Recruitment and Placement and

OFWs
1. PEOPLE OF THE PHILIPPINES v.
MELISSA CHUA G.R. No. 184058
March 10, 2010
Doctrines:
A person convicted of illegal recruitment may, in addition, be convicted of Estafa
as penalized under Article 315, paragraph 2(a) of the Revised Penal Code, held
that the elements thereof were sufficiently established, viz:
(a)that appellant deceived the complainants by assuring them of employment
in Taiwan provided they pay the required placement fee;
(b)that relying on such representation, the complainants paid appellant the
amount demanded;
(c) that her representation turned out to be false because she failed to deploy
them as promised; and
(d) that the complainants suffered damages when they failed to be
reimbursed the amounts they paid.
ILLEGAL RECRUITMENT v. ESTAFA
Illegal recruitment is malum prohibitum, while estafa is malum in se. In the first,
the criminal intent of the accused is not necessary for conviction. In the second,
such an intent is imperative. Estafa under Article 315, paragraph 2, of the
Revised Penal Code, is committed by any person who defrauds another by
using fictitious name, or falsely pretends to possess power, influence,
qualifications, property, credit, agency, business or imaginary transactions, or by
means of similar deceits executed prior to or simultaneously with the
commission of fraud.
FACTS:
Sometime in 2002, accused Josie Campos (at large) and accused-appellant
Chua promised to the complainants deployment to Taiwan as factory workers.
In connection with their deployment, accused-appellant Chua, who was then a
temporary cashier at Golden Gate (Recruitment Agency), collected from the
complainants the following amount as part of their placement fees:
ERIK DE GUIA TAN P73,000.00 MARILYN D.
MACARANAS - 83,000.00
NAPOLEON H. YU, JR. 23,000.00 HARRY JAMES
P. KING - 23,000.00
ROBERTO C. ANGELES 23,000.00

Without valid reasons and without fault on the part of the said complainants,
accused-appellant Chua failed to actually deploy them and failed to reimburse
expenses incurred in connection with their documentation and processing for
purposes of their deployment.
As her defense, appellant Chua maintains that Golden Gate was a licensed
recruitment agency and that Josie, who is her godmother, was an agent.
Admitting having received P80,000 each from Marilyn and Tan, receipt of which
she issued but denying receiving any amount from King, she claimed that she
turned over the money to the documentation officer, one Arlene Vega, who in
turn remitted the money to Marilyn Calueng whose present whereabouts she did
not know.
RTC RULING: Found CHUA GUILTY as principal of a large scale illegal
recruitment and estafa three (3) counts. She is sentenced to life imprisonment
and to pay a fine of Five Hundred Thousand Pesos (P500,000.00) for illegal
recruitment. As regards Criminal Cases Nos. 04- 222597 and 04-222599, both
are dismissed for lack of interest of complainants Roberto Angeles and
Napoleon Yu, Jr.
CA RULING: AFFIRMED RTC
ISSUE: WON CHUA is guilty of Illegal Recruitment in a Large Scale and Estafa.
SC RULING:
YES. The recruitment activities were done at the time Golden Gates license
had already expired. Further, the illegal recruitment was made in a large scale
because the following essential elements are present, to wit: (1) the accused
undertook a recruitment activity under Article 13(b) or any prohibited practice
under Article 34 of the Labor Code; (2) the accused did not have the license or
the authority to lawfully engage in the recruitment and placement of workers;
and (3) the accused committed such illegal activity against three or more
persons individually or as a group.
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Even if CHUA were a mere temporary cashier of Golden Gate, that did not
make her any less an employee to be held liable for illegal recruitment as
principal by direct participation, together with the employer, as it was shown that
she actively and consciously participated in the recruitment process.
Assuming arguendo that CHUA was unaware of the illegal nature of the
recruitment business of Golden Gate, that does not free her of liability either.
Illegal Recruitment in Large Scale penalized under Republic Act No. 8042, or
"The Migrant Workers and Overseas Filipinos Act of 1995," is a special law, a
violation of which is malum prohibitum, not malum in se. Intent is thus
immaterial. And that explains why CHUA was, aside from Estafa, convicted of
such offense.

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2. PEOPLE OF THE PHILIPPINES v. RODOLFO GALLO y GADOT, FIDES

PACARDO y JUNGCO and
PILAR MANTA y DUNGO
G.R. No. 184058
March 10, 2010
VELASCO, JR., J.:
Doctrine:
To commit syndicated illegal recruitment, three elements must be
established: (1) the offender undertakes either any activity within the meaning of
"recruitment and placement" defined under Article 13(b), or any of the prohibited
practices enumerated under Art. 34 of the Labor Code; (2) he has no valid
license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; 8 and (3) the illegal recruitment is
committed by a group of three (3) or more persons conspiring or confederating
with one another.When illegal recruitment is committed by a syndicate or in
large scale, i.e., if it is committed against three (3) or more persons individually
or as a group, it is considered an offense involving economic sabotage.
FACTS:
The present case involves two criminal cases, one for syndicated illegal
recruitment and the other for estafa, filed by Edgardo Dela Caza against 13
persons including the accused. However, only accused-appellant Gallo,
Pacardo and Manta have proceeded to trial because the others were at large.
Sometime in May 2011, Dela Caza was briefed by Mardeolyn, president of
MPM Agency (non -licensed), about the processing of his papers for a possible
job opportunity in Korea, as well as their possible salary. One Yeo Sin Ung, a
Korean national, gave a briefing about the business and what to expect from the
company. Then, here comes accused -appellant Gallo who introduced himself
as Mardeolyns relative and specifically told Dela Caza of the fact that the
agency was able to send many workers abroad. Dela Caza was even showed
several workers visas who were already allegedly deployed abroad. Later on,
accused-appellant Gallo signed and issued an official receipt acknowledging the
down payment of Dela Caza. After two weeks, Dela Caza went back to MPMs
office only to find out that it had transferred to another place. After successfully
locating the new office, Dela Caza made a follow-up again but the agency failed
to deploy him. Later on, MPM transferred to another location without informing
Dela Caza. After two months, MPM has still failed to deploy Dela Caza and also
failed to return his money despite repeated demands. Dela Caza and other
applicants decided to take action.
As his defense, accused-appellant Gallo denied having any part in the
recruitment of Dela Caza. In fact, he testified that he also applied with MPM
Agency for deployment to Korea as a factory worker. He then worked for MPM
in order for him to fully pay the placement fee. Accused-appellant Gallo further

avers that he cannot be held criminally liable for illegal recruitment because he
was neither an officer nor an employee of the recruitment agency.
RTC RULING:
Found GALLO GUILTY of syndicated illegal recruitment and estafa. He is
sentenced to life imprisonment and to pay a fine of P 1, 000,000.00 for illegal
recruitment. He is ordered to return P 45, 000 to Dela Caza.
Pacardo and Manta were acquitted for lack of evidence. It was only established
that Pacardo acted as the MPMs employee who was in charge of the records of
the applicants. Manta, on the other hand, was also an employee who was
tasked to deliver documents to the Korean Embassy.
CA RULING: AFFIRMED RTC with MODIFICATION
In the Criminal Case for estafa, accused-appellant Gallo is sentenced to four (4)
years of prision correccional to ten (10) years of prision mayor (previous
sentence was FOUR (4) years of prision correccional as minimum to NINE (9)
years of prision mayor as maximum)
ISSUE: WON GALLO is guilty of Syndicated Illegal Recruitment and Estafa.
SC RULING:
YES. All the elements for Syndicated Illegal Recruitment are present (see case
doctrine). Further, the testimony Dela Caza showed that accused-appellant
Gallo made false misrepresentations and promises in assuring them that after
they paid the placement fee, jobs in Korea as factory workers were waiting for
them and that they would be deployed soon. In fact, Dela Caza personally
talked to accused-appellant Gallo and gave him the money and saw him sign
and issue an official receipt as proof of his payment. Without a doubt, accusedSan Beda College
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appellant Gallos actions constituted illegal recruitment.

Additionally, accused-appellant Gallo cannot argue that the trial court erred in
finding that he was indeed an employee of the recruitment agency. On the
contrary, his active participation in the illegal recruitment is unmistakable. The
fact that he was the one who issued and signed the official receipt belies his
profession of innocence.

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3. CLAUDIO S. YAP v. THENAMARIS SHIP'S MANAGEMENT and

INTERMARE MARITIME AGENCIES,
INC.
May 30,
G.R. No. 179532
2011
NACHURA, J.:
Doctrine:
While this case was pending before the SC, we declared as unconstitutional the
clause "or for three months for every year of the unexpired term, whichever is
less" provided in the 5th paragraph of Section 10 of R.A. No. 8042. The reason
for declaring such clause unconstitutional is that it gives an erring employer the
option to pay an illegally dismissed migrant worker only three months for every
year of the unexpired term of his contract whereas under the Labor Code, he is
guaranteed with reinstatement with full backwages computed from the time
compensation was withheld from them up to their actual reinstatement.
FACTS:
In August 23, 2001, Yap commenced the job as an electrician of the vessel,
M/T SEASCOUT, with Intermare as his agency and Vulture Shipping Ltd., as his
principal. The duration of his contract was for 12 months. However, on
November 8, 2001, the vessel was sold, so Yap effectively lost his job. Capt.
Adviento of Intermare and Thenamaris informed the crew members, including
Yap, that they are given the option to be transferred to other vessels. Yap
received bonuses and was offered payment equivalent to his one- month basic
wage. He refused to accept the payment of one -month basic wage, insisting
that he is entitled to the payment of the unexpired portion of his contract since
he was illegally dismissed from employment. The refusal of Intermare and
Thenamaris to pay the unexpired portion of Yaps contract and their inaction in
transferring him to other vessels have lead Yap to file a complaint for Illegal
Dismissal.
LA RULING:
Yap has been CONSTRUCTIVELY AND ILLEGALLY DISMISSED by
respondents. The latter was ordered to pay Yap the amount corresponding to
the unexpired portion of his contract with damages.
LA found that respondents acted in bad faith when they assured Yap of reembarkation and required him to produce an electrician certificate during the
period of his contract, but actually he was not able to board one despite of
respondents numerous vessels.
NLRC RULING: AFFIRMED LA with MODIFICATION
The NLRC ordered the respondent to pay Yap the amount equivalent to three
(3) months basic salary pursuant the clause "or for three months for every year

of the unexpired term, whichever is less" provided in the 5th paragraph of

Section 10 of R.A. No. 8042.
CA RULING: AFFIRMED NLRC
ISSUE: WON Yap is entitled to the payment of the unexpired portion of his
contract.
SC RULING:
YES. During the pendency of this case before the SC, the clause "or for three
months for every year of the unexpired term, whichever is less" has been
declared unconstitutional. Thus, Yap is entitled to the payment of the unexpired
portion of his contract.
The doctrine of operative fact as an exception to Article 7 of the New Civil
Code is not applicable in this case because the respondents were in bad faith in
the first place. The doctrine only applies as a matter of equity and fair play. It
nullifies the effects of an unconstitutional law by recognizing that the existence
of a statute prior to a determination of unconstitutionality is an operative fact and
may have consequences which cannot always be ignored.
The SC also ruled, as raised for the first time, that the tanker allowance is part
of the basic salary. It is even encapsulated in the basic salary clause found in
Yaps contract.

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4. PEOPLE OF THE PHILIPPINES v. HON. DOMINGO PANIS, Presiding

Judge of the Court of First Instance of Zambales & Olongapo City, Branch
III and SERAPIO ABUG
G.R. Nos. L-58674-77 July 11, 1990
CRUZ, J:
Doctrine:
The proviso That any person or entity which, in any manner, offers or promises
for a fee employment to two or more persons shall be deemed engaged in
recruitment and placement found in Article 13(b) of the Labor Code merely
creates a presumption that an individual or entity is engaged in recruitment and
placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course
of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers. ". It does not require that there be at least two victims
before the activity is to be considered as illegal recruitment.
FACTS:
On January 9, 1981, four (4) Informations were filed against Abug charging him
of Illegal Recruitment. Abug then filed a Motion to Quash on the ground that the
informations did not charge an offense because he was accused of illegally
recruiting only one person in each of the four informations. Under the proviso in
Article 13(b), he claimed, there would be illegal recruitment only "whenever two
or more persons are in any manner promised or offered any employment for a
fee. " On the other hand, the prosecution argues that the requirement of two or
more persons is imposed only where the recruitment and placement consists of
an offer or promise of employment to such persons and always in consideration
of a fee. The other acts mentioned in the body of the article may involve even
only one person and are not necessarily for profit.
ISSUE: WON the Labor Code requires that there be at least two victims before
an activity is to be considered as illegal recruitment.
SC RULING:
NO. The proviso merely lays down a rule of evidence that where a fee is
collected in consideration of a promise or offer of employment to two or more
prospective workers, the individual or entity dealing with them shall be deemed
to be engaged in the act of recruitment and placement. The words "shall be
deemed" create that presumption.
This is not unlike the presumption in article 217 of the Revised Penal Code, for
example, regarding the failure of a public officer to produce upon lawful demand
funds or property entrusted to his custody. Such failure shall be prima facie
evidence that he has put them to personal use; in other words, he shall be
deemed to have malversed such funds or property. In the instant case, the word
"shall be deemed" should by the same token be given the force of a disputable

presumption or of prima facie evidence of engaging in recruitment and

placement.

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5. TRANS ACTION OVERSEAS CORPORATION v.THE HONORABLE

SECRETARY OF LABOR and (33)
PRIVATE RESPONDENTS
G.R. No. 109583
September 5, 1997
ROMERO, J.:
Doctrine:
In view of the Court's disposition in the case of People v. Diaz, we rule that the
power to suspend or cancel any license or authority to recruit employees for
overseas employment is concurrently vested with the POEA and the Secretary
of Labor.
FACTS:
From July 24 to September 9, 1987, Trans, a private fee-charging employment
agency, scoured Iloilo City for possible recruits for alleged job vacancies in
Hongkong. Private respondents sought employment as domestic helpers
through Transs employees, Luzviminda Aragon, Ben Hur Domincil and his wife
Cecille. The applicants paid placement fees ranging from P1,000 to P14,000,
but Trans failed to deploy them. Their demands for refund proved unavailing;
thus, they were constrained to institute complaints against Trans for violation of
Articles 32 and 34(a) of the Labor Code, as amended. For their part, Trans
claims that they have not receive the money and that their employees had no
authority to collect the same.
On April 5, 1991, Labor Usec. Nieves Confesor rendered the assailed Order
cancelling the license of Trans. According to Usec. Confesor, Trans is liable for
twenty eight (28) counts of violation of Article 32 and five (5) counts of Article 34
(a) with a corresponding suspension in the aggregate period of sixty six (66)
months. Considering however, that under the schedule of penalties, any
suspension amounting to a period of 12 months merits the imposition of the
penalty of cancellation, prompting him to cancel Trans license.
Trans filed a petition under Rule 65. Trans contends that Usec. Confesor acted
with grave abuse of discretion in rendering the assailed orders on alternative
grounds, viz.: (1) it is the Philippine Overseas Employment Administration
(POEA) which has the exclusive and original jurisdiction to hear and decide
illegal recruitment cases, including the authority to cancel recruitment licenses,
or (2) the cancellation order based on the 1987 POEA Schedule of Penalties is
not valid for non -compliance with the Revised Administrative Code of 1987
regarding its registration with the U.P. Law Center.
ISSUES:
(a) WON the DOLE, through Usec. Confesor, has the authority to cancel the
license of Trans.
(b)WON the non-filing of the 1987 POEA Schedule of Penalties with the UP
Law Center rendered it ineffective.

SC RULING:
(a)YES. See Case Doctrine
(b)NO. The POEA Revised Rules on the Schedule of Penalties was issued
pursuant to Article 34 of the Labor Code, as amended. The same merely
amplified and particularized the various violations of the rules and regulations of
the POEA and clarified and specified the penalties therefore. The questioned
schedule of penalties contains only a listing of offenses. It does not prescribe
additional rules and regulations governing overseas employment but only
detailed the administrative sanctions imposable by this Office for some
enumerated prohibited acts.
Under the circumstances, the license of the respondent agency was cancelled
on the authority of Article 35 of the Labor Code, as amended, and not pursuant
to the 1987 POEA Revised Rules on Schedule of Penalties.

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6. REPUBLIC OF THE PHILIPPINES v. PRINCIPALIA MANAGEMENT AND

PERSONNEL CONSULTANTS,
INC.
G.R. No. 167639
April 19, 2006
YNARES-SANTIAGO, J.:
Doctrine:
Until such time that the appeal (as to the Order of Suspension) is resolved with
finality by the DOLE, Principalia has a clear and convincing right to operate as a
recruitment agency.
FACTS:
This case stemmed from two separate complaints filed before the Philippine
Overseas Employment Administration (POEA) against Principalia Management
and Personnel Consultants, Incorporated (Principalia) for violation of the 2002
POEA Rules and Regulations.
The first complaint was filed by Ruth Yasmin Concha where she alleged that
after paying P20,000.00 fee required by Principalia which was not properly
receipted, Principalia failed to deploy her for employment abroad as caregiver or
physical therapist. The Adjudication Office of the POEA found Principalia liable
for violations of the 2002 POEA Rules and Regulations.
The second complaint was filed by Rafael E. Baldoza. He alleged that
Principalia assured him of employment in Doha, Qatar as a machine operator
with a monthly salary of $450.00. After paying P20,000.00 as placement fee, he
departed but when he arrived, he was made to work as welder. An alternative
position as helper was offered to him, which he refused. Thus, he was
repatriated.
On November 12, 2003, Baldoza and Principalia entered into a compromise
agreement with quitclaim and release whereby the latter agreed to redeploy
Baldoza for employment abroad. Principalia, however, failed to deploy Baldoza
as agreed hence, in an Order dated April 29, 2004, the POEA suspended
Principalias documentary processing. Principalia moved for reconsideration
which the POEA granted on June 25, 2004. The latter lifted its order suspending
the documentary processing by Principalia after noting that it exerted efforts to
obtain overseas employment for Baldoza within the period stipulated in the
settlement agreement but due to Baldozas lack of qualification, his application
was declined by its foreign principal.
Meanwhile, on June 14, 2004, or before the promulgation of POEAs order lifting
the suspension, Principalia filed a Complaint (Complaint) against Rosalinda D.
Baldoz in her capacity as Administrator of POEA and Atty. Jovencio R. Abara in
his capacity as POEA Conciliator, before the RTC of Mandaluyong City for
"Annulment of Order for Suspension of Documentation Processing with

Damages and Application for Issuance of a Temporary Restraining Order and/or

Writ of Preliminary Injunction, and a Writ of Preliminary Mandatory Injunction."
Principalia claimed that the suspension of its documentary processing would
ruin its reputation and goodwill and would cause the loss of its applicants,
employers and principals. Thus, a writ of preliminary injunction and a writ of
mandatory injunction must be issued to prevent serious and irreparable damage
to it.
On June 14, 2004, the Trial Court granted the prayer for a Temporary
Restraining Order enjoining the defendant[s] Rosalinda D. Baldoz and Atty.
Jovencio R. Abara, from implementing the Orders of Suspension.
After the hearing on the preliminary injunction, the trial court held that the issue
on the application for preliminary mandatory injunction has become moot
because POEA had already released the renewal of license of Principalia. It
however issue the Writ of Preliminary Prohibitory Injunction prayed for by the
plaintiff, upon posting of a bond in the amount of Php 500,000.00, stressing that
the Order of Suspension dated March 15, 2004 is still pending appeal before the
Office of the Secretary of Labor and Employment, and that the said Order dated
March 15, 2004 does not categorically state that the suspension of Plaintiffs
License is immediately executory contrary to the contention of the defendants.
Counsel for POEA argued that the basis for the immediate implementation
thereof is Section 5, Rule V, Part VI of the 2002 POEA Rules and Regulation,
which is quoted hereunder, as follows:
"Section 5. Stay of Execution. The decision of the Administration shall
be stayed during the pendency of the appeal; Provided that where the
penalty imposed carried the maximum penalty of twelve (12) months
suspension o[r] cancellation of license, the decision shall be
immediately executory despite pendency of the appeal."
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The Order dated March 15, 2004 decreed Plaintiff as having violated Section 2
(a) (d) and (e) of Rule I, Part VI of the POEA Rules and Regulations and the
Plaintiffs was imposed the penalty of twelve (12) months suspension of license
(or in lieu, to pay fine of P120,000, it being its first offense).
Being a first offender, the plaintiff was imposed suspension of license for four (4)
months for each violation or an aggregate period of suspension for twelve (12)
months for the three (3) violations.
POEA avers that the trial court gravely abused its discretion in granting the writ
of preliminary prohibitory injunction when the requirements to issue the same
have not been met. It asserts that Principalia had no clear and convincing right
to the relief demanded as it had no proof of irreparable damage as required
under the Rules of Court.
ISSUE: Whether or not the trial court erred in issuing the writ of preliminary
injunction?
SC RULING:
No. The trial court did not decree that the POEA, as the granting authority of
Principalias license to recruit, is not allowed to determine Principalias
compliance with the conditions for the grant, as POEA would have us believe.
For all intents and purposes, POEA can determine whether the licensee has
complied with the requirements. In this instance, the trial court observed that the
Order of Suspension dated March 15, 2004 was pending appeal with the
Secretary of the Department of Labor and Employment (DOLE). Thus, until
such time that the appeal is resolved with finality by the DOLE, Principalia
has a clear and convincing right to operate as a recruitment agency.
Furthermore, irreparable damage was duly proven by Principalia. Suspension of
its license is not easily quantifiable nor is it susceptible to simple mathematical
computation, as alleged by POEA.
If the injunctive writ was not granted, Principalia would have been labeled
as an untrustworthy recruitment agency before there could be any final
adjudication of its case by the DOLE. It would have lost both its employerclients and its prospective Filipino-applicants. Loss of the former due to a
tarnished reputation is not quantifiable.
Moreover, POEA would have no authority to exercise its regulatory functions
over Principalia because the matter had already been brought to the jurisdiction
of the DOLE. Principalia has been granted the license to recruit and process
documents for Filipinos interested to work abroad. Thus, POEAs action of
suspending
Principalias license before final adjudication by the DOLE would be
premature and would amount to a violation of the latters right to recruit
and deploy workers.

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7. SANTOSA B. DATUMAN v. FIRST COSMOPOLITAN MANPOWER AND

PROMOTION SERVICES, INC.
G.R. No. 156029
November 14, 2008
LEONARDO-DE CASTRO, J.:
Doctrine:
The signing of the "substitute" contracts with the foreign employer/principal
before the expiration of the POEA-approved contract and any continuation of
petitioner's employment beyond the original one-year term, against the will of
petitioner, are continuing breaches of the original POEA-approved contract.
FACTS:
Sometime in 1989, respondent First Cosmopolitan Manpower & Promotion
Services, Inc. recruited petitioner Santosa B. Datuman to work abroad under
the following terms and conditions:
Site of employment - Bahrain
Employees
Classification/Position/Grade Saleslady Basic Monthly Salary US$370.00
Duration of Contract - One (1) year
Foreign Employer - Mohammed Sharif Abbas Ghulam Hussain
On April 17, 1989, petitioner was deployed to Bahrain after paying the required
placement fee. However, her employer Mohammed Hussain took her passport
when she arrived there; and instead of working as a saleslady, she was forced
to work as a domestic helper with a salary of Forty Bahrain Dinar (BD40.00),
equivalent only to US$100.00. This was contrary to the agreed salary of
US$370.00 indicated in her Contract of Employment signed in the Philippines
and approved by the POEA.
On September 1, 1989, her employer compelled her to sign another contract,
transferring her to another employer as housemaid with a salary of BD40.00 for
the duration of two (2) years. She pleaded with him to give her a release paper
and to return her passport but her pleas were unheeded. She continued working
against her will. Worse, she even worked without compensation from
September 1991 to April 1993 because of her employer's continued failure and
refusal to pay her salary despite demand. In May 1993, she was able to finally
return to the Philippines through the help of the Bahrain Passport and
Immigration Department.
In May 1995, petitioner filed a complaint before the POEA Adjudication Office
against respondent for underpayment and non-payment of salary, vacation
leave pay and refund of her plane fare. While the case was pending, she filed
the instant case before the NLRC for underpayment of salary for a period of one

year and six months, non-payment of vacation pay and reimbursement of return
airfare.
LA RULING:
Labor Arbiter Jovencio Mayor, Jr. rendered a Decision finding respondent liable
for violating the terms of the Employment Contract and ordering it to pay
petitioner: (a) the amount of US$4,050.00 representing her salary differentials
for fifteen (15) months; and, (b) the amount of BD 180.00 representing the
refund of plane ticket.
NLRC RULING: Affirmed LA with modification. NLRC reduced the award of
salary differentials from US$4,050.00 to US$2,970.00 ratiocinating as follows:
Accordingly, we find that the claims for salary differentials accruing
earlier than April of 1993 had indeed prescribed. This is so as
complainant had filed her complaint on May 31, 1995 when she
arrived from the jobsite in April 1993. Since the cause of action for
salary differential accrues at the time when it falls due, it is clear that
only the claims for the months of May 1993 to April 1994 have not yet
prescribed. With an approved salary rate of US$370.00 vis--vis the
amount of salary received which was $100.00, complainant is entitled
to the salary differential for the said period in the amount of $2,970.00
CA RULING: CA issued the assailed Decision granting the petition and
reversing the NLRC and the Labor Arbiter.
It ruled that the provisions in number 2, Section 10 (a), Rule V, Book I of the
Omnibus Rules Implementing the Labor Code Section 1 (f), Rule II, Book II of
the 1991 POEA Rules and Regulations were not made to make the local
agency a perpetual insurer against all untoward acts that may be done by the
foreign principal or the direct employer abroad. It is only as regards the principal
contract to which it is privy shall its liability extend.
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ISSUE: Whether or not the CA erred in not holding respondent liable for
petitioner's money claims pursuant to their Contract of Employment.
SC RULING:
YES.
On whether respondent is solidarily liable for petitioner's monetary claims
YES
Section 1 of Rule II of the POEA Rules and Regulations states that:
Section 1. Requirements for Issuance of License. - Every applicant
for license to operate a private employment agency or manning
agency shall submit a written application together with the following
requirements:
xxx
f. A verified undertaking stating that
the applicant: x x x
(3) Shall assume joint and solidary liability with the employer for
all claims and liabilities which may arise in connection with the
implementation of the contract; including but not limited to payment
of wages, death and disability compensation and repatriation.
(emphasis supplied).
The above provisions are clear that the private employment agency shall
assume joint and solidary liability with the employer. This Court has, time and
again, ruled that private employment agencies are held jointly and severally
liable with the foreign-based employer for any violation of the recruitment
agreement or contract of employment. This joint and solidary liability imposed by
law against recruitment agencies and foreign employers is meant to assure the
aggrieved worker of immediate and sufficient payment of what is due him. This
is in line with the policy of the state to protect and alleviate the plight of the
working class.
We cannot agree with the view of the CA that the solidary liability of
respondent extends only to the first. The signing of the "substitute" contracts
with the foreign employer/principal before the expiration of the POEA-approved
contract and any continuation of petitioner's employment beyond the original
one-year term, against the will of petitioner, are continuing breaches of the
original POEA-approved contract.
To be sure, Republic Act No. 8042 explicitly prohibits the substitution or
alteration to the prejudice of the worker of employment contracts already
approved and verified by the Department of Labor and Employment (DOLE)
from the time of actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of the DOLE.

In Placewell International Services Corporation v. Camote, we held that

the subsequently executed side agreement of an overseas contract worker with
her foreign employer which reduced his salary below the amount approved by
the POEA is void because it is against our existing laws, morals and public
policy. The said side agreement cannot supersede the terms of the standard
employment contract approved by the POEA. Hence, in the present case, the
diminution in the salary of petitioner from US$370.00 to US$ 100 (BD 40.00) per
month is void for violating the POEA- approved contract which set the minimum
standards, terms, and conditions of her employment. Consequently, the solidary
liability of respondent with petitioner's foreign employer for petitioner's money
claims continues although she was forced to sign another contract in Bahrain. It
is the terms of the original POEA-approved employment contract that shall
govern the relationship of petitioner with the respondent recruitment agency and
the foreign employer.
It is the recruitment agency's responsibility to ensure that the terms and
conditions of the employment contract, as approved by the POEA, are faithfully
complied with and implemented properly by its foreign client/principal.
On whether petitioner's claims for underpaid salaries have prescribed
PARTLY Prescribed
Article 291 of the Labor Code which provides that:
Art. 291. Money Claims. - All money claims arising from employeremployee relations accruing during the effectivity of this Code shall
be filed within three years from the time that cause of action accrued;
otherwise, they shall be forever barred. (emphasis supplied)
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We do not agree with the CA when it held that the cause of action of
petitioner had already prescribed as the three- year prescriptive period should
be reckoned from September 1, 1989 when petitioner was forced to sign
another contract against her will.
To determine for which months petitioner's right to claim salary
differentials has not prescribed, we must count three years prior to the filing of
the complaint on May 31, 1995. Thus, only claims accruing prior to May 31,
1992 have prescribed when the complaint was filed on May 31, 1995. Petitioner
is entitled to her claims for salary differentials for the period May 31, 1992 to
April 1993, or approximately eleven (11) months.
We find that the NLRC correctly computed the salary differential due to
petitioner at US$2,970.00 (US$370.00 as approved salary rate - US$100.00 as
salary received = US$290 as underpaid salary per month x 11 months).
However, it should be for the period May 31, 1992 to April 1993 and not May
1993 to April 1994 as erroneously stated in the NLRC's Decision.

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8. STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND CHUNG GAI

SHIP MANAGEMENT, vs.
SULPECIO MEDEQUILLO, JR.
G.R. No. 177498
January 18, 2012
PEREZ, J.:
Doctrine:
Even before the start of any employer-employee relationship, contemporaneous
with the perfection of the employment contract was the birth of certain rights
and obligations, the breach of which may give rise to a cause of action against
the erring party.
FACTS:
On 6 March 1995, Sulpecio Madequillo (respondent) filed a complaint before the
Adjudication Office of the POEA against the petitioners for illegal dismissal
under a first contract and for failure to deploy under a second contract. In his
complaint-affidavit, respondent alleged that:
1. Respondent was hired by Stolt-Nielsen Marine Services, Inc on behalf of
its principal Chung-Gai Ship Management of Panama as Third Assistant
Engineer on board the vessel "Stolt Aspiration" for a period of nine (9)
for $1,212.00 per month commencing on 6 November 1991;
2. He then joined the vessel MV "Stolt Aspiration", but only after three (3)
months, he was ordered by the ships master to disembark the vessel
and repatriated back to Manila for no reason or explanation;
3. Upon his return to Manila, he immediately proceeded to the petitioners
office where he was transferred employment with another vessel named
MV "Stolt Pride" under the same terms and conditions of the First
Contract;
4. POEA approved the Second Contract, however, respondent was not
deployed by petitioners despite the commencement of the contract. POEA
subsequently certified the Second Employment Contract without the
knowledge that petitioners failed to deploy the respondent.
5. Because of petitioners alleged non-compliance with the Second Contract,
respondent Medequilla demanded for the return of his passport and other
employment documents from the petitioners. He
claimed that he was made to involuntarily sign a document in order to
recover his employment papers. Medequilla prayed for payment of damages
as well as attorneys fees for his illegal dismissal and in view of the
Petitioners bad faith in not complying with the Second Contract. The case
was transferred to the Labor Arbiter of the DOLE upon the effectivity of the
Migrant Workers and Overseas Filipinos Act of 1995.
LA RULING:
The LA declared the respondents guilty of constructively dismissing the
complainant by not honoring the employment contract. Accordingly,

respondents are hereby ordered jointly and solidarily to pay complainant

$12,537.00 or its peso equivalent at the time of payment. The LA found the
first contract entered into by and between the complainant and the
respondents to have been novated by the execution of the second contract.
In other words, respondents cannot be held liable for the first contract but are
clearly and definitely liable for the breach of the second contract. However, he
ruled that there was no substantial evidence to grant the prayer for moral and
exemplary damages.
NLRC RULING: Affirmed with modification the Decision of the LA.
NLRC deleted the award of overtime pay in the total amount of US $3,636.00.
ISSUE: Whether or not petitioners have the obligation to deploy the respondent
by virtue of the perfected contract, and thus will be held liable for
damages in case of non-deployment.
SC RULING:
Yes. The petitioners argue that under the POEA Contract, actual deployment of
the seafarer is a suspensive condition for the commencement of the
employment. The Court agreed with petitioners on such point. However, even
without actual deployment, the perfected contract gives rise to obligations on
the part of petitioners. Parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law.
Thus, even if by the standard contract employment commences only "upon
actual departure of the seafarer", this does not mean that the seafarer has no
remedy in case of non-deployment without any valid reason.
The Court further made a distinction between the perfection of the employment
contract and the commencement of the employer-employee relationship. The
perfection of the contract occurred when petitioner
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and respondent agreed on the object and the cause, as well as the rest of the
terms and conditions therein. The commencement of the employer-employee
relationship would have taken place had petitioner been actually deployed from
the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, the breach of which may give rise
to a cause of action against the erring party.
Respondent is thus liable to pay petitioner actual damages in the form of the
loss of nine (9) months worth of salary as provided in the contract. This is but
proper because of the non-deployment of respondent without just cause.

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9. PEOPLE OF THE PHILIPPINES vs.

