whether or not the petitioner was illegally dismissed.
Ruling: I. The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code. [T]he standards violated in this case were not mere orders of the employer;
they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that
establish continuing qualifications for an employees position.
By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They applyprior to employment because these are the standards a job
applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job.
Under this perspective, a violation is not one of the faults for which an employee can be dismissed
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Aircrafts have constricted cabin space, and narrow aisles and exit doors.
Being overwieight impedes mobility in times of emergencies where seconds are precious.
Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his regular allowances.



S.I.P. Food House et al. vs. Batolina

G.R. No. 192473
October 11, 2010
Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC
wanted to operate a canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP),
owned by the spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents) worked as waiters and waitresses
in the canteen.
The respondents money claims
We likewise affirm the CA ruling on the monetary award to Batolina and the other complainants. The free board and lodging SIP furnished the employees cannot operate as a setoff for the underpayment of their wages. We held in Mabeza v. National Labor Relations Commission that the employer cannot simply deduct from the employees wages the
value of the board and lodging without satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in
writing by the employees of the deductible facilities; and
(3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear from the records
that SIP failed to comply with these requirements.
SLL International Cables Specialist vs. NLRC
G.R. No. 172161
March 2, 2011
On May 21, 1999, private respondents for the 4th time worked with Lagon's project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract
would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of P145.00. At this time,
the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date of completion. Face[d] with
economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including private respondents. Thus, when requested by private respondents on
February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be
given anymore time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents
filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorney's
Moreover, before the value of facilities can be deducted from the employees' wages, the following requisites must all be attendant: first, proof must be shown that such facilities
are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be
charged at reasonable value.[20] Mere availment is not sufficient to allow deductions from employees' wages.[21]
These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of
the employee's salaries. It also failed to provide proof of the employees' written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear
whether private respondents actually enjoyed said facilities.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when
said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given,
but in the purpose for which it is given. In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers
while they were working at their respective projects.
Vergara, Jr. vs. Coca-cola Bottlers Phils Inc.
G.R. No. 17685
April 1, 2013

Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice

There is diminution of benefits when the following requisites are present:


the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;


the practice is consistent and deliberate;


the practice is not due to error in the construction or application of a doubtful or difficult question of law; and


The diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has
been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in
order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits
over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered

by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to
grant the benefit over a considerable period of time.

Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to all retired DSSs regardless of whether or not they qualify to the same had
ripened into company practice.

Royal Plant Workers Union v Coca-cola Bottlers Phils Inc. Cebu Plant
G.R. No. 198783
April 15, 2013

The operators chairs cannot be considered as one of the employee benefits covered in Article 10016 of the Labor Code. In the Courts view, the term "benefits" mentioned in the
non-diminution rule refers to monetary benefits or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees wage, salary or compensation making them enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or privileges involved in those cases mainly concern monetary considerations
or privileges with monetary equivalents. Without a doubt, equating the provision of chairs to the bottling operators is something within the ambit of "benefits'' in the context of
Article 100 of the Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100 of the Labor Code do not show even with the slightest hint that such
provision of chairs for the bottling operators may be sheltered under its mantle.

The National Wages & Productivity Commission et al. vs. The Alliance of Progressive Labor et al.
G.R. No. 150326
March 12, 2004
Feeling aggrieved by their noncoverage by the wage adjustment, the Alliance of Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an
appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR07. They contended that neither the NWPC nor the RTWPBNCR had the authority to expand
the noncoverage and exemptible categories under the wage order; hence, the assailed sections of the wage order should be voided.
Ruling: the RTWPBNCR had the authority to provide additional exemptions from the minimum wage adjustments embodied in Wage Order No. NCR07
The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing
of minimum wage rates by region, province and industry. Section 1 of Rule VIII of NWPC Guidelines No. 00195 recognized the power of the RTWPBs to issue exemptions from the
application of the wage orders subject to the guidelines issued by the NWPC
The following categories of establishments may be exempted upon application with and as determined by the Board:

Distressed establishments
New business enterprises (NBEs)
Retail/Service establishments employing not more than ten (10) workers
Establishments adversely affected by natural calamities