CAROL M. DELA PIEDRA G.R. No. 121777
January 24, 2001
KAPUNAN, J.:
Doctrine: ILLEGAL RECRUITMENT
Illegal recruitment is committed when two elements concur. First, the offender
has no valid license or authority required by law to enable one to lawfully
engage in recruitment and placement of workers. Second, he or she undertakes
either any activity within the meaning of "recruitment and placement" defined
under Article 13 (b), or any prohibited practices enumerated under Article 34 of
the Labor Code.38 In case of illegal recruitment in large scale, a third element is
added: that the accused commits said acts against three or more persons,
individually or as a group.
A conviction for large scale illegal recruitment must be based on a finding in
each case of illegal recruitment of three or more persons whether individually or
as a group.
FACTS:
Carol M. dela Piedra is convicted for illegal recruitment in large scale and
assails, as well, the constitutionality of the law defining and penalizing said
crime.
On January 30, 1994, at exactly 10:00 in the morning, Erlie Ramos, Attorney II
of the Philippine Overseas Employment Agency (POEA), received a telephone
call from an unidentified woman inquiring about the legitimacy of the recruitment
conducted by a certain Mrs. Carol Figueroa.
Bellotindos entered the house and pretended to be an applicant; She received a
bio- data form from a Carol Fegueroa Ramos contacted a friend, Mayeth
Bellotindos, so they could both go to No. 26-D, Tetuan Highway, Sta. Cruz,
Zamboanga City, where the recruitment was reportedly being undertaken.
A raiding team was planned between POEA and CIS team led by Capt.
Mendoza to commence the next day with SPO2 Fermindoza posing as a wouldbe-applicant. Fermindoza talked personally with Carol and as the latter was
filling up the application form, Fermindoza signaled to the raiding party waiting
outside the house. Carol Fegueroa was caught holding filled up application
forms.
The CIS asked Figueroa if she had a permit to recruit. Figueroa retorted that
she was not engaged in recruitment. Capt. Mendoza nevertheless proceeded to
arrest Figueroa. He took the application forms she was holding as the raiding
party seized the other papers on the table. The CIS team then brought

Figueroa, a certain Jasmine Alejandro, and the three women suspected to be

applicants, to the office for investigation.
In the course of their investigation, the CIS discovered that Carol Figueroa
had many aliases, among them, Carol Llena and Carol dela Piedra. The
accused was not able to present any authority to recruit when asked by
the investigators. A check by Ramos with the POEA revealed that the
acused was not licensed or authorized to conduct recruitment. A
certification dated February 2, 1994 stating thus was executed by Renegold M.
Macarulay, Officer-in-Charge of the POEA.
Accused was charged before RTC of Zamboanga in an information alleging:
That on or about January 30, 1994, in the City of Zamboanga,
Philippines, Carol dela Piedra, having no POEA license or
authority to engage in recruitment and overseas placement of
workers willfully, unlawfully, and feloniously, offered and
promised for a fee an employment in Singapore to: Maria
Lourdes Modesto [y] Gadrino, Nancy Araneta y Aliwanag and
Jennelyn Baez y Timbol Maria Lourdes had already advanced
P2k to accused in consideration of the promised employment.
The accused denied in court that she went to Jasmine's residence to engage in
recruitment. She claimed she came to Zamboanga City to visit her friends, to
whom she could confide since she and her husband were having some
problems. She denied she knew Nancy Araneta or that she brought information
sheets for job placement. She also denied instructing Jasmine to collect P2,000
from alleged applicants as processing fee.
ISSUES:
1. Whether or not sec. 13 (b) of P.D. 442, as amended, otherwise known as
the illegal recruitment law is unconstitutional as it violates the due process
clause.
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2. Whether or not there is illegal recruitment? Is it in large scale?

RTC RULING:
The accused Carol dela Piedra alias Carol Llena and Carol Figueroa guilty
beyond reasonable doubt of Illegal Recruitment committed in a large scale and
hereby sentences her to suffer the penalty of LIFE IMPRISONMENT and to pay
a fine of P100,000.00, and also to pay the costs. Being a detention prisoner, the
said accused is entitled to the full time of the period of her detention during the
pendency of this case under the condition set forth in Article 29 of the Revised
Penal Code.
SC RULING:
1. IT IS CONSTITUTIONAL.
In the first assigned error, appellant maintains that the law defining "recruitment
and placement" violates due process. Appellant also aver, that she was denied
the equal protection of the laws.
Due process requires that the terms of a penal statute must be sufficiently
explicit to inform those who are subject to it what conduct on their part will
render them liable to its penalties. As a rule, a statute or act may be said to be
vague when it lacks comprehensible standards that men "of common
intelligence must necessarily guess at its meaning and differ as to its
application." It is repugnant to the Constitution in two respects: (1) it violates due
process for failure to accord persons, especially the parties targeted by it, fair
notice of the conduct to avoid; and (2) it leaves law enforcers unbridled
discretion in carrying out its provisions and become an arbitrary flexing of the
Government muscle.
We added, however, that:
x x x the act must be utterly vague on its face, that is to say, it cannot be
clarified by either a saving clause or by construction.
As we see it, the proviso (see ARTICLE 13(B) of the Illegal Recruitment Law)
was intended neither to impose a condition on the basic rule nor to provide an
exception thereto but merely to create a presumption. The presumption is that
the individual or entity is engaged in recruitment and placement whenever he or
it is dealing with two or more persons to whom, in consideration of a fee, an
offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."
The number of persons dealt with is not an essential ingredient of the act
of recruitment and placement of workers. Any of the acts mentioned in the
basic rule in Article 13(b) will constitute recruitment and placement even if only
one prospective worker is involved. The proviso merely lays down a rule of
evidence that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or entity dealing

with them shall be deemed to be engaged in the act of recruitment and

placement. The words "shall be deemed" create that presumption.
2. THERE IS SIMPLE ILLEGAL RECRUITMENT
In this case, the first element of illegal recruitment is present. The
certification of POEA Officer -in-Charge Macarulay states that appellant is not
licensed or authorized to engage in recruitment and placement.
The second element is also present. Appellant is presumed engaged in
recruitment and placement under Article 13 (b) of the Labor Code. Both Nancy
Araneta and Lourdes Modesto testified that appellant promised them
employment for a fee. Their testimonies corroborate each other on material
points: the briefing conducted by appellant, the time and place thereof, t he fees
involved.
Affirmative testimony of persons who are eyewitnesses of the fact asserted
easily overrides negative testimony.
That appellant did not receive any payment for the promised or offered
employment is of no moment. From the language of the statute, the act of
recruitment may be "for profit or not;" it suffices that the accused
"promises or offers for a fee employment" to warrant conviction for illegal
recruitment.
Considering that the two elements of lack of license or authority and the
undertaking of an activity constituting recruitment and placement are
present, appellant, at the very least, is liable for "simple" illegal
recruitment.
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She is not guilty of illegal recruitment in a large scale

A conviction for large scale illegal recruitment must be based on a finding in
each case of illegal recruitment of three or more persons whether
individually or as a group. In this case, only two persons, Araneta and
Modesto, were proven to have been recruited by appellant. The third
person named in the complaint as having been promised employment for a
fee, Jennelyn Baez, was not presented in court to testify.
It is true that law does not require that at least three victims testify at the
trial; nevertheless, it is necessary that there is sufficient evidence proving
that the offense was committed against three or more persons. In this case,
evidence that appellant likewise promised her employment for a fee is
sketchy. The only evidence that tends to prove this fact is the testimony of
Nancy Araneta, who said that she and her friends, Baez and Sandra
Aquino, came to the briefing and that they (she and her "friends") filled up
application forms.
Baez affidavit executed with Araneta cannot support Aranetas testimony.
Insofar as it purports to prove that appellant recruited Baez, therefore, the
affidavit is hearsay and inadmissible.
Neither can appellant be convicted for recruiting CIS agent Eileen
Fermindoza or even the other persons present in the briefing of January 30,
1994. Appellant is accused of recruiting only the three persons named in
the information Araneta, Modesto and Baez. The information does not
include Fermindoza or the other persons present in the briefing as among
those promised or offered employment for a fee.
Section 19 (1), Article III of the Constitution states: "Excessive fines shall not
be imposed, nor cruel, degrading or inhuman punishment inflicted."
The penalty of life imprisonment imposed upon appellant must be
reduced. Because the prosecution was able to prove that appellant committed
recruitment and placement against two persons only, she cannot be convicted of
illegal recruitment in large scale, which requires that recruitment be committed
against three or more persons.
Appellant can only be convicted of two counts of "simple" illegal recruitment,
one for that committed against Nancy Araneta, and another count for that
committed against Lourdes Modesto. Appellant is sentenced, for each count, to
suffer the penalty of four (4) to six (6) years of imprisonment and to pay a fine of
P30,000.00.
WHEREFORE , the decision of the regional trial court is MODIFIED. Appellant
is hereby declared guilty of illegal recruitment on two (2) counts and is

sentenced, for each count, to suffer the penalty of four (4) to six (6) years of
imprisonment and to pay a fine of P30,000.00.

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10. ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY

JANE P. DULAY v. ABOITIZ JEBSEN MARITIME, INC. and GENERAL
CHARTERERS, INC.,
G.R. No. 172642
June 13, 2012
PERALTA, J.
Doctrine:
With respect to disputes involving claims of Filipino seafarers wherein the
parties are covered by a collective bargaining agreement, the dispute or claim
should be submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining agreement that
parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration. It is elementary that rules and regulations issued by administrative
bodies to interpret the law which they are entrusted to enforce, have the force of
law, and are entitled to great respect. [8] Such rules and regulations partake of
the nature of a statute and are just as binding as if they have been written in the
statute itself.[9] In the instant case, the Court finds no cogent reason to depart
from this rule.
FACTS:
Nelson R. Dulay was employed by General Charterers Inc. (GCI), a subsidiary
of co-petitioner Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as
an ordinary seaman and later as bosun on a contractual basis. From September
3, 1999 up to July 19, 2000, Nelson was detailed in petitioners vessel, the MV
Kickapoo Belle.
After the completion of his employment contract, Nelson died due to acute renal
failure secondary to septicemia. At the time of his death, Nelson was a bona
fide member of the Associated Marine Officers and Seamans Union of the
Philippines (AMOSUP), GCIs collective bargaining agent.
Nelsons widow, Merridy Jane, thereafter claimed for death benefits through the
grievance procedure of the Collective Bargaining Agreement (CBA) between
AMOSUP and GCI. However, the grievance procedure was declared
deadlocked as petitioners refused to grant the benefits sought by the widow.
Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in
General Santos City against GCI for death and medical benefits and damages.
The amount claimed by Nelsons widow is $90,000 however GCI awarded
P20,000 in favor of the deceaseds brother. Merridy claims the remaining
amount less the P20,000 her brother-in-law received.
Respondents on the other hand, asserted that the NLRC had no jurisdiction
over the action on account of the absence of employer-employee relationship
between GCI and Nelson at the time of the latters death. Nelson also had no
claims against petitioners for sick leave allowance/medical benefit by reason of
the completion of his contract with GCI. They further alleged that private
respondent is not entitled to death benefits because petitioners are only liable

for such in case of death of the seafarer during the term of his contract pursuant
to the POEA contract and the cause of his death is not work-related. Petitioners
admitted liability only with respect to article 20(A) 2 [of the CBA].
ISSUE: Whether or not the Labor Arbiter has jurisdiction over the case.
LA RULING: The Labor Arbiter ruled in favor of private respondent. It took
cognizance of the case by virtue of Article 217 (a), paragraph 6 of the Labor
Code and the existence of a reasonable causal connection between the
employer -employee relationship and the claim asserted. It ordered the
petitioner to pay P4,621,300.00, the equivalent of US$90,000.00 less
P20,000.00, at the time of judgment. The Labor Arbiter also ruled that the
proximate cause of Nelsons death was not work-related.
NLRC RULING: On appeal, [the NLRC] affirmed the Labor Arbiters
decision as to the grant of death benefits under the CBA but reversed the
latters ruling as to the proximate cause of Nelsons death. [3]
CA RULING: The CA ruled that while the suit filed by Merridy Jane is a money
claim, the same basically involves the interpretation and application of the
provisions in the subject CBA. As such, jurisdiction belongs to the voluntary
arbitrator and not the labor arbiter.
SC RULING:
JURISDICTION BELONGS TO THE VOLUNTARY ARBITRATOR AND NOT
THE LABOR ARBITER.
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The Court agrees with petitioner's contention that the CBA is the law or contract
between the parties. Article 13.1 of the CBA entered into by and between
respondent GCI and AMOSUP, the union to which petitioner belongs, provides
as follows:
The Company and the Union agree that in case of dispute or conflict in the
interpretation or application of any of the provisions of this Agreement, or
enforcement of Company policies, the same shall be settled through
negotiation, conciliation or voluntary arbitration.
In the same manner, Section 29 of the prevailing Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean
Going Vessels, promulgated by the Philippine Overseas Employment
Administration (POEA), provides as follows:
Section 29. Dispute Settlement Procedures. In cases of
claims and disputes arising from this employment, the
parties covered by a collective bargaining agreement
shall submit the claim or dispute to the original and
exclusive jurisdiction of the voluntary arbitrator or
panel of arbitrators.
It is clear from the above that the interpretation of the DOLE, in consultation
with their counterparts in the respective committees of the Senate and the
House of Representatives, as well as the DFA and the POEA is that with
respect to disputes involving claims of Filipino seafarers wherein the parties are
covered by a CBA, the dispute or claim should be submitted to the jurisdiction of
a voluntary arbitrator or panel of arbitrators. It is only in the absence of a CBA
that parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration.
On the basis of the foregoing, the Court finds no error in the ruling of the CA
that the voluntary arbitrator has jurisdiction over the instant case.

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11. SANTIAGO vs. CF SHARP CREW

MANAGEMENT INC. G.R. No. 162419
July 10, 2007
Tinga, J.:
Doctrine:
The jurisdiction of labor arbiters is not limited to claims arising from employer
-employee relationships. Under Section 10 of R.A. No. 8042 the Labor Arbiters
of the National Labor Relations Commission (NLRC) shall also have the original
and exclusive jurisdiction to hear and decide, the claims arising xxx by virtue of
any law or contract involving Filipino workers for overseas deployment including
claims for actual, moral, exemplary and other forms of damages.
FACTS:
On 3 February 1998, Paul Santiago signed a new contract of employment with
CF Sharp Crew Mgmt., Inc., with the duration of nine (9) months. He was
assured of a monthly salary of US$515.00, overtime pay and other benefits.
Santiago was to be deployed on board the "MSV Seaspread" which was
scheduled to leave the port of Manila for Canada on 13 February 1998.
A week before the scheduled date of departure, Capt. Pacifico Fernandez, CF
Sharps Vice President, sent a fax to the captain of "MSV Seaspread telling the
latter that he received calls from various individuals about the possibility that
Santiago may jump ship in Canada like his brother did before him. On 9
February 1998, Santiago was thus told that he would not be leaving for Canada
anymore, but he was reassured that he might be considered for deployment at
some future date.
Consequently, Santiago filed a complaint for illegal dismissal, damages, and
attorney's fees against CF Sharp and its foreign principal. In defense, CF Sharp
contends that there is no employer-employee relationship between petitioner
and respondent because under the POEA Standard Contract, the employment
contract shall commence upon actual departure of the seafarer from the airport
or seaport at the point of hire. In the absence of an employer -employee
relationship between the parties, the claims for illegal dismissal, actual
damages, and attorneys fees should be dismissed as the NLRC does not have
jurisdiction over the same.
ISSUE: WON the failure of CF Sharp to deploy Santiago without a valid contract
entitles the latter to relief sought despite the non-commencement of the
employer-employee relationship?
SC RULING:
YES. The jurisdiction of labor arbiters is not limited to claims arising from
employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant
Workers Act), provides that the Labor Arbiters of the National Labor Relations

Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, the claims arising xxx by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.
Here, since the present petition involves the employment contract entered into
by petitioner for overseas employment, his claims are cognizable by the labor
arbiters of the NLRC.
Even before the start of any employer-employee relationship, contemporaneous
with the perfection of the employment contract was the birth of certain rights
and obligations, the breach of which may give rise to a cause of action against
the erring party. Thus, if the reverse had happened, that is the seafarer failed or
refused to be deployed as agreed upon, he would be liable for damages.

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12. STO. TOMAS vs. SALAC

G.R. No. 152642 November 13,
2012 Abad, J.:
Doctrine:
Sections 29 and 30 have been repealed by R.A. No. 9422, thereby putting
private overseas recruitment activities under government regulation. On the
other hand, Sections 6, 7, 9 and the last sentence of par.2, Sec. 10 of R.A. No.
8042 are not unconstitutional.
FACTS:
These are consolidated cases pertaining to questions being raised on the
constitutionality of certain provisions of R.A. No. 8042 or the Migrant Workers
Act.
The first case questions the constitutionality of Sections 29 and 30 deregulating
the business of handling the recruitment and migration of overseas Filipino
workers and phasing out within five years the regulatory functions of the
Philippine Overseas Employment Administration (POEA).
The second, on the other hand, questioned Sections 6, 7 and 9 of the same law.
The issue raised as to Sec. 6 was that that its definition of "illegal recruitment" is
vague as it fails to distinguish between licensed and non-licensed recruiter and
for that reason gives undue advantage to the non-licensed recruiters in violation
of the right to equal protection of those that operate with government licenses or
authorities.
As to Sec. 7, it was held by an RTC as unconstitutional on the ground that its
sweeping application of the penalties failed to make any distinction as to the
seriousness of the act committed for the application of the penalty imposed on
such violation. As an example, said the trial court, the mere failure to render a
report under Section 6(h) or obstructing the inspection by the Labor Department
under Section 6(g) are penalized by imprisonment for six years and one day
and a minimum fine of P200,000.00 but which could unreasonably go even as
high as life imprisonment if committed by at least three persons.
The same RTC also held invalid Sec. 9 for on the ground that allowing the
offended parties to file the criminal case in their place of residence would
negate the general rule on venue of criminal cases which is the place where the
crime or any of its essential elements were committed. Venue, said the RTC, is
jurisdictional in penal laws and, allowing the filing of criminal actions at the place
of residence of the offended parties violates their right to due process.
The third and final case questions the constitutionality of the last sentence of the
par.2, Sec. 10, R.A. No. 8042, which holds the corporate directors, officers and

partners jointly and solidarily liable with their company for money claims filed by
OFWs against their employers and the recruitment firms.
ISSUE: WON the assailed provisions of the law are constitutional.
SC RULING:
YES. As to the first case, the issue has been rendered moot with the passage
into law of R.A. 9422 which expressly repealed Sections 29 and 30 of R.A. 8042
and adopted the policy of close government regulation of the recruitment and
deployment of OFWs.
Coming to the second case, illegal recruitment" as defined in Section 6 is clear
and unambiguous and, contrary to the RTCs finding, actually makes a
distinction between licensed and non-licensed recruiters. By its terms, persons
who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers" without the appropriate government license or authority
are guilty of illegal recruitment whether or not they commit the wrongful acts
enumerated in that section. On the other hand, recruiters who engage in the
canvassing, enlisting, etc. of OFWs, although with the appropriate government
license or authority, are guilty of illegal recruitment only if they commit any of the
wrongful acts enumerated in Section 6.
Neither is Sec. 7 unconstitutional as the law can impose such grave penalties
upon what it believed were specific acts that were not as condemnable as the
others in the lists. But, in fixing uniform penalties for each of the enumerated
acts under Section 6, Congress was within its prerogative to determine what
individual acts are equally reprehensible, consistent with the State policy of
according full protection to labor, and deserving of the same penalties. It is not
within the power of the Court to question the wisdom of this kind of choice.
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As to Sec. 9, there is nothing arbitrary or unconstitutional in Congress fixing an

alternative venue for violations of Section 6 of R.A. 8042 that differs from the
venue established by the Rules on Criminal Procedure. Indeed, Section 15(a),
Rule 110 of the latter Rules allows exceptions provided by laws. Section 9 of
R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent
with that laws declared policy of providing a criminal justice system that protects
and serves the best interests of the victims of illegal recruitment.
On to the third case, the Court has already held that the liability of corporate
directors and officers is not automatic. To make them jointly and solidarily liable
with their company, there must be a finding that they were remiss in directing
the affairs of that company, such as sponsoring or tolerating the conduct of
illegal activities.
13. SAMEER OVERSEAS PLACEMENT AGENCY,
INC. vs. JOY C. CABILES G.R. No. 170139 August 5,
2014
Leonen, J.:
Doctrine:
The re-enactment of the last paragraph of Sec. 10 of R.A. No. 8042 did not
erase its unconstitutionality and a central bank circular on interest rates cannot
repeal a positive provision R.A. No. 8042, as regards interest rates on certain
pecuniary awards granted to illegally dismissed OFWs.
FACTS:
Joy C. Cabiles, submitted her application for a quality control job in Taiwan via
the Sameer Overseas Placement Agency, Inc. Joys application was accepted.
Joy was later asked to sign a one-year employment contract for a monthly
salary of NT$15,360.00. She alleged that Sameer Overseas Agency required
her to pay a placement fee of P70,000.00 when she signed the employment
contract.
Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26,
1997. Sameer Overseas Placement Agency claims that on July 14, 1997,
Wacoal informed Joy, without prior notice, that she was terminated and that "she
should immediately report to their office to get her salary and passport." She
was asked to "prepare for immediate repatriation."
Consequently, Joy filed a complaint with the NLRC against Sameer and Wacoal.
She claimed that she was illegally dismissed. She asked for the return of her
placement fee, the withheld amount for repatriation costs, payment of her salary
for 23 months as well as moral and exemplary damages. Sameer, on the other
hand, posits among others that Petitioner Wacoal's accreditation with it had
already been transferred to the Pacific Manpower & Management Services, Inc.

(Pacific) as of August 6, 1997. Thus, it asserts that it was already substituted by

Pacific Manpower.
Joy won before the NLRC and the CA who both awarded Joy a mere (3)
months worth of salary, reimbursement of withheld repatriation expense, and
attorneys fees. Sameer brought a petition for review with the SC. Brought to the
fore is the issue on the constitutionality of the last paragraph of Sec. 10 of R.A.
No. 8042 which has been declared unconstitutional in Serrano v. Gallant
Maritime but re-enacted by legislation subsequent to Serrano. Also brought for
discussion is the proper application of the newly imposed interest rates on the
pecuniary awards given to Joy in view of Central Bank Circular No. 799.
ISSUE(S): 1. WON the award of 3-months worth of salary to Joy was legal in
view of the re-enactment of the last paragraph of Sec. 10 of R.A.
No. 8042 which was previously declared as unconstitutional.
2.WON the new Central Bank circular on interest rates applies to the
award of reimbursement of placement fee and other deductions.
SC RULING:
1. NO. the reinstated clause, this time as provided in Republic Act. No. 10022,
violates the constitutional rights to equal protection and due process.Sameer as
well as the Solicitor General have failed to show any compelling change in the
circumstances that would warrant us to revisit the precedent. Again, limiting
wages that should be recovered by an illegally dismissed overseas worker to
three months is both a violation of due process and the equal protection clauses
of the Constitution.
The adoption of the reinstated clause in Republic Act No. 8042 subjected the
money claims of illegally dismissed overseas workers with an unexpired term of
at least a year to a cap of three months worth of their
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salary. There was no such limitation on the money claims of illegally terminated
local workers with fixed-term employment.
Also, the subject clause creates a sub -layer of discrimination among OFWs
whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their
salaries for the entire unexpired portion thereof, while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered
by the reinstated clause, and their monetary benefits limited to their salaries for
three months only
These classifications do not rest on any real or substantial distinctions that
would justify different treatments in terms of the computation of money claims
resulting from illegal termination.
As such, Joy Cabiles is entitled to her salary for the unexpired portion of her
contract, in accordance with Section 10 of Republic Act No. 8042. The award of
the three-month equivalence of her salary must be modified accordingly. Since
she started working on June 26, 1997 and was terminated on July 14, 1997,
respondent is entitled to her salary from July 15, 1997 to June 25, 1998.
2. NO. A Central Bank Circular cannot repeal a law. Only a law can repeal
another law. For example, Section 10 of Republic Act No. 8042 provides that
unlawfully terminated overseas workers are entitled to the reimbursement of his
or her placement fee with an interest of 12% per annum. Since Bangko Sentral
ng Pilipinas circulars cannot repeal Republic Act No. 8042, the issuance of
Circular No. 799 does not have the effect of changing the interest on awards for
reimbursement of placement fees from 12% to 6%. This is despite Section 1 of
Circular No. 799, which provides that the 6% interest rate applies even to
judgments.
However, the same cannot be said for awards of salary for the unexpired portion
of the employment contract under Republic Act No. 8042. These awards are
covered by Circular No. 799 because the law does not provide for a specific
interest rate that should apply.

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14. MAERSK-FILIPINAS CREWING, INC., A.P. MOLLER SINGAPORE PTE.

LIMITED, AND JESUS AGBAYANI vs. TORIBIO C. AVESTRUZ
G.R. No. 207010
February 18, 2015
Doctrine
Except in cases of clear and existing danger to the crew or vessel, an erring
seaman should be given a written notice of the charge against him and should
be afforded an opportunity to explain or defend himself. Should sanctions be
imposed, then a written notice of penalty and the reasons for it shall be
furnished the erring seafarer. In all cases, a complete report should be sent to
the manning agency, supported by substantial evidence of the findings.
FACTS:
Maersk-Filipinas Crewing, Inc. (Maersk), on behalf of its foreign principal hired
Avestruz as Chief Cook on board the vessel M/V Nedlloyd Drake for a period of
six (6) months
Avestruz boarded the vessel on May 4, 2011.
On June 22, 2011, in the course of the weekly inspection of the vessels galley,
Captain Charles C. Woodward (Captain Woodward) noticed that the cover of
the garbage bin in the kitchen near the washing area was oily. Woodward called
Avestruz. An altercation ensued.
On the very same day, Captain Woodward informed Avestruz that he would be
dismissed from service and be disembarked in India. On July 3, 2011, Avestruz
was disembarked in Colombo, Sri Lanka and arrived in the Philippines on July
4, 2011.
Consequently, Avestruz filed a complaint for illegal dismissal, payment for the
unexpired portion of his contract, damages, and attorneys fees against Maersk
et al. and that Captain Woodward failed to observe the provisions under Section
17 of the Philippine Overseas Employment Administration (POEA) Standard
Employment Contract (POEA-SEC) on disciplinary procedures. Maersk
maintained that Avestruz was dismissed for a just and valid cause and is,
therefore, not entitled to recover his salary for the unexpired portion of his
contract. They contend that Avestruz was dismissed on the ground of
insubordination, consisting of his repeated failure to obey his superiors order to
maintain cleanliness in the galley of the vessel as well as his act of insulting a
superior officer by words or deeds. In support of this contention, petitioners
presented as evidence the e -mails sent by Captain Woodward, both dated June
22, 2011, and time-stamped 10:07 a.m. and 11:40 a.m., respectively
The CA held for Avestruz and directed petitioners to pay him, jointly and
severally, the full amount of his placement fee and deductions made, with
interest at twelve percent (12%) per annum, as well as his salaries for the

unexpired portion of his contract, and attorneys fees of ten percent (10%) of the
total award. All other money claims were denied for lack of merit.
ISSUE(S): 1. WON Avestruz dismissal was proper
pursuant to the POEA -SEC. 2. WON the
pecuniary awards given to Avestruz was proper.
SC RULING:
1. NO. An erring seaman is given a written notice of the charge against him and
is afforded an opportunity to explain or defend himself. Should sanctions be
imposed, then a written notice of penalty and the reasons for it shall be
furnished the erring seafarer. It is only in the exceptional case of clear and
existing danger to the safety of the crew or vessel that the required notices are
dispensed with; but just the same, a complete report should be sent to the
manning agency, supported by substantial evidence of the findings.
In this case, there is dearth of evidence to show that Avestruz had been given a
written notice of the charge against him, or that he was given the opportunity to
explain or defend himself. The statement given by Captain Woodward requiring
him to explain in writing the events that transpired at the galley in the morning of
June 22, 2011 hardly qualifies as a written notice of the charge against him, nor
was it an opportunity for Avestruz to explain or defend himself. While Captain
Woodward claimed in his e-mail that he conducted a disciplinary hearing
informing Avestruz of his inefficiency, no evidence was presented to support the
same. Neither was Avestruz given a written notice of penalty and the reasons
for its imposition.
2. YES. It is in consonance with Section 10 of RA 8042, as amended
by RA 10022, which reads:
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Section 10. Money claims. x x x

x x x x In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant workers salary, the worker shall be entitled to
the full reimbursement of his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.
Similarly, the Court affirmed the grant of attorneys fees of ten percent (10%) of
the total award. All other monetary awards were denied for lack of merit.

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15. SUNACE INTERNATIONAL MANAGEMENT

SERVICES, INC. vs. NLRC G.R. No. 161757 January
25, 2006
Carpio-Morales, J.:
Doctrine:
The theory of imputed knowledge ascribes the knowledge of the agent to the
principal not the other way around. Also, the agency between a foreign principal
and its local recruitment agent is revoked if the foreign principal directly
manages the business (hiring of employee) entrusted to the local recruitment
agent, dealing directly with third persons.
FACTS:
Sunace International Management Services (Sunace), deployed to Taiwan
Divina A. Montehermozo (Divina) as a domestic helper under a 12-month
contract effective February 1, 1997. After her 12-month contract expired on
February 1, 1998, Divina continued working for her Taiwanese employer, Hang
Rui Xiong, for two more years, after which she returned to the Philippines on
February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint before
the National Labor Relations Commission (NLRC) against Sunace and three
others including the employer-foreign principal alleging that she was jailed for
three months and that she was underpaid.
Divina filed also claimed that under her original one-year contract and the 2year extended contract which was with the knowledge and consent of Sunace,
amounts representing income tax and savings were deducted from her salary
and while the amounts deducted in 1997 were refunded to her, those deducted
in 1998 and 1999 were not.
For its part, Sunace alleged that Divinas 2 -year extension of her contract was
without its knowledge and consent, hence, it had no liability attaching to any
claim arising therefrom, and Divina in fact executed a Waiver/Quitclaim and
Release of Responsibility and an Affidavit of Desistance. The CA affirmed the
Labor Arbiter and NLRCs finding that Sunace knew of and impliedly consented
to the extension of Divinas 2-year contract. It went on to state that It is
undisputed that Sunace was continually communicating with Divinas foreign
employer. It thus concluded that as agent of the foreign principal, petitioner
cannot profess ignorance of such extension as obviously, the act of the principal
extending complainants employment contract necessarily bound it.
ISSUE: WON Sunace was solidarily liable with the foreign principal to Divina as
to the events which transpired during her 2-year extension in Taiwan.
SC RULING:

NO. The theory of imputed knowledge ascribes the knowledge of the agent,
Sunace, to the principal, employer Xiong, not the other way around. The
knowledge of the principal-foreign employer cannot, therefore, be imputed to its
agent Sunace. Also, the agency is revoked if the principal directly manages the
business entrusted to the agent, dealing directly with third persons.
Here, there is no substantial proof that Sunace knew of and consented to
be bound under the 2-year employment contract extension, it cannot be said to
be privy thereto. As such, it cannot be held solidarily liable for any of Divinas
claims arising from the 2-year employment extension. Furthermore, Sunace
correctly points out, there was an implied revocation of its agency relationship
with its foreign principal when, after the termination of the original employment
contract, the foreign principal directly negotiated with Divina and entered into a
new and separate employment contract in Taiwan.

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ARTICLE 2278
16. HON. PATRICIA A. STO.TOMAS, et al. vs.
REY SALAC, et al. G.R. No. 152642
November 13, 2012
ABAD, J.:
FACTS:
These consolidated cases pertain to the constitutionality of certain provisions of
RA 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, enacted
on June 7, 1995, which sets the Governments policies on overseas
employment and establishes a higher standard of protection and promotion of
the welfare of migrant workers, their families, and overseas Filipinos in distress.
*Constitutionality of Sections 29 and 30 of R.A. 8042
Sections 29 and 30 commanded the Department of Labor and Employment
(DOLE) to begin deregulating within one year of its passage the business of
handling the recruitment and migration of OFWs and phase out within five years
the regulatory functions of the Philippine Overseas Employment Administration
(POEA).
On January 8, 2002, Rey Salac, et al. filed a petition for certiorari, prohibition
and mandamus with application for TRO and preliminary injunction against
Patricia Sto. Tomas as DOLE Secretary, et al. in RTC Quezon City. They sought
to: 1) nullify DOLE Department Order 10 and POEA Memorandum Circular 15;
2) prohibit the DOLE, POEA, and TESDA from implementing the same and from
further issuing rules and regulations that would regulate the recruitment and
placement of OFWs; and 3) also enjoin them to comply with the policy of
deregulation mandated under Sections 29 and 30 of Republic Act 8042.
On March 20, the Quezon City RTC granted Salac, et al.s petition and ordered
the government agencies mentioned to deregulate the recruitment and
placement of OFWs. The RTC also annulled DOLE DO 10, POEA MC 15, and
all other orders, circulars and issuances that are inconsistent with the policy of
deregulation under R.A. 8042. Hence, the petition seeking to annul the RTCs
decision and have the same enjoined pending action on the petition.
On April 17, the Philippine Association of Service Exporters, Inc. intervened,
claiming that Decision gravely affected them since it paralyzed the deployment
abroad of OFWs and performing artists. So did the Confederated Association of
Licensed Entertainment Agencies, Incorporated (CALEA). On May 23, the Court
issued a TRO, enjoining the Quezon City RTC from enforcing its decision.
In a parallel case, Asian Recruitment Council Philippine Chapter, Inc. and others
(Arcophil, et al.) filed a petition for certiorari and prohibition with application for

TRO and preliminary injunction to enjoin the implementation of the 2002 Rules
and Regulations Governing the Recruitment and Employment of Overseas
Workers and to cease and desist from issuing other orders, circulars, and
policies that tend to regulate the recruitment and placement of OFWs in
violation of the policy of deregulation provided in Sections 29 and 30 of R.A.
8042. It was granted.
On December 4, 2008, however, the Republic informed the Court that on April
10, 2007 former President Gloria Macapagal-Arroyo signed into law R.A. 9422
which expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the
policy of close government regulation of the recruitment and deployment of
OFWs.
The repeal of Sections 29 and 30 of R.A. 8042 renders the issues moot and
academic. Hence, they should be dismissed.
*Constitutionality of Sections 6, 7, and 9 of R.A. 8042
On August 21, 1995, PASEI filed a petition for declaratory relief and
prohibition with prayer for issuance of TRO and writ of preliminary injunction in
RTC Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being
unconstitutional. Section 6 defines the crime of "illegal recruitment" and
enumerates the acts constituting the same. Section 7 provides the penalties for
prohibited acts. Section 9 allowed the filing of criminal actions arising from
"illegal recruitment" before the RTC of the province or city where the offense
was committed or where the offended party actually resides at the time of the
commission of the offense.
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RTC Manila declared Section 6 unconstitutional on the ground that its definition
of "illegal recruitment" is vague. But "illegal recruitment" as defined in Section 6
is clear and unambiguous and, contrary to the RTCs finding, actually makes a
distinction between licensed and non-licensed recruiters.
RTC Manila also declared Section 7 unconstitutional on the ground that its
sweeping application of the penalties failed to make any distinction as to the
seriousness of the act committed for the application of the penalty imposed on
such violation. But, in fixing uniform penalties for each of the enumerated acts
under Section 6, Congress was within its prerogative to determine what
individual acts are equally reprehensible, consistent with the State policy of
according full protection to labor, and deserving of the same penalties. It is not
within the power of the Court to question the wisdom of this kind of choice.
Notably, this legislative policy has been further stressed in July 2010 with the
enactment of R.A. 10022 which increased even more the duration of the
penalties of imprisonment and the amounts of fine for the commission of the
acts listed under Section 7.
RTC Manila also invalidated Section 9 on the ground that allowing the offended
parties to file the criminal case in their place of residence would negate the
general rule on venue of criminal cases which is the place where the crime or
any of its essential elements were committed. Venue, said the RTC, is
jurisdictional in penal laws and, allowing the filing of criminal actions at the place
of residence of the offended parties violates their right to due process. But there
is nothing arbitrary or unconstitutional in Congress fixing an alternative venue
for violations. Section 9, as an exception to the rule on venue of criminal actions
is consistent with that laws declared policy of providing a criminal justice system
that protects and serves the best interests of the victims of illegal recruitment.
*Constitutionality of Section 10, last sentence of 2nd paragraph
Spouses Simplicio and Mila Cuaresma filed a claim for death and insurance
benefits and damages against Becmen Service Exporter and Promotion, Inc.
and White Falcon Services, Inc. for the death of their daughter Jasmin while
working as staff nurse in Riyadh, Saudi Arabia.
The Labor Arbiter dismissed the claim. However, the National Labor Relations
Commission found Becmen and White Falcon jointly and severally liable for
Jasmins death and ordered them to pay the Cuaresmas the amount of
US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan City
Health Offices autopsy finding that Jasmin died of criminal violence and rape.
CA upheld.
SC found Jasmins death not work-related or work-connected since her rape
and death did not occur while she was on duty at the hospital or doing acts
incidental to her employment. The Court deleted the award of actual damages
but ruled that Becmens corporate directors and officers are solidarily liable with

their company for its failure to investigate the true nature of her death. Becmen
and White Falcon abandoned their legal, moral, and social duty to assist the
Cuaresmas in obtaining justice for their daughter.
The corporate directors and officers of Becmen, namely, Eufrocina Gumabay, et
al. filed a motion for leave to Intervene. They questioned the constitutionality of
the last sentence of the second paragraph of Section 10, R.A. 8042 which holds
the corporate directors, officers and partners jointly and solidarily liable with their
company for money claims filed by OFWs against their employers and the
recruitment firms.
The key issue that Gumabay, et al. present is whether or not the 2nd paragraph
of Section 10, R.A. 8042, which holds the corporate directors, officers, and
partners of recruitment and placement agencies jointly and solidarily liable for
money claims and damages that may be adjudged against the latter agencies,
is unconstitutional.
Absent sufficient proof that the corporate officers and directors of the erring
company had knowledge of and allowed the illegal recruitment, making them
automatically liable would violate their right to due process of law. The liability of
corporate directors and officers is not automatic. To make them jointly and
solidarily liable with their company, there must be a finding that they were
remiss in directing the affairs of that company, such as sponsoring or tolerating
the conduct of illegal activities. In the case of Becmen and White Falcon, while
there is evidence that these companies were at fault in not investigating the
cause of Jasmins death, there is no mention of any evidence in the case
against them that intervenors Gumabay, et al., Becmens corporate officers and
directors, were personally involved in their companys particular actions or
omissions in Jasmins case.
SC RULING:
R.A. 8042 is a police power measure intended to regulate the recruitment and
deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses
suffered by numerous OFWs seeking to work abroad. The rule is
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settled that every statute has in its favor the presumption of constitutionality.
The Court cannot inquire into the wisdom or expediency of the laws enacted by
the Legislative Department. Hence, in the absence of a clear and unmistakable
case that the statute is unconstitutional, the Court must uphold its validity.