David/Yiels Hog Dealer vs. Macasio

G.R. No. 195466
July 2, 2014
Issue: Whether or not Respondent Macasio is entitled to overtime pay, holiday pay, 13th month pay, and service incentive leave (SIL)
Ruling: Respondent Macasio is entitled to such monetary claims except 13th month pay.
Macasio is engaged on "pakyaw" or task basis.
At this point, we note that all three tribunals the LA, the NLRC and the CA found that Macasio was engaged or paid on "pakyaw" or task basis. This factual finding binds the
Court under the rule that factual findings of labor tribunals when supported by the established facts and in accord with the laws, especially when affirmed by the CA, is binding on
this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage payment, is the non-consideration of the time spent in working. In a taskbasis work, the emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of the number of time spent in the
completion of work. Once the work or task is completed, the worker receives a fixed amount as wage, without regard to the standard measurements of time generally used in pay
In Macasios case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the
total number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task. Clearly, these circumstances show a
"pakyaw" or task basis engagement that all three tribunals uniformly found.
In determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the presence (or absence) of employer supervision as regards the workers
time and performance is the key: if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless exempted
from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also
falls within the meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.
Our Haus Realty Development Corp. vs. Parian et al.
G.R. No. 204651
August 6, 2014
Respondents are entitled to other monetary benefits. A party who alleges payment as a defense has the burden of proving it. Particularly in labor cases, the burden of proving
payment of monetary claims rests on the employer. Records will disclose the absence of any credible document which will show that respondents had been paid their 13th month
pay, holiday and SIL pays. Our Haus merely presented a hand-written certification from its administrative officer that its employees automatically become entitled to five days of
service incentive leave as soon as they pass probation.
Milan et al. vs. NLRC
G.R. No. 202961
February 4, 2015
Issue: Whether or not the benefits of Petitioners may be validly and legally withheld by Solid Mills Inc.

Ruling: Petition DENIED; Solid Mills may validly and legally withhold the benefits.
The Civil Code provides that the employer is authorized to withhold wages for debts due:
Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It includes any accountability that the employee may have to the employer. There is no reason
to limit its scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the release of petitioners' benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term "accountability" does not limit the definition of accountability to those incurred
in the worksite. As long as the debt or obligation was incurred by virtue of the employer-employee relationship, it shall be included in the employee's accountabilities that are
subject to clearance procedures.
Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they do not claim superior right to it. What can be gathered from the findings of the
Labor Arbiter, NLRC, and the CA is that respondent Solid Mills allowed the use of its property for the benefit of petitioners as its employees. Petitioners were merely allowed to
possess and use it out of respondent Solid Mills' liberality. The employer may, therefore, demand the property at will.
Withholding of payment by the employer does not mean that the employer may renege on its obligation to pay employees their wages, termination payments, and due benefits.
The employees' benefits are also not being reduced. It is only subjected to the condition that the employees return properties properly belonging to the employer. This is only
consistent with the equitable principle that "no one shall be unjustly enriched or benefited at the expense of another."


Tiger Construction and Development Corp. vs. Albay et al.

G.R. No. 164141
February 26, 2010.
Issue: Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained
finality and is already in the execution stage.
Ruling: In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no longer be questioned (as it is final and executory)
Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was within the latters jurisdiction, did not oust or deprive her of jurisdiction
over the case. She therefore retained the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority to try a
certain case is conferred by law and not by the interested parties, much less by one of them, and should be exercised precisely by the person in authority or body in whose hands
it has been placed by the law.
We also cannot accept petitioners theory that Director Manalos initial endorsement of the case to the NLRC served as a dismissal of the case, which prevented her from
subsequently assuming jurisdiction over the same. The said endorsement was evidently not meant as a final disposition of the case; it was a mere referral to another agency, the
NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from subsequently deciding the case after the mistake was
rectified and the case was returned to her by the DOLE Secretary, particularly since it was a labor case where procedural lapses may be disregarded in the interest of substantial
Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al.
G.R. No. 179652
March 6, 2012 Resolution on the main Decision of May 8, 2009
Issue: Whether or not the Secretary of Labor has the power to determine the existence of an employer-employee relationship.
Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. The DOLE must have the power
to determine whether or not an employer-employee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the
Labor Code, as amended by RA 7730.
If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no
jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed in the first place.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in
the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.
To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the
DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee
relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with
the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay,
hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing
employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule
65 of the Rules of Court.
Superior Packaging Corp. vs. Balagsay et al.
G.R. No. 178909
October 10, 2012
Issue: Whether or not DOLE has authority to determine the existence of an employer-employee relationship? Whether Superior Packaging Corporation may be held solidarily
liable with Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims?
Ruling: The petition is bereft of merit.
The DOLE clearly acted within its authority when it determined the existence of an employer-employee relationship between the petitioner and respondents as it falls within the
purview of its visitorial and enforcement power under Article 128(b) of the Labor Code. The determination of the existence of an employer-employee relationship by the DOLE
must be respected.
It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but was engaged in "labor-only contracting"; hence, the petitioner was
considered an indirect employer of respondents and liable to the latter for their unpaid money claims.
Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees
of the supposed contractor, and the "labor only" contractor is considered as a mere agent of the principal, the real employer. The former becomes solidarily liable for all the
rightful claims of the employees.
Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents unpaid money claims.


SHS Perforated Materials, Inc et al. vs Diaz

G.R. No. 185814
October 13, 2010
Issues: Whether or not the temporary withholding of respondents salary/wages by petitioners was a valid exercise of management prerogative.
Ruling: Withholding respondents salary was not a valid exercise of management prerogative.
Management prerogative refers to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work. Although management
prerogative refers to the right to regulate all aspects of employment, it cannot be understood to include the right to temporarily withhold salary/wages without the consent of
the employee.
Any withholding of an employees wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code,
as set forth below:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker
concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose
any choice by him except to forego his continued employment. It exists where there is cessation of work because continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a diminution in pay.
In this case, the withholding of respondents salary does not fall under any of the circumstances provided under Article 113. Neither was it established with certainty that
respondent did not work from November 16 to November 30, 2005. Hence, the Court agrees with the LA and the CA that the unlawful withholding of respondents salary amounts
to constructive dismissal.
Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
G.R. No. 188169
November 28, 2011

Whether or not Nia Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their goldsmiths requiring them to post cash bonds or deposits; and
Whether or not there is constructive dismissal.

Ruling: 1) NO, the Nia Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition against
requiring deposits and effecting deductions from the employees' salaries.
ART. 113. Wage Deduction
Article 114.Deposits for loss or damage No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making
deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.
The petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor. The petitioners failed to
prove that their imposition of the new policy upon the goldsmiths under Nia Jewelry's employ falls under the exceptions specified in Articles 113 and 114 of the Labor Code.
2) There is NO constructive dismissal. The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from the workers' salaries. As
attested to by the respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason behind the implementation of the new policy.
Instead of airing their concerns, the respondents just promptly stopped reporting for work.
Locsin II vs. Mekeni Food Corp.
G.R. No. 192105
December 9, 2015
Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the service vehicle under the car plan.
Ruling: Given the vast territory petitioner had to cover to be able to perform his work effectively and generate business for his employer, the service vehicle was an absolute
necessity, or else Mekeni's business would suffer adversely. Thus, it is clear that while petitioner was paying for half of the vehicle's value, Mekeni was reaping the full benefits
from the use thereof.
In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between them.
Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective promotion of its
Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost of the vehicle; that is not property or money that belongs to him, nor
was it intended to be given to him in lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation package. The vehicle is an asset that
belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to refund petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart
contribution to the car plan, as this would unjustly enrich him at Mekeni's expense.
Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under the car plan agreement amounting only to the extent of the contribution Locsin made,
totalling to the amount of P112,500.00.
TH Shopfitters Corp. et al. vs. T&H Shopfitters Corp. Union
G.R. No. 191714
February 26, 2014
Issues: Whether ULP acts were committed by petitioners against respondents.
Ruling: ULP were committed by petitioners against respondents.
Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.It shall be unlawful for an employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(c) To contract out services or functions being performed by union members when such will interfere with, restrain, or coerce employees in the exercise of their right to selforganization;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. x
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the exclusion of union members, before the scheduled certification
election; 2) the active campaign by the sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its employees after the field
trip to the polling center; 4) the continuous hiring of subcontractors performing respondents functions; 5) assigning union members to the Cabangan site to work as grass cutters;
and 6) the enforcement of work on a rotational basis for union members, taken together, reasonably support an inference that, indeed, such were all orchestrated to restrict
respondents free exercise of their right to self-organization.
The Court is of the considered view those petitioners undisputed actions prior and immediately before the scheduled certification election, while seemingly innocuous, unduly
meddled in the affairs of its employees in selecting their exclusive bargaining representative.
Wesleyan University- Phils vs. Wesleyan University- Phils, Faculty and Staff Association
G.R. No. 181806
March 12, 2014
Issue: Whether or not the respondents are entitled to two retirement plans.
Ruling: The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This
rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it must be consistently and
deliberately made by the employer over a long period of time. Respondent was able to present substantial evidence in the form of affidavits to support its claim that there are two
retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early as 1997. Petitioner, on the other hand, failed to present any evidence to
refute the veracity of these affidavits. Petitioner's assertion that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one and the same is not
supported by any evidence.
The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave credits of an employee at the start of the school year. The Memorandum
dated imposes a limitation not agreed upon by the parties nor stated in the CBA, so it must be struck down.
Bluer Than Blue Joint Ventures Co. vs. Esteban
G.R. No. 192582
April 7, 2014, citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc vs Montecillo

Issue: Whether the negative sales variance could be validly deducted from the respondents wage?
Ruling: No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in cases
where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules Implementing the Labor Code,
meanwhile, provides:
SECTION 14. Deduction for loss or damage. Where the employer is engaged in a trade, occupation or business where the practice of making deductions or requiring deposits is
recognized to answer for the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the employee, the employer may make wage
deductions or require the employees to make deposits from which deductions shall be made, subject to the following conditions:



employee concerned is clearly shown to be responsible for the loss or damage;