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17. CENTURY CANNING CORPORATION vs. CA

and GLORIA C. PALAD G.R. No. 152894 August 17,
2007
CARPIO, J.:
FACTS:
On 15 July 1997, Century Canning Corporation hired Gloria C. Palad as fish
cleaner at its tuna and sardines factory. Palad signed an apprenticeship
agreement and received an apprentice allowance of P138.75 daily. On 25 July,
CCC submitted its apprenticeship program for approval to the Technical
Education and Skills Development Authority (TESDA) of the Department of
Labor and Employment (DOLE). On 26 September, the TESDA approved the
same.
According to CCC, a performance evaluation was conducted on 15 November,
where CCC gave Palad a rating of N.I. or needs improvement since she scored
only 27.75% based on a 100% performance indicator. Furthermore, according
to the performance evaluation, Palad incurred numerous tardiness and
absences.
As
a
consequence,
CCC
issued
a
termination
noticehttp://sc.judiciary.gov.ph/jurisprudence/2007/august2007/152894.htm
_ftn5 dated 22 November to Palad, informing her of her termination effective at
the close of business hours of 28 November.
Palad then filed a complaint for illegal dismissal, underpayment of wages, and
non-payment of pro-rated 13th month pay for the year 1997.
On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of
merit but ordered CCC to pay Palad her last salary and her pro-rated 13 th month
pay. On appeal, the National Labor Relations Commission affirmed with
modification. Upon denial of Palads motion for reconsideration, Palad filed a
special civil action for certiorari with the CA. On 12 November 2001, CA set
aside the decision of NLRC, and found that the dismissal was illegal.
CA held that the apprenticeship agreement which Palad signed was not valid
and binding because it was executed more than two months before the TESDA
approved CCCs apprenticeship program. CA also held that CCC illegally
dismissed Palad. CA ruled that CCC failed to show that Palad was properly
apprised of the required standard of performance. CA likewise held that Palad
was not afforded due process because CCC did not comply with the twin
requirements of notice and hearing.
ISSUES:
1. Whether Palad was an apprentice. No
2. Whether CCC had adequately proven the existence of a valid cause in
terminating the service of palad.
No

SC RULING:
The Labor Code defines an apprentice as a worker who is covered by a written
apprenticeship agreement with an employer. One of the objectives of Title II
(Training and Employment of Special Workers) of the Labor Code is to establish
apprenticeship standards for the protection of apprentices. (Articles 60 and 61)
In Nitto Enterprises v. National Labor Relations Commission, the Court cited
Article 61 of the Labor Code and held that an apprenticeship program should
first be approved by the DOLE before an apprentice may be hired, otherwise the
person hired will be considered a regular employee.
Based on the evidence, CCC did not comply with the requirements of the law.
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is a condition sine qua non before an apprenticeship
agreement can be validly entered into.
Hence, since the apprenticeship agreement between CCC and Palad has no
force and effect in the absence of a valid apprenticeship program duly approved
by the DOLE, Palads assertion that she was hired not as an apprentice
deserves credence. She should rightly be considered as a regular employee of
CCC as defined by Article 280 of the Labor Code.
RA 7796, which created the TESDA, has transferred the authority over
apprenticeship programs from the Bureau of Local Employment of the DOLE to
the TESDA. RA 7796 emphasizes TESDAs approval of the apprenticeship
program as a pre-requisite for the hiring of apprentices. Such intent is clear
under Section 4.
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Clearly, the apprenticeship agreement was enforced even before the TESDA
approved CCCs apprenticeship program. Thus, the apprenticeship agreement
is void because it lacked prior approval from the TESDA. The requisite TESDA
approval of the apprenticeship program prior to the hiring of apprentices was
further emphasized by the DOLE with the issuance of Department Order No.
68-04 on 18 August 2004.
Since Palad is not considered an apprentice because the apprenticeship
agreement was enforced before the TESDAs approval of CCCs apprenticeship
program, Palad is deemed a regular employee performing the job of a fish
cleaner. Clearly, the job of a fish cleaner is necessary in CCCs business as a
tuna and sardines factory.
No clear and sufficient evidence exist to warrant Palads dismissal as an
apprentice during the agreed period. Besides the absence of any written
warnings given to Palad reminding her of poor performance, CCCs evidence in
this respect consisted of an indecipherable or unauthenticated xerox of the
performance evaluation allegedly conducted on Palad. This is of doubtful
authenticity and/or credibility.
Under Article 227 of the Labor Code, the employer has the burden of proving
that the termination was for a valid or authorized cause. CCC failed to
substantiate its claim that Palad was terminated for valid reasons. It was
likewise not shown that CCC ever apprised Palad of the performance standards
set by the company. When the alleged valid cause for the termination of
employment is not clearly proven, as in this case, the law considers the matter a
case of illegal dismissal. Furthermore, Palad was not accorded due process.
CCC failed to warn Palad of her alleged poor performance. The records are
bereft of evidence to show that petitioner ever gave Palad the opportunity to
explain and defend herself. Clearly, the two requisites for a valid dismissal are
lacking in this case. CA decision AFFIRMED.

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18. MARITES BERNARDO, et al. vs. NATIONAL LABOR RELATIONS

COMMISSION & FAR EAST BANK
AND TRUST COMPANY
G.R. No. 122917; July
12, 1999
PANGANIBAN, J.:
FACTS:
Complainants Marites Bernardo, et al., numbering 43, are deaf-mutes who were
hired on various periods from 1988 to 1993 by Far East Bank and Trust Co. as
Money Sorters and Counters through a uniformly worded agreement called
Employment Contract for Handicapped Workers.
By the time this case arose, there were 56 deaf-mutes who were employed by
FEBTC under the said employment agreement. Disclaiming that complainants
were regular employees, FEBTC maintained that complainants who are a
special class of workers - the hearing impaired employees were hired
temporarily under a special employment arrangement which was a result of
overtures made by some civic and political personalities to FEBTC; that
complainants were hired due to pakiusap which must be considered in the light
of the context of FEBTCs corporate philosophy; that the idea of hiring
handicapped workers was acceptable to them only on a special arrangement
basis; that it adopted the special program to help tide over a group of
handicapped workers such as deaf-mutes like the complainants who could do
manual work for the Bank, among others.
The labor arbiter and, on appeal, the NLRC ruled against the complainants
petition to be deemed regular employees under Art. 280 of the Labor Code
because their task as money sorters and counters was necessary and desirable
to the business of the bank. Hence, the recourse to the Supreme Court.
NLRC said that Art. 280 is not controlling herein as complainants were hired as
an accommodation to the recommendation of civic oriented personalities and
the contracts of employment were with special provisions on duration as
specified under Art. 80. The NLRC also declared that the Magna Carta for
Disabled Persons was not applicable, considering the prevailing
circumstances/milieu of the case.
ISSUE: Whether the NLRC committed grave abuse of discretion in holding that
the bernardo, et al. were not regular employees.
SC RULING:
YES. The employees, who worked for more than six months and whose
contracts were renewed, are deemed regular. Hence, their dismissal from
employment was illegal. The Supreme Court appreciates the nobility of FEBTC
effort to provide employment to physically impaired individuals and to make

them more productive members of society. However, SC cannot allow it to elude

the legal consequences of that effort, simply because it now deems their
employment irrelevant. The facts, viewed in light of the Labor Code and the
Magna Carta for Disabled Persons, indubitably show that the Bernardo, et al.,
except 16 of them, should be deemed regular employees. As such, they have
acquired legal rights that SC is duty-bound to protect and uphold, not as a
matter of compassion but as a consequence of law and justice.
The stipulations in the employment contracts indubitably conform with Art. 80 of
the Labor Code. Succeeding events and the enactment of RA No. 7277,
however, justify the application of Article 280. Verily, the renewal of the contracts
of the handicapped workers and the hiring of others lead to the conclusion that
their tasks were beneficial and necessary to the bank. More important, these
facts show that they were qualified to perform the responsibilities of their
positions. In other words, their disability did not render them unqualified or unfit
for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified
disabled employee should be given the same terms and conditions of
employment as a qualified able-bodied person. (Section 5: Equal Opportunity
for Employment)
The fact that the employees were qualified disabled persons necessarily
removes the employment contracts from the ambit of Article 80. Since the
Magna Carta accords them the rights of qualified able-bodied persons, they are
thus covered by Article 280 of the Labor Code.
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Without a doubt, the task of counting and sorting bills is necessary and
desirable to the business of FEBTC. With the exception of 16 of them,
Bernardo, et al. performed these tasks for more than six months. Thus, they
should be deemed regular employees.
Because FEBTC failed to show such cause, Bernardo, et al. are deemed
illegally dismissed and therefore entitled to back wages and reinstatement
without loss of seniority rights and other privileges. But considering the
allegation of FEBTC that the job of money sorting is no longer available
because it has been assigned back to the tellers to whom it originally belonged,
Bernardo, et al. are awarded separation pay in lieu of reinstatement.
The noble objectives of Magna Carta for Disabled Persons are not based
merely on charity or accommodation, but on justice and the equal treatment of
qualified persons, disabled or not. In the present case, the handicap is not a
hindrance to their work. The eloquent proof of this statement is the repeated
renewal of their employment contracts. The Court believes, that, after showing
their fitness for the work assigned to them, they should be treated and granted
the same rights like any other regular employees. Petition GRANTED.

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Art. 82 (EMPLOYER-EMPLOYEE
RELATIONSHIP)
19. ANGELINA FRANCISCO vs. NATIONAL LABOR
RELATIONS COMMISSION G.R. No. 170087 August 31,
2006
YNARES-SANTIAGO, J.:
Doctrine:
When the control test is not sufficient to give a complete picture of the
relationship between the parties, two-tiered test must be applied.
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.
FACTS:
In 1995, petitioner was hired by Kasei Corporation during its incorporation
stage. She was designated as Accountant and Corporate Secretary and was
assigned as Liaison Officer. In 1996, petitioner was designated as Acting
Manager and was assigned to handle recruitment of all employees and perform
management administration functions; represent the company in all dealings
with government agencies, especially with the BIR, SSS and in the city
government of Makati; and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated by Kasei
Corporation. For five years, petitioner performed the duties of Acting Manager.
Her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share
in the profit of Kasei Corporation.
In January 2001, petitioner was replaced as Manager and reduced her salary by
P2,500.00 a month. On October 15, 2001, petitioner was informed that she is
no longer connected with the company.
ISSUE: Whether or not there is an employer-employee relationship between
petitioner and Kasei Corp.
SC RULING:
YES, there is an employer-employee relationship between petitioner and Kasei
Corporation.
There are instances when, aside from the employers power to control the
employee with respect to the means and methods by which the work is to be
accomplished, economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.

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.
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.
By applying the control test, there is no doubt that petitioner is an
employee of Kasei Corporation because she was under the direct control and
supervision of Seiji Kamura, the corporations Technical Consultant.
Under the broader economic reality test, the petitioner can likewise be said to
be an employee of respondent corporation because she had served the
company for six years before her dismissal, receiving check vouchers indicating
her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well
as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. It is therefore apparent that petitioner
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is economically dependent on respondent corporation for her continued

employment in the latters line of business.
Based on the foregoing, there can be no other conclusion that petitioner is an
employee of respondent Kasei Corporation. She was selected and engaged by
the company for compensation, and is economically dependent upon
respondent for her continued employment in that line of business.

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20. JOSE Y. SONZA vs. ABS-CBN

BROADCASTING CORPORATION G.R. No.
138051 June 10, 2004
Doctrine:
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,
and the less control the hirer exercises, the more likely the worker is considered
an independent contractor.
FACTS:
In May 1994, respondent ABS-CBN signed an Agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by SONZA,
as President and General Manager, and Tiangco, as EVP and Treasurer.
Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs
services exclusively to ABS -CBN as talent for radio and television. ABS-CBN
agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first
year and P317,000 for the second and third year of the Agreement. ABS-CBN
would pay the talent fees on the 10th and 25th days of the month.
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the
DOLE. SONZA complained that ABS-CBN did not pay his salaries, separation
pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan (ESOP) .
ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee
relationship existed between the parties.
ISSUE: Whether or not there is an employer-employee relationship between
petitioner and ABS-CBN.
LA RULING: There is no employer-employee relationship between petitioner
and ABS-CBN.
It must be noted that complainant was engaged by respondent by reason of his
peculiar skills and talent as a TV host and a radio broadcaster. Unlike an
ordinary employee, he was free to perform the services he undertook to render
in accordance with his own style. The fact that per the May 1994 Agreement
complainant was accorded some benefits normally given to an employee is
inconsequential. Whatever benefits complainant enjoyed arose from specific
agreement by the parties and not by reason of employer-employee relationship.
The fact that complainant was made subject to respondents Rules and
Regulations, likewise, does not detract from the absence of employer-employee
relationship.

NLRC and CA RULING: There is no employer-employee relationship between

petitioner and ABS-CBN.
SC RULING:
NO, there is no employer-employee relationship between petitioner and ABSCBN.
Case law has consistently held that the elements of an employer-employee
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 on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most important
element.
As to the selection and engagement of the employee: ABS- CBN engaged
SONZAs services to co-host its television and radio programs because of
SONZAs peculiar skills, talent and celebrity status. Independent contractors
often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and hiring of
SONZA, because of his unique skills, talent and celebrity status not possessed
by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship.
As to payment of wages: All the talent fees and benefits paid to SONZA were
the result of negotiations that led to the Agreement. If SONZA were ABS -CBNs
employee, there would be no need for the parties to stipulate on benefits such
as SSS, Medicare, x x x and 13 th month pay which the law automatically
incorporates into every employer-employee contract. Whatever benefits SONZA
enjoyed arose from contract and not because of an employer-employee
relationship.
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As to power of dismissal: For violation of any provision of the Agreement, either

party may terminate their relationship. SONZA failed to show that ABS-CBN
could terminate his services on grounds other than breach of contract, such as
retrenchment to prevent losses as provided under labor laws.
As to power of control, which is the most important: Applying the control test to
the present case, we find that SONZA is not an employee but 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. ABS-CBN did not assign any other work to SONZA.
How SONZA delivered his lines, appeared on television, and sounded on radio
were outside ABS-CBNs control. SONZA did not have to render eight hours of
work per day. The clear implication is that SONZA had a free hand on what to
say or discuss in his shows provided he did not attack ABS-CBN or its interests.

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21. BITOY JAVIER vs. FLY ACE

CORPORATION/FLORDELYN CASTILLO G.R. No.
192558 February 15, 2012
MENDOZA, J.:
Doctrine:
Whoever claims entitlement to the benefits provided by law should establish his
or her right thereto. Hence, a person who claims to be an employee must
establish such claim.
FACTS:
Javier filed a complaint before the NLRC for underpayment of salaries and other
labor standard benefits. He alleged that he was an employee of Fly Ace since
September 2007, performing various tasks at the respondents warehouse such
as cleaning and arranging the canned items before their delivery to certain
locations, except in instances when he would be ordered to accompany the
companys delivery vehicles, as pahinante; that he reported for work from
Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the
afternoon; that during his employment, he was not issued an identification card
and payslips by the company; that thereafter, Javier was terminated from his
employment without notice; and that he was neither given the opportunity to
refute the cause/s of his dismissal from work.
For its part, Fly Ace denied that Javier is its employee and averred that it was
engaged in the business of importation and sales of groceries. Javier was
contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis. Mr.
Ong contracted Javier roughly 5 to 6 times only in a month whenever the
vehicle of its contracted hauler, Milmar Hauling Services, was not available.
ISSUE: Whether or not the petitioner is a an employee of Fly Ace Corporation.
RULING IN LA: Petitioner is not an employee of Fly Ace Corporation. It ruled
that Javier has no employee ID showing his employment with the Respondent
nor any document showing that he received the benefits accorded to regular
employees of the Respondents. Respondent Fly Ace is not engaged in trucking
business but in the importation and sales of groceries. Since there is a regular
hauler to deliver its products, we give credence to Respondents claim that
complainant was contracted on pakiao basis.
RULING IN NLRC: The NLRC reversed the decision of the LA and ruled that
the LA skirted the argument of Javier and immediately concluded that he was
not a regular employee simply because he failed to present proof. It was of the
view that a pakyaw -basis arrangement did not preclude the existence of
employer-employee relationship. Payment by result x x x is a method of
compensation and does not define the essence of the relation. It is a mere

method of computing compensation, not a basis for determining the existence

or absence of an employer-employee relationship.
RULING IN CA:The CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of Javiers complaint
as ordered by the LA.
SC RULING:
NO, petitioner is not an employee of Fly Ace Corporation.
No particular form of evidence is required to prove the existence of such
employer -employee relationship. Any competent and relevant evidence to
prove the relationship may be admitted. The rule of thumb remains: the onus
probandi falls on petitioner to establish or substantiate such claim by the
requisite quantum of evidence. Whoever claims entitlement to the benefits
provided by law should establish his or her right thereto x x x. Sadly, Javier
failed to adduce substantial evidence as basis for the grant of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his
employment with Fly Ace. By way of evidence on this point, all that Javier
presented were his self-serving statements purportedly showing his activities as
an employee of Fly Ace. Clearly, Javier failed to pass the substantiality
requirement to support his claim. Hence, the Court sees no reason to depart
from the findings of the CA.

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22. SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, ET AL vs.

HON. JESUS G. BERSAMIRA,
IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC,
PASIG, and SAN MIGUEL CORP. G.R. No. 87700 June 13, 1990
MELENCIO-HERRERA, J.
Doctrine:
A labor dispute can nevertheless exist regardless of whether the disputants
stand in the proximate relationship of employer and employee. The existence of
a labor dispute is not negative by the fact that the plaintiffs and defendants do
not stand in the proximate relation of employer and employee.
FACTS:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising
services with Lipercon and D'Rite. These companies are independent
contractors duly licensed by the DOLE. In said contracts, it was expressly
understood and agreed that the workers employed by the contractors were to
be paid by the latter and that none of them were to be deemed employees or
agents of SanMig. There was to be no employer-employee relation between the
contractors and/or its workers, on the one hand, and SanMig on the other.
Petitioner SMCEU is the duly authorized representative of the monthly paid
rank-and-file employees of SanMig with whom the latter executed a CBA.
In a letter, the Union advised SanMig that some Lipercon and D'Rite workers
had signed up for union membership and sought the regularization of their
employment with SMC. The Union alleged that this group of employees, while
appearing to be contractual workers supposedly independent contractors, have
been continuously working for SanMig for a period ranging from 6 months to 15
years and that their work is neither casual nor seasonal as they are performing
work or activities necessary or desirable in the usual business or trade of
SanMig. Thus, it was contended that there exists a "labor- only" contracting
situation. It was then demanded that the employment status of these workers be
regularized.
SMC filed a verified Complaint for Injunction and Damages before respondent
Court. The Union filed a Motion to Dismiss SanMig's Complaint on the ground of
lack of jurisdiction over the case/nature of the action, which motion was
opposed by SanMig.
ISSUE: Whether or not there the Respondent Court has jurisdiction in issuing
the injunction.
RULING IN THE RTC: The respondent Court issued injunction. The absence of
employer-employee relationship negates the existence of labor dispute. Verily,
this court (RTC) has jurisdiction to take cognizance of Sanmig's grievance.

The evidence so far presented indicates that plaintiff has contracts for services
with Lipercon and D'Rite. The application and contract for employment of the
defendants' witnesses are either with Lipercon or D'Rite. What could be
discerned is that there is no employer-employee relationship between plaintiff
and the contractual workers employed by Lipercon and D'Rite. This, however,
does not mean that a final determination regarding the question of the existence
of employer-employee relationship has already been made. To finally resolve
this dispute, the court must extensively consider and delve into the manner of
selection and engagement of the putative employee; the mode of payment of
wages; the presence or absence of a power of dismissal; and the Presence or
absence of a power to control the putative employee's conduct.
SC RULING:
NO, the respondent Court has no jurisdiction in issuing the injunction.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any
controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and
employee." A labor dispute, as defined by the law, does exist herein is evident.
Whether or not the Union demands are valid; whether or not SanMig's contracts
with Lipercon and D'Rite constitute "labor- only" contracting and, therefore, a
regular employer-employee relationship may, in fact, be said to exist; whether or
not the Union can lawfully represent the workers of Lipercon and D'Rite in their
demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself
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legal when it was allegedly instigated to compel the employer to hire strangers
outside the working unit; those are issues the resolution of which call for the
application of labor laws, and SanMig's causes of action in the Court below are
inextricably linked with those issues.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the
labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior
to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was
instituted on 6 March 1989, Labor Arbiters have original and exclusive
jurisdiction to hear and decide the following cases involving all workers.

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23. RAUL G. LOCSIN and EDDIE B. TOMAQUIN v. PHILIPPINE LONG

DISTANCE TELEPHONE COMPANY
G.R. No. 185251
October 2, 2009
VELASCO, JR., J.:
Doctrine:
The power of control, in this case, has been explained as the right to control
not only the end to be achieved but also the means to be used in reaching such
end. With the conclusion that respondent directed petitioners to remain at their
posts and continue with their duties, it is clear that respondent exercised the
power of control over them; thus, the existence of an employer-employee
relationship.
FACTS:
Respondent PLDT and the SSCP entered into a Security Services Agreement
whereby SSCP would provide armed security guards to PLDT to be assigned to
its various offices. Pursuant to such agreement, petitioners Raul Locsin and
Eddie Tomaquin, among other security guards, were posted at a PLDT office.
Then respondent issued a Letter terminating the Agreement. Despite the
termination of the Agreement, however, petitioners continued to secure the
premises of their assigned office. They were allegedly directed to remain at their
post by representatives of respondent. In support of their contention, petitioners
provided the Labor Arbiter with copies of petitioner Locsins pay slips for the
period after the said termination of Agreement.
Then, after a year, petitioners services were terminated. Thus, petitioners filed
a complaint before the Labor Arbiter for illegal dismissal and recovery of money
claims.
ISSUE: Whether or not there is an employer-employee relationship between the
petitioners and PLDT.
RULING IN LA: Petitioners were found to be employees of PLDT and not of
SSCP. Such conclusion was arrived at with the factual finding that petitioners
continued to serve as guards of PLDTs offices. As such employees, petitioners
were entitled to substantive and procedural due process before termination of
employment. The Labor Arbiter held that respondent failed to observe such due
process requirements.
RULING IN NLRC: The NLRC affirmed the decision of the LA.
RULING IN CA: The CA reversed the decision of LA and NLRC. The CA applied
the four- fold test in order to determine the existence of an employer-employee
relationship between the parties but did not find such relationship. It determined
that SSCP was not a labor-only contractor and was an independent contractor

having substantial capital to operate and conduct its own business. The CA
further bolstered its decision by citing the Agreement whereby it was stipulated
that there shall be no employer-employee relationship between the security
guards and PLDT.
SC RULING:
YES, there is employer-employee relationship between the petitioners and
PLDT. From the foregoing circumstances, reason dictates that we conclude that
petitioners remained at their post under the instructions of respondent. We can
further conclude that respondent dictated upon petitioners that the latter perform
their regular duties to secure the premises during operating hours. This, to our
mind and under the circumstances, is sufficient to establish the existence of an
employer-employee relationship.
To reiterate, while respondent and SSCP no longer had any legal relationship
with the termination of the Agreement, petitioners remained at their post
securing the premises of respondent while receiving their salaries, allegedly
from SSCP. Clearly, such a situation makes no sense, and the denials proffered
by respondent do not shed any light to the situation. It is but reasonable to
conclude that, with the behest and, presumably, directive of respondent,
petitioners continued with their services. Evidently, such are indicia of control
that respondent exercised over petitioners.
Such power of control has been explained as the right to control not only the
end to be achieved but also the means to be used in reaching such end. With
the conclusion that respondent directed petitioners to remain at their posts and
continue with their duties, it is clear that respondent exercised the power of
control over them; thus, the existence of an employer-employee relationship.
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Evidently, respondent having the power of control over petitioners must be

considered as petitioners employer from the termination of the Agreement on
wards as this was the only time that any evidence of control was exhibited by
respondent over petitioners.

24. PEOPLE'S BROADCASTING (BOMBO RADYO PHILS., INC.) vs.

SECRETARY OF DOLE
May 8,
G.R. No. 179652
2009
TINGA, J.:
Doctrine:
The Department of Labor and Employment 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.
FACTS:
Private respondent Jandeleon Juezan filed a complaint against petitioner before
(DOLE) Regional Office, for illegal deduction, nonpayment of service incentive
leave, 13th month pay, premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and non- coverage of SSS,
PAG-IBIG and Philhealth. After summary investigation, DOLE found that private
respondent was an employee of petitioner, and was entitled to his money.
Bombo Radyo appealed the decision, but the DOLE dismissed the same. The
Court of Appeals (CA) afirmed such dismissal.
When the matter reached the Supreme Court, the CA decision was reversed
and set aside. The Court found that there was no employer-employee
relationship between Bombo Radyo and Juezan. It was held that while the
DOLE may make a determination of the existence of an employer-employee
relationship, this function could not be co -extensive with the visitorial and
enforcement power provided in Art. 128(b) of the Labor Code, as amended by
RA 7730. The National Labor Relations Commission (NLRC) was held to be the
primary agency in determining the existence of an employer-employee
relationship. From this decision, the Public Attorneys Ofice (PAO) filed a Motion
for Clariication of Decision (with Leave of Court). The PAO sought to clarify as
to when the visitorial and enforcement power of the DOLE can be considered as
co-extensive with the power to determine the existence of an employeremployee relationship. The Court treated the Motion for Clarification as a
second motion for reconsideration, granting said motion and reinstating the
petition.

ISSUE: Whether or not the Department of Labor and Employment has the
power to determine the existence of employer-employee relationship in its
exercise of its visitorial and its enforcement power.
RULING:
No limitation in the law was placed upon the power of the DOLE to determine
the existence of an employer-employee relationship. No procedure was laid
down where the DOLE would only make a preliminary inding, that the power
was primarily held by the NLRC. The law did not say that the DOLE would first
seek the NLRCs determination of the existence of an employer-employee
relationship, or that should the existence of the employer -employee relationship
be disputed, the DOLE would refer the matter to the NLRC. 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.
The determination of the existence of an employer -employee relationship by
the DOLE must be respected. The expanded visitorial and enforcement power
of the DOLE granted by RA 7730 would be rendered nugatory if the alleged
employer could, by the simple expedient of disputing the employer - employee
relationship, force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an employeremployee relationship be made to oust the DOLE of jurisdiction. But it is
precisely the DOLE that will be faced with that evidence, and it is the DOLE that
will weigh it, to see if the same does successfully refute the existence of an
employer-employee relationship.
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25. ERNESTO G. YMBONG vs. ABS-CBN

BROADCASTING CORPORATION G.R. No. 184885
March 7, 2012
VILLARAMA, JR., J.:
Doctrine:
A company is estopped from denying the existence of employer- employee
relationship after applying a company policy to all its employees including those
under talent contracts.
FACTS:
Ernesto G. Ymbong worked for ABS-CBN Broadcasting Corporation (ABS-CBN
at its regional station in Cebu as a television talent which extended to radio
when ABS-CBN Cebu launched its AM station DYAB where he worked as
drama and voice talent, spinner, scriptwriter and public affairs program anchor.
Leandro Patalinghug also worked for ABS-CBN Cebu as talent, director and
scriptwriter for various radio programs aired over DYAB.
ABS-CBN head office issued Policy No. HR- ER-016 (Policy on Employees
Seeking Public Office) requiring an employee (1) to resign if he intends to run
for a public position (2) to file a leave of absence if he intends to join a political
group/party or even with no political affiliation but who intends to openly and
aggressively campaign for a candidate or group of candidates (e.g. publicly
speaking/endorsing candidate, recruiting campaign workers, etc.) Dante Luzon,
Assistant Station Manager of DYAB issued a memorandum stating that those
who intend to run shall file a leave of absent not consonance with the Policy.
Ymbong then file a leave of absence although he ran for a public office.
Patalinghug filed a resignation. Unfortunately both lost in the election. They then
tried to go back to work with the ABS. However, they were only allowed to wind
up their programs. After such, they were informed of their automatic termination
because of the policy.
Ymbong filed complaint for illegal dismissal, in contrast contended that
after the expiration of his leave of absence, he reported back to work as a
regular talent and in fact continued to receive his salary;
The ground cited by ABS-CBN for his dismissal was not among those
enumerated in the Labor Code, as amended; and
The company policy violates his constitutional right to suffrage.
In their defense, complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug. ABS-CBN
contended that they are not employees but talents as evidenced by their talent
contracts.

LA RULING: There exists employer-employee relationship based on the

appointment letters/talent contracts imposed conditions in the performance of
their work, specifically on attendance and punctuality, which effectively placed
them under the control of ABS-CBN.
Also, the policy was not made known to them and superseded by the memo of
Luzon.
NLRC RULING: The NLRC held that ABS-CBN wielded the power of control
over Ymbong and Patalinghug, thereby proving the existence of an employeremployee relationship between them. However, the two were treated differently
(1) Patalinghug was considered resigned while (2) Ymbong was not considered
resigned. In the latter, it was ruled that the memorandum of Luzon shall prevail
ever the policy under the principle of social justice.
CA RULING: The CA ruled that ABS-CBN is estopped from claiming that
Ymbong was not its employee after applying the provisions of Policy No. HRER-016 to him. The CA likewise held that the subject company policy is the
controlling guideline and therefore, Ymbong should be considered resigned
from ABS-CBN.
ISSUES:
1) Whether or not Ymbong and Patalinghug were
employees of ABS-CBN. 2) Whether or not Ymbong
was terminated.
SC RULING:
1) Yes. They were employees. The Court upheld the decision of CA as to
employment issue.
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2) Ymbong was not terminated. He resigned.

a) The Policy was a valid exercise of management prerogative. In the
instant case, ABS-CBN validly justified the implementation of Policy No.
HR-ER-016. It is well within its rights to ensure that it maintains its
objectivity and credibility and freeing itself from any appearance of
impartiality so that the confidence of the viewing and listening public in
it will not be in any way eroded.
b) Ymbongs overt act of running for councilor of Lapu-Lapu City is
tantamount to resignation on his part. He was separated from ABSCBN not because he was dismissed but because he resigned. Since
there was no termination to speak of, the requirement of due process in
dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is not
duty-bound to ask him to explain why he did not tender his resignation
before he ran for public office as mandated by the subject company
policy.