employee is given reasonable opportunity to show cause why deduction should not be made;
amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage; and
deduction from the wages of the employee does not exceed 20 percent of the employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative variance it had in its sales for the year 2005 to 2006 and that Esteban was
given the opportunity to show cause the deduction from her last salary should not be made.
Netlink Computer Inc. vs. Delmo
G.R. No. 160827
June 18, 2014
Issue: Whether the payment of commission by U.S Dollar as a company practice/policy is protected by the non-diminution rule.
Ruling: As a general rule, all obligations shall be paid in Philippine currency. However, the contracting parties may stipulate that foreign currencies may be used for settling
obligations. This is pursuant to Republic Act No. 8183,which provides as follows:
1. All monetary obligations shall be settled in the Philippine currency which is legal tender in the Philippines. However, the parties may agree that the obligation or transaction
shall be settled in any other currency at the time of payment.
Though there was no written contract for the U.S Dollars commission, the payment of which is still mandated because it is an established practice as a company policy which is
protected by the non-diminution rule.
The principle of non-diminution of benefits, which has been incorporated in Article 100of the Labor Code, forbade Netlink from unilaterally reducing, diminishing, discontinuing or
eliminating the practice. Verily, the phrase "supplements, or other employee benefits" in Article 100 is construed to mean the compensation and privileges received by an
employee aside from regular salaries or wages.
With regard to the length of time the company practice should have been observed to constitute a voluntary employer practice that cannot be unilaterally reduced, diminished,
discontinued or eliminated by the employer, we find that jurisprudence has not laid down any rule requiring a specific minimum number of years. Several jurisprudence varies on
the number of required years for a practice to ripen.
With the payment of US dollar commissions having ripened into a company practice, there is no way that the commissions due to Delmo were to be paid in US dollars or their
equivalent in Philippine currency determined at the time of the sales. To rule otherwise would be to cause an unjust diminution of the commissions due and owing to Delmo.
PLDT vs. Estranero
G.R. No. 192518

October 15, 2014

Issue: Whether or not PLDT can validly deduct the respondent's outstanding loan obligation from his redundancy pay.
Ruling: In this case, the deductions made to the respondent's redundancy pay do not fall under any of the circumstances provided under Article 113, nor was it established with
certainty that the respondent has consented to the said deductions or that the petitioners had authority to make such deductions. Furthermore, the petitioners may not offset the
outstanding loans of the respondent against the latter's monetary benefits. The records expressly revealed that the respondent has obtained various loans from different entities
and not with PLDT. Accordingly, set-off or legal compensation cannot take place between PLDT and the respondent because they are not mutually creditor and debtor of each
other. Thus, there can be no valid set-off because the respondent's creditor is not PLDT.
The Court further agrees with the labor tribunals that the petitioners cannot offset the outstanding balance of the respondent's loan obligation with his redundancy pay because
the balance on the loan does not come within the scope of jurisdiction of the LA. The demand for payment of the said loans is not a labor, but a civil dispute. It involves debtorcreditor relations, rather than employee-employer relations. Evidently, the respondent's unpaid balance on his loans cannot be offset against the redundancy pay due to him.
The Court rules that PLDT has no legal right to withhold the respondent's redundancy pay and other benefits to recompense for his outstanding loan obligations to different
entities. The respondent's entitlement to his redundancy pay is mandated by law which the petitioners cannot unjustly deny.


Congson vs. NLRC

243 SCRA 260 (1995)
Ruling: Petitioner's practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to the above
cited provision of the Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even
expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of
Article 102 are present.
North Davao Mining vs. NLRC
254 SCRA 721 (1996)
Issue: Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time.
Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered
compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the time in collecting
complainants salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for. Corollary, we likewise hold respondents liable for the
transportation expenses incurred by complainants at P40.00 round trip fare during pay days.
Heirs of Sara Lee vs. Rey
G.R. No. 149013
August 31, 2006
Issue: WON the respondent is entitled to 13th month pay.
Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC
and the CA are correct in refusing to award 14th and 15th month pay as well as the monthly salary increase of 10 percent per year for two years based on her latest salary rate.
The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same.
With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a
component in the computation of back wages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables,

including the companys fiscal situation, the employees future performance on the job, or the employees continued stay in a position. In short, absent any proof, there is no
vested right to salary increases.


San Juan De Dios Hospital vs. NLRC

282 SCRA 316 (1997)
Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon completion of 40-hour/5-day workweek, is valid based on existing labor laws.
Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the provision of Article 83 of the Labor Code, as well as to R.A. No. 5901.
A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory
Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and
not to dole out a two days off with pay. Petitioners' position is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards which implement
Republic Act No. 5901. Section 15 of aforementioned implementing rules grants specific rate of additional compensation for work performed on Sunday or for work performed in
excess of forty hours a week. Policy Instruction No. 54 unduly extended the statute.
Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work
on the sixth day. There is nothing in the law that supports then Secretary of Labor and petitioners assertion. The Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court will not hesitate to strike
down an administrative interpretation that deviates from the provision of the statute.
Simedarby vs. NLRC
289 SCRA 86 (1998)
Issue: Whether or not the memorandum dated Aug 14 1992 discontinuing the 30-minute paid on call lunch break constituted unfair labor practice and diminution of benefits
Ruling: The Supreme Court sustained petitioner, holding that it is clearly a management prerogative to fix the work schedules of company employees. Under the old schedule,
the employees are compensated during their 30-minute lunch break, but in essence it is still working time since the workers could be called upon to work. Whereas in the new
schedule, the employees are given a longer break of 1 hour, though uncompensated, it is uninterrupted as workers on their break are no longer on call. The change in schedule
would improve company productivity as well as enhance the comfort of workers who could enjoy an uninterrupted break.
The Supreme Court also reiterated the policy that while social justice and the protection of the working class is ensured by the Constitution, the same fundamental law also
protects the right of the management to regulate all aspects of employment as well as to retain the prerogative of changing work schedules according to the exigencies of the
enterprise. So long as this prerogative is exercised in good faith, the Court upholds such exercise.
Philippine Airlines vs. NLRC
302 SCRA 582 (1990)
Issue: WON being a full-time employee, private respondent is obliged to stay in the company premises for not less than eight (8) hours.
Ruling: NO. Employees are not prohibited from going out of the premises as long as they return to their post on time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises.
Employees are not prohibited from going out of the premises as long as they return to their posts on time. Private respondents act, therefore, of going home to take his dinner
does not constitute abandonment.
Linton Commercial Company Inc. vs. Hellera et al.
G.R. No. 163147
October 10, 2007
Issue: WON there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six to three the number of working days with the
employees working on a rotation basis.
Ruling: The compressed workweek arrangement was unjustified and illegal.
Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management
prerogative must be exercised in good faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before a company can validly opt to
reduce the work hours of its employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction
of work hours. If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor
Code were to be considered, petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the
employer's operation of a business or undertaking for a period not exceeding six (6) months.
Records show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned more than the maximum period. On the other
hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not de
minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the
alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these
Bisig Manggagawa sa Tryco vs. NLRC
G.R. No. 151309
October 15, 2008
Issue: Whether or not the company committed Unfair Labor Practices
Ruling: No. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits,
and other privileges, the employee may not complain that it amounts to a constructive dismissal. In this case, the transfer orders do not entail a demotion in rank or diminution of
salaries, benefits and other privileges of the petitioners.
Finally, MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. In addition, D.O. No. 21 sanctions
the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme. Moreover, the adoption of a
compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA
complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its
terms should be implemented as they are written.


San Miguel Cop. vs. CA

G.R. No. 146775
January 30, 2002

Whether or not public respondents seriously erred and committed grave abuse of discretion when they granted Muslim Holiday Pay to non-Muslim employees of SMC.

Ruling: The court ruled the issues in negative.

Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays:


Amun Jadd (New Year), which falls on the first day of the first lunar month of Muharram;
Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar month of Rabi-ul-Awwal;
Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the twenty-seventh day of the seventh lunar month of Rajab;
d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal, commemorating the end of the fasting season; and
d-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhl-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created; (2) Upon proclamation by the
President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides:
Art. 94. Right to holiday pay. (a)
Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10)
The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the provisions of this Code shall be applicable only to Muslims." However, there should be no
distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. Wages and other emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws and certainly not on the basis of the workers faith or religion.
On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides:
Article 128. Visitorial and enforcement power. In the case before us, Regional Director Macaraya acted as the duly authorized representative of the Secretary of Labor and Employment and it was within his power to issue the
compliance order to SMC. In addition, the Court agrees with the Solicitor General that the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim
employees. Indeed, petitioner merely contends that its non-Muslim employees are not entitled to Muslim holiday pay. Hence, the issue could be resolved even without
documentary proofs. In any case, there was no indication that Regional Director Macaraya failed to consider any documentary proof presented by SMC in the course of the
Tan vs. Lagrama (kadtong nangihi lol)
G.R. No. 151228
August 15, 2002
Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits provided by law.
Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a just or
authorized cause provided by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for
under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in
the manner of dismissal is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was
dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy
environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama did
urinate in a place other than a rest room in the premises of his work.
Lambo vs. NLRC
317 SCRA 420
Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of
benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.
Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law.
Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners were employees of private respondents although they were paid
not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those
whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A
piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the
employers control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished.
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term
"wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task,
piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not
covered by the SSS affect the employer-employee relationship.
As petitioners were illegally dismissed, they are entitled to reinstatement with back wages.
R&E Transport vs. Latag
G.R. No. 155214
February 13, 2004
Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Ruling: The Supreme Court ruled that the respondent is entitled to retirement benefits despite of the waiver of quitclaims.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides:
Retirement. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as
one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and
the cash equivalent of not more than five (5) days of service incentive leaves.
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the
"boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles.
Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per
day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000. Hence, it is clear that the late Pedro M. Latag is entitled to retirement
Asian Transmission vs. CA
425 SCRA 478 (2004)
Issue: Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on the same day.
Ruling: The Court dismissed the petition and ruled that petitioners should pay its employees 200% and not just 100% of their regular daily wages for the unworked April 9, 1998
which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor. Its purpose is not merely "to prevent diminution
of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his
holiday pay."
The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory
benefit demandable under the law.