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26. PROFESSIONAL SERVICES, INC. vs. COURT OF APPEALS and

NATIVIDAD and ENRIQUE AGANA
G.R. No. 126297
February 11, 2008
SANDOVAL-GUTIERREZ, J.:
Doctrine:
"Consultant" physicians can be considered as employee of the hospital if there
is an actual control over their selection, hiring and termination.
FACTS:
Dr. Fuentes and Dr. Ampil performed and completed the hysterectomy upon
Natividad Agana who was suffering from "cancer of the sigmoid." However, the
operation appeared to be flawed. Natividad complained of excruciating pain in
her anal region. She consulted both Dr. Ampil and Dr. Fuentes about it. They
told her that the pain was the natural consequence of the surgical operation.
She then sought treatment at the Polymedic General Hospital wherein Dr.
Ramon Gutierrez detected the presence of a foreign object in her vagina -- a
foul-smelling gauze which badly infected her vaginal vault. Two surgeries were
performed to remedy the infection.
Natividad and her husband filed with the RTC QC a complaint for damages
against Professional Service Inc (PSI) (owner of Medical City), Dr. Ampil and Dr.
Fuentes. Pending the outcome of the above case, Natividad died. She was duly
substituted by her above-named children (the Aganas).
RTC RULING:
PSI, Dr. Ampil and Dr. Fuentes are severally liable.
CA RULING:
The court affirmed the assailed judgment with modification in the sense that the
complaint against Dr. Fuentes was dismissed.PSI, Dr. Ampil and the Aganas
filed with this Court separate petitions for review on certiorari.
SUPREME COURT FIRST DIVISION:
The Court, through its First Division, rendered a Decision holding that PSI is
jointly and severally liable;
1. there is an employer-employee relationship between Medical City and Dr.
Ampil for purposes of apportioning responsibility in medical negligence
cases;
2. PSIs act of publicly displaying in the lobby of the Medical City the names
and specializations of its accredited physicians, including Dr. Ampil,
estopped it from denying the existence of an employer-employee
relationship between them under the doctrine of ostensible agency or
agency by estoppel;

3. PSIs failure to supervise Dr. Ampil and its resident physicians and nurses
and to take an active step in order to remedy their negligence rendered it
directly liable under the doctrine of corporate negligence.
Arguments of PSI in the MR:
1. PSI contends that there's no employer-employee relationship between it
and its consultant, Dr. Ampil. PSI stressed that the Courts Decision in
Ramos holding that "an employer-employee relationship in effect exists
between hospitals and their attending and visiting physicians for the
purpose of apportioning responsibility".
2. PSI maintains that consultants, like Dr. Ampil, are "independent
contractors," not employees of the hospital.
3.
ISSUES:
1. Whether or not there's an employee - employer relationship for solidary
liability to attach.
2. Whether or not Dr. Ampil an independent contractor-physician hence
liability is personal.
SC RULING:
Yes, employer -employee relationship "in effect" exists between the Medical
City and Dr. Ampil. Consequently, both are jointly and severally liable to the
Aganas.
First, hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital premises. The
applicant for "consultant" required to submit;
1. proof of completion of residency;
2. their educational qualifications;
3. generally, evidence of accreditation by the appropriate board (diplomate);
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4. evidence of fellowship in most cases, and

5. references.
After a physician is accepted, either as a visiting or attending consultant, he is
normally required to attend clinico-pathological conferences, rounds and patient
audits. In addition to these, the physicians performance as a specialist is
generally evaluated by a peer review committee on the basis of mortality and
morbidity statistics, and feedback from patients, nurses, interns and residents.
Hence, private hospitals hire, fire and exercise real control over their attending
and visiting "consultant" staff. While "consultants" are not, technically
employees, a point which respondent hospital asserts in denying all
responsibility for the patients condition, the control exercised, the hiring, and the
right to terminate consultants all fulfill the important hallmarks of an employeremployee relationship, with the exception of the payment of wages. In
assessing whether such a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing, we rule that for the
purpose of allocating responsibility in medical negligence cases, an employeremployee relationship in effect exists between hospitals and their attending and
visiting physicians.
Second, even assuming that Dr. Ampil is not an employee of Medical City, but
an independent contractor, still the said hospital is liable to the Aganas based on
the "doctrine of apparent authority." There are two factors to consider:
1. 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; and
2. Whether the plaintiff acted in reliance upon the conduct of the hospital or
its agent, consistent with ordinary care and prudence.
In this case, PSI is estopped from passing the blame solely to Dr. Ampil. Its act
of displaying his name and those of the other physicians in the public directory
at the lobby of the hospital amounts to holding out to the public that it offers
quality medical service through the listed physicians. This justifies Atty. Aganas
belief that Dr. Ampil was a member of the hospitals staff. It must be stressed
that under the doctrine of apparent authority, the question in every case is
whether the principal has by his voluntary act placed the agent in such a
situation that a person of ordinary prudence, conversant with business usages
and the nature of the particular business, is justified in presuming that such
agent has authority to perform the particular act in question.

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27. SOUTH EAST INTERNATIONAL

RATTAN INC. v. COMING G.R. No. 126297
February 11, 2008 VILLARAMA, JR., J.:
Doctrine:
Payroll not conclusive proof of existence or absence of ER-EE relationship.
FACTS:
Respondent Jesus J. Coming filed a complaint for illegal dismissal,
underpayment of wages, non-payment of holiday pay, 13th month pay and
service incentive leave pay, with prayer for reinstatement, back wages,
damages and attorneys fees against South East International Rattan Inc
(SEIRI). He alleged that he was hired by petitioners as Sizing Machine Operator
on March 17, 1984. His work schedule is from 8:00 a.m. to 5:00 p.m. Initially, his
compensation was on "pakiao" basis but sometime in June 1984, it was fixed at
P150.00 per day which was paid weekly. In 1990, he was told not to work for
two months for no reason. After two months, he reported back to wrk only to be
later on terminated because the company is not doing well financially and that
he would be called back to work only if they need his services again.
Respondent waited for almost a year but petitioners did not call him back to
work. Hence, he filed a complaint before the regional arbitration branch. To
bolster his claim, respondent submitted an affidavit signed by five former coworkers stating that respondent was one of the pioneer employees who worked
in SEIRI for almost twenty years.
In their defense, petitioners denied having hired respondent. They stressed that
respondent was not included in the list of employees submitted to the Social
Security System (SSS). There's also an affidavit of Comings's brother attesting
that he worked for another employer.
LA RULING: Respondent is a regular employee of SEIRI and that the
termination of his employment was illegal. Labor Arbiter Carreon found that
respondents work as sizing machine operator is usually necessary and
desirable to the rattan furniture business of petitioners and their failure to
include respondent in the employment report to SSS is not conclusive proof that
respondent is not their employee.
NLRC RULING: Set aside the decision of LA ruling that, complainant failed to
present a single payslip, voucher or a copy of a company payroll showing that
he rendered service during the period indicated therein. The appeal to (NLRC)Cebu City submitted the following additional evidence:
(1)copies of SEIRIs payrolls and individual pay records of employees;
(2)affidavit15 of SEIRIs Treasurer, Angelina Agbay; and
(3)second affidavit16 of Vicente Coming.

CA RULING: Reinstated the decision of LA. The CA gave more credence to the
declarations of the five former employees of petitioners that respondent was
their co-worker in SEIRI. As to the absence of respondents name in the payroll
and SSS employment report, the CA observed that the payrolls submitted were
only from January 1, 1999 to December 29, 2000 and not the entire period of
eighteen years when respondent claimed he worked for SEIRI. It further noted
that the names of the five affiants, whom petitioners admitted to be their former
employees, likewise do not appear in the aforesaid documents. According to the
CA, it is apparent that petitioners maintained a separate payroll for certain
employees or willfully retained a portion of the payroll.
As to the control test, records show that:
(1)they required him to work within the company premises;
(2)they obliged petitioner to report every day of the week and tasked him to
usually perform the same job;
(3)they enforced the observance of definite hours of work from 8 oclock in
the morning to 5 oclock in the afternoon;
(4)the mode of payment of petitioners salary was under their discretion, at
first paying him on pakiao basis and thereafter, on daily basis;
(5)they implemented company rules and regulations;
(6)[Estanislao] Agbay directly paid petitioners salaries and controlled all
aspects of his employment and
(7)petitioner rendered work necessary and desirable in the business of the
respondent company.
ISSUE: Whether or not an employer-employee relationship exists.
SC RULING:
Yes. The Court affirmed the ruling of the CA.

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To ascertain the existence of an employer-employee relationship

jurisprudence has invariably adhered to the four-fold test, to wit:
(1)the selection and engagement of the employee;
(2)the payment of wages;
(3)the power of dismissal; and
(4)the power to control the employees conduct, or the so-called "control
test."
[Evidence]
In resolving the issue of whether such relationship exists in a given case,
substantial evidence that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion is sufficient. Although
no particular form of evidence is required to prove the existence of the
relationship, and any competent and relevant evidence to prove the relationship
may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence.
As to the SSS or payroll list:
The Court reiterated that in Tan v. Lagrama, the fact that a worker was not
reported as an employee to the SSS is not conclusive proof of the absence of
employer- employee relationship. Otherwise, an employer would be rewarded
for his failure or even neglect to perform his obligation.
For a payroll to be utilized to disprove the employment of a person, it must
contain a true and complete list of the employee. In this case, the exhibits
offered by petitioners before the NLRC consisting of copies of payrolls and pay
earnings records are only for the years 1999 and 2000; they do not cover the
entire 18-year period during which respondent supposedly worked for SEIRI.
As to the certifications issued by Mayol and Apondar asserting that
respondent worked for them and not for SEIRI:
The Court ruled that the certifications did not prove any fact that respondent
was not an employee of SEIRI. The certifications only claimed that (1)
respondent worked under Mayor on his own discretion and (2) under Apondar
as his sideline but only after regular working hours and "off and on" basis. Even
assuming the truth of the foregoing statements, these do not foreclose
respondents regular or full-time employment with SEIRI.
As to the affidavit of former co-workers submitted by respondent:
The petitioner claimed that the affiants were employees of their suppliers Mayol
and Apondar. However, they did not submit proof that the latter were indeed
independent contractors; clearly, petitioners failed to discharge their burden of
proving their own affirmative allegation.
Hence, respondent Coming was a regular employee and unlawfully dismissed.

Decision regarding BACKWAGES and reinstatement

Respondent, whose employment was terminated without valid cause by
petitioners, is entitled to reinstatement without loss of seniority rights and other
privileges and to his full back wages, inclusive of allowances and other benefits
or their monetary equivalent, computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Where
reinstatement is no longer viable as an option, back wages shall be computed
from the time of the illegal termination up to the finality of the decision.
Separation pay equivalent to one month salary for every year of service should
likewise be awarded as an alternative in case reinstatement in not possible.

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28. TENAZAS ET.AL v. R. VILLEGAS TAXI

TRANSPORTATION G.R. No. 192998 April 2,
2014
REYES, J.:
Doctrine:
The employee must present evidence to establish the existence of employeremployee relationship.
FACTS:
Tenazas, Francisco and Edraca were complainants in a consolidated case for
illegal dismissal against R. Villegas Taxi Transport and Romualdo Villegas
before the Labor Arbiter of. In their positions papers, they alleged they were
hired as taxi drivers on a boundary system by the respondents.
1. The taxi Tenazas was driving was sideswiped by another vehicle. When
he reported the matter to the company, he was scolded by the
respondents and told to leave the garage as he was already fired.
2. Francisco alleged that he was terminated on suspicion that he was
organising a labor union, hence he was terminated without due process.
3. Isidro alleged that he was terminated when he fell short of the required
boundary after he brought his unit to an auto repair shop for an urgent
repair. When he returned to the garage his drivers license was
confiscated and he was no longer allowed to drive a taxi despite his pleas.
In their defense, the company admitted Tenazas and Edraca were regular and
spare drivers respectively, but denied employing Francisco as a driver. Tenzas
was never terminated by the company. He was informed that his unit was due
for overhaul and advised to wait for further notice from the company if his unit
was already fixed. Despite being informed on July 8, 2007 that his unit was
ready for release, Tenazas did not return. On Edraca, the company alleged he
was a spare driver of the company from 2001, substituting whenever a driver is
not around. They could not have terminated him in 2006 since he stopped
reporting for work in 2003.
LA RULING: The LA dismissed their complaint, finding no employer-employee
relationship between them and the company. The company having denied the
existence thereof, it was incumbent upon complainants to prove the existence
of the employer-employee relationship.
NLRC RULING: On appeal to the NLRC, however, the commission, relying on
the newly discovered evidence submitted by the complainant Tenazas, ruled
them illegally dismissed. It ordered payment of their back wages from the time
of dismissal, as well as payment of separation pay and attorneys fees.

CA RULING: On petition for certiorari with the CA, the latter affirmed the NLRC
judgment but deleted the award of separation pay and ordered their
reinstatement. It also deleted the award in favour of Francisco, who, the CA
averred, failed to prove that he was an employee of the respondent. Thus, the
petitioners elevated their case to the Supreme Court to review the CA decision
dismissing Franciscos complaint and deleting the award of separation pay to
the other petitioners.
ISSUE: Whether or not employer-employee relations exist between the Jaime
Francisco and the company.
SC RULING:
The petition lacks merit.Pivotal to the resolution of the instant case is the
determination of the existence of employer-employee relationship and whether
there was an illegal dismissal.
Unlike the other complainant, Tenazas who submitted proof of SSS contribution,
affidavit of co-drivers and pictures wearing company shirt, Francisco failed to
present sufficient evidence to prove regular employment such as company ID,
SSS membership, withholding tax certificates or similar articles.
The Court ruled that in determining the presence or absence of an employeremployee relationship the following requisites must be present;
(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 on the means and
methods by which the work is accomplished. The last element, the socalled control test, is the most important element.
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There is no hard and fast rule designed to establish the aforesaid elements. Any
competent and relevant evidence to 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.
In this case, however, Francisco failed to present any proof substantial enough
to establish his relationship with the respondents.
He failed to present any attendance logbook, payroll, SSS record or any
personnel file that could somehow depict his status as an employee;
He was not issued with employment records, he could have, at least,
produced his social security records which state his contributions, name and
address of his employer, as his co-petitioner Tenazas did.
There's no testimonial evidence showing the respondents exercise of control
over the means and methods by which he undertakes his work.
The employment was being claimed by Emmanuel who executed an affidavit
alleging that Francisco was employed as a spare driver in his taxi garage, a
fact that the latter failed to deny or question in any of the pleadings attached
to the records of this case.
In Opulencia Ice Plant and Storage v. NLRC, the Court emphasized, that there's
no particular form of evidence is required to prove the existence of an employeremployee relationship. However in this case, Francisco simply relied on his
allegation that he was an employee of the company without any other evidence
supporting his claim.
Hence, CA correctly ruled that Francisco could not be considered an employee
of the respondents.
THE CASE ALSO DISCUSS THE APPLICATION OF BACKWAGES AND
REINSTATEMENT.
The CAs order of reinstatement of Tenazas and Endraca, instead of the
payment of separation pay, is also well in accordance with prevailing
jurisprudence. In Macasero v. Southern Industrial Gases Philippines,14 the
Court reiterated, thus:
[A]n illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. In instances
where reinstatement is no longer feasible because of strained relations between
the employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation
pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are
reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual

reinstatement. Where reinstatement is no longer viable as an option, separation

pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to
payment of backwages. (Emphasis supplied)
Clearly, it is only when reinstatement is no longer feasible that the payment of
separation pay is ordered in lieu thereof. For instance, if reinstatement would
only exacerbate the tension and strained relations between the parties, or
where the relationship between the employer and the employee has been
unduly strained by reason of their irreconcilable differences, it would be more
prudent to order payment of separation pay instead of reinstatement.16
This doctrine of strained relations, however, should not be used recklessly or
applied loosely17 nor be based on impression alone. It bears to stress that
reinstatement is the rule and, for the exception of strained relations to apply, it
should be proved that it is likely that if reinstated, an atmosphere of antipathy
and antagonism would be generated as to adversely affect the efficiency and
productivity of the employee concerned.18
Moreover, the existence of strained relations, it must be emphasized, is a
question of fact. In Golden Ace Builders v. Talde, the Court underscored:
Strained relations must be demonstrated as a fact, however, to be adequately
supported by evidence substantial evidence to show that the relationship
between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy (Citations omitted and emphasis ours)
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After a perusal of the NLRC decision, this Court failed to find the factual basis of
the award of separation pay to the petitioners. The NLRC decision did not state
the facts which demonstrate that reinstatement is no longer a feasible option
that could have justified the alternative relief of granting separation pay instead.
The petitioners themselves likewise overlooked to allege circumstances which
may have rendered their reinstatement unlikely or unwise and even prayed for
reinstatement alongside the payment of separation pay in their position paper. A
bare claim of strained relations by reason of termination is insufficient to warrant
the granting of separation pay. Likewise, the filing of the complaint by the
petitioners does not necessarily translate to strained relations between the
parties. As a rule, no strained relations should arise from a valid and legal act
asserting ones right. Although litigation may also engender a certain degree of
hostility, the understandable strain in the parties relation would not necessarily
rule out reinstatement which would, otherwise, become the rule rather the
exception in illegal dismissal cases. Thus, it was a prudent call for the CA to
delete the award of separation pay and order for reinstatement instead, in
accordance with the general rule stated in Article 279 of the Labor Code.
Finally, the Court finds the computation of the petitioners backwages at the rate
of P800.00 daily reasonable and just under the circumstances. The said rate is
consistent with the ruling of this Court in Hyatt Taxi Services, Inc. v. Catinoy,
which dealt with the same matter.
WHEREFORE, in view of the foregoing disquisition, the petition for review on
certiorari is DENIED. The Decision dated March 11, 2010 and Resolution dated
June 28, 2010 of the Court of Appeals.

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29. GREGORIO V. TONGKO, petitioner vs. THE MANUFACTURERS LIFE

INSURANCE CO. (PHILS.), INC.
G.R. No. 167622
November 7, 2008
VELASCO, JR., J.:
Doctrines:
1. An employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end to be
achieved but also the means to be used in reaching such end.
2. An employer may terminate the services of an employee for just cause
and this must be supported by substantial evidence.
FACTS:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic
corporation engaged in life insurance business. It executed a Career Agents
Agreement with Gregorio Tongko whereby the latter agreed to be an
independent contracor for the canvass of insurance policies and other products
offered by the company. Tongko was promoted to Unit Manager in 1983 and
Branch Manager in 1990. However, Tongko received a letter in 2001 from
Manulife President and Chief Executive Officer, Ranato Vergel De Dios,
regarding a Metro North Sales Managers Meeting. The said letter stated that
the region of Tongko is the lowest performer in terms of recruiting and provided
for measures to address such issue. Subsequently, Tongko received another
letter form De Dios terminating his Agents Contract for his failure to align his
directions with the Managements avowed agency growth policy. Tongko then
filed a complaint for illegal dismissal against Manulife before the NLRC.
ISSUES
1. Whether or not an Employer-Employee relationship exist between Tongko
and Manulife.
2. Whether or not Tongko was illegaly dismissed.
LA RULING: No. The LA ruled that no Employer-Employee relationship was
found in applying the four-fold test.
NLRC RULING:nYes. The NLRC ruled that an Employer-Employee relationship
existed because Manulife exercised control over Tongko as evidence by a letter
of De Dios, which contained various directives to Tongko. The NLRC also held
Manulife liable for illegal Dismissal.
CA RULING: No. The CA ruled that no Employer-Employee relationship existed
because Manulife did not exercise control over Tongko that would render the
latter an employee of the former.
SC RULING:
1. Yes. Manulife had the power of control over Tongko. Under the Agreement
executed between Tongko and Manulife in 1977, the former must comply

with the following requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of knowledge of
the companys products that is satisfactory to the company; and (3)
compliance with a quota of new businesses. Tongko was required to
comply with the different codes of conduct of Manulife and he was also
tasked to perform administrative duties that established his employment.
2. Yes. Manulife fialed to cite a single iota of evidence to support its claims
that there was gross and habitual neglect of duties, inefficiency as well as
willful disobedince of the lawful order of Manulife on the part of Tongko. An
employer may only terminate the services of an employee for a just cause
which must be supported by substantial evidence.

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30. TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P.

TUVIERA, petitioners, vs.
ROBERTO C. SERVAA
G.R. No. 167648
January 28, 2008
TINGA, J.:
Doctrine:
There is an employer-employee relationship when the person for whom the
services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end.
FACTS:
TAPE is a domestic corporation engaged in the production of television
programs while Antonio Tuviera serves as its president. Roberto Servaa
served as security guard for TAPE from 1987 until his services were termitated
on 3 March 2000. Servaa filed a complaint for illegal dismissal agianst
TAPE.He alleged that he was first connected with Agro-Commercial Security
Agency but was later on absorbed by TAPE as a regular company guard. His
services were terminated on account of TAPEs decision to contract the services
of a professional security agency. Tape, on the other hand, alleged that Servaa
was an independent contractor falling under the talent group category and was
working under a special arrangement. It alleged that it was agreed that Servaa
would render his services unitil such time that the company shall have engaged
the services of a professional security agency.
ISSUE: Whether or not there is an Employer-Employee relationship between
TAPE and Servaa?
LA RULING: Yes. The Labor Arbiter ruled that Servaa was a regular employee
of Tape on account of the nature of the work of Servaa, which is securing and
maintaining order in the studio, as necessary and desirable in the usual
business of TAPE. However, the Labor Aribter ruled the termination valid on the
ground of redundancy.
NLRC RULING: No. The NLRC reversed the ruling of the Labor Arbiter on the
ground security services may not be deemed necessary and desirable in the
usual business of TAPE.
CA RULING: Yes. The CA ruled that that Servaa was a regular employee
considering the nature and length of his service.
SC RULING:
Yes. Jurisprudence is abound with cases that recite the factors to be considered
in determining the existence of employer-employee relationship, namely: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control the employee with
respect to the means and method by which the work is to be accomplished.

Servaa was hired by TAPE when the latter absorbed him upon the expiration of
his security agency contract with RPN-9. The monthly salary received by
Servaa is considered wages despite being designated as talent fees by TAPE.
The Memorandum informing Servaa of discontinuance of his services also
proves that TAPE had the power to dismiss him. Control is also manifested in
the bundy cards submitted by Servaa. He was required to report daily and
observe definite work hours. He is also considered a regular employee by
reason of his 5 year continuous service regardless of whether or not respondent
had been performing work that is necessary or desirable to the usual business
of TAPE. Thus being a regular employee, his services may not be terminated
except for a just or authorized cause. TAPE is liable for illegal dismissal for it
failure to comply the 1 month requirement for termination of services as required
by law.
However, with respect to the liability of petitioner Tuviera, president of TAPE,
absent any showing that he acted with malice or bad faith in terminating
respondent, he cannot be held solidarily liable with TAPE.

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LABOR LAW REVIEW

Atty. Joyrich Golangco

31.
ENCYCLOPAEDI BRITANNICA (PHILIPPINES), INC. v. NATIONAL
A
LABOR RELATIONS
COMMISSION, HON. LABOR ARBITER TEODORICO L. ROGELIO and
BENJAMIN LIMJOCO
G.R. No. 87098
November 4, 1996
TORRES, JR., J.:
Doctrine:
The mere issuance of memoranda does not establish an Employer-Employee
relationship.
FACTS:
Respondent Benjami Limjoco was a Sales Division Manager of petitioner
Encyclopaedia Britannica. He was in charge of selling its products through
some sales represenatives and received commisions from the products sold by
his agents. His office expenses were deducted from his commissions and he
was informed by petitioner of appointment, promotions and transfers of
employees in his district. He resigned from the said office on 14 June 1974 to
pursue his private business but on 30 October 1975, he filed a complaint
against petitioner for non-payment of separation pay and other benefits and
also illegal deduction form his sales commision.
Petitioner alleged that respondent is not its employee but an independent
dealer. He did not have any salary and his income from petitioner is depended
on the volume of sales accomplished. He also maintained his own office and his
expenses are chargeable to his commissions. Petitioner further alleges that it
had no control and supervision over the respondent. Respondent, on the other
hand, alleges that he was hired by petitioner and was assigned in the sales
department with an average of Php 4,000.00 monthly as earnings. He was
under the supervision of petitioner through the issuances of memoranda,
guidelines on company policies, instructions and other orders.
ISSUE: Whether or not there is an Employer-Employee Relationship between
Encyclopaedia Britannica and Limjoco?
LA RULING:
Yes. The Labor Arbiter ruled that Limjoco was under the control of the
petitioner since he was required to make periodic reports of his sales activities
to the company and all transactions were subject to the final approval of the
petitioner.
NLRC RULING:
Yes. The NLRC found no evidence supporting the allegation that Limjoco
was an independent contractor or dealer. The petitioner dictated Limjoco how
and where to sell its products.

SC RULING:
No. The fact that petitioner issued memoranda to Limjoco and to other division
sales managers did not prove that petitioner had actual control over them.
These were merely guidelines on company policies, which the sales managers
follow and impose on their respective agents. Independent authorized agents
who did not receive regular compensations but commissions based on the sale
of products primarily conducted the sales operation. They also financed their
own expenses and maintained their own staff.
The prices of the products may have been fixed but the independent agents still
had free rein in the means and methods for conducting the marketing
operations. He was free to conduct his work and he was free to engage in other
means of livelihood. In fact, he was also a director and later president of the
Farmers Rural Bank while he was connected with the petitioner.

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32. ATOK BIG WEDGE COMPANY, INC. vs.

JESUS P. GISON G.R. No. 169510 August
8, 2011
PERALTA, J.:
Doctrine:
Article 280 of the Labor Code, is not the yardstick for determining the existence
of an employment relationship because it merely distinguished two kinds of
employees that is regular and casual employees.
FACTS:
Atok Big Wedge Company, Inc. through it then Asst. Vice-President and Acting
Manager, Rutillo Torres engaged Jesus Gison as part-time consultant on
retainer basis. He assisted Atok with matters pertaining to the prosecution of
cases against illegal surface occupants within the area covered by the
companys mineral claims. He likewise performed liaison work with several
government agencies. He was not required to report to office on a regular basis
except when requested by the management. He received Php 3,000.00 a month
as retainer fee, which was delivered to him in his residence or in a local
restaurant.
Gison requested Atok to cause his registration with the SSS considering he was
getting old. Atok, however, ignored his request, which prompted him to file a
complaint against Atok before the SSS. Afterwards, his services was terminated
by Atok on the ground his services were no longer necessary. This prompted
Gison to file a complaint for illegal dismissal before the NLRC against Atok.
ISSUE: Whether or not there is an Employer-Employee Relationship between
Atok and Gison?
LA RULING: No. The Labor Arbiter ruled that there is no Employer-Employee
relationship.
NLRC RULING: No. The NLRC affirmed the ruling of the Labor Arbiter.
CA RULING: Yes. The CA annulled and set aside the decision of the NLRC.
The CA opined that applying Article 280 of the Labor Code Gison is deemed a
regular employee of the petitioner after the lapse of one year from his
employment.
SC RULING:
No. There is the absence of the element of control on the part of Atok, which
results to the conclusion of an Employer-Employee relationship. He was not
required to report everyday during regular office hours and his monthly retainer
fees were paid to him either at his residence or a local restaurant. He was also
assigned tasks to perform but Atok did not control the manner and methods by
which Gison performed these tasks.

Article 280 of the Labor, which was used by the CA to support its findings, is not
applicable in the case at bar. The said provision merely distinguishes between
two kinds of employment, i.e., regular employees and casual employees, for the
purposes of determining the right of an employee to certain benefits. It does not
apply where the existence of an employment relationship is in dispute.
Therefore, it was erroneous for the CA to rely on the said provision in
determining whether an Employer-Employee relationship exists between Atok
and Gison.

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33. DUMPIT-MURILLO vs. COURT

OF APPEALS G.R. No. 164652
June 8, 2007 QUISUMBING, J.:
Doctrine:
The assertion that a talent contract exists does not necessarily prevent a regular
employment status.
FACTS:
Associated Broadcasting Company (ABC) hired Thelma Dumpit-Murillo as a
newscaster and co-anchor for Balitang-Balita under a Talent Contract for a
period of three -months. The said contract was renewed multiple times. When
the last contract expired, Dumpit-Murillo sent a letter to Jose Javire, Vice
President for News and Public Affairs of ABC, informing the latter of her interest
in renewing her contract. She sent another letter stating that she was not able to
receive any reply from her previous letter. She also stated that she considered
the failure of a formal response on the part of the company as her constructive
dismissal. She then sent a demand letter requesting her reinstatement and
payment of unpaid wages and other benefits. ABC replied that the checks for
her talent fees are being processed but claimed that the other claims hand no
basis. Dumpit-Murillo filed a complaint against ABC for illegal dismissal before
the NLRC.
ISSUES:
1. Whether or not there is an employer-employee relationship between ABC
and Dumpit-Murillo?
2. Whether or not Dumpit-Murillo is a regular employee?
LA RULING: No. The Labor Arbiter dismissed the Complaint.
NLRC RULING: Yes. The NLRC held that an employer-employee relationship
existed between Dumpit-Murillo and ABS; that the subject talent contract was
void; and that she was a regular employee illegally dismissed.
CA RULING: No. The CA reversed the decision of the NLRC. It ruled that
Dumpit- Murillo was a fixed- term employee and not a regular employee and
should not be allowed to renege from the stipulation she had voluntarily and
knowingly executed.
SC RULING:
1. Yes. The practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law.
The assertion that a talent contract exists does not necessarily prevent a
regular employment status. The duties of Dumpit-Murillo as enumerated in
her employment contract indicate that ABC had control over the work of

petitioner. Aside from control, ABC also dictated the work assignments
and payment of her wages. ABC also had the power to dismiss.
2. Yes. Dumpit-Murillos work was necessary or desirable in the usual
business or trade of the employer, which includes its participation in the
governments news and public information dissemination. Her work was
continuous for a period of four years and her repeated engagement under
contract of hire is indicative of the necessity and desirability of her work in
ABCs business.
There is no valid fixed-term employment between Dumpit-Murillo and
ABC. Fixed-term employment will not be considered valid where, from the
circumstances, it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee. It should satisfactorily
appear that the employer and the employee dealt with each other on more
or less equal terms with no moral dominance being exercised by the
employer over the employee. Patently, Dumpit-Murillo occupied a position
of weakness vis--vis the employer. She was merely one of the numerous
newscasters/broadcasters of ABC and she was left with no choice but to
affix her signature of conformity on each renewal of her contract or risk the
loss of her job.

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34. JOSE MEL BERNARTE vs. PHILIPPINE BASKETBALL ASSOCIATION

(PBA), JOSE EMMANUEL M.
EALA, and PERRY MARTINEZ
G.R. No. 192084
September 14, 2011
CARPIO, J
FACTS:
Complainants Jose Mel Bernarte and Renato Guevara were referees of the
PBA. They claim that they had been made to sign contracts on a year to year
basis until 2003, when Bernarte was made to sign a one and a half month
contract for the period of July 1st to August 5th 2003. In January 2004, Bernarte
Received a letter advising him that his contract would not be renewed citing his
unsatisfactory performance on and off the court. Bernarte was shocked, and felt
that the dismissal was caused by his refusal to fix a game upon order of Ernie
De Leon.
Complainant Guevarra, a referee since 2001, was likewise no longer made to
sign a contract beginning February 2004. Complainants aver that they were
employees of the PBA and were illegally dismissed.
Respondents PBA aver that the complainants entered into contracts of retainer
with the PBA which after the lapse of their respective periods, were not
renewed. Respondents argue that complainants were not illegally dismissed
because they were not employees of the PBA, that their respective contracts
were simply not renewed, and that the PBA had the prerogative of whether or
not to renew their contracts.
ISSUE: Whether or not complainants are employees of the PBA.
LA RULING: In her 31 March 2005 Decision, the Labor Arbiter declared
petitioner an employee whose dismissal by respondents was illegal.
Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the
payment of backwages, moral and exemplary damages and attorney's fees.
NLRC RULING: Affirmed the decision of the LA.
CA RULING: The Court of Appeals found petitioner an independent contractor
since respondents did not exercise any form of control over the means and
methods by which petitioner performed his work as a basketball referee. The
Court of Appeals held:
While the NLRC agreed that the PBA has no control over the referees
acts of blowing the whistle and making calls during basketball games, it,
nevertheless, theorized that the said acts refer to the means and methods
employed by the referees in officiating basketball games for the illogical
reason that said acts refer only to the referees skills. How could a skilled
referee perform his job without blowing a whistle and making calls?

Worse, how can the PBA control the performance of work of a referee
without controlling his acts of blowing the whistle and making calls?
SC RULING:
The Petition is bereft of merit. To determine the existence of an employeremployee relationship, case law has consistently applied the four-fold test, to
wit: (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 on the means and methods by which the work is accomplished. The
so-called control test is the most important indicator of the presence or
absence of an employer-employee relationship.
The contractual stipulations do not pertain to, much less dictate, how and when
petitioner will blow the whistle and make calls. On the contrary, they merely
serve as rules of conduct or guidelines in order to maintain the integrity of the
professional basketball league. As correctly observed by the Court of Appeals,
how could a skilled referee perform his job without blowing a whistle and
making calls? x x x [H]ow can the PBA control the performance of work of a
referee without controlling his acts of blowing the whistle and making calls?
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 petitioners
job of officiating a professional basketball game undoubtedly calls for freedom of
control by respondents.
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Further, 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.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove
that petitioner is an employee of the former. For a hired party to be considered
an employee, the hiring party must have control over the means and methods
by which the hired party is to perform his work, which is absent in this case. The
continuous rehiring by PBA of petitioner simply signifies the renewal of the
contract between PBA and petitioner, and highlights the satisfactory services
rendered by petitioner warranting such contract renewal. Conversely, if PBA
decides to discontinue petitioners services at the end of the term fixed in the
contract, whether for unsatisfactory services, or violation of the terms and
conditions of the contract, or for whatever other reason, the same merely results
in the non-renewal of the contract, as in the present case. The non-renewal of
the contract between the parties does not constitute illegal dismissal of
petitioner by respondents.

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35. ANGEL JARDIN vs. NATIONAL LABOR RELATIONS COMMISSION

(NLRC) and GOODMAN TAXI
(PHILJAMA INTERNATIONAL, INC.)
G.R. No. 119268
February 23, 2000
QUISUMBING, J.
FACTS:
Petitioners were drivers of private respondent, Philjama International Inc., a
domestic corporation engaged in the operation of "Goodman Taxi." Petitioners
used to drive private respondent's taxicabs every other day on a 24 -hour work
schedule under the boundary system. Under this arrangement, the petitioners
earned an average of P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners, daily earnings the amount of
P30.00 supposedly for the washing of the taxi units. Believing that the deduction
is illegal, petitioners decided to form a labor union to protect their rights and
interests.
Upon learning about the plan of petitioners, private respondent refused to let
petitioners drive their taxicabs when they reported for work on August 6, 1991,
and on succeeding days. Petitioners suspected that they were singled out
because they were the leaders and active members of the proposed union.
Aggrieved, petitioners filed with the labor arbiter a complaint against private
respondent for unfair labor practice, illegal dismissal and illegal deduction of
washing fees.
ISSUE: Whether or not petitioners are employees of the respondent.
LA RULING: Dismissed the complaint for lack of merit.
NLRC RULING: At first, the NLRC reversed and set aside the judgment of the
LA and declared that petitioners are employees of private respondent, and as
such, their dismissal must be for just cause and after due process.
However, after TWO motions for reconsideration, the NLRC ruled that it
lacks jurisdiction over the case as petitioners and private respondent have NO
employer employee relationship. It held that the relationship of the parties is
leasehold which is covered by the Civil Code rather than the Labor Code.
SC RULING:
The petition is impressed with merit. The SC declared that the NLRC should not
have entertained the respondent's second motion for reconsideration, the same
being a prohibited pleading under the NLRC rules.
As to the substantive issue, the SC ruled as follows:
In a number of cases decided by this Court, we ruled that the
relationship between jeepney owners/operators on one hand and
jeepney drivers on the other under the boundary system is that of

employer- employee and not of lessor-lessee. We explained that in

the lease of chattels, the lessor loses complete control over the
chattel leased although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the damages to the
lessor.
In the case of jeepney owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The management of the
business is in the owner's hands. The owner as holder of the certificate of public
convenience must see to it that the driver follows the route prescribed by the
franchising authority and the rules promulgated as regards its operation. Now,
the fact that the drivers do not receive fixed wages but get only that in excess of
the so-called "boundary" they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee.
We have applied by analogy the abovestated doctrine to the relationships
between bus owner/operator and bus conductor, auto-calesa owner/operator
and driver, and recently between taxi owners/operators and taxi drivers. Hence,
petitioners are undoubtedly employees of private respondent because as taxi
drivers they perform activities which are usually necessary or desirable in the
usual business or trade of their employer.