Autobus Transport System vs. Bautista

G.R. No. 156364
May 16, 2005
Issue: Whether or not respondent is entitled to service incentive leave. (manong driver)
Ruling: The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all employees except: (d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof;
The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive
leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work
in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel,"
applying the rule on ejusdem generis that the general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task
or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field
What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is field personnel?
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the employer.
Respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly,
respondent is entitled to the grant of service incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that "every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days
with pay."
Penaranda vs. Baganga Plywood Corp.
G.R. No. 159577
My 3, 2006
Facts: Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance
of its steam plant boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit supporting documents.
Pearanda alleges that he was employed by respondent Banganga on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was
illegally terminated on December 19, 2000. he alleges that his services were terminated without the benefit of due process and valid grounds in accordance with law.
Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claimed for payment of damages and
attorney's fees having been forced to litigate the present complaint.
Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and is represented herein by its General Manager HUDSON CHUA, the individual
respondent. Respondents allege that complainant's separation from service was done pursuant to Art. 283 of the Labor Code. The respondent BPC was on temporary closure due
to repair and general maintenance and it applied for clearance with the Department of Labor and Employment, Regional Office No. XI, to shut down and to dismiss employees.
And due to the insistence of herein complainant he was paid his separation benefits.
Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed to reapply.
The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature because he was still employed by BPC. Petitioners money claims for
illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions
and thirteenth month pay.
Issue: Whether or not Pearanda is a regular, common employee entitled to monetary benefits under Art. 82 of the Labor Code and is entitled to the payment of overtime pay
and other monetary benefits.
Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.
The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of
the coverage of labor standards. Like managerial employees, officers and member of the managerial staff are not entitled to the provisions of law on labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities:
The primary duty consists of the performance of work directly related to management policies of the employer;
Customarily and regularly exercise discretion and independent judgment;
(i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience,
or knowledge; or (iii) execute under general supervision special assignments and tasks; and
who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of
the work described in paragraphs (1), (2), and (3) above."
The petitioners work involves:
To supply the required and continuous steam to all consuming units at minimum cost.
To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories.
To evaluate performance of machinery and manpower.
To follow-up supply of waste and other materials for fuel.
To train new employees for effective and safety white working.
Recommend parts and suppliers purchases. acEHSI
To recommend personnel actions such as: promotion, or disciplinary action.
To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.
Implement Chemical Dosing.
Perform other task as required by the superior from time to time." 34
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the
definition of a member of a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the
engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor,
petitioner is deemed a member of the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. The term
foreman implies that he was the representative of management over the workers and the operation of the department. Petitioner's evidence also showed that he was the

supervisor of the steam plant. His classification as supervisors is further evident from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees
who were paid on a monthly basis; the others were paid only on a daily basis.

Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU

G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004
Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA)
covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-President, Vicente P.
Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper, insisted payment of the
holiday pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the covered employees is
Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and
special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of
the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper that the employees
were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees' salaries gains
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers Bank of the Philippines v. National Labor Relations Commission. In this
case, the monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law and excluding only
Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special
holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable
to the employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a divisor that was less than 365 days cannot make the employer
automatically liable for underpayment of holiday pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum
allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were
deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays
and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are
being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of
holiday pay, a "double burden" was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been
included in the computation of their monthly salaries.

Bahia Shipping Services vs. Chua

G.R. No. 162195
April 8, 2008 citing Cagampan vs. NLRC 195 SCRA 533 (1998)
Issue: In the computation of the award, should the guaranteed overtime pay per month be included as part of his salary?
Ruling: There is no factual or legal basis in the inclusion of his "guaranteed overtime" pay into his monthly salary computation for the entire unexpired period of his contract.
The Court ruled in Cagampan v. National Labor Relations Commission, that although an overseas employment contract may guarantee the right to overtime pay, entitlement to
such benefit must first be established, otherwise the same cannot be allowed.
Petitioners contention that there is no factual or legal basis for the inclusion of said amount since respondents repatriation is well-taken.
PNCC Skyway Traffic Management and Security Division Workers Organization
G.R. No. 171231
February 17, 2010
Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its employees.
Ruling: Yes. In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of
vacation leave shall be under the option of the employer. The preference requested by the employees is not controlling because respondent retains its power and prerogative to
consider or to ignore said request. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall
prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the law between the parties.
Radio Mindanao Network Inc. et al. vs. Ybarola, Jr.
G.R. No. 198662
September 12, 2012
Issue:Whether or not the release/quitclaim affidavits are invalid for being against public policy.
Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy for two reasons: (1) the terms of the settlement are
unconscionable; the separation pay for termination due to reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of the
amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the document, it was their dire circumstances and inability to support their
families that finally drove them to accept the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim instrument, but were eventually
forced to sign given their circumstances. To be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the respondents length of service
25 years for Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.


Reyes vs. NLRC et al.

G.R. No.160233 August 8, 2007 citing Bole Takeda Chemicals vs. Dela Serna, 228 SCRA 329 (1993) &Phil. Duplicators vs. NLRC, 241 SCRA 380 (1995)
Issue: Whether or not the average monthly sales commission of thirty one thousand eight hundred forty six and 97/100 (Php31,846.97) should be included in the computation of
his retirement benefits and 13th month pay.
Ruling: As to the main issue whether petitioner's commissions be considered in the computation of his retirement benefits and 13th month pay, we rule in the negative. Article
287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. Any employee may be retired upon
reaching the retirement age established in the collective bargaining agreement or other applicable employment contract
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retirement benefits is his latest salary rate of P10,919.22 as the
commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when these earnings and remuneration are
closely akin to fringe benefits, overtime pay or profit-sharing statements, they are properly excluded in computing retirement pay. However, sales commissions which are
effectively an integral portion of the basic salary structure of an employee, shall be included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his position as Unit Manager. Thus, as correctly ruled by public
respondent NLRC, the "overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid
its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale of article at all. Therefore, any commission which they receive is certainly not the
basic salary which measures the standard or amount of work of complainant as Unit Manager. Accordingly, the additional payments made to petitioner were not in fact sales
commissions but rather partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation,
which pronounced that commissions are additional pay that does not form part of the basic salary, applies to the present case.

Arco Metal Products Co. Inc et al. vs Samahan ng mga Mangagawa sa Arco Metal- NAFLU (3 union members did not receive the same benefits as to the 7)
G.R. No. 170734
May 14, 2008
Issue:Whether or not the prorated payment of the benefits constitute a violation under Art. 100 of the Labor Code.
Ruling:SC ruled in favor of the respondents. The voluntary grant of the benefits has been an established company practice. It has been a company practice which grants full
benefits to its employees regardless of the length of service rendered.
There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The
clear wording of the provisions does not allow any other interpretation. Anent the 13th month pay and bonus, we agree with the findings of Labor Arbiter Mangabat that the CBA
provisions did not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total compensation which an employee receives for the whole
calendar year. The bonus is also equivalent to the amount of the 13th month pay given, or in proportion to the actual service rendered by an employee within the year.
Universal Robina Sugar Millin Corp. vs. Caballeda
G.R. No 156644
July 28, 2008

Whether RA 7641 can be given retroactive effect?

Whether or not Agripino Caballeda and Alejandro Cadalin voluntarily retired from the service?

Ruling:The issue of retroactivity has long been settled in the case of Enriquez Security Services, Inc. vs. Cabotaje.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial wellbeing of workers during their twilight years soon following their
life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect,
and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have
This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given
retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the
requirements for eligibility for such retirement benefits under the statute.
When respondents were compulsorily retired from the service, RA 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply
with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive
application of R.A. 7641 in this case.
Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Generally, the law looks with disfavor on quitclaims and releases by
employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of
employees. They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of
benefits therefrom does not amount to estoppel.
In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites: (1) the employee executes
a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the
contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. In this case, petitioners failed to
establish all the foregoing requisites.
Absent any convincing proof of voluntariness in the submission of the documentary requirements and the execution of the quitclaim, we cannot simply assume that respondents
were not subjected to the very same pressure. Respondents vigorously pursued this case all the way up to the Supreme Court. Without doubt, this is a manifestation that
respondents had no intention of relinquishing their employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired. Respondents did not voluntarily
retire but were forced to retire, tantamount to illegal dismissal.
Cercado vs. Uniprom, Inc.
G.R. No. 188154
October 13, 2010

Whether or not UNIPROM has a bona fide retirement plan

Whether or not petitioner was validly retired pursuant thereto

Ruling: Petition is meritorious.


Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as amended by R.A 7641, pegs the age for compulsory retirement at 65 years old, while
the minimum age for optional retirement is set at 60 years. However, an employer is free to impose a retirement age earlier than the foregoing mandates. This has
been upheld in numerous cases as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22 years, pursuant to the companys retirement plan, which
provides that employees who have rendered at least 20 years of service can be retired at the option of the copany. Respondents retirement plan can be expediently
stamped with validity and justified under the all encompassing phrase management prerogative.


No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that a retirement plan giving the employer the option to retire its employees below
the ages provided by law must be assented to and accepted by the latter, otherwise its adhesive imposition will amount to a deprivation of property without due
process. In decided cases, the retirement plans were either embodied in the CBA, or established after consultations and negotiations with the emplyees bargaining
representative. The cnsent of the employees to be retired even before the statutory retirement age of 65 years was thus clear and unequivocal. Acceptance by the
employees of an early retirement age must be explicit, voluntary, free and uncompelled.

Radio Mindanao Network Inc. et al. vs. Ybarola, Jr. et al.