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36. CHAVEZ v. NLRC

G.R. No. 146530 January 17, 2005
CALLEJO, SR., J.
Doctrine:
Of the four elements of the employer-employee relationship, the control test is
the most important.
Compared to an employee, an independent contractor is one who carries on a
distinct and independent business and undertakes to perform the job, work, or
service on its own account and under its own responsibility according to its 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. Hence, while an independent contractor enjoys independence and
freedom from the control and supervision of his principal, an employee is
subject to the employers power to control the means and methods by which the
employees work is to be performed and accomplished.
FACTS:
The respondent company, Supreme Packaging, Inc., is in the business of
manufacturing cartons and other packaging materials for export and distribution.
On 1984, it engaged the services of the petitioner, Pedro Chavez, as truck
driver and as such, he was tasked to deliver the respondent companys
products from its factory to its various customers, mostly in Metro Manila.
Sometime in 1992, Chavez asked respondent companys plant manager his
desire to avail himself of the benefits that regular employees were receiving
such as overtime pay, nightshift differential pay, and 13th month pay, among
others but the same was never given.
On 1995, Chavez filed a complaint for regularization with the Regional
Arbitration Branch 3 but before the case could be heard, respondent company
terminated the services of Chavez prompting Chavez to amend the complaint
against the respondents for illegal dismissal, unfair labor practice and nonpayment of overtime pay, nightshift differential pay, 13th month pay, among
others.
The respondents, for their part, denied the existence of an employer-employee
relationship between the respondent company and the petitioner. They averred
that the petitioner was an independent contractor as evidenced by the contract
of service which he and the respondent company entered into.
ISSUE: Whether or not Chavez was respondent companys employee or was a
private contractor.

LA RULING: The LA found Chavez to be respondent companys employee thus

finding respondent guilty of illegal dismissal. It held that the petitioner was a
regular employee of the respondent company as he was performing a service
that was necessary and desirable to the latters business. Moreover, it was noted
that the petitioner had discharged his duties as truck driver for the respondent
company for a continuous and uninterrupted period of more than ten years.
NLRC RULING: The NLRC initially affirmed the LAs decision but later on
reversed it decision declaring that no employer-employee relationship existed.
The NLRC stated that the respondents did not exercise control over the means
and methods by which the petitioner accomplished his delivery services. It
upheld the validity of the contract of service as it pointed out that said contract
was silent as to the time by which the petitioner was to make the deliveries and
that the petitioner could hire his own helpers whose wages would be paid from
his own account.
CA RULING: Initially, the CA reversed the NLRCs decision ruling in favor of
Chavez but later reconsidered the same ruling in favor of respondent company.
In reconsidering its decision, the CA explained that the extent of control
exercised by the respondents over the petitioner was only with respect to the
result but not to the means and methods used by him. The CA cited the
following circumstances: (1) the respondents had no say on how the goods
were to be delivered to the customers; (2) the petitioner had the right to employ
workers who would be under his direct control; and (3) the petitioner had no
working time.
The fact that the petitioner had been with the respondent company for more
than ten years was, according to the CA, of no moment because his status was
determined not by the length of service but by the contract of service. This
contract, not being contrary to morals, good customs, public order or public
policy, should be given
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the force and effect of law as between the respondent company and the
petitioner. Consequently, the CA reinstated the July 10, 1998 Decision of the
NLRC dismissing the petitioners complaint for illegal dismissal.
SC RULING:
The court held that an employer-employee relationship existed and that Chavez
was not a mere private contractor.
Applying the four-fold test, the SC found:
First. Undeniably, it was the respondents who engaged the services of the
petitioner without the intervention of a third party.
Second. That the petitioner was paid on a per trip basis is not significant.
This is merely a method of computing compensation and not a basis for
determining the existence or absence of employer-employee relationship.
One may be paid on the basis of results or time expended on the work,
and may or may not acquire an employment status, depending on whether
the elements of an employer-employee relationship are present or not. In
this case, it cannot be gainsaid that the petitioner received compensation
from the respondent company for the services that he rendered to the
latter.
Third. The respondents power to dismiss the petitioner was inherent in the
fact that they engaged the services of the petitioner as truck driver. They
exercised this power by terminating the petitioners services albeit in the
guise of severance of contractual relation due allegedly to the latters
breach of his contractual obligation.
Fourth. As earlier opined, of the four elements of the employer-employee
relationship, the control test is the most important. Compared to an
employee, an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service
on its own account and under its own responsibility according to its 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. Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his
principal, an employee is subject to the employers power to control the
means and methods by which the employees work is to be performed and
accomplished.

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37. COCA-COLA BOTTLERS PHILS.,

INC. v. CLIMACO G.R. No. 146881
February 5, 2007 AZCUNA, J.
Doctrine:
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. The issuance by the principal of
guidelines does not establish control by principal.
FACTS:
Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of
retainer agreement. The agreement states that there is no employer-employee
relationship between the parties. The retainer agreement was renewed annually.
The last one expired on Dec. 31, 1993. Despite of the non-renewal of the
agreement, respondent continued to perform his functions as company doctor
until he received a letter in March 1995 concluding their retainer agreement.
Respondent filed a complaint before the NLRC seeking recognition as a regular
employee of the petitioner company and prayed for the payment of all benefits
of a regular employee.
ISSUE: Whether or not an employer-employee relationship existed between
petitioner Coca-Cola Bottlers and respondent Dr. Climaco.
LA AND NLRC RULING: The Labor Arbiter and the NLRC found that the
company lacked the power of control over Dr. Climaco, therefore no employeremployee relationship existed.
CA RULING: Court of Appeals ruled that there existed an employer-employee
relationship. It held that Coca-Colas power to control petitioner is present
because the particular objectives and activities to be observed and
accomplished by the latter are fixed and set under the Comprehensive Medical
Plan which was made an integral part of the retainer agreement. Moreover, the
times for accomplishing these objectives and activities are likewise controlled
and determined by the company. Petitioner is subject to definite hours of work,
and due to this, he performs his duties to Coca-Cola not at his own pleasure but
according to the schedule dictated by the company.
The CA added that Dr. Climaco should be classified as a regular
employee having rendered 6 years of service as plant physician by virtue of
several renewed retainer agreements.
SC RULING:

The court held no, upholding the decisions of both the LA and the NLRC. 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.
The Labor Arbiter and the NLRC correctly found that Coca Cola lacked the
power of control over the performance by respondent of his duties. The
petitioner company, 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.
The NLRC affirmed the findings of the Labor Arbiter and stated that it is
precisely because the company lacks the power of control that the contract
provides that respondent shall be directly responsible to the employee
concerned and their dependents for any injury, harm or damage caused through
professional negligence, incompetence or other valid causes of action.
In addition, the Court finds that the schedule of work and the requirement to be
on call for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement.
The Court agrees with the Labor Arbiter and the NLRC that there is nothing
wrong with the employment of respondent as a retained physician of petitioner
company and upholds the validity of the Retainership Agreement which clearly
stated that no employer-employee relationship existed between the parties.
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38. GABRIEL v. BRILON

G.R. No. 146989 February 7, 2007
AZCUNA, J.:
Doctrine:
The relationship between jeepney owners/operators and jeepney drivers under
the boundary system is that of employer-employee and not of lessor- lessee
because in the lease of chattels the lessor loses complete control over the
chattel leased although the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages to the lessor. In the case of
jeepney owners/operators and jeepney drivers, the former exercises supervision
and control over the latter.
FACTS:
Petitioner, represented by his surviving spouse, Flordeliza V. Gabriel, was the
owner-operator of a public transport business, "Gabriel Jeepney," with a fleet of
54 jeepneys plying the Baclaran-Divisoria-Tondo route. Petitioner had a pool of
drivers, which included respondents, operating under a "boundary system" of
P400 per day.
Respondents alleged that they were regular drivers of Gabriel Jeepney under a
boundary system of P400 per day, plying Baclaran to Divisoria via Tondo, and
vice versa. They added that despite the fact that there is no law providing that
the operator can require the drivers to pay police protection, deposit, washing,
and garage fees, they were forced to pay additional P55.00 per day for the
following: a) P20.00 police protection; b) P20.00 washing; c) P 10.00 deposit;
and [d)] P5.00 garage fees. Respondents further alleged that on April 1995,
petitioner told them not to drive anymore, and when they went to the garage to
report for work the next day, they were not given a unit to drive.
Based on the foregoing, respondents filed an action for illegal dismissal, illegal
deductions, and separation pay against petitioner Gabriel with the NLRC.
ISSUE: Whether or not an employer-employee relationship existed between
Gabriel and its jeepney drivers considering that the latter worked for the
former under a boundary system.
LA RULING: The Labor Arbiter ruled in favor of the respondents- jeepney
drivers declaring the illegality of respondents dismissal and ordered Melencio
Gabriel to pay the respondents the sum of PHP1,034,000 representing
respondents backwages and separation pay.
NLRC RULING: The NLRC Division reversed and set aside the LAs decision
for lack of employer-employee relationship.

CA RULING: The CA reversed the NLRCs decision and held that an employeremployee relationship existed between Gabriel and the respondent-jeepney
drivers. The CA iterated that the NLRCs decision is egregiously wrong insofar
as it was anchored on the absence of an employer-employee relationship. Wellsettled is the rule that the boundary system used in jeepney and (taxi)
operations presupposes an employer-employee relationship (National Labor
Union v. Dinglasan, 98 Phil. 649)
SC RULING:
The SC upheld the CAs decision reiterating that the relationship between
jeepney owners/operators and jeepney drivers under the boundary system is
that of employer-employee and not of lessor- lessee because in the lease of
chattels the lessor loses complete control over the chattel leased although the
lessee cannot be reckless in the use thereof, otherwise he would be responsible
for the damages to the lessor. In the case of jeepney owners/operators and
jeepney drivers, the former exercises supervision and control over the latter.
The fact that the drivers do not receive fixed wages but get only that in excess
of the so- called "boundary" that they pay to the owner/operator is not sufficient
to withdraw the relationship between them from that of employer and employee.
Thus, private respondents were employees because they had been engaged
to perform activities which were usually necessary or desirable in the usual
business or trade of the employer.
The Court also agrees with the labor arbiter and the CA that respondents were
illegally dismissed by petitioner. Respondents were not accorded due process.
Moreover, petitioner failed to show that the cause for termination falls under any
of the grounds enumerated in Article 282 of the Labor Code. Consequently,
respondents are entitled to reinstatement without loss of seniority rights and
other privileges and to their full backwages
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computed from the date of dismissal up to the time of their actual reinstatement
in accordance with Article 279 of the Labor Code.
The SC also awarded reinstatement if favor of the respondents ruling that
Reinstatement is obtainable in this case because it has not been shown that
there is an ensuing "strained relations" between petitioner and respondents.
This is pursuant to the principle laid down in Globe-Mackay Cable and Radio
Corporation v. NLRC as quoted earlier in the CA decision.

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39. FELIX VS. BUENSANEDA

G.R. No. 109704 January 17, 1995
KAPUNAN, J.:
Doctrine:
A residency or resident physician position in a medical specialty is never a
permanent one. Residency connotes training and temporary status. It is the
step taken by a physician right after post-graduate internship (and after hurdling
the Medical Licensure Examinations) prior to his recognition as a specialist or
sub-specialist in a given field.
FACTS:
Petitioner Dr. Alfredo Felix, after passing the Physician's Licensure
Examinations given by the Professional Regulation Commission in June of
1979, joined the National Center for Mental Health (then the National Mental
Hospital) on May 26, 1980 as a Resident Physician. He was later on promoted
to the position of Senior Resident Physician in a temporary capacity
immediately after he and other employees of the NCMH allegedly tendered their
courtesy resignations to the Secretary of Health on January 1983 pursuant to a
reorganization act, EO No. 119. He was again promoted to the position of
Medical Specialist I (Temporary Status), which position was renewed the
following year on August 1988.
In the same year, 1988, the DOH subsequently issued Department Order No.
347 which required board certification as a prerequisite for renewal of specialist
positions in various medical centers, hospitals and agencies of the said
department. Petitioner was one of the hundreds of government medical
specialist who was subjected to such certification requirement for them to
enable to continue to work in their present positions.
On 1991, after reviewing petitioner's service record and performance, the
Medical Credentials Committee of the National Center for Mental Health
recommended non- renewal of his appointment as Medical Specialist I. He was,
however, allowed to continue in the service, and receive his salary, allowances
and other benefits even after being informed of the termination of his
appointment. A subsequent meeting took place and discussed the Dr. Felixs
status. Dr. Felixs immediate supervisor, pointed out his poor performance,
frequent tardiness and inflexibility as among the factors responsible for the
recommendation not to renew his appointment. With one exception, other
department heads present in the meeting expressed the same opinion, and the
overwhelming concensus was for non-renewal.
After having been issued a memorandum ordering Dr. Felix to vacate his
cottage, he filed a petition with the Merit System Protection Board (MSPB)
complaining about the alleged harassment by respondents and questioning the
non-renewal of his appointment.

MSPB RULING: The MPSB dismissed Dr. Felixs complaint for lack of merit
finding that as an apparent incident of the power to appoint, the renewal of a
temporary appointment upon or after its expiration is a matter largely addressed
to the sound discretion of the appointing authority. Complainant therefore, has
no basis in law to assail the non-renewal of his expired temporary appointment
much less invoke the aid of this Board cannot substitute its judgment to that of
the appointing authority nor direct the latter to issue an appointment in the
complainant's favor. Dr. Felix then appealed to the Civil Service Commission.
CSC DECISION: The CSC dismissed the appeal and denied Dr. Felixs motion
for reconsideration.
ISSUE: Whether or not Dr. Alfredo Felixs dismissal was illegal and violative of
the constitutional provision on security of tenure allegedly because his
removal was made pursuant to an invalid reorganization.
SC DECISION:
The court held no. The court held that the patent absurdity of petitioner's
posture is readily obvious. A residency or resident physician position in a
medical specialty is never a permanent one. Residency connotes training and
temporary status. It is the step taken by a physician right after post-graduate
internship (and after hurdling the Medical Licensure Examinations) prior to his
recognition as a specialist or sub-specialist in a given field.
Petitioner's insistence on being reverted back to the status quo prior to the
reorganizations made pursuant to Executive Order No. 119 would therefore be
akin to a college student asking to be sent back to high school and staying
there. From the position of senior resident physician, which he held at the time
of the government
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reorganization, the next logical step in the stepladder process was obviously his
promotion to the rank of Medical Specialist I, a position which he apparently
accepted not only because of the increase in salary and rank but because of the
prestige and status which the promotion conferred upon him in the medical
community.
Such status, however, clearly carried with it certain professional responsibilities
including the responsibility of keeping up with the minimum requirements of
specialty rank, the responsibility of keeping abreast with current knowledge in
his specialty rank, the responsibility of completing board certification
requirements within a reasonable period of time. The evaluation made by the
petitioner's peers and superiors clearly showed that he was deficient in a lot of
areas, in addition to the fact that at the time of his non-renewal, he was not even
board-certified.
The court also took notice of the fact that petitioner made no attempt to oppose
earlier renewals of his temporary Specialist I contracts, clearly demonstrating
his acquiescence to if not his unqualified acceptance of the promotion (albeit
of a temporary nature) made in 1988. Whatever objections petitioner had
against the earlier change from the status of permanent senior resident
physician to temporary senior physician were neither pursued nor mentioned at
or after his designation as Medical Specialist I (Temporary).
The court ruled then that he is therefore estopped from insisting upon a right or
claim which he had plainly abandoned when he, from all indications,
enthusiastically accepted the promotion. His negligence to assert his claim
within a reasonable time, coupled with his failure to repudiate his promotion to a
temporary position, warrants a presumption, in the words of this Court in Tijam
vs. Sibonghanoy, that he "either abandoned (his claim) or declined to assert it."

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40. AUTO BUS TRANSPORT SYSTEM,

INC. VS. BAUTISTA G.R. No. 156367 May
16, 2005 CHICO-NAZARIO, J.:
Doctrine:
The term field personnel is not merely concerned with the location where the
employee regularly performs his duties but also with the fact that the employees
performance is unsupervised by the employer. 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.
FACTS:
Respondent Antonio Bautista was employed with petitioner Auto Bus Transport
System, Inc. since May 24, 1995 as a driver-conductor of the latters bus.
Bautista was paid on commission basis per travel on a twice a month basis. On
January 3, 2000, the bus driven by Bautista accidentally bumped another bus
owned by the respondent. As a result, Auto Bus did not allow Bautista to work
until he paid the cost of the repair of the damaged bus. Bautista failed to pay
and after given the opportunity to explain his side, Auto Bus sent him a letter for
termination. Bautista then instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service incentive leave pay
(SILP) against Auto Bus.
ISSUE: Whether or not Antonio Bautista is considered a field personnel thus
determinative of his service incentive leave pay entitlement.
LA RULING: Labor Arbiter Tabingan decided on the case in favor of Auto Bus,
dimissing the Complaint of Bautista. However, the LA ordered Auto Bus to pay
Bautista his 13th month pay from the date of his hiring to the date of his
dismissal and his SILP for all the years he has been in service for the former.
NLRC RULING: The NLRC affirmed with modification the LAs decision. It held
that Bautista, being an employee paid on commission basis, was not entitled for
13th month pay in accordance with Section 3 of the Rules and Regulations
Implementing PD No. 851, leaving Bautista with a claim for his SILP.
The NLRC also denied petitioners motion for reconsideration in which petitioner
denied their liability to pay Bautista of his SILP contending that that Bautista,
being a field personnel, was an exception to the rule that employees are
entitled to SILP. As a legal basis, petitioner cited Section 1(d), Rule V, Book 3 of
the Implementing Rules and Regulations of the Labor Code which delimits the
grant of the SIL, excluding among others 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.
CA RULING: The CA affirmed the NLRCs decision.
SC RULING:
The Court held no. 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. The term field personnel is not merely concerned with the location
where the employee regularly performs his duties but also with the fact that the
employees performance is unsupervised by the employer. 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 the case of Bautista, it was observed in the facts found by the LA that he
must be at a specific place in a specified time to be able to observe prompt
departure and arrival from his point of origin to his point of destination. In each
and every depot, there is always a dispatcher whose function is to see to it that
Bautistas bus and its crew leave the premises at specific time and arrive at the
estimated proper time. Therefore, Bautista was under constant supervision
while in the performance of his work. In conclusion, he was not a field personnel
but a regular employee who performs tasks usually necessary and desirable to
the usual trade of Auto Bus. Thus, being a regular employee, he has the right to
claim service incentive leave pay under Article 95 of the Labor Code.
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41. ARIEL L. DAVID, doing business under the name and style "YIELS
HOG DEALER vs. JOHN G.
MACASIO
G.R. No. 195466
July 2, 2014
BRION, J.:
Doctrine:
Engagement in a pakyaw or task basis does not negate the existence of
employer-employee relationship.
FACTS:
Macasio filed a complaint against David, doing business under the name and
style Yiels Hog Dealer, for non-payment of overtime pay, holiday pay, 13th
month pay, and SIL plus moral and exemplary damages and attorneys fees.
Macasio alleged that he has been working as a butcher for David. Macasio
claimed that David exercised control and supervision over his work because
David:
1. Set the work day, reporting time and hogs to be chopped, as well as the
manner by which he was to perform his work;
2. Daily paid his salary of P700.00;
3. Approved and disapproved his leaves; and
4. Owned the hogs delivered for chopping, as well as the work tools and
implements and also rented the workplace.
On the other hand, David claimed that he hired Macasio on pakyaw or task
basis thus he is not entitled to the benefits claimed. David pointed out that
Macasios work starts at 10:00pm-2:00am depending on the volume of hogs
delivered. Macasio was paid a fixed amount regardless of the number of hogs
chopped but was not engaged to work, and accordingly not paid, when no hogs
are delivered.
To support his claims, Macasio presented the Certificate of Employment (COE)
issued to him by David and likewise faulted David for not presenting as
evidence the DTRs and payrolls which could have easily established Macasios
claims. David, however, insists that Macasio was not his employee, as he was
engaged in a pakyaw or task basis and that the COE was issued only for
overseas employment purposes.
LA RULING: The LA dimissed the complaint banking on the argument of David
that Macasio was merely engaged in a pakyaw or task basis. Accordingly,
Macasio is not entitled to the monetary awards.
NLRC RULING: Affirmed LA ruling. It ruled that Macasio was not covered by
the Labor Standards on the awards claimed because he was paid by results.

CA RULING: The CA modified the NLRC ruling. While agreeing that Macasio
was paid by results, this did not preclude the award of the benefits sought by
Macasio. The CA ruled that he will only be excluded from the coverage of the
holiday, SIL, 13th month pay only if he is a field personnel, which are lacking in
Macasios case.
On appeal to the SC, David alleges, among others, engagement on a pakyaw
or task basis precludes the creation of employer-employee relationship.
ISSUE: Whether engagement on pakyaw or task basis negates the existence
of employer-employee relationship between them the parties involved.
SC RULING:
No. Engagement in pakyaw or task basis does not characterize the
relationship between the parties whether employment or independent
contractorship. It only determines the manner of calculation of the wages due to
the employee which, is in this case, is the quantity or quality of work done.
Moreover, employing the control test, employer-employee relationship exists in
this case as shown by the following circumstances:
1. David engaged the services of Macasio;
2. David paid Macasios wages;
3. David had been setting the day and time when Macasio should report for
work;
4. David rents the place where Macasio had been performing his tasks;
5. Macasio would leave the workplace only after he had finished chopping
all of the hog meats given to him for the days task; and
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6. David would still engage Macasios services and have him report for
work even during the days when only few hogs were delivered for
butchering.
The totality of the surrounding circumstances of the present case
sufficiently points to an employer-employee relationship existing between David
and Macasio.

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42. BEGINO V. ABS-CBN

G.R. No. 199166 April 20, 2015
PEREZ, J.:
Doctrine:
Exclusivity Clause and Prohibitions in talent contracts are indicative of control
by the employer if it does not concern well- known television and radio
personality who can legitimately be considered as talent and compensated as
such.
FACTS:
ABS-CBN employed Begino and Del Valle sometime in 1996 as
Cameramen/Editors for TV Broadcasting. Sumayao Avila-Llorin were similarly
engaged as reporters sometime in 1996 and 2002, respectively. [hereinafter
referred to as petitioners] Petitioner were engaged through Talent Contracts
which, though regularly renewed over the years, provided terms ranging from
three (3) months to one (1) year. Petitioners were given Project Assignment
Forms which detailed, among other matters, the duration of a particular project
as well as the budget and the daily technical requirements thereof. In the
aforesaid capacities, petitioners were tasked with coverage of news items for
subsequent daily airings in respondents TV Patrol Bicol Program.
The Talent Contract specified the absence of employer-employee relationship
between the parties and mandated compliance with the professional standards
of ABS- CBN and its policies and guidelines as well as the rules of KBP. It also
prohibited the petitioners from engaging in similar work for persons or entities in
direct or indirect competition with ABS-CBN. Petitioners compensation were
termed as Talent Fees and were results oriented in nature, thus petitioners
were not required to observe normal working hours.
Claiming that they were regular employees, petitioners filed a complaint against
ABS- CBN before the NLRC S-RAB Naga City. Petitioners claimed that they
performed functions necessary and desirable in ABS-CBN's business.
Petitioners averred that they worked under the direct control and supervision of
Villafuerte, ABS-CBNs manager, because they were mandated to wear
company IDs and the latter provided all the equipment they needed, and, at the
end of each day, were informed about the news to be covered the following day,
the routes they were to take and, whenever the subject of their news coverage
is quite distant, even the start of their workday. Moreover, noncompliance with
the company policies will merit dismissal. Petitioners were constantly evaluated
and were subjected to annual competency assessment alongside other ABSCBN employees.

As a result of their denomination as talents, they merely earned an average of

P7,000.00 to P8,000.00 per month, or decidedly lower than the P21,773.00
monthly salary ABS-CBN paid its regular rank-and-file employees.
ABS-CBN contends that, due to the lack of manpower to produce its own
programs, it is necessary to hire independent contractors who offered their
services in relation to a particular program. Due to the unpredictability of viewer
preferences, their payment usually depends on the budget allocation for a
project.
It argued that its control is limited to the imposition of general guidelines on
conduct and performance, simply for the purpose of upholding the standards of
the company and the strictures of the industry. There is no control or restrictions
over the means and methods by which they performed or discharged the tasks
for which their services were engaged. Petitioners were, at most, briefed
whenever necessary regarding the general requirements of the project to be
executed.
LA RULING: The LA ruled that petitioners were regular employees having
rendered services necessary and related to ABS-CBNs business for more than
a year. It ruled that the exclusivity and prohibitions in the contract showed ABSCBNs control over petitioners.
NLRC RULING: The NLRC affirmed LA decision.
CA RULING: The CA discounted the existence of an employer-employee
relation between the parties upon the following findings and conclusions: (a)
petitioners, were engaged by respondents as talents for periods, work and the
program specified in the Talent Contracts and/or Project Assignment Forms
concluded between them;
(b) petitioners were paid talent fees depending on the budget allocated for the
program to which they were assigned; (c) being respondents did not exercise
control over the manner and method by which petitioner accomplished their
work but only ensured that they complied with the standards of the company,
the KBP and
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the industry; and, (d) the existence of an employer-employee relationship is not

necessarily established by the exclusivity clause and prohibitions which are but
terms and conditions on which the parties are allowed to freely stipulate.
ISSUE: Whether an employer-employee relationship exists between petitioners
and ABS-CBN.
SC RULING:
Yes. Notwithstanding the nomenclature of their Talent Contracts and/or Project
Assignment Forms and the terms and condition embodied therein, petitioners
are regular employees of ABS-CBN because they perform functions necessary
and essential to ABS-CBNs business. Respondents repeated hiring of
petitioners for its long-running news program positively indicates that the latter
were ABS-CBNs regular employees.
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. The talent contracts specifically provide that ABSCBN shall retain all creative, administrative, financial and legal control of the
programs which were assigned to petitioners. They were likewise required to
attend and participate in all promotional or merchandising campaigns, activities
or events for the Program, and to perform their functions at such locations and
Performance/Exhibition Schedules. Such terms demonstrate the control over
petitioners not only over the results but also over the means employed to
achieve the same.
While it is true that in Sonza, where similar exclusivity clause and restrictions
were held not to be indicative of control and lead to the conclusion that Sonza
was an independent contractor, such cannot be applied in this case. The said
case enunciated that guidelines for the achievement of mutually desired results
are not tantamount to control. It cannot not be applied in this case because
Sonza case involved a well-known television and radio personality who was
legitimately considered a talent and amply compensated as such. While
possessed of skills for which they were modestly recompensed by respondents,
petitioners lay no claim to fame and/or unique talents for which talents like
actors and personalities are hired and generally compensated in the broadcast
industry.

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ARTICLE
95
43. AUTO BUS TRANSPORT SYSTEM
INC. V. BAUTISTA G.R. No. 156367 May
16, 2005 CHICO-NAZARIO, J.:
Doctrine:
The three (3)-year prescriptive period for SIL commences, not at the end of the
year when the employee becomes entitled to the commutation of his SIL, but
from the time when the employer refuses to pay its monetary equivalent after
demand of commutation or upon termination of the employees services, as the
case may be.
FACTS:
Antonio Bautista has been employed by petitioner Auto Bus Transport Systems,
Inc. (Autobus), as driver-conductor and was paid on commission basis at the
rate of 7% of the total gross income per travel. Bautista, while driving
petitioners bus along Sta. Fe, Nueva Vizcaya, the bus he was driving
accidentally bumped the rear portion of another bus of petitioner, as the latter
vehicle suddenly stopped at a sharp curve without giving any warning.
After a month, Bautista was terminated for failing to pay 30% of the cost of the
repairs. Thus, Bautista instituted a complaint for Illegal dismissal with Money
Claims for nonpayment of 13 th month pay and service incentive leave pay
against Autobus.
Autobus, on the other hand, maintained that Bautistas employment was replete
with offenses involving reckless imprudence, gross negligence, and dishonesty.
To support its claim, petitioner presented copies of letters, memos, irregularity
reports, and warrants of arrest pertaining to several incidents wherein
respondent was involved. It likewise claimed to have afforded Bautista
opportunity to explain his side.
LA RULING: The LA ruled that there was no illegal dismissal but ordered
petitioner to pay Bautista his 13th month pay and SIL.
NLRC RULING: The NLRC deleted the award of 13th month pay but retained
the award of SIL.
CA RULING: The CA affirmed in toto the decision of the NLRC.
ISSUES:
1. Whether Bautista is entitled to SIL.
2. Whether 3 year prescriptive period under Art. 291 is applicable to
Bautistas SIL.
SC RULING:

1. Yes. As a rule, SIL shall not apply to employees classified as field personnel.
The phrase other employees whose performance is unsupervised by the
employer must not be understood as a separate classification of employees to
which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the
Labor Code as those whose actual hours of work in the field cannot be
determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or
contract basis, purely commission basis. Said phrase should be related with
field personnel, applying the rule on ejusdem generis that general and unlimited
terms are restrained and limited by the particular terms that they follow. Hence,
employees engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.
Accordingly, the mere fact that Bautista is paid purely on a commission basis
does not deprive him entitlement to SIL.
Bautista cannot be considered as field personnel because the definition of field
personnel is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employees
performance is unsupervised by the employer.
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Along the routes that are plied by these bus companies, there are its inspectors
assigned at strategic places who board the bus and inspect the passengers, the
punched tickets, and the conductors reports. There is also the mandatory oncea-week car barn or shop day, where the bus is regularly checked as to its
mechanical, electrical, and hydraulic aspects, whether or not there are problems
thereon as reported by the driver and/or conductor. They too, must be at specific
place as specified time, as they generally observe prompt departure and arrival
from their point of origin to their point of destination. In each and every depot,
there is always the Dispatcher whose function is precisely to see to it that the
bus and its crew leave the premises at specific times and arrive at the estimated
proper time. Bautista, was therefore under constant supervision while in the
performance of this work.
2. Yes. As such, in the computation of the three-year prescriptive period, a
determination must be made as to the period when the act constituting a
violation of the workers right to the benefits being claimed was committed. In the
case of service incentive leave, the employee may choose to either use his
leave credits or commute it to its monetary equivalent if not exhausted at the
end of the year. Furthermore, if the employee entitled to service incentive leave
does not use or commute the same, he is entitled upon his resignation or
separation from work to the commutation of his accrued service incentive leave.
Thus, the three (3)-year prescriptive period commences, not at the end of the
year when the employee becomes entitled to the commutation of his service
incentive leave, but from the time when the employer refuses to pay its
monetary equivalent after demand of commutation or upon termination of the
employees services, as the case may be.
Bautista had not made use of his service incentive leave nor demanded for its
commutation until his employment was terminated by petitioner. Neither did he
compensate his accumulated service incentive leave pay at the time of his
dismissal. It was only upon his filing of a complaint for illegal dismissal, one
month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. His cause of action to
claim the payment of his accumulated service incentive leave thus accrued from
the time when his employer dismissed him and failed to pay his accumulated
leave credits. It cannot be denied that his cause of action did not prescribe.

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ARTICLE
97
44. SONGCO ET. AL V. NATIONAL LABOR
RELATIONS COMMISSION G.R. No. 50999-51000
March 23, 1990
MEDIALDEA J.:
Doctrines:
1. In computing the basis for paying separation pay, commissions and
allowances shall be added to the basic monthly salary.
2. The average commissions earned by a salesman during their last year of
employment should be used in computing the separation pay.
FACTS:
Petitioners are in the sales force of Zuellig. They received monthly salaries of at
least P400.00. In addition, they received commissions for every sale they made.
Zuellig filed with the DOLE an application seeking clearance to terminate the
services of petitioners allegedly on the ground of retrenchment due to financial
losses. Initially, petitioners opposed the dismissal on the ground that they are
dismissed for being part of the union. Later, they agreed that the sole issue to
be resolved is the basis of the separation pay due to them.
Petitioners maintain that their earned sales commissions and allowances should
be added together with their salary to arrive at the basis for computing
separation pay, citing Article 97(f) of the Labor Code. Zuellig on the other hand
argues that in the said article the term wage, commission is used only as one
of the features or designations attached to the word remuneration or earnings.
ISSUES:
1. Whether the allowances should be included in the monthly salary of
petitioners for the purpose of computation of their separation pay; and
2. Whether the sales commissions should be included in the monthly salary of
petitioners for the purpose of computation of their separation pay.
LA RULING: The basis of separation pay shall be equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year in service that
they have worked in with the company.
The appeal to the NLRC was dismissed for lack of merit.
SC RULING:
1.Yes. In computing the basis for separation pay of a dismissed employee,
allowances should be included in the monthly salary. This has been settled in
the case of Santos v. NLRC, et al. (GR No. 76721. September 21, 1987) where

the SC ruled that in the computation of backwages and separation pay, account
must be taken not only of the basic salary but also of her transportation and
emergency living allowances.
2.Yes. Article 97(f) by itself is explicit that commission is included in the
definition of the term wage. The law speaks in clear and categorical language,
there is no room for interpretation or construction. Said Article provides:
(f) Wage paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method calculating the same, which is
payable by an employer to an employee under a written or unwritten
contract of employment for wok done or to be done, or for services
rendered or to be rendered, and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee. Fair
and reasonable value shall not include any profit to the employer or to
any person affiliated with the employer.
Granting, in grantia argumenti, that the commissions were in the form of
incentives or encouragement, so that the petitioners would be inspired to put a
little more industry on the jobs particularly assigned to them, still these
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commissions are direct remunerations for services rendered which contributed

to the increase of income of Zuellig. Commission is the recompense,
compensation or reward of an agent, salesman, executor, trustee, receiver,
factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the Principal. The nature of the
work of a salesman and the reason for such tyoe of remuneration for services
rendered demonstrate clearly that commissions are part of petitioners wage or
salary.
In computation thereof, what should be taken into account is the average
commissions earned during their last year of employment.
45. MILLARES ET AL V. NLRC
GR No. 122827
March 29, 1999
BELLOSILLO, J.:
Doctrines:
1. In determining whether a privilege is a facility, the criterion is not so much
its kind but its purpose.
2. The Sec. of Labor may from time to time fix in appropriate issuances the
fair and reasonable value of board, lodging and other facilities customarily
furnished by an employer to his employees.
3. Separation pay when awarded to an illegally dismissed employee should
be computed based not only on the basic salary but also on the regular
allowances that the employee had been receiving.
FACTS:
Petitioners numbering 116 occupied positions of Technical Staff, Unit Manager,
Section Manager, Department Manager, Division Manager and Vice President in
the mill site of PICOP in Bislig, Surigao del Sur.
Their services were terminated when the company undertook a retrenchment
program. They received separation pay at the rate of one (1) month basic salary
for every year in service.
They lodged a complaint for separation pay differentials believing that the
allowances they allegedly regularly received on a monthly basis during their
employment should have been included in the computation of their separation
pay.
The allowances pertained to the following:
1.

Staff/Managers Allowance

a.PICOP provides free housing facilities to supervisory and

managerial employees assigned in Bislig. The privilege
includes free water and electric consumption.
b. Owing to the shortage of such facilities, PICOP was
constrained to grant Staff allowance instead to those who live
in rented houses outside but near the vicinity of the mill site.
The allowance ceases whenever a vacancy occurs in the
companys housing facilities.
2. Transportation Allowance Transportation allowance is granted to
key officers and Managers assigned in the mill site who use their own
vehicles in the performance of their duties. It is a conditional grant such
that when the conditions no longer obtain, the privilege is discontinued.
3. Bislig Allowance Given to Division Managers and corporate officers
assigned in Bislig on account of the hostile environment. But once the
recipient is transferred elsewhere outside Bislig, the allowance ceases.
Petitioners maintain that the said allowances are included in the definition of
facilities in Art. 97, par. (f), of the Labor Code, being necessary and
indispensable for their existence and subsistence. Furthermore, they claim that
their availment of the monetary equivalent of those facilities on a monthly
basis was characterized by permanency, regularity and customariness.
ISSUES:
1. Whether the receipt of the above-mentioned allowances, on a monthly
basis, ipso facto characterize it as regular and forming part of salary; and
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2. Whether the above-mentioned can be considered as facilitites and

therefore included in the computation of separation pay as wage.
LA RULING: Yes, the allowances are to be characterized as being received
regularly and forming part of salary. It is also to be considered as facilities
under Art 97, par. (f) of the Labor Code for purposes of computing separation
pay. The LA cited Santos v NLRC and Soriano v NLRC that in the computation
of separation pay account should be taken not just of the basic salary but also
of the regular allowances that the employee had been receiving.
NLRC RULING: No, the NLRC reversed the Labor Arbiter. The NLRC found
that petitioners allowances were contingency-based and thus not included in
their salaries.
SC RULING:
The decision of the NLRC is affirmed. The allowances are not to be included in
the computation of wage for purposes of paying separation pay
1. The receipt of an allowance on a monthly basis does not ipso facto
characterize it as regular and forming part of salary because the nature of the
grant is a factor worth considering. The subject allowances were temporarily,
not regularly, received by petitioners. Petitioners continuous enjoyment of the
disputed allowances was based on contingencies the occurrence of which wrote
finis to such enjoyment.
For housing allowance, the same is discontinued once a vacancy occurs
in the company-provided housing accommodations.
Transportation allowance is given only to employees who have personal
cars in the form of advances for actual transportation expenses subject to
liquidation.
Bislig allowance is- once the officer is transferred outside Bislig, the allowance
stops.
2. The Staff/Managers allowance may fall under lodging but the
transportation and Bislig allowances are not embraced in facilitites on the main
consideration that they are granted as well as the Staff/Managers allowance for
respondent PICOPs benefit and convenience, i.e. to insure that petitioners
render quality performance. In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose.

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46. SLL INTERNATIONAL CABLES SPECIALIST AND

SONNY LAGON V. NLRC GR No. 172161. March 2, 2011
MENDOZA, J.:
Doctrines:
1. Before the value of facilities can be deducted from the employees wages,
3 requisites must concur: (1) proof must be shown that such facilities are
customarily furnished by the trade; (2) the provision of deductible facilities
must be voluntarily accepted in writing by the employee; and (3) facilities
must be charged at reasonable value.
2. Distinction between Facilities and Supplements. Supplements
constitute extra remuneration or special privileges or benefits given to or
received by the laborers over and above their ordinary earnings or wages.
Facilities are items of expense necessary for the laborers and his familys
existence and subsistence so that they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay for them just the same.
FACTS:
Private respondents Lopez, Canete and Zuniga were hired by petitioner, initially
as trainee cable/lineman. They were paid the full minimum wage. After their
training, they were repeatedly hired by petitioner as project employees. They
were not paid the required minimum wage. In their last project with petitioner,
respondents were not allowed to render overtime work. This prompted
respondents to return home and leave their work.
They filed a complaint for illegal dismissal, non-payment of wages, holiday pay,
13th month pay and damages.
In its answer, petitioner argued that respondents are not regular employees. It
also reasoned that the food allowance, allowance for lodging house,
transportation. Electricity, water and snacks should be added to their basic pay.
With these, petitioners claimed that private respondents received higher wage
rate than that prescribed in their areas of work.
ISSUE: Whether the said allowances are to be considered as facilities and are
therefore deductible from the wage of the respondent employees.
LA RULING: No. The free board and lodging, electricity, water and food
enjoyed by respondents could not be included in the computation of their wages
because these were given without their written consent.
NLRC RULING: No. decision of the Labor Arbiter affirmed.
CA RULING: No. decision of the Labor Arbiter affirmed.

SC RULING:
No. Before the value of facilities can be deducted from the employees wages, 3
requisites must concur: (1) proof must be shown that such facilities are
customarily furnished by the trade; (2) the provision of deductible facilities must
be voluntarily accepted in writing by the employee; and (3) facilities must be
charged at reasonable value. These requirements have not been met in this
case.

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47. OUR HAUS REALTY DEVELOPMENT CORPORATION vs.ALEXANDER

PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO
and JERRY SABULAO
G.R. No. 204651
August 6, 2014
BRION J.:
Doctrines:
1. To be able to deduct facilities to the wage of an employee, three
requisites must concur:
a. proof must be shown that such facilities are customarily furnished by
the trade;
b. the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and
c. The facilities must be charged at fair and reasonable value.
2. DOLE DO No. 56, series of 2005, which sets out the guidelines for the
implementation of DOLE DO No. 13, mandates that the cost of the
implementation of the requirements for the construction safety and health
of workers, shall be integrated to the overall project cost. The rationale
behind this is to ensure that the living accommodation of the workers is
not substandard and is strictly compliant with the DOLEs OSH criteria.
As part of the project cost that construction companies already charge to
their clients, the value of the housing of their workers cannot be charged
again to their employees salaries. Our Haus cannot pass the burden of
the OSH costs of its construction projects to its employees by deducting it
as facilities. This is Our Haus obligation under the law.
3. Lastly, even if a benefit is customarily provided by the trade, it must still
pass the purpose test set by jurisprudence. Under this test, if a benefit or
privilege granted to the employee is clearly for the employers
convenience, it will not be considered as a facility but a supplement. Here,
careful consideration is given to the nature of the employers business in
relation to the work performed by the employee. This test is used to
address inequitable situations wherein employers consider a benefit
deductible from the wages even if the factual circumstances show that it
clearly redounds to the
employers greater advantage.
FACTS:
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao
and Bernardo Tenederowere all laborers working for petitioner Our Haus Realty
Development Corporation (Our Haus), a company engaged in the construction
business.
They claimed that they were not paid the required minimum wage. Petitioner
argues that aside from subsidizing their meals (3 times a day), it also gave them

free lodging near the construction project they were assigned to. In determining
the total amount of the respondents daily wages, the value of these benefits
should be considered, in line with Article 97(f) of the Labor Code.
The respondents pointed out that Our Haus never presented any proof that they
agreed in writing to the inclusion of their meals value in their wages. Also, Our
Haus failed to prove that the value of the facilities it furnished was fair and
reasonable. Finally, instead of deducting the maximum amount of 70% of the
value of the meals, Our Haus actually withheld its full value (which was
Php290.00 per week for each employee).
ISSUE: Whether the amounts for food subsidy and lodging should be
considered as part of the daily wages of a construction worker
LA RULING: Yes. The LA ruled in favor of Our Haus. He held that if the
reasonable values of the board and lodging would be taken into account, the
respondents daily wages would meet the minimum wage rate
NLRC RULING: No. The NLRC reversed the LA. Citing the case of Mayon
Hotel & Restaurant v. Adana, the NLRC noted that the respondents did not
authorize Our Haus in writing to charge the values of their board and lodging to
their wages. Thus, the samecannot be credited.
CA RULING: No. The CA dismissed Our Haus certiorari petition and affirmed
the NLRC rulings in toto.
SC RULING:
No. As the CA correctly ruled, the requirements for deducting the value of
facilities to the wages of an employee, as summarized in Mabeza, are the
following:
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a. proof must be shown that such facilities are customarily furnished by

the trade;
b. the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and
c. The facilities must be charged at fair and reasonable value
None of these are proven to have existed by petitioner.
Our Haus could not really be expected to prove compliance with the first
requirement since the living accommodation of workers in the construction
industry is not simply a matter of business practice. Peculiar to the construction
business are the occupational safety and health (OSH) services which the law
itself mandates employers to provide to their workers. This isto ensure the
humane working conditions of construction employees despite their constant
exposure to hazardous working environments. Under Section 16 of DOLE
Department Order (DO) No. 13, series of 1998, 43 employers engaged in the
construction business are required to providethe following welfare amenities:
16.1 Adequate supply of safe drinking water
16.2 Adequate sanitaryand washing facilities
16.3 Suitable living accommodation for workers, and as may be
applicable, for their families
16.4 Separate sanitary, washing and sleeping facilitiesfor men and
women workers.
Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for
the implementation ofDOLE DO No. 13, mandates that the cost of the
implementation of the requirements for the construction safety and health of
workers, shall be integrated to the overall project cost. 44 The rationale behind
this isto ensure that the living accommodation of the workers is not substandard
and is strictly compliant with the DOLEs OSH criteria.
As part of the project cost that construction companies already charge to their
clients, the value of the housing of their workers cannot be charged again to
their employees salaries. Our Haus cannot pass the burden of the OSH costs
of its construction projects to its employees by deducting it as facilities. This is
Our Haus obligation under the law.
As to the second requirement, Our Haus belatedly submitted five kasunduans,
supposedly executed by the respondents, containing their conformity to the
inclusion of the values of the meals and housing to their total wages. Oddly, Our
Haus only offered these documents when the NLRC had already ruled that
respondents did not accomplish any written authorization, to allow deduction
from their wages. These five kasunduans were also undated, making us wonder
if they had reallybeen executed when respondents first assumed their jobs.
Moreover, in the earlier sinumpaang salaysay by Our Haus four employees, it
was not mentioned that they also executed a kasunduanfor their board and

lodging benefits. Because of these surrounding circumstances and the

suspicious timing when the five kasunduanswere submitted as evidence, we
agree withthe CA that the NLRC committed no grave abuse of discretion in
disregarding these documents for being self serving.
As to the third requirement, Our Haus never explained how it came up with the
values it assigned for the benefits it provided; it merely listed its supposed
expenses without any supporting document. Since Our Haus is using these
additional expenses (cooks salary, water and LPG) to support its claim that it
did not withhold the full amount of the meals value, Our Haus is burdened to
present evidence to corroborate its claim. The records however, are bereft of
any evidence to support Our Haus meal expense computation. Even the value
it assigned for the respondents living accommodations was not supported by
any documentary evidence. Without any corroborative evidence, it cannot be
said that Our Haus complied with this third requisite.

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LABOR LAW
REVIEW

Atty. Joyrich Golangco

ARTICLE
100
48. AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION V.
AMERICAN WIRE AND CABLE
CO., INC.
GR No. 155059
April 29, 2005
CHICONAZARIO J.
Doctrines:
1. The granting of a bonus is a management prerogative, something given in
addition to what is ordinarily received by or strictly due the recipient. Thus, a
bonus is not a demandable and enforceable obligation, except when it is
made part of the wage, salary or compensation of the employee.
2. For a bonus to be enforceable, it must have been promised by the employer
and expressly agreed upon by the parties, or it must have had a fixed
amount and had been a long ad regular practice on the part of the employer.
3. To be considered a regular practice, the giving of the bonus should have
been done over a long period of time, and must be shown to have been
consistent and deliberate.
FACTS:
The American Wire and Cable Co. Inc., has been giving its employees certain
benefits and entitlements. These include the following:
a.
Service Award
b.35% premium pay of an employees basic pay for work rendered
during Holy Monday, Holy Tuesday, Holy Wednesday, Dec. 23, 26,
27, 28 and 29
c.
Christmas Party
d.
Promotional Increase
All the said benefits are no part of the CBA and the grant thereof was based
upon the financial performance of the company. Moreover, the grant of the 35%
premium pay was only made for a period of two years with the express
condition that it is based on the financial situation of the company.
Over the years, there has been a downtrend in the giving of service awards and
its amount and holding of Christmas parties.
When the financial situation of the company worsened, the company unilaterally
stopped giving the said benefits.

The unions (petitioners), filed a complaint alleging that the company violated
Article 100 of the Labor Code. It argues that the benefits and incentives can no
longer be withdrawn since it has ripened into a company practice.
The company answered by arguing that the said benefits are in the nature of
bonuses which it can withdraw unilaterally.
ISSUES:
1. Whether the said benefits are in the nature of bonuses which can be
withdrawn unilaterally by respondent company
2. If considered as bonuses, whether it can be considered as part of the
wage or salary or compensation making them enforceable obligations
LA RULING: Yes, therefore the company is not guilty of violating Art 100 of the
Labor Code.
CA RULING: Yes. The decision of the VA is affirmed and upheld.
SC RULING:

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1. Yes. A bonus is an amount granted and paid to an employee for his industry
and loyalty which contributed to the success of the employers business and
made possible the realization of profits. The granting of a bonus is a
management prerogative, something given in addition to what is ordinarily
received by or strictly due the recipient. Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the wage, salary or
compensation of the employee.
All the said benefits are in excess of what the law requires each employer to
give its employees. Since they are above what is strictly due to the members of
the union, the granting of the same was a management prerogative, which,
whenever management sees necessary, may be withdrawn, unless they have
been made a part of the wage or salary or compensation of the employees.
2. No. For a bonus to be enforceable, it must have been promised by the
employer and expressly agreed upon by the parties, or it must have had a fixed
amount and had been a long and regular practice on the part of the employer.
The benefits in question were never subjects of any express agreement
between the parties. They were never incorporated in the CBA. The Christmas
parties and its incidental benefits and the giving of case incentive together with
the service award cannot be said to have fixed amounts, To be considered a
regular practice, the givng of the bonus should have been done over a long
period of time, and must be shown to have been consistent and deliberate. The
downtrend in the grant of these two bonuses over the years demonstrate that
there is nothing consistent about it.

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49. TSPIC CORPORATION V. TSPIC

EMPLOYEES UNION GR No. 163419
February 13, 2008 VELASCO, JR., J.
Doctrines:
1. Diminution of benefits is the unilateral withdrawal by the employer of
benefits already enjoyed by the employees. There is diminution of benefits
when it is shown that: (1) the grant or benefit is founded on a policy or has
ripened into a practice over a long period; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or
application of a doubtful or difficult question of law; and (4) the diminution or
discontinuance is done unilaterally by the employer
2. An erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits
FACTS:
Respondent Union is the registered bargaining agent of petitioner TSPIC. The
two entered into a CBA for the years 2000-2004. The CBA included a provision
on yearly salary increases starting January 2000 until January 2002. Under the
CBA, different rates of wage increases in the duration of the CBA, are given to
different sets of employees. The increases for the second year and third year of
implementation of the CBA are deemed to be inclusive of any Wage Increase
ordered by the Wage Boards and as correction of any wage distortion that may
have been brought about by future Wage Orders (crediting provision.)
When Wage Order No. 8 was implemented increasing the minimum wage of
regular employees, an error in the automated payroll system occurred and
TSPIC claims that 24 employees were overpaid. They were notified that the
overpayment would be deducted from their salaries in a staggered basis. TSPIC
explained that the correction of the erroneous computation was based on the
crediting provision of the CBA.
The Union asserted that there was no error and that the deduction constituted
diminution of pay. The Union insists that the crediting provision of the CBA
finds no application in the present case, since at the time the Wage Order was
issued, the probationary employees were not yet covered by the CBA,
particularly by the crediting provision.
ISSUE: Whether charging the overpayments made to the respondents through
staggered deductions constitute diminution of benefits.
LA RULING: Yes. The unilateral deduction made by TSPIC violated Art. 100 of
the Labor Code
CA RULING: Yes, the decision of the VA is affirmed in toto

SC RULING:
No. Diminution of benefits is the unilateral withdrawal by the employer of
benefits already enjoyed by the employees. There is diminution of benefits
when it is shown that: (1) the grant or benefit is founded on a policy or has
ripened into a practice over a long period; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or application
of a doubtful or difficult question of law; and (4) the diminution or discontinuance
is done unilaterally by the employer
As correctly pointed out by TSPIC, the overpayment of its employees was
a result of an error. This error was immediately rectified by TSPIC upon its
discovery. We have ruled before that an erroneously granted benefit may be
withdrawn without violating the prohibition against non-diminution of benefits.

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50. LEPANTO CERAMICS, INC., V. LEPANTO CERAMICS

EMPLOYEES ASSOCIATION GR No. 180866 March 2, 2010
PEREZ, J.:
Doctrine:
A bonus that has been incorporated in the CBA becomes more than just an act
of generosity on the part of the employer but a contractual obligation it has
undertaken.
FACTS:
In December 1998, petitioner gave a P3,000.00 bonus to its employees,
members of the respondent Association. In September 1999, the two entered
into a CBA which provides for the grant of a Christmas gift package/bonus to
the members of the respondent Association. The Christmas bonus was one of
the enumerated existing benefit, practice of traditional rights which shall
remain in full force and effect.
In 2002, the year-end cash benefit was only P600.00. The Association objected
arguing that such act was a violation of the CBA. After failure to settle, the
Association filed a Notice of Strike. The case was referred to the Voluntary
Arbitrator.
The Association insisted that it has been the company practice grant members
Christmas bonuses in the amount of P3,000.00. Thus it argues that failure on
the part of the company to give said amount was in violation of the CBA.
Petitioner argues that the said amount is in the form of a bonus and is thus not
demandable. It argued that the giving of extra compensation was based on the
companys available resources for a given year and the workers are not entitled
to a bonus if the company does not make profits. Petitioner avers that it is debt
ridden and could not give out the bonus.
ISSUE: Whether the amount of P3,000 Christmas gift/bonus is demandable for
being included in the CBA
LA RULING: Yes. The CBA is a binding contract and constitutes the law
between the parties.
CA RULING: The decision of the VA is affirmed in toto
SC RULING:
Yes. Generally, a bonus is not a demandable and enforceable obligation. For a
bonus to be enforceable, it must have been promised by the employer and
expressly agreed upon by the parties. Given that the bonus in this case is
integrated in the CBA, the same partakes the nature of a demandable
obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus

due to respondent Association has become more than just an act of generosity
on the part of the petitioner but a contractual obligation it has undertaken.

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51. EASTERN TELECOMMUNICATIONS PHIL. INC. V. EASTERN

TELECOMS EMPLOYEES UNION GR No. 185665. February 8, 2012
MENDOZA, J.:
Doctrines:
1. Whether or not a bonus forms part of wages depends upon the
circumstances and conditions for its payment. If it is additional compensation
which the employer promised and agreed to give without any conditions
imposed for its payment, such as success of business or greater production
or output, then it is part of the wage, But if its paid only if profits are realized
or if a certain level of productivity is achieved, it cannot be considered part of
wage. Where it is not payable to all but only to some employees and only
when their labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefore, not a part of wage.
2. A bonus may be granted on equitable consideration when the giving of such
bonus has been the companys long and regular practice.
3. The principle of non-diminution of benefits is founded on the constitutional
mandate to protect the rights of workers and to promote their welfare and to
afford labor full protection.
FACTS:
Respondent Union is the exclusive bargaining agent in the establishment of
Petitioner Company. Since 1975, the company has been giving its employees
14th , 15th and 16th month bonuses. In 2001, the two signed a side agreement
which provides that the 14th, 15th and 16th month bonuses are granted.
Due to continuing financial losses which started in 2000, the company, decided
in 2003, to defer the payment of the said bonuses. The Union opposed the said
plan. The Union argues that the bonuses are now legally demandable for being
included in the CBA. Furthermore, the giving of the said bonuses has now
ripened into company practice and can no longer be withdrawn without violating
Article 100 of the Labor Code.
The company argues that the said bonuses are not legally demandable. It
argues that the giving of said bonuses are dependent on the financial capability
of the company. Since it has been sustaining losses since 2000, it no longer has
the capacity to give such bonuses.
ISSUE: Whether the said bonuses are legally demandable
NLRC RULING: No. the payment of these bonuses are management
prerogative, being an act of generosity and munificence on the part of the
company and contingent upon the realization of profits. The company may not
be obliged to pay extra compensation in view of the substantial decline in its
financial condition.

CA RULING: Yes, the Side Agreement in the CBA granting the bonuses are
contractual obligations on the company without qualification or condition. Also,
the grant of the said bonuses has already ripened into a company practice and
their denial would amount to diminution of the employees benefits.
SC RULING:
Yes. A bonus becomes a demandable or enforceable obligation when it is made
part of the wage or salary or compensation of the employee. It is indubitable
that the company and the union agreed on the inclusion of a provision for the
grant of the bonuses in the Side Agreement. There were no conditions specified
in the CBA Side Agreement for the grant of the benefits. By its inclusion in the
CBA Side Agreements, the bonuses has become more than just an act of
generosity on the part of the company but a contractual obligation it has
undertaken.
Granting arguendo that the CBA Side Agreement does not contractually bid the
company, its act of granting the same has become an established company
practice such that it has virtually become part of the employees salary or wage.
A bonus may be granted on equitable consideration when the giving of such
bonus has been the companys long and regular practice.
In this case, the company has been giving the said bonuses since 1975 whether
it earned profits or not.
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ARTICLE
106
52. GSIS vs. NLRC
G.R. No. 180045 November 17,
2010 NACHURA, J.:
JOINT AND SOLIDARY LIABILITY OF THE PRINCIPAL
FACTS:
Respondents were employed as security guards by DNL Security Agency. By
virtue of the service contract entered into by DNL Security and GSIS,
respondents were assigned to GSIS Tacloban City office.
However, DNL Security informed respondents that its service contract with GSIS
was terminated. Notwithstanding, DNL Security instructed respondents to
continue reporting for work to GSIS. Respondents worked as instructed but
without receiving their wages; after which, they were terminated from
employment. Hence, respondents filed with the LA a complaint against DNL
Security and GSIS.
ISSUE: Is GSIS liable for payment of the respondents unpaid salary and other
monetary benefits?
LA RULING: LA rendered a decision against DNL Security and GSIS ordering
both as jointly and solidarily liable to respondent for the unpaid salary.
NLRC RULING: NLRC treated DNL Securitys motion for reconsideration as an
appeal, but dismissed the same, as it was not legally perfected. GSIS filed a
petition for certiorari before the CA.
CA RULING: CA affirmed the NLRC ruling. GSIS averred that it has no actual
and direct employer-employee relationship between it and the respondents.
SC RULING:
GSIS is jointly and severally liable with DNS Security with respect to
respondents claims. When GSIS contracted DNL Securitys services, it became
an indirect employer of respondents, pursuant to Article 107 of LC. After DNL
Security failed to pay respondents the correct wages and other monetary
benefits, GSIS, as principal, became jointly and severally liable, as provided in
Articles 106 and 109 of LC.
While it is true that respondents continued working for GSIS after the expiration
of their contract, based on the instruction of DNL Security, GSIS did not object
to such assignment and allowed respondents to render service. Thus, GSIS
impliedly approved the extension of respondents services. Accordingly, GSIS is
bound by the provisions of the LC on indirect employment. So long as the work,

task, job, or project has been performed for its benefit or on its behalf, the
liability accrues for such services. However, the solidary liability of GSIS does
not preclude the application of Article 1217 of the Civil Code on the right of
reimbursement from its co-debtor, DNS Security.
GSIS liability, however, cannot extend to the payment of separation pay. An
order to pay separation pay is invested with a punitive character, such that an
indirect employer should not be made liable without a finding that it had
conspired in the illegal dismissal of the employees.

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53. ALIVIADO, et.al. vs. PROCTOR

AND GAMBLE G.R. No. 160506
June 6, 2011
DEL CASTILLO, J.:
CONTROL TEST IS MERELY ONE OF THE ELEMENTS TO DETERMINE
EXISTENCE OF LABOR-ONLY
CONTRACTING
FACTS:
(The full text of the case does not include the facts since it only resolved the 2nd
MR filed by P&G to SC.) On March 9, 2010, the SC rendered a Decision holding
that Promm-Gem is a legitimate independent contractor; that Sales and
Promotions Services (SAPS) is a labor-only contractor consequently its
employees are considered employees of Procter & Gamble Phils., Inc. (P&G);
that Promm-Gem is guilty of illegal dismissal; that SAPS/P&G is likewise guilty
of illegal dismissal; that petitioners are entitled to reinstatement; and that the
dismissed employees of SAPS/P&G are entitled to moral damages and
attorneys fees there being bad faith in their dismissal.
P&G filed a Motion for Reconsideration but was denied by the SC. P&G filed a
second MR. P&G claimed that the SC erred in not applying the four -fold test,
particularly the control test in determining whether SAPS is a legitimate
independent contractor or a labor-only contractor.
ISSUE: Whether SAPS is a labor-only contractor?
SC RULING:
The SC correctly determined SAPS as a labor-only contractor. As discussed in
the March 9, 2010 SC Decision, the applicable rules are Article 106 of the LC
and Rule VIII-A, Book III of the Omnibus Rules Implementing the LC, as
amended by D.O. No. 18 -06. The said DO provides that labor- only contracting
exists when any of the two elements is present: (1) the contractor or
subcontractor does not have substantial capital or investment which relates to
the job, work or service to be performed and the employees recruited, supplied
or placed by such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; OR (2) the contractor
does not exercise the right to control over the performance of the work of the
contractual employee.
Therefore, the control test is merely one of the factors to consider. It was
already established that SAPS has no substantial capitalization and it was
performing merchandising and promotional activities which are directly related
to P&G's business. Since SAPS met one of the requirements, it was enough
basis for SC to hold that it is a labor -only contractor. Consequently, its principal,
P&G, is considered the employer of its employees. This is pursuant to the ruling

in Aklan v. San Miguel Corporation[27] where it was held that [a] finding that a
contractor is a labor-only contractor, as opposed to permissible job contracting,
is equivalent to declaring that there is an employer-employee relationship
between the principal and the employees of the supposed contractor, and the
labor-only contractor is considered as a mere agent of the principal, the real
employer.

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54. MANDAUE GALLEON TRADE INC.

vs. ANDALES et.al. G.R. No. 159668
March 7, 2008 AUSTRIA-MARTINEZ, J.:
FACTS:
Respondent Vicente Andales filed a complaint with the Labor Arbiter (LA)
against petitioners Mandaue Galleon Trade, Inc. (MGTI) and Gamallosons
Traders, Inc. (GTI) for illegal dismissal and non-payment of 13th month pay and
service incentive leave pay. Respondents alleged that MGTI hired them on
various dates as weavers, grinders, sanders and finishers but they were
dismissed without notice and just cause.
Respondents further alleged that they are regular employees of MGTI because:
(a) they performed their work inside the company premises; (b) they were
issued uniforms by MGTI and were told to strictly follow company rules and
regulations; (c) they were under the supervision of MGTI's foremen, quality
control personnel and checkers; (d) MGTI supplied the materials, designs, tools
and equipment in the production of furniture; (e) MGTI conducts orientations on
how the work was to be done and the safe and efficient use of tools and
equipment; (f) MGTI issues memoranda regarding absences and waste of
materials; and (g) MGTI exercises the power to discipline them.
On the other hand, MGTI denied the existence of employer-employee
relationship with complainants, claiming that they are workers of independent
contractors whose services were engaged temporarily and seasonally when
the demands for its products are high and could not be met by its regular
workforce; the independent contractors recruited and hired the complainants,
prepared the payroll and paid their wages, supervised and directed their work,
and had authority to dismiss them.
LA RULING: LA held that the respondents are regular piece-rate employees of
MGTI since they were made to perform functions which are necessary to
MGTI's rattan furniture manufacturing business. The independent contractors
were not properly identified. The absence of proof that the independent
contractors have work premises of their own, substantial capital or investment in
the form of tools, equipment and machineries make them only labor contractors.
NLRC RULING: It affirmed the decision of LA. It held that labor-only contracting
and not job -contracting was present since the alleged contractors did not have
substantial capital in the form of equipment, machineries and work premises.
CA RULING: MGTI is liable to the respondents because the alleged contractors
are not independent contractors but labor-only contractors.
ISSUE: Whether or not MGIT is a labor-only contractor?

SC RULING:
MGIT is a labor-only contractor. Based on Article 106 of the Labor Code and
Sections 5 and 7 of the Implementing Rules, labor-only contracting exists when
the following criteria are present: (1) where the contractor or subcontractor
supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among
other things; and the workers recruited and placed by the contractor or
subcontractor are performing activities which are directly related to the principal
business of such employer; or (2) where the contractor does not exercise the
right to control the performance of the work of the contractual employee.
First, respondents work as weavers, grinders, sanders and finishers is directly
related to MGTI's principal business of rattan furniture manufacturing. Where
the employees are tasked to undertake activities usually desirable or necessary
in the usual business of the employer, the contractor is considered as a laboronly contractor and such employees are considered as regular employees of
the employer.
Second, MGTI was unable to present any proof that its contractors had
substantial capital. There was no evidence pertaining to the contractors'
capitalization; nor to their investment in tools, equipment or implements actually
used in the performance or completion of the job, work, or service that they
were contracted to render.
Thus, the contractors are labor-only contractors since they do not have
substantial capital or investment which relates to the service performed and
respondents performed activities which were directly related to MGTI's
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main business. MGTI, the principal employer, is solidarily liable with the laboronly contractors, for the rightful claims of the employees. Under this set-up,
labor -only contractors are deemed agents of the principal, MGTI, and the law
makes the principal responsible to the employees of the labor-only contractor as
if the principal itself directly hired or employed the employees.

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55. SPIC N SPAN SERVICES

CORPORATION vs. PAJE et.al. G.R. No.
174084 August 25, 2010
BRION, J.:
REQUIREMENTS OF LEGITIMATE CONTRACTING/SUBCONTRACTING
FACTS:
Swift Foods, Inc. (Swift) manufactures and processes meat products and other
food products. Petitioner SNSs business is to supply manpower services to its
clients for a fee. Swift and SNS have a contract to promote Swift products.
Respondents worked as Deli/Promo Girls of Swift products in supermarkets.
They were all dismissed from their employment on February 28, 1998. They
filed two complaints for illegal dismissal against SNS and Swift before NLRC.
Swift moved to dismiss the complaints on the ground that it entered into an
independent labor contract with SNS for the promotion of its products. It alleged
that the respondents were the employees of SNS, not of Swift.
RULING OF LA: LA found SNS to be the agent of Swift. First, the agreement
between SNS and Swift shows that the latter exercised control over the promo
girls and/or merchandisers through the services of coordinators. Second, it
cannot be said that SNS has substantial capital. Third, the duties of the
petitioners were directly related, necessary and vital to the day-to -day
operations of Swift. Lastly, the uniform and identification cards used by the
petitioners were subject to the approval of Swift.
RULING OF NLRC: NLRC ruled that SNS is an independent contractor. First,
there is no evidence that Swift exercised the power of control over the
petitioners. Rather, it is SNS who exercised direct control and supervision over
the nature and performance of the works of herein petitioners. Second, by law,
Swift and SNS have distinct and separate juridical personality from each other.
RULING OF CA: CA dismissed the appeal. It concluded that SNS was merely
an agent of Swift; thus, the latter should not be exempt from liability.
ISSUE: Whether SNS is merely an agent of Swift?
SC RULING:
SNS is considered merely an agent of Swift which does not exempt the latter
from liability. To be legitimate, contracting or subcontracting must satisfy the
following requirements: 1) The contractor or subcontractor carries on a distinct
and independent business and undertakes to perform the job, work or service
on its own account and under its own responsibility; 2) the contractor or
subcontractor has substantial capital or investment; and 3) the agreement
between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health

standards, free exercise of right to self-organization, security of tenure, and

social and welfare benefit.
Nowhere in the decisions of both the LA and the NLRC show that SNS had full
control of the means and methods of the performance of their work. Moreover,
as found by the LA, there was no evidence that SNS has substantial capital or
investment. Lastly, there was no finding by the LA nor the NLRC that the
agreement between the principal (Swift) and contractor (SNS) assures the
contractual employees entitlement to all labor and occupational safety and
health standards, free exercise of right to self-organization, security of tenure,
and social and welfare benefit.

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56. VIGILLA et.al. vs. PCCI

G.R. No. 200094
June 10, 2013
MENDOZA, JR:
A QUITCLAIM EXECUTED IN FAVOR OF THE LABOR-ONLY CONTRACTOR
WILL REDOUND TO THE
BENEFIT OF THE PRINCIPAL EMPLOYER; A LABOR-ONLY CONTRACTOR
IS SOLIDARILY LIABLE
WITH THE EMPLOYER
FACTS:
PCCI is a non-stock educational institution, while the petitioners were janitors,
janitresses and supervisor in the Maintenance Department of PCCI under the
supervision and control of Atty. Seril, PCCIs Senior Vice President for
Administration. The petitioners, however, were made to understand, upon
application with PCCI, that they were under Metropolitan Building Services, Inc.
(MBMSI), a corporation engaged in providing janitorial services to clients. Atty.
Seril is also the President and General Manager of MBMSI.
PCCI, citing the revocation of MBMSI Articles of Incorporation, terminated its
relationship with MBMSI, resulting in the dismissal of the petitioners.
In their complainants before LA, petitioners alleged that it was the school, not
MBMSI, which was their real employer because PCCI had direct control over
MBMSIs operations and the selection and hiring of employees were undertaken
by PCCI.
On the other hand, PCCI contended that it could not have illegally dismissed the
complainants because it was not their direct employer; (b) MBMSI was the one
who had complete and direct control over the complainants; and (c) PCCI had a
contractual agreement with MBMSI, thus, making the latter their direct
employer. Also, PCCI submitted before LA the releases, waivers and quitclaims
in favor of MBMSI executed by the respondents to prove that they were
employees of MBMSI and not PCCI.
LA RULING: LA found that PCCI was the real principal employer of the
complainants and that MBMSI was a mere adjunct or alter ego/labor-only
contractor. LA explained that PCCI was actually the one which exercised control
over the means and methods of the work of the petitioners, thru Atty. Seril, who
was acting, throughout the time in his capacity as Senior Vice President for
Administration of PCCI, not in any way or time as the supposed
employer/general manager or president of MBMSI. However, LA did not touch
on the validity and effect of the quitclaims.
NLRC RULING: NLRC affirmed the LAs findings. Nevertheless, the
respondents were excused from their liability by virtue of the releases, waivers

and quitclaims executed by the petitioners. Hence, petitioners filed an appeal

before CA.
CA RULING: CA affirmed the NLRC decision. Petitioners argue that there is no
solidary liability to speak of in case of an existence of a labor-only contractor.
Petitioners contend that under Article 106 of the LC, a labor-only contractors
liability is not solidary as it is the employer who should be directly responsible to
the supplied worker. Hence, the said releases, waivers and quitclaims which
they purportedly issued in favor of MBMSI and Atty. Seril do not automatically
release respondents from their liability.
ISSUES: Whether the quitclaims executed in favour of MBMSI redounded to the
benefit of PCCI?
SC RULING:
The NLRC and the CA correctly ruled that the releases, waivers and quitclaims
executed by petitioners in favor of MBMSI redounded to the benefit of PCCI
pursuant to Article 1217 of the New Civil Code. The reason is that MBMSI is
solidarily liable with the respondents for the valid claims of petitioners pursuant
to Article 109 of the Labor Code.
The issue of whether there is solidary liability between the labor-only contractor
and the employer is crucial in this case. If a labor -only contractor is solidarily
liable with the employer, then the releases, waivers and quitclaims in favor of
MBMSI will redound to the benefit of PCCI. On the other hand, if a labor- only
contractor is not solidarily liable with the employer, the latter being directly liable,
then the releases, waivers and quitclaims in favor of MBMSI will not extinguish
the liability of PCCI.
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There is solidary liability between the principal and labor-only contractor. In

labor-only contracting, the statute creates an employer -employee relationship
for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the latter
is responsible to the employees of the labor -only contractor as if such
employees had been directly employed by the principal employer. The principal
employer therefore becomes solidarily liable with the labor-only contractor for all
the rightful claims of the employees.