G.R. No. 198662
September 12, 2012
Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983, respectively, by Radio Mindanao Network (RMN). They
eventually became account managers, soliciting advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a result of RMN's reorganization/restructuring; they were given their separation pay P631,250.00 for
Ybarola, and P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which were later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal
with several money claims, including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for Ybarola and P40,000.00 for Rivera.
Issue: Whether the amounts the respondents received represented a fair and reasonable settlement of their claims
Ruling:The petitioners insist that the respondents' commissions were not part of their salaries, because they failed to present proof that they earned the commission due to
actual market transactions attributable to them. They submit that the commissions are profit-sharing payments which do not form part of their salaries. We are not convinced.
If these commissions had been really profit-sharing bonuses to the respondents, they should have received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera
received P372,173.11 and P586,998.50 commissions, respectively, in 2002. The variance in amounts the respondents received as commissions supports the CA's finding that the
salary structure of the respondents was such that they only received a minimal amount as guaranteed wage; a greater part of their income was derived from the commissions

they get from soliciting advertisements; these advertisements are the "products" they sell. As the CA aptly noted, this kind of salary structure does not detract from the character
of the commissions being part of the salary or wage paid to the employees for services rendered to the company, as the Court held in Philippine Duplicators, Inc. v. NLRC.
The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding the "proper appreciation of quitclaims," as they put it, is misplaced. While Talam,
in the cited case, and Ybarola and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than two years of service with the company; he was not shortchanged and no essential unfairness took
place. In this case, as the CA noted, the separation pay the respondents each received was deficient by at least P400,000.00; thus, they were given only half of the amount they
were legally entitled to. To be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the respondents' length of service 25 years for
Ybarola and 19 years for Rivera. The CA was correct when it opined that the respondents were in dire straits when they executed the release/quitclaim affidavits. Without jobs and
with families to support, they dallied in executing the quitclaim instrument, but were eventually forced to sign given their circumstances.

Padillo vs. Rural Bank of Nabunuturan Inc.

G.R. No. 199338
January 21, 2013
Facts: On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity
problems which arose sometime in 2003, the Bank took out retirement/insurance plans with Philippine American Life and General Insurance Company (Philam Life) for all its
employees in anticipation of its possible closure and the concomitant severance of its personnel. In this regard, the Bank procured Philam Plan Certificate of Full Payment No.
88204, Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for a benefit amount of P100,000.00 and which was set to mature on July 11,
2009. .During the latter part of 2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to effectively pursue his work.On September 10,
2007, he wrote a letter addressed to respondent Oropeza, the president of the bank, expressing his intention to avail of an early retirement package. Despite several follow-ups,
his request remained unheeded. On October 3, 2007, Padillo was separated from employment due to his poor and failing health as reflected in a Certification dated December 4,
2007 issued by the Bank. Not having received his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid retirement benefits.
Issue: Whether Padillo is entitled to claim for separation and retirement benefits under the Labor Code?
Ruling: The Labor Code provision on termination on the ground of disease under Article 297 does not apply in this case, considering that it was the petitioner and not the Bank
who severed the employment relations. It was Padillo who voluntarily retired and that he was not terminated by the Bank.
Under article 300 of the labor code, in the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5)
years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being
considered as one whole year. Notably, these age and tenure requirements are cumulative and non-compliance with one negates the employee's entitlement to the retirement
benefits under Article 300 of the Labor Code.
In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract between the parties which set out the terms
and condition for the retirement of employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the Bank. In the absence of any
applicable contract or any evolved company policy, Padillo should have met the age and tenure requirements set forth under Article 300 of the Labor Code to be entitled to the
retirement benefits provided therein. Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for twenty-nine (29) years he,
however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds
due under the Philam Life Plan, petitioners' claim for retirement benefits must be denied.
Grace Christian High School vs. Lavandera
G.R. No. 177845
August 20, 2014
Issue: Whether Grace Christian High school can have permanent seat in board as director?
Ruling: No. The former and present corporation law leave no room for doubt as to their meaning: the board of directors of corporations must be elected from among the
stockholders or members. There may be corporations in which there are unelected members in the board but it is clear that in the examples cited by petitioner the unelected
members sit as ex officio members, i.e., by virtue of and for as long as they hold a particular office. Nor can petitioner claim a vested right to sit in the board on the basis of
practice. Practice, no matter how long continued, cannot give rise to any vested right if it is contrary to law. Even less tenable is petitioners claim that its right is coterminus
with the existence of the association.
Banco De Oro Unibank vs. Sagaysay
G.R. No. 214961
September 16, 2015
Issue: Whether a retirement plan adopted before the employment of an employee is deemed binding on the latter.
Ruling: Sagaysay was sufficiently informed of the retirement plan and had consented to the retirement plan of BDO before his compulsory retirement because the retirement
plan was established 12 years before Sagaysay was employed and no employee had earnestly questioned the retirement plan.
By accepting the employment offer of BDO, Sagaysay was deemed to have assented to all existing rules, regulations and policy of the bank, including the retirement plan.
BDO issued a memorandum regarding the implementation of its retirement program, reiterating that the normal retirement date was the first of the month following the
employees sixtieth birthday addressed to all employees and officers. By this time Sagaysay was already an employee and he did not deny being informed of such memorandum.
For four years, from the time he was employed until his retirement, yet he did not express his dissent.
Sagaysay earlier acknowledged the retirement program of BDO and even requested for an extension of service. Moreover, he signed a quitclaim for and in consideration of
P98,376.14 which discharged the bank, its affiliates and its subsidiaries from any action, suit, claim or demand in connection with his employment. When it is shown that the
person executing the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim was credible and reasonable, the transaction
must be recognized as a valid and binding undertaking. Court is of the view that the quitclaim was validly executed.