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57. BABAS, ET AL. V. LORENZO

SHIPPING CORP. GR. No. 186091
December 15, 2010 NACHURA, J.:
Doctrine:
In labor-only contracting, a prohibited act, the following elements are present:
(a) the contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under its own account
and responsibility; and (b) the employees recruited, supplied, or placed by such
contractor or subcontractor perform activities which are directly related to the
main business of the principal.
On the other hand, permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out with the
contractor or subcontractor the performance or completion of a specific job,
work, or service within a definite or predetermined period, regardless of whether
such job, work, or service is to be performed or completed within or outside the
premises of the principal.
FACTS:
Respondent LSC entered into a General Equipment Maintenance Repair and
Management Services Agreement (Agreement) with Best Manpower Services,
Inc. (BMSI). Under the Agreement, BMSI undertook to provide maintenance and
repair services to LSCs container vans, heavy equipment, trailer chassis, and
generator sets. BMSI further undertook to provide checkers to inspect all
containers received for loading to and/or unloading from its vessels.
Simultaneous with the execution of the Agreement, LSC leased its equipment,
tools, and tractors to BMSI. The period of lease was coterminous with the
Agreement.
BMSI then hired petitioners on various dates to work at LSC as checkers,
welders, utility men, clerks, forklift operators, motor pool and machine shop
workers, technicians, trailer drivers, and mechanics. Six years later, LSC
entered into another contract with BMSI, this time, a service contract.
In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for
regularization against LSC and BMSI. On October 1, 2003, LSC terminated the
Agreement. Consequently, petitioners lost their employment.
BMSI asserted that it is an independent contractor. It averred that it was willing
to regularize petitioners; however, some of them lacked the requisite
qualifications for the job. BMSI was willing to reassign petitioners who were
willing to accept reassignment.

LSC, on the other hand, averred that petitioners were employees of BMSI and
were assigned to LSC by virtue of the Agreement. The Agreement between LSC
and BMSI constituted legitimate job contracting. Thus, petitioners were
employees of BMSI and not of LSC.
LA RULING: LA found that petitioners were employees of BMSI.
NLRC RULING: Reversing the LA, the NLRC held: BMSI is not engaged in
legitimate job contracting. BMSI has no equipment, no office premises, no
capital and no investments as shown in the Agreement itself. BMSI has no
independent business or activity or job to perform in respondent LSC free from
the control of respondent LSC except as to the results thereof. LSC [petitioners]
performed work that was necessary and desirable to the main business of
respondent LSC. BMSI has no other client but respondent LSC.
Consequently, respondent Lorenzo Shipping Corp. is ordered to reinstate
[petitioners] to their former positions as regular employees and pay their
wage differentials and benefits. If reinstatement is not feasible, both
respondents Lorenzo Shipping Corp. and Best Manpower Services are
adjudged jointly and solidarily to pay [petitioners] separation pay.
CA RULING: CA rendered the now challenged Decision, reversing the
NLRC. According to the CA, the fact that BMSI entered into a contract of
lease with LSC did not ipso facto make BMSI a labor-only contractor; on
the contrary, it proved that BMSI had substantial capital. The CA was of
the view that the law only required substantial capital or investment.
ISSUE: Whether or not LSC the employer of the petitioners as BSMI is not an
independent contractor.
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SC RULING:
YES. In distinguishing between prohibited labor-only contracting and
permissible job contracting, the totality of the facts and the surrounding
circumstances of the case are to be considered.
In labor-only contracting, a prohibited act, the following elements are present:
(a) the contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under its own account
and responsibility; and (b) the employees recruited, supplied, or placed by such
contractor or subcontractor perform activities which are directly related to the
main business of the principal.
A person is considered engaged in legitimate job contracting or subcontracting if
the following conditions concur:
(a)The contractor carries on a distinct and independent business and
undertakes the contract work on his account under his own responsibility
according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the
performance of his work except as to the results thereof;
(b)The contractor has substantial capital or investment; and
(c) The agreement between the principal and the contractor or subcontractor
assures the contractual employees' entitlement to all labor and
occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social welfare benefits.
The Court sustains the petitioners contention that BMSI is engaged in labor-only
contracting.
First, petitioners worked at LSCs premises, and nowhere else. There was no
showing that it was BMSI which established petitioners working procedure and
methods, which supervised petitioners in their work, or which evaluated the
same. There was absolute lack of evidence that BMSI exercised control over
them or their work.
Second, LSC was unable to present proof that BMSI had substantial capital.
What is clear was that the equipment used by BMSI were owned by, and merely
rented from, LSC.
Third, petitioners performed activities which were directly related to the main
business of LSC.
Lastly, BMSI had no other client except for LSC. A Certificate of Registration
issued by the Department of Labor and Employment is not conclusive evidence

of status of independent contractor. The fact of registration simply prevents the

legal presumption of being a mere labor-only contractor from arising.
Consequently, the workers that BMSI supplied to LSC became regular
employees of the latter. Having gained regular status, petitioners were entitled
to security of tenure and could only be dismissed for just or authorized causes
and after they had been accorded due process.

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58. FIRST PHILIPPINE INDUSTRIAL CORPORATION v. RAQUEL M.

CALIMBAS AND LUISA P. MAHILOM
G.R. No. 179256
July 10, 2013
PERALTA, J.:
Doctrine:
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
FACTS:
(FPIC) is a domestic corporation primarily engaged in the transportation of
petroleum products by pipeline. [DGMS] is engaged in the business of supplying
manpower to render general clerical, building and grounds maintenance, and
janitorial and utility services.
FPIC, entered into a Contract of Special Services with DGMS, wherein the
latter agreed to undertake some aspects of building and grounds maintenance
at FPICs premises, offices and facilities, as well as to provide clerical and other
utility services as may be required from time to time by FPIC.
Pursuant to the said Contract, petitioner Raquel Calimbas and Luisa Mahilom
were engaged by the DGMS to render services to FPIC. Thereat, petitioner
Calimbas was assigned as a department secretary at the Technical Services
Department while petitioner Mahilom served as a clerk at the Money Movement
Section of the Finance Division.
FPIC, through its Human Resources Manager, Lorna Young, informed the
petitioners that their services to the company would no longer be needed as a
result of the Pace- Setting Study conducted by an outside consultant.
Accordingly, Treasurer of DGMS, formally notified both the petitioners that their
respective work assignments in FPIC were no longer available to them citing the
termination of the Project Contract with FPIC as the main reason thereof.
Calimbas and Mahilom signed quitclaims, releasing and discharging DGMS
from whatever claims that they might have against it by virtue of their past
employment.
Petitioners still filed a Complaint against FPIC for illegal dismissal and for the
collection of monetary benefits, alleging that they were regular employees of
FPIC after serving almost five (5) years, rendering services which were usually

necessary or desirable in the usual business or trade of FPIC and that they
were dismissed without cause.
In their Position Paper, petitioners maintained that their real employer was
FPIC, and that DGMS was merely its agent for having been engaged in
prohibited labor-only contracting. The petitioners averred that DGMS did not
have substantial capital.
FPIC insisted that the Labor Arbiter had no jurisdiction over the case because
there was absolutely no employer-employee relationship between it and the
petitioners; and that they executed quitclaims in favor of
DGMS
LA RULING: Labor Arbiter rendered a Decision4 holding that respondents were
regular employees of FPIC, and that they were illegally dismissed.
NLRC RULING: NLRC the Labor Arbiters decision. However, in a Resolution
after MR by FPIC, the NLRC reversed its decision. The CA finds no legal basis
to deem DGMS a labor-only contracting entity as maintained by complainants.
The fact that DGMS had only a capitalization of P75,000.00, without an
investment in tools, equipment, etc., does not necessarily constitute the latter as
labor-only contractor. Labor Arbiter is hereby REINSTATED.
ISSUE: Whether or not respondents are employees of FPIC.
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SC RULING:
YES. Article 106 of the Labor Code and Sections 8 and 9 of DOLE Department
Order No. 10, Series of 1997 are the standards to apply.
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
Respondents are petitioners employees and that DGMS is engaged in laboronly contracting.
First, in Vinoya v. National Labor Relations Commission, 12 this Court
categorically stated that the actual paid-in capital of P75,000.00 could not be
considered as substantial capital. Thus, DGMSs actual paid-in capital in the
amount of P75,000.00 does not constitute substantial capital essential to carry
out its business as an independent job contractor. DGMS has no substantial
equipment in the form of tools, equipment and machinery. As a matter of fact,
respondents were using office equipment and materials owned by petitioner
while they were rendering their services at its offices.
Second, FPIC exercised the power of control and supervision over the
respondents. The fact that DGMS did not assign representatives to supervise
over respondents work in petitioners company tends to disprove the
independence of DGMS. Respondents were subjected to the control and
supervision of petitioner while they were performing their jobs.
Third, also worth stressing are the points highlighted by respondents:
Respondents worked only at petitioners offices for an uninterrupted period of
five years, occupying the same position at the same department under the
supervision of company officials; FPICs HR Manager Lorna Young notified
respondents, in a closed-door meeting, that their services to the company would
be terminated; The direct superiors of respondents were managerial employees
of petitioner, and had direct control over all the work-related activities of the
latter.
All told, an employer-employee relationship exists between petitioner and
respondents. And having served for almost five years at petitioners company,
respondents had already attained the status of regular employees.
In the present case, petitioners failed to show any valid or just cause under the
Labor Code on which it may justify the termination of services of respondents.

Also, apart from notifying that their services had already been terminated,
petitioner failed to comply with the rudimentary requirement of notifying
respondents regarding the acts or omissions which led to the termination of their
services as well as giving them an ample opportunity to contest the legality of
their dismissal. Having failed to establish compliance with the requirements of
termination of employment under the Labor Code, respondents dismissal is
tainted with illegality.

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59. AVELINO S. ALILIN, ET. AL. vs.

PETRON CORPORATION G.R. No. 177592
June 9, 2014
DEL CASTILLO, J.
Doctrine:
A contractor is presumed to be a labor-only contractor, unless it proves that it
has the substantial capital, investment, tools and the like. However, where the
principal is the one claiming that the contractor is a legitimate contractor, the
burden of proving the supposed status of the contractor rests on the principal.
FACTS:
Romualdo D. Gindang Contractor, started recruiting laborers for fielding to
Petrons Mandaue Bulk Plant. When Romualdo died, his son Romeo D.
Gindang through Romeo D. Gindang Services(RDG), took over the business
and continued to provide manpower services to Petron. Petitioners were among
those recruited by Romualdo D. Gindang Contractor and RDG to work in the
premises of the said bulk plant.
Petron and RDG entered into a Contract for Services 9 for the period from June
1, 2000 to May 31, 2002, whereby RDG undertook to provide Petron with
janitorial, maintenance, tanker receiving, packaging and other utility services in
its Mandaue Bulk Plant. This contract was extended on July 31, 2002 and
further extended until September 30, 2002. Upon expiration thereof, no further
renewal of the service contract was done.
Alleging that they were barred from continuing their services on October 16,
2002, petitioners filed a Complaint for illegal dismissal, underpayment of wages,
damages and attorneys fees against Petron and RDG.
Petitioners did not deny that RDG hired them and paid their salaries. They,
however, claimed that the latter is a labor -only contractor, which merely acted
as an agent of Petron, their true employer. They asseverated that their jobs,
which are directly related to Petrons business, entailed them to work inside the
premises of Petron using the required equipment and tools furnished by it and
that they were subject to Petrons supervision.
RDG corroborated petitioners claim that they are regular employees of Petron.
Petron, on the other hand, maintained that RDG is an independent contractor
and the real employer of the petitioners. It was RDG which hired and selected
petitioners, paid their salaries and wages, and directly supervised their work.
And not being the employer, Petron cannot be held liable for petitioners claim of
illegal dismissal.
LA RULING: Labor Arbiter ruled that petitioners are regular employees of
Petron; also found that Petron merely utilized RDG in its attempt to hide the

existence of employee-employer relationship between it and petitioners and

avoid liability under labor laws. The Labor Arbiter declared them to have been
illegally dismissed. Petron was thus held solidarily liable with Romeo for the
payment of petitioners separation pa.
NLRC RULING: NLRC affirmed the ruling of the LA.
CA RULING: The CA found no employer-employee relationship between the
parties. The CA also found RDG to be an independent labor contractor with
sufficient capitalization and investment as shown by its financial statement for
year-end 2000.
ISSUE: Whether RDG is a labor-only contractor (prohibited) as such, petitioners
are regular employees of Petron.
SC RULING: YES. The prevailing rule on labor-only contracting at the time
Petron and RDG entered into the Contract for Services in June 2000 is DOLE
Department Order No. 10, series of 1997.
"Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to farm out with a
contractor or subcontractor the performance of a specific job, work,
or service within a definite or predetermined period, regardless of
whether such job, work or, service is to be performed or completed
within or outside the premises of the principal.
Labor-only contracting, on the other hand, is a prohibited act, defined as
"supplying workers to an employer who does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises,
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among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of such
employer."45 "[I]n distinguishing between prohibited labor-only contracting and
permissible job contracting, the totality of the facts and the surrounding
circumstances of the case shall be considered." 46 Generally, the contractor is
presumed to be a labor-only contractor, unless such contractor overcomes the
burden of proving that it has the substantial capital, investment, tools and the
like. However, where the principal is the one claiming that the contractor is a
legitimate contractor, as in the present case, said principal has the burden of
proving that supposed status.47 It is thus incumbent upon Petron, and not upon
petitioners as Petron insists,48 to prove that RDG is an independent contractor.
Petron failed to discharge the burden of proving that RDG is a legitimate
contractor. Hence, the presumption that RDG is a labor-only contractor stands.
Here, the audited financial statements and other financial documents of RDG
for the years 1999 to 2001 establish that it does have sufficient working capital
to meet the requirements of its service contract. The evidence adduced merely
proves that RDG was financially qualified as a legitimate contractor but only
with respect to its last service contract with Petron in the year 2000.
While Petron was able to establish that RDG was financially capable as a
legitimate contractor at the time of the execution of the service contract in 2000,
it nevertheless failed to establish the financial capability of RDG at the time
when petitioners actually started to work for Petron in 1968, 1979, 1981, 1987,
1990,1992 and 1993.
Petrons power of control over petitioners exists in this case.
The facts that petitioners were hired by Romeo or his father and that their
salaries were paid by them do not detract from the conclusion that there exists
an employer-employee relationship between the parties due to Petrons power
of control over the petitioners. One manifestation of the power of control is the
power to transfer employees from one work assignment to another. 55 Here,
Petron could order petitioners to do work outside of their regular
"maintenance/utility" job. Also, petitioners were required to report for work
everyday at the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work
schedule, and wear proper uniform and safety helmets as prescribed by the
safety and security measures being implemented within the bulk plant. All these
imply control.
Petitioners already attained regular status as employees of Petron.
Petitioners were given various work assignments. While the jobs performed by
petitioners may be menial and mechanical, they are nevertheless necessary
and related to Petrons business operations. If not for these tasks, Petrons
products will not reach the consumers in their proper state. Indeed, petitioners
roles were vital inasmuch as they involve the preparation of the products that
Petron will distribute to its consumers.

In view of these, and considering further that petitioners length of service

entitles them to become regular employees under the Labor Code, petitioners
are deemed by law to have already attained the status as Petrons regular
employees. As such, Petron could not terminate their services on the pretext
that the service contract it entered with RDG has already lapsed.
Petron therefore, being the principal employer and RDG, being the labor-only
contractor, are solidarily liable for petitioners' illegal dismissal and monetary
claims.

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60. FONTERRA BRANDS PHILS., INC. v. LEONARDO 1 LARGADO AND

TEOTIMO ESTRELLADO
G.R. No. 205300
March 18, 2015
VELASCO JR., J.
Doctrine:
A person is considered engaged in legitimate job contracting or subcontracting if
the following conditions concur:
1. The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility according to its own manner and
method, and 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;
2. The contractor or subcontractor has substantial capital or investment; and
3. The agreement between the principal and contractor or subcontractor
assures the contractual employees entitlement to all labor and
occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social and welfare benefits.
FACTS:
Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron
Marketing and Promotions Corp. (Zytron) for the marketing and promotion of its
milk and dairy products. Zytron provided Fonterra with trade merchandising
representatives (TMRs), including respondents Leonardo Largado (Largado)
and Teotimo Estrellado (Estrellado). The engagement of their services began on
September 15, 2003 and May 27, 2002, respectively.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions
contract. Fonterra then entered into an agreement for manpower supply with
A.C. Sicat Marketing and Promotional Services (A.C. Sicat). Desirous of
continuing their work as TMRs, respondents submitted their job applications
with A.C. Sicat, which hired them for a term of five (5) months.
When respondents 5-month contracts with A.C. Sicat were about to expire,
they allegedly sought renewal thereof, but were allegedly refused. This
prompted respondents to file complaints for illegal dismissal, regularization.
LA RULING: Labor Arbiter dismissed the complaint and ruled that: (1)
respondents were not illegally dismissed and (2) they were consecutively
employed by Zytron and A.C. Sicat, not by Fonterra.
NLRC RULING: NLRC affirmed the Labor Arbiter.
CA RULING: The CA, found that A.C. Sicat satisfies the requirements of
legitimate job contracting, but Zytron does not. According to the CA: Zytrons

paid-in capital of P250,000 cannot be considered as substantial capital; its claim

that it has the necessary tools and equipment for its business is
unsubstantiated. Therefore, according to the CA, respondents were Fonterras
employees.
Additionally, the CA held that respondents were illegally dismissed since
Fonterra itself failed to prove that their dismissal is lawful. However, the illegal
dismissal should be reckoned from the termination of their supposed
employment with Zytron on June 6, 2006.
ISSUE: Whether or not Zytron and A.C. Sicat are labor-only contractors, making
Fonterra the employer of herein respondents.
SC RULING:
NO. Fonterra is not the employer and respondents were not illegally dismissed.
As correctly held by the Labor Arbiter and the NLRC, the termination of
respondents employment with Zytron was brought about by the cessation of
their contracts with the latter. By refusing to renew their contracts with Zytron,
respondents effectively resigned from the latter.
Respondents voluntarily terminated their employment with Zytron by refusing to
renew their employment contracts with the latter, applying with A.C. Sicat, and
working as the latters employees, thereby abandoning their previous
employment with Zytron. Too, it is well to mention that for obvious reasons,
resignation is inconsistent with illegal dismissal. This being the case, Zytron
cannot be said to have illegally dismissed respondents.
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A.C. Sicat is as a legitimate job contractor, seeing that it is consistent with the
rules on job contracting and is sufficiently supported by the evidence on record.
A person is considered engaged in legitimate job contracting or subcontracting if
the following conditions concur:
1. The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility according to its own manner and
method, and 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;
2. The contractor or subcontractor has substantial capital or investment; and
3. The agreement between the principal and contractor or subcontractor
assures the contractual employees entitlement to all labor and
occupational safety and health standards, free exercise of the right to selforganization, security of tenure, and social and welfare benefits.
A.C. Sicat has substantial capital, having assets totaling P5,926,155.76 as of
December 31, 2006. Too, its Agreement with Fonterra clearly sets forth that A.C.
Sicat shall be liable for the wages and salaries of its employees or workers,
including benefits, premiums, and protection due them.
We agree with the findings of the CA that the termination of respondents
employment with the latter was simply brought about by the expiration of their
employment contracts.
Foremost, respondents were fixed-term employees. It is clear that respondents
were employed by A.C. Sicat as project employees. In their employment
contract with the latter, it is clearly stated that [A.C. Sicat is] temporarily
employing [respondents] as TMRs.
Respondents, by accepting the conditions of the contract with A.C. Sicat, were
well aware of and even acceded to the condition that their employment thereat
will end on said pre- determined date of termination. They cannot now argue
that they were illegally dismissed by the latter when it refused to renew their
contracts after its expiration.

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ARTICLE
110
61. DEVELOPMENT BANK OF THE
PHILIPPINES vs. NLRC G.R. No. 108031
March 1, 1995
BELLOSILLO, J.
Doctrine:
A declaration of bankruptcy or a judicial liquidation must be present before the
worker's preference may be enforced.
FACTS:
Leonor Ang was an employee of Tropical Philippines Wood Industries, Inc.
(TPWII). DBP, as mortgagee of TPWII, foreclosed its plant facilities and
equipment. It took possession of the foreclosed properties. From then on the
company ceased its operations. As a consequence private respondent was
verbally terminated from the service. Private respondent Ang filed with Labor
Arbiter a complaint for separation pay, 13th month pay, vacation and sick leave
pay, salaries and allowances against TPWII, its General Manager, and
petitioner. LA awarded Angs separation pay and vacation and sick leave pay
and held DBP subsidiarily liable in the even the company failed to satisfy the
judgment. The Labor Arbiter rationalized that the right of an employee to be paid
benefits due him from the properties of his employer is superior to the right of
the latter's mortgage. NLRC affirmed the ruling of LA.
ISSUE: Whether or not the declaration of bankruptcy or judicial liquidation
required before the worker's preference may be invoked under Art. 110 of the
Labor Code.
SC RULING:
Yes, a declaration of bankruptcy or a judicial liquidation must be present before
the worker's preference may be enforced. In the event of insolvency, a principal
objective should be to effect an equitable distribution of the insolvents property
among his creditors. To accomplish this there must first be some proceeding
where notice to all of the insolvent's creditors may be given and where the
claims of preferred creditors may be bindingly adjudicated. A preference applies
only to claims which do not attach to specific properties. A lien creates a charge
on a particular property. The right of first preference as regards unpaid wages
recognized by Article 110 does not constitute a lien on the property of the
insolvent debtor in favor of workers.
It is but a preference of credit in their favor, a preference in application. It is a
method adopted to determine and specify the order in which credits should be
paid in the final distribution of the proceeds of the insolvent's assets. It is a right
to a first preference in the discharge of the funds of the judgment debtor. Article

110 of the Labor Code does not purport to create a lien in favor of workers or
employees for unpaid wages either upon all of the properties or upon any
particular property owned by their employer. Claims for unpaid wages do not
therefore fall at all within the category of specially preferred claims established
under Articles 2241 and 2242 of the Civil Code, except to the extent that such
claims for unpaid wages are already covered by Article 2241, number 6: "claims
for laborers: wages, on the goods manufactured or the work done;" or by Article
2242, number 3, "claims of laborers and other workers engaged in the
construction reconstruction or repair of buildings, canals and other works, upon
said buildings, canals and other works . . . . To the extent that claims for unpaid
wages fall outside the scope of Article 2241, number 6, and 22421 number 3,
they would come within the ambit of the category of ordinary preferred credits
under Article 2244.

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ARTICLE
113
62. SHS PERFORATED
MATERIALS, INC. vs. DIAZ G.R. No.
185814 October 13, 2010
Doctrine:
Absent a showing that the withholding of complainants wages falls under the
exceptions provided in Article 113, the withholding thereof is thus unlawful.
FACTS:
Manuel Diaz was hired by petitioner SHS as Manager for Business
Development on probationary status. During his employment in the said
company, Mr. Hartmannshenn, the companys president, was often abroad and
sent instructions to respondent either by electronic mail or through telephone or
mobile phone. During meetings with respondent, Hartmannshen expressed his
dissatisfaction over respondents poor performance. When Hartmannshenn
arrived in the Philippines, he notified respondent of his arrival through electronic
mail messages, which the respondent claimed he never received, but the
respondent refused to respond and to meet with him. Hartmannshenn instructed
not to release respondents salary. Later that afternoon, respondent called and
inquired about his salary but he was informed that it was being withheld and that
he had to immediately communicate with Hartmannshen. The next day,
respondent served a demand letter and a resignation letter. In the evening of
the same day, respondent met with Hartmannshenn in Alabang. The latter told
him that he was extremely disappointed for the following reasons: his poor work
performance; his unauthorized leave and malingering from November 16 to
November 30, 2005; and failure to immediately meet Hartmannshenn upon his
arrival from Germany. Respondent, on the other hand, claimed that the meeting
with Hartmannshenn took place in the evening of December 1, 2005, at which
meeting the latter insulted him and rudely demanded that he accept P25,000.00
instead of his accrued wage and stop working for SHS, which demands he
refused. Later that same night, he sent Hartmannshenn and Schumacher an
electronic mail message appealing for the release of his salary. Respondent
filed a Complaint against the petitioners for illegal dismissal; non-payment of
salaries/wages and 13th month pay with prayer for reinstatement and full
backwages; exemplary damages, and attorneys fees, costs of suit, and legal
interest.
LA RULING: The Labor Arbiter rendered a decision declaring complainant as
having been illegally dismissed and further ordering his immediate
reinstatement without loss of seniority rights and benefits. The LA found that
respondent was constructively dismissed because the withholding of his salary
was contrary to Article 116 of the Labor Code as it was not one of the
exceptions for allowable wage deduction by the employer under Article 113 of

the Labor Code. He had no other alternative but to resign because he could not
be expected to continue working for an employer who withheld wages without
valid cause
NLRC RULING: On appeal, NLRC reversed the decision of LA. The NLRC
explained that the withholding of respondents salary was a valid exercise of
management prerogative. The act was deemed justified as it was reasonable to
demand an explanation for failure to report to work and to account for his work
accomplishments. The NLRC held that the respondent voluntarily resigned as
evidenced by the language used in his resignation letter and demand letters. CA
reversed NLRC resolution and held that withholding respondents salary was not
a valid exercise of management prerogative as there is no such thing as a
management prerogative to withhold wages temporarily.
ISSUE: Whether or not the temporary withholding of salary of employee by
employer is a valid exercise of management prerogative
SC RULING: No. 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 correctly pointed out by the LA, absent a
showing that the withholding of complainants wages falls under the exceptions
provided in Article 113, the withholding thereof is thus unlawful.
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What made it impossible, unreasonable or unlikely for respondent to continue

working for SHS was the unlawful withholding of his salary. For said reason, he
was forced to resign. It is of no moment that he served his resignation letter on
November 30, 2005, the last day of the payroll period and a non-working
holiday, since his salary was already due him on November 29, 2005, being the
last working day of said period. In fact, he was then informed that the wages of
all the other SHS employees were already released, and only his was being
withheld. What is significant is that the respondent prepared and served his
resignation letter right after he was informed that his salary was being withheld.
It would be absurd to require respondent to tolerate the unlawful withholding of
his salary for a longer period before his employment can be considered as so
impossible, unreasonable or unlikely as to constitute constructive dismissal.
Even granting that the withholding of respondents salary on November 30,
2005, would not constitute an unlawful act, the continued refusal to release his
salary after the payroll period was clearly unlawful. The petitioners claim that
they prepared the check ready for pick-up cannot undo the unlawful withholding.

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ARTICLE 124 Standards/Criteria for

Minimum Wage Fixing
63. P.I. MANUFACTURING, INC. v. P.I. MANUFACTURING SUPERVISORS
AND FOREMAN ASSOCIATION and the NATIONAL LABORUNION
G.R. No. 167217
February 4, 2008
SANDOVAL-GUTIERREZ
DOCTRINE:
The Court adopts the policy that requires recognition and validation of wage
increases given by employers either unilaterally or as a result of collective
bargaining negotiations in an effort to correct wage distortions.
FACTS:
P.I. Manufacturing, Inc. is a domestic corporation engaged in the manufacture
and sale of household appliances. P.I. Manufacturing Supervisors and Foremen
Association (PIMASUFA) is an organization of supervisors and foremen, joined
in this case by its federation, the National Labor Union (NLU). In 1987, the
President signed into law RA 6640 providing, among others, an increase in the
statutory minimum wage and salary rates of employees and workers in the
private sector.
Section 2 provides: The statutory minimum wage rates of workers and
employees in the private sector, whether agricultural or non-agricultural, shall be
increased by ten pesos (P 10.00) per day, except non-agricultural workers and
employees outside Metro Manila who shall receive an increase of eleven pesos
(P11.00) per day: Provided, That those already receiving above the minimum
wage up to one hundred pesos (P100.00) shall receive an increase of ten pesos
(P10.00) per day. Excepted from the provisions of this Act are domestic helpers
and persons employed in the personal service of another.
P.I. and PIMASUFA entered into a new Collective Bargaining Agreement (1987
CBA) whereby the supervisors were granted an increase of P625.00 per month
and the foremen, P475.00 per month. The increases were made retroactive
prior to the passage of R.A. No. 6640, and every year thereafter until July 26,
1989.
In 1989, PIMASUFA and NLU filed a complaint with the Arbitration Branch of the
NLRC,
charging
P.I.
with
violation
of
R.A.
No.
6640.
Theyhttp://sc.judiciary.gov.ph/jurisprudence/2008/feb2008/167217.htm - _ftn3
attached to their complaint a numerical illustration of wage distortion resulting
from the implementation of R.A. No. 6640.
LABOR ARBITER RULING: in favor of PIMASUFA.
NLRC RULING: affirmed the Labor Arbiters judgment.

CA RULING: affirmed the Decision of the NLRC with modification by raising the
13.5% wage increase to 18.5%.
ISSUE: Whether the increase resulting from any wage distortion caused by the
implementation of Republic Act 6640 is waivable.
SC RULING:
YES. R.A. No. 6727, otherwise known as the Wage Rationalization Act,
explicitly defines wage distortion as: a situation where an increase in prescribed
wage rates results in the elimination or severe contraction of intentional
quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied
in such wage structure based on skills, length of service, or other logical bases
of differentiation.
In this case, the Court of Appeals correctly ruled that a wage distortion occurred
due to the implementation of R.A. No. 6640. Significantly, the 1987 CBA wage
increases almost doubled that of the P10.00 increase under R.A. No. 6640.
Clearly, the gap between the wage rates of the supervisors and those of the
foremen was inevitably re-established. It continued to broaden through the
years.
Interestingly, such gap as re-established by virtue of the CBA is more than a
substantial compliance with R.A. No. 6640. The CA erred in not taking into
account the provisions of the CBA viz-a-viz the wage increase under
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the said law. To direct petitioner to grant an across- the-board increase to all of
them, regardless of the amount of wages they are already receiving, would be
harsh and unfair to the former.
To compel employers simply to add on legislative increases in salaries or
allowances without regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutory prescribed minimum
rates of increases. Clearly, this would be counter-productive so far as securing
the interests of labor is concerned.
At this juncture, it must be stressed that a CBA constitutes the law between the
parties when freely and voluntarily entered
into.http://sc.judiciary.gov.ph/jurisprudence/2008/feb2008/167217.htm - _ftn13
Here, it has not been shown that respondent PIMASUFA was coerced or forced
to sign the 1987 CBA. All of its 13 officers signed the CBA with the assistance of
respondent NLU.

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64. BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE

UNIONS v. NATIONAL LABOR RELATIONS COMMISSION and BANKARD,
INC.
G.R. No. 140689
February 17, 2004
CARPIO MORALES, J.:
ARTICLE 124
DOCTRINE:
The four elements of wage distortion are: (1.) An existing hierarchy of positions
with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one; (3) The elimination of
the distinction between the two levels; and (4) The existence of the distortion in
the same region of the country.
FACTS:
Bankard, Inc. classifies its employees by levels, to wit: Level I to V. In 1993, its
Board of Directors approved a New Salary Scale for the purpose of making its
hiring rate competitive in the industrys labor market. The New Salary Scale
increased the hiring rates of new employees, to wit: Levels I and V by P1,000,
and Levels II, III and IV by P900. Accordingly, the salaries of employees who fell
below the new minimum rates were also adjusted to reach such rates under
their levels.
Bankards move drew the Bankard Employees Union -WATU, the duly certified
exclusive bargaining agent of the regular rank and file employees of Bankard, to
press for the increase in the salary of its old, regular employees. Bankard took
the position, however, that there was no obligation on the part of the
management to grant to all its employees the same increase in an across-theboard manner.
As the continued request remained unheeded, it filed a Notice of Strike on the
ground of discrimination and other acts of Unfair Labor Practice.
NLRC RULING: finding no wage distortion, dismissed the case for lack of merit.
CA RULING: denied the same for lack of merit. Hence, the present petition.
ISSUE: Whether the unilateral adoption by an employer of an upgraded salary
scale that increased the hiring rates of new employees without increasing the
salary rates of old employees resulted in wage distortion within the
contemplation of Article 124 of the Labor Code.
SC RULING:

NO. Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT,
amending, among others, Article 124 of the Labor Code) on June 9, 1989, the
term wage distortion was explicitly defined as:
... a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage
or salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation.
The four elements of wage distortion are: (1.) An existing hierarchy of positions
with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one; (3) The elimination of
the distinction between the two levels; and (4) The existence of the distortion in
the same region of the country.
Involved in the classification of employees are various factors such as the
degrees of responsibility, the skills and knowledge required, the complexity of
the job, or other logical basis of differentiation. The differing wage rate for each
of the existing classes of employees reflects this classification.
Petitioner maintains that for purposes of wage distortion, the classification is not
one based on levels or ranks but on two groups of employees, the newly hired
and the old, in each and every level, and not between and among the different
levels or ranks in the salary structure.
The employees of Bankard have been historically classified into levels, i.e. I to
V, and not on the basis of their length of service. The Union cannot make a
contrary classification of Bankards employees without encroaching
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upon recognized management prerogative of formulating a wage structure, in

this case, one based on level. It is thus clear that there is no hierarchy of
positions between the newly hired and regular employees of Bankard, hence,
the first element of wage distortion is wanting. For purposes of determining the
existence of wage distortion, employees cannot create their own independent
classification and use it as a basis to demand an across-the-board increase in
salary.
Even assuming that there is a decrease in the wage gap between the pay of the
old employees and the newly hired employees, said gap is not significant as to
obliterate or result in severe contraction of the intentional quantitative
differences in the salary rates between the employee group. The classification
under the wage structure is based on the rank of an employee, not on seniority.
For this reason, wage distortion does not appear to exist.

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13th MONTH
PAY
65. CENTRAL AZUCARERA DE TARLAC v. CENTRAL AZUCARERA DE
TARLAC LABOR UNION-NLU
G.R. No. 188949
July 26, 2010
NACHURA, J.:
DOCTRINE:
The term basic salary of an employee for the purpose of computing the 13thmonth pay was interpreted to include all remuneration or earnings paid by the
employer for services rendered, but does not include allowances and monetary
benefits which are not integrated as part of the regular or basic salary, such as
the cash equivalent of unused vacation and sick leave credits, overtime,
premium, night differential and holiday pay, and cost -of-living allowances.
However, these salary-related benefits should be included as part of the basic
salary in the computation of the 13th- month pay if, by individual or collective
agreement, company practice or policy, the same are treated as part of the
basic salary of the employees.
FACTS:
Central Azucarera de Tarlac is a domestic corporation engaged in the business
of sugar manufacturing, while Central Azucarera de Tarlac Labor Union-NLU is
a legitimate labor organization which serves as the exclusive bargaining
representative of the Central's rank-and-file employees. The controversy stems
from the interpretation of the term basic pay, essential in the computation of the
13th-month pay.
In compliance with P.D. No. 851, the Central granted its employees the
mandatory 13th month pay since 1975. The formula used was: Total Basic
Annual Salary divided by 12. Included in the computation of the Total Basic
Annual Salary were the following: basic monthly salary; first 8 hours overtime
pay on Sunday and legal/special holiday; night premium pay; and vacation and
sick leaves for each year. Throughout the years, the Central used this
computation until 2006.
After a strike staged by the Union, the Central gave the employees their 13thmonth pay based on the employees total earnings during the year divided by
12. The latter objected to this computation. The Union filed a complaint against
for money claims based on the alleged diminution of benefits/erroneous
computation of 13th-month pay before the Regional Arbitration Branch of the
NLRC.
LA RULING : dismissed the complaint and declared that the Central had the
right to rectify the error in the computation of the 13th-month pay of its
employees.

NLRC RULING: reversed the Labor Arbiter.

CA RULING: affirmed the decision and resolution of the NLRC. Hence, the
petition.
ISSUE: Whether there was an error in the computation of the employees' 13th
month pay.
SC RULING:
YES. The 13th-month pay mandated by P.D. No. 851 represents an additional
income based on wage but not part of the wage. It is equivalent to one-twelfth
(1/12) of the total basic salary earned by an employee within a calendar year. All
rank-and-file employees, regardless of their designation or employment status
and irrespective of the method by which their wages are paid, are entitled to this
benefit, provided that they have worked for at least one month during the
calendar year. If the employee worked for only a portion of the year, the 13thmonth pay is computed pro rata.
It is clear that there could have no erroneous interpretation or application of
what is included in the term basic salary for purposes of computing the 13thmonth pay of employees. From the inception of P.D. No. 851 on December 16,
1975, clear-cut administrative guidelines have been issued to insure uniformity
in the interpretation, application, and enforcement of the provisions of P.D. No.
851 and its implementing regulations.
As correctly ruled by the CA, the practice of the Central in giving 13th-month
pay based on the employees gross annual earnings which included the basic
monthly salary, premium pay for work on rest days and special holidays, night
shift differential pay and holiday pay continued for almost thirty (30) years and
has ripened into a company policy or practice which cannot be unilaterally
withdrawn.
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The argument of the Central that the grant of the benefit was not voluntary and
was due to error in the interpretation of what is included in the basic salary
deserves scant consideration. No doubtful or difficult question of law is involved
in this case. The voluntariness of the grant of the benefit was manifested by the
number of years the employer had paid the benefit to its employees. The
Central only changed the formula in the computation of the 13th-month pay
after almost 30 years and only after the dispute between the management and
employees erupted. This act of changing the formula at this time cannot be
sanctioned, as it indicates a badge of bad faith.

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ARTICLE 128 Visitorial and

Enforcement Power
66. PEOPLES BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.)
vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and
JANDELEON JUEZAN
G.R. No. 179652
March 6, 2012
VELASCO, JR., J.:
DOCTRINE:
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 employeremployee relationship in the exercise of its visitorial and enforcement power,
subject to judicial review, not review by the NLRC.
FACTS:
Jandeleon Juezan filed a complaint against Peoples Broadcasting Service
(Bombo) with the DOLE Regional Office No. VII, Cebu City, for illegal deduction,
nonpayment of service incentive leave, 13th month pay, among others. After the
conduct of summary investigations, and after the parties submitted their position
papers, the DOLE Regional Director found that Juezan was an employee of
Bombo, and was entitled to his money claims. Bombo sought reconsideration of
the Directors Order, but failed.
The Acting DOLE Secretary dismissed Bombos appeal. When the matter was
brought before the CA, where Bombo claimed that it had been denied due
process, it was held that Bombo was accorded due process as it had been
given the opportunity to be heard, and that the DOLE Secretary had jurisdiction
over the matter, as the jurisdictional limitation imposed by Article 129 of the
Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code
had been repealed by Republic Act No. (RA) 7730.
SC reversed the CA Decision and the complaint against Bombo was dismissed.
The Court found that there was no employer-employee relationship between
Bombo and Juezan. It was held that while the DOLE may make a determination
of the existence of an employer-employee relationship, this function could not
be co-extensive with the visitorial and enforcement power provided in Art.
128(b) of the Labor Code, as amended by RA 7730. The NLRC was held to be
the primary agency in determining the existence of an employer-employee
relationship. From this Decision, the Public Attorneys Office (PAO) filed a Motion
for Clarification of Decision (with Leave of Court). The PAO sought to clarify as
to when the visitorial and enforcement power of the DOLE be not considered as
co-extensive with the power to determine the existence of an employeremployee relationship. The SC revisits its former conclusion.

ISSUE: Whether DOLE can make a determination of the existence of employeremployee relationship.
SC RULING:
YES. No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure
was laid down where the DOLE would only make a preliminary finding, that the
power was primarily held by the NLRC. The law did not say that the DOLE
would first seek the NLRCs determination of the existence of an employeremployee relationship, or that should the existence of the employer -employee
relationship be disputed, the DOLE would refer the matter to the NLRC. 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.
The determination of the existence of an employer-employee relationship by the
DOLE must be respected. The expanded visitorial and enforcement power of
the DOLE granted by RA 7730 would be rendered nugatory if the alleged
employer could, by the simple expedient of disputing the employer-employee
relationship, force the referral of the matter to the NLRC. 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.
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
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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. 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.

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67. MRS. ALBERTA YANSON v. SECRETARY OF

LABOR AND EMPLOYMENT G.R. No. 159026 February
11, 2008
AUSTRIA-MARTINEZ, J.:
ARTICLE 128
DOCTRINE:
The posting of the proper amount of the appeal bond under Article 128 (b) is
mandatory for the perfection of an appeal from a monetary award in labor
standard cases.
FACTS:
In 1998, Mardy Cabigo and 40 other workers filed with DOLE Bacolod a request
for payroll inspection of Hacienda Valentin Balabag owned by Alberta Yanson.
DOLE Bacolod conducted an inspection of the establishment and issued a
Notice of Inspection Report, finding Yanson liable for the following violations of
labor standard laws:
1. Underpayment of salaries and wages (workers being paid a daily rate of
P90.00 since 1997 and P75.00 prior to such year);
2. Non-payment of 13th month pay for two (2) years;
3. Non-payment of Social Amelioration Bonus (SAB) for two (2) years;
4. Non-payment of employers 1/3 carabao share.
In addition, DOLE Bacolod scheduled a summary investigation. Yanson did not
appear in any of the scheduled hearings, or present any pleading or document.
In a Compliance Order, DOLE Bacolod directed Yanson to pay a total of
P372,444 and to correct existing violations of occupational safety and health
standards. It then issued a Writ of Execution. Yanson filed with public
respondent a Verified Appeal and posted a bond.
SECRETARY OF LABOR RULING: dismissed the appeal.
CA RULING: Petition for Certiorari was denied due course and dismissed.
Hence, the present recourse.
ISSUE:
1. Whether the compliance order by DOLE Bacolod, in the exercise of its
visitorial and enforcement power, was proper. YES
2. Whether the appeal was perfected. NO.
SC RULING:
For its perfection, the appeal was subject to the requirements prescribed under
Article 128 of the Labor Code, as amended by Republic Act No. 7730, viz.:

Art. 128. Visitorial and Enforcement Power. - x x x (b) Notwithstanding the

provisions of Articles 129 and 217 of this Code to the contrary, and in
cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his duly
authorized representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement
officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
An order issued by the duly authorized representative of the Secretary of Labor
and Employment under this article may be appealed to the latter. In case said
order involves a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Secretary of Labor and Employment in the
amount equivalent to the monetary award in the order appealed from.
When Yanson filed her Verified Appeal and Supplement to the Verified Appeal,
Public respondent rejected said appeal for insufficiency of the appeal bond. The
posting of the proper amount of the appeal bond under Article 128 (b) is
mandatory for the perfection of an appeal from a monetary award in labor
standard cases. Also
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applying the Implementing Rules, there is one other reason for holding that
Yanson failed to perfect her appeal. It is of record that she received Compliance
Order issued by DOLE-Bacolod. She was put on actual notice not only of the
existence of the Compliance Order but also of the summary investigation of her
establishment. It behooves her to file a timely appeal to public respondent or
object to the conduct of the investigation. Yanson did neither, opting instead to
sit idle and wait until the following year to question the investigation and
resultant order, in the guise of opposing the writ of execution.
In fine, the CA was correct in holding that public respondent did not commit
grave abuse of discretion in rejecting the appeal due to the insufficiency of her
appeal bond.
Even on its substance, her appeal would still not prosper. The determination
made by DOLE-Bacolod on this matter binds the Court, especially as it was not
reversed by public respondent and the CA.

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68. BALLADARES ET. AL. v. PEAK

VENTURES CORPORATION G.R. No. 161794
June 16, 2009
Nachura, J.:
ART. 128: VISITORIAL AND ENFORCEMENT POWERS OF THE DOLE
REGIONAL DIRECTOR
DOCTRINE:
The visitorial and enforcement powers of the DOLE Regional Director to order
and enforce compliance with labor standard laws can be exercised even when
the individual claim exceeds P5,000. However, if the labor standards case is
covered by the exception clause in Article 128 (b) of the Labor Code, then the
Regional Director will have to endorse the case to the appropriate Arbitration
Branch of the NLRC.
FACTS:
Petitioners Nestor J. Balladares et al., were employed by respondent Peak
Ventures Corp as security guards and were assigned at the premises of
respondent YMOAA. They filed a complaint for underpayment of wages against
their employer, Peak Ventures, with the DOLE. Acting on the complaint, DOLE
conducted an inspection of Peak Ventures and the following violations were
noted: underpayment of the minimum wage and other auxiliary benefits;
pertinent employment records were not available at the time of inspection.
A Notice of Inspection Result was issued to Peak Ventures instructing them to
effect restitution and/or file its objections within five working days from receipt
thereof. Respondent failed to correct the violations or contest the findings as
required, hence, the parties were summoned for hearing. Peak Ventures moved
to implead its client YMOAA, claiming that any underpayment of wages arose
from the failure of YMOAA to pay Peak Ventures the amount due petitioners as
prescribed by various wage orders.
After the hearing, DOLE Regional Director Maximo Lim rendered judgment in
favor of petitioners and ruled that the contractor was jointly and severally liable
with the principal. Lim averred that because Peak Ventures failed to controvert
the complaint and its repeated denial to give access to records, it is deemed to
have waived its constitutional right to due process. Petitioners were awarded
P1,106,298. Peak Ventures filed a motion for reconsideration, but the same was
denied prompting them to appeal to the CA.
CA RULING: The CA granted the petition, ruling that the Regional Director had
no jurisdiction to hear and decide the case, because the claims of each of the
petitioners exceeded P5,000.00, and the power to adjudicate such claims
belonged to the Labor Arbiter, pursuant to Servandos, Inc. v. Secretary of Labor.
The appellate court ratiocinated that this exclusive jurisdiction of the Labor

Arbiters was confirmed by Article 129 of the Labor Code, which excludes from
the jurisdiction of the Regional Directors or any hearing officer of the DOLE the
power to hear and decide claims of employees arising from employer-employee
relations exceeding the amount of P5,000.00 for each employee.
ISSUE: Does DOLE Regional Director has jurisdiction to even though the
claims of the complainants exceeded P5,000?
SC RULING:
YES. Yes. The Supreme Court ruled that the visitorial and enforcement powers
of the DOLE Regional Director to order and enforce compliance with labor
standard laws can be exercised even when the individual claim exceeds
P5,000. However, if the labor standards case is covered by the exception clause
in Article 128 (b) of the Labor Code, then the Regional Director will have to
endorse the case to the appropriate Arbitration Branch of the NLRC. In order to
divest the Regional Director or his representatives of jurisdiction, the
following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that in
order to resolve such issues, there is a need to examine evidentiary matters;
and (c) that such matters are not verifiable in the normal course of inspection.
The rules also provide that the employer shall raise such objections during the
hearing of the case or at any time after receipt of the notice of inspection
results.
In the case at bar, Peak Ventures did not contest the findings of the labor
regulations officer during the hearing or after receipt of notice of the inspection
results. Accordingly, we find no sufficient reason to warrant the certification of
the instant case to the LA and divest the Regional Director of jurisdiction.
Respondent did not contest the findings of the labor regulations officer. Even
during the hearing, respondent never denied that petitioners were not paid
correct wages and benefits.
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69. ALLIED INVESTIGATION BUREAU, INC., v.

SECRETARY OF LABOR GR No. 122006 November
24, 1999
ART. 128 VISITORIAL AND ENFORCEMENT POWERS OF THE DOLE
REGIONAL DIRECTOR
DOCTRINE:
While it is true that under Articles 129 and 217of the Labor Code, the Labor
Arbiter has jurisdiction to hear and decide cases where the aggregate money
claims of each employee exceedsP5,000.00, said provisions of law do not
contemplate nor cover the visitorial and enforcement powers of the Secretary of
Labor or his duly authorized representatives. Said powers are defined and set
forth in Art. 128 of the Labor Code.
FACTS:
Petitioner Allied Investigation Bureau is a security agency which entered into a
security contract with Novelty Philippines Inc (NPI). Private respondents Melvin
Pelayo and Samuel Sucanel, two of the security guards assigned by petitioner
to NPI, filed a complaint with the Office of respondent Regional Director Romeo
Young, charging petitioner with non-compliance with a wage order increasing
the minimum daily pay of workers. Regional Director Young conducted
inspection visits at petitioners establishment and found that Petitioner failed to
implement the wage increase. Petitioner was required to effect restitution and/or
correction of the foregoing within five calendar days, or challenge the findings
within five working days. Thereafter, a series of conferences and hearings were
scheduled by the Regional Director to facilitate amicable settlement. However,
despite due notice, petitioner failed to appear in any of said hearings. As a
result, the Regional Director ruled in favor of private respondents and awarded
them P807,570.
Petitioners appealed the Order to respondent Secretary of Labor, without
posting a cash or surety bond, as such the appeal was dismissed. Petitioner
argues that the power to adjudicate money claims belongs to the Labor Arbiter
who has exclusive jurisdiction over employees claims where the aggregate
amount of the claims of each employee exceeds P5,000.
ISSUE: Whether or not the DOLE Regional Director acted without jurisdiction in
adjudicating the private respondents claims which were in excess of P5,000.

RULING:
Yes. While it is true that under Articles 129 and 217of the Labor Code, the
Labor Arbiter has jurisdiction to hear and decide cases where the aggregate
money claims of each employee exceedsP5,000.00, said provisions of law do
not contemplate nor cover the visitorial and enforcement powers of the
Secretary of Labor or his duly authorized representatives. Said powers are
defined and set forth in Art. 128 of the Labor Code.
Art. 128. Visitorial and enforcement power.
(a)The Secretary of Labor or his duly authorized representatives, including labor
regulation officers, shall have access to employers records and premises at
any time of the day or night whenever work is being undertaken therein, and
the right to copy therefrom, to question any employee and investigate any
fact, condition or matter which may be necessary to determine violations or
which may aid in the enforcement of this Code and of any labor law, wage
order or rules and regulations issued pursuant thereto.
(b)Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee exists,
the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and other labor
legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution
to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection.
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An order issued by the duly authorized representatives of the Secretary of Labor

and Employment under this article may be appealed to the latter. In case said
order involves a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Secretary of Labor and Employment in the
amount equivalent to the monetary award in the order appealed from.
In the case at bar, the Office of respondent Regional Director conducted
inspection visits at petitioners establishment on February 9 and 14, 1995 in
accordance with the above -mentioned provision of law. In the course of said
inspection, several violations of the labor standard provisions of the Labor Code
were discovered and reported by Senior Labor Enforcement Officer Eduvigis A.
Acero in his Notice of Inspection Results. It was on the bases of the aforesaid
findings (which petitioner did not contest), that respondent Regional Director
issued the assailed Order for petitioner to pay private respondents the
respective wage differentials due them.
Clearly, as the duly authorized representative of respondent Secretary of Labor,
and in the lawful exercise of the Secretarys visitorial and enforcement powers
under Article 128 of the Labor Code, respondent Regional Director had
jurisdiction to issue his impugned Order.
70. URBANES v. SECRETARY OF LABOR
GR No. 122791
February 19, 2003
ART. 128 VISITORIAL AND ENFORCEMENT POWERS OF THE DOLE
REGIONAL DIRECTOR
DOCTRINE:
It is well settled in law and jurisprudence that where no employer- employee
relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its
complaint, private respondent is not seeking any relief under the Labor Code
but seeks payment of a sum of money and damages on account of petitioner's
alleged breach of its obligation under their Guard Service Contract. The action is
within the realm of civil law hence jurisdiction over the case belongs to the
regular courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the solidary
liability of the petitioner to the respondent where no employer-employee relation
exists.
FACTS:
Petitioner Placido O. Urbanes, Jr., doing business under the name and style of
Catalina Security Agency, entered into an agreement to provide security

services to respondent Social Security System (SSS). During the effectivity of

the agreement, petitioner, by letter of May 16, 1994, requested the SSS for the
upward adjustment of their contract rate in view of Wage Order No. NCR-03. As
SSS refused to comply, On June 29, 1994, petitioner filed a complaint with the
DOLE-NCR against the SSS seeking the implementation of Wage Order No.
NCR-03. In its position paper, the SSS prayed for the dismissal of the complaint
on the ground that petitioner is not the real party in interest and has no legal
capacity to file the same. In any event, it argued that if it had any obligation, it
was to the security guards. On the other hand, petitioner in his position paper,
citing Eagle Security Agency, Inc. v. NLRC, contended that the security guards
assigned to the SSS do not have any legal basis to file a complaint against it for
lack of contractual privity.
Finding for petitioner, the Regional Director of the DOLE- NCR issued an Order
for SSS to pay petitioner P1.6 million. SSS appealed to the Secretary of Labor,
claiming that the Regional Director has no jurisdiction to issue the assailed
order. The Secretary set aside the order and remanded the case. Petitioner filed
the present petition for certiorari with the Supreme Court asserting that the
Secretary of Labor does not have jurisdiction to review appeals from decisions
of the Regional Directors in complaints filed under Art. 129 of the Labor Code.
They claim that appeals from orders of Regional directors should be made with
the NLRC.
ISSUE: Whether or not the Secretary of Labor has jurisdiction to review appeals
from decisions of the Regional Directors in complaints filed under Art. 129.
SC RULING:
No. Neither the petitioners contention nor the SSSs is impressed with merit,
rather, it is the RTC that has jurisdiction over the subject matter of the present
case. It is well settled in law and jurisprudence that where no employeremployee relationship exists between the parties and no issue is involved which
may be resolved by
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reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction. In its complaint,
private respondent is not seeking any relief under the Labor Code but seeks
payment of a sum of money and damages on account of petitioner's alleged
breach of its obligation under their Guard Service Contract. The action is within
the realm of civil law hence jurisdiction over the case belongs to the regular
courts. While the resolution of the issue involves the application of labor laws,
reference to the labor code was only for the determination of the solidary liability
of the petitioner to the respondent where no employer-employee relation exists.
In the case at bar, even if petitioner filed the complaint on his and also on behalf
of the security guards, the relief sought has to do with the enforcement of the
contract between him and the SSS which was deemed amended by virtue of
Wage Order No. NCR-03. The controversy subject of the case at bar is thus a
civil dispute, the proper forum for the resolution of which is the civil courts.
Even if the petition was filed with the proper forum, it must still be dismissed for
lack of cause of action. Under Art. 106 of the Labor Code: In the event that the
contractor or subcontractor fails to pay the wage of his employees in
accordance with this Code, the employer shall be jointly and severally liable with
his contractor or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that he is liable to
employees directly employed by him.
It is only when [the] contractor pays the increases mandated that it can claim an
adjustment from the principal to cover the increases payable to the security
guards. The conclusion that the right of the contractor (as principal debtor)
to recover from the principal (as solidary co-debtor) arises only if he has
paid the amounts for which both of them are jointly and severally liable is
in line with Article 1217 of the Civil Code.
In fine, the liability of the SSS to reimburse petitioner arises only if and when
petitioner pays his employee-security guards the increases mandated by Wage
Order No. NCR-03.
ARTICLE 136 (now Art. 134) Stipulation
Against Marriage
71. ZIALCITA, ET AL. v.
PAL RO4-3-398-76.
February 20, 1977
FACTS:
Complainant Zialcita, an international flight stewardess of PAL, was discharged
from the service on account of her marriage. In separating Zialcita, PAL invoked
its policy which stated that flight attendants must be single, and shall be
automatically separated from employment in the event they subsequently get

married. They claimed that this policy was in accordance with Article 132 of the
Labor Code. On the other hand, Zialcita questioned her termination on account
of her marriage, invoking Article 136 of the same law.
ISSUE: Was Zialcita validly terminated on account of her marriage?
SC RULING:
NO. When Presidential Decree No. 148, otherwise known as the Women and
Child Labor Law, was promulgated in 13 March 1973, PALs policy had met its
doom. However, since no one challenged its validity, the said policy was able to
obtain a momentary reprieve. Section 8 of PD148 is exactly the same provision
reproduced verbatim in Article 136 of the Labor Code, which was promulgated
on 1 May 1974 and took effect six months later. Although Article 132 enjoins the
Secretary of Labor to establish standards that will ensure the safety and health
of women employees and in appropriate cases shall by regulation require
employers to determine appropriate minimum standards for termination in
special occupations, such as those of flight attendants, it is logical to presume
that, in the absence of said standards or regulations which are yet to be
established, the policy of PAL against marriage is patently illegal.
Article 136 is not intended to apply only to women employed in ordinary
occupations, or it should have categorically expressed so. The
sweepingintendment of the law, be it on special or ordinary occupations, is
reflected in the whole text and supported by Article 135 that speaks of nondiscrimination on the employment of women.

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72.
STAR
PAPER
CORPORATION v. SIMBOL GR
No. 164774 April 12, 2006 Puno,
J.
ART. 136 OF THE LABOR CODE AND DISCRIMINATION.
DOCTRINE:
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 company.
FACTS: Petitioner Star Paper Corporation promulgated a company policy which
states:
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 (both singles [sic], 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 Ronaldo Simbol, and Wilfreda Comia are employees of Star
Paper who claim that they were compelled to resign in view of an illegal
company policy, after they married fellow co-workers. They filed a complaint for
unfair labor practice and constructive dismissal against Star Paper Corp.
Respondents submit that their dismissal violates the above provision.
Petitioners allege that its policy "may appear to be contrary to Article 136 of the
Labor Code" but it assumes a new meaning if read together with the first
paragraph of the rule. The rule does not require the woman employee to resign.
The employee spouses have the right to choose who between them should
resign. Further, they are free to marry persons other than co-employees. Hence,
it is not the marital status of the employee, per se, that is being discriminated. It
is only intended to carry out its no-employment-for-relatives-within-the-thirddegree-policy which is within the ambit of the prerogatives of management.
LA RULING: The LA dismissed the complaint ruling that the policy against
marriage between employees was a valid management prerogative. The ruling
was affirmed by the NLRC.
CA RULING: The CA reversed the above rulings and held that the dismissal of
the respondents was illegal and ordering their reinstatement.

ISSUE: Whether or not the policy of Star Paper requiring the resignation of
either spouse-employee is in violation of Art. 136 of the Labor Code.
SC RULING:
Yes. The Supreme Court ruled that Petitioners sole contention that "the
company did not just want to have two
(2) or more of its employees related between the third degree by affinity and/or
consanguinity is lame. That the second paragraph was meant to give teeth to
the first paragraph of the questioned rule is evidently not the valid reasonable
business necessity required by the law.
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 coemployee. 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
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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 company.

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SEXUAL
HARASSMENT
73. MA. LOURDES T. DOMINGO v.
ROGELIO I. RAYALA G.R. No. 155831
February 18, 2008 NACHURA, J.:
DOCTRINES:
1. It is not necessary that the demand, request or requirement of a sexual
favor be articulated in a categorical oral or written statement to be
considered as sexual harassment.
2. The Chief Executive does not have unfettered discretion to impose a
penalty other than the penalty provided by law for sexual harassment.
FACTS:
Petitioner Ma. Lourdes T. Domingo, then Stenographic Reporter III at the NLRC,
filed a Compliant for sexual harassment against Respondent, NLRC Chairman
Rogelio I. Rayala before the Secretary of Labor and Employment. She claimed
that the respondent committed the following acts:
1. Holding and squeezing her shoulders;
2. Running his fingers across her neck and tickling her ear;
3. Having inappropriate conversations wither her;
4. Giving her money allegedly for school expenses with a promise of future
privileges; and
5. Making statements with unmistakable sexual overtones.
A committee was created to investigate the said allegations. The said committee
found the respondent guilty of the offense charged and recommended the
imposition of the minimum penalty provided under AO 250, which it erroneously
stated as suspension for 6 months. However, the Secretary of Labor and
employment recommended that the penalty should be suspension for 6 months
and 1 day, in accordance with AO 250. The Office of the President, through
Executive Secretary Zamora, concurred with the findings of the Committee but
imposed the penalty of dismissal. The respondent assailed the decision claiming
his acts do not constitute sexual harassment.
CA RULING: The CA held that there was sufficient evidence on record to create
moral certainty that the Respondent committed the acts he was charged with.
ISSUE:
1. Whether or not the Respondent is guilty of sexual harassment?
2. Whether or not the Office of the President may impose the penalty of
dismissal?
SC RULING:

1. Yes. If we were to test Rayalas acts strictly by the standards set in

Section 3, RA 7877, he would still be administratively liable. It is true that
this provision calls for a "demand, request or requirement of a sexual
favor." But it is not necessary that the demand, request or requirement of
a sexual favor be articulated in a categorical oral or written statement. It
may be discerned, with equal certitude, from the acts of the offender.
Holding and squeezing Domingos shoulders, running his fingers across
her neck and tickling her ear, having inappropriate conversations with her,
giving her money allegedly for school expenses with a promise of future
privileges, and making statements with unmistakable sexual overtones
all these acts of Rayala resound with deafening clarity the unspoken
request for a sexual favor.
Likewise, contrary to Rayalas claim, it is not essential that the demand,
request or requirement be made as a condition for continued employment
or for promotion to a higher position. It is enough that the respondents
acts result in creating an intimidating, hostile or offensive environment for
the employee.45 That the acts of Rayala generated an intimidating and
hostile environment for Domingo is clearly shown by the common factual
finding of the Investigating Committee, the OP and the CA that Domingo
reported the matter to an officemate and, after the last incident, filed for a
leave of absence and requested transfer to another unit.
2. No. Under AO 250, the penalty for the first offense is suspension for six
(6) months and one (1) day to one (1) year, while the penalty for the
second offense is dismissal.52 On the other hand, Section 22(o), Rule XVI
of the Omnibus Rules Implementing Book V of the Administrative Code of
198753 and Section
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52 A(15) of the Revised Uniform Rules on Administrative Cases in the

Civil Service54 both provide that the first offense of disgraceful and
immoral conduct is punishable by suspension of six (6) months and one
(1) day to one (1) year. A second offense is punishable by dismissal.
Under the Labor Code, the Chairman of the NLRC shall hold office during
good behavior until he or she reaches the age of sixty -five, unless sooner
removed for cause as provided by law or becomes incapacitated to
discharge the duties of the office.55
In this case, it is the President of the Philippines, as the proper disciplining
authority, who would determine whether there is a valid cause for the
removal of Rayala as NLRC Chairman. This power, however, is qualified
by the phrase "for cause as provided by law." Thus, when the President
found that Rayala was indeed guilty of disgraceful and immoral conduct,
the Chief Executive did not have unfettered discretion to impose a penalty
other than the penalty provided by law for such offense. As cited above,
the imposable penalty for the first offense of either the administrative
offense of sexual harassment or for disgraceful and immoral conduct is
suspension of six (6) months and one (1) day to one (1) year. Accordingly,
it was error for the Office of the President to impose upon Rayala the
penalty of dismissal from the service, a penalty, which can only be
imposed upon commission of a second offense.

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74. PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION and/or

FRANCIS CHUA v. NATIONAL LABOR RELATIONS COMMISSION and
ROSALINDA C. CORTEZ, respondents.
G.R. No. 124617
April 28, 2000
BELLOSILLO, J.:
SEXUAL HARASSMENT
DOCTRINE:
The gravamen of the offense in sexual harassment is not the violation of the
employee's sexuality but the abuse of power by the employer.
FACTS:
Petitioner Philippine Aeolus Automotive United Corporation (PAAUC) is a
corporation duly organized and existing under Philippine laws, petitioner,
Francis Chua is its President while private respondent Rosalinda C. Cortez was
a company nurse of Petitioner Corporation until her termination.
PAAUC dismissed Private Respondent from service on the ground of serious
misconduct, gross habitual neglect and fraud or willful breach of trust. Among
the acts she allegedly committed is throwing a stapler at Plant Manager William
Chua, her superior and uttering invectives against him. She filed with the Labor
Arbiter a complaint for illegal dismissal, non-payment of annual service incentive
leave, 13th month pay and damages against PAAUC and its President Francis
Chua. She claimed as a defense for the offense charged against her that
William Chua manifested a special liking for her. She claimed that William Chua
would oftentimes invite her for a date, make sexual advances touching her
hands, putting his arms around her shoulders, running his finger on her arms
and telling her she looked beautiful. The special treatment and sexual advances
continued during her employment for 4 years but she never reciprocated his
flirtations, until finally, she noticed that his attitude toward her changed. He
made her understand that if she would not give in to his sexual advances he
would cause her termination from the service; and he made good his threat
when he started harassing her.
LA RULING:
The Labor Arbiter rendered a decision holding the termination of Cortez as valid
and legal, at the same time dismissing her claim for damages for lack of merit.
NLRC RULING:
The NLRC disbelieved the explanation proffered by private respondent on the
ground she never filed a complaint against William Chua for more than 4 years.
ISSUE:
Whether or not William Chua committed acts of sexual harassment against
Cortez?
SC RULING:

Yes. The gravamen of the offense in sexual harassment is not the violation of
the employee's sexuality but the abuse of power by the employer. Any
employee, male or female, may rightfully cry "foul" provided the claim is well
substantiated. Strictly speaking, there is no time period within which he or she is
expected to complain through the proper channels. The time to do so may vary
depending upon the needs, circumstances, and more importantly, the emotional
threshold of the employee.
Private respondent admittedly allowed four (4) years to pass before finally
coming out with her employer's sexual impositions. Not many women, especially
in this country, are made of the stuff that can endure the agony and trauma of a
public, even corporate, scandal. If petitioner corporation had not issued the third
memorandum that terminated the services of private respondent, we could only
speculate how much longer she would keep her silence. Moreover, few persons
are privileged indeed to transfer from one employer to another. The dearth of
quality employment has become a daily "monster" roaming the streets that one
may not be expected to give up one's employment easily but to hang on to it, so
to speak, by all tolerable means. Perhaps, to private respondent's mind, for as
long as she could outwit her employer's ploys she would continue on her job
and consider them as mere occupational hazards. This uneasiness in her place
of work thrived in an atmosphere of tolerance for four (4) years, and one could
only imagine the prevailing anxiety and resentment, if not bitterness, that beset
her all that time. But William Chua faced reality soon enough. Since he had no
place in private respondent's heart, so must she have no place in his office. So,
he provoked her, harassed her, and finally dislodged her; and for finally venting
her pent-up anger for years, he "found" the perfect reason to terminate her.
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ARTICLE 141 (now Art. 139)

- Coverage
75. APEX MINING COMPANY, INC. v. NATIONAL LABOR RELATIONS
COMMISSION and SINCLITICA
CANDIDO
G.R. No. 94951
April 22, 1991
GANCAYCO, J.:
HOUSEHELPER OR DOMESTIC SERVANT
DOCTRINE:
The definition provided by the Labor Code of the terms househelper or
domestic servant cannot be interpreted to include househelp or laundrywomen
working in staffhouses of a company, like petitioner who attends to the needs of
the company's guest and other persons availing of said facilities
FACTS:
Private respondent Sinclita Candida was employed by petitioner Apex Mining
Company, Inc. to perform laundry services at its staff house. In the beginning,
she was paid on a piece rate basis. However, she was then paid on a monthly
basis at Php 250.00 a month, which was ultimately increased, to Php 575.00 a
month. On 18 December 1987, while she was attending to her assigned task
and she was hanging her laundry, she accidentally slipped and hit her back on a
stone. As a result of which, she was not able to continue her work. She was
offered the amount of Php 2,000.00, which was eventually increased to Php
5,000.00, to persuade her to quit her job, but she refused. The petitioner
subsequently disallowed her to return to work. She filed a request for assistance
with the DOLE.
LA RULING:
The Labor Arbiter ordered the petitioner to pay her the following: 1) salary; 2)
Emergency Living; 3) 13th Month Pay; and 4) Separation Pay. The petitioner
appealed the decision to the NLRC.
NLRC RULING:
The NLRC dismissed the appeal for lack of merit and affirmed the appealed
decision. A motion for reconsideration thereof was likewise denied.
ISSUE: Whether or not private responded should be treated as a mere
househelper or domestic servant and not as a regular employee entitled to the
amounts granted by the Labor Arbiter?
SC RULING:
No. Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the
terms "househelper" or "domestic servant" are defined as follows:

The term "househelper" as used herein is synonymous to the term

"domestic servant" and shall refer to any person, whether male or female,
who renders services in and about the employer's home and which
services are usually necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the personal comfort and
enjoyment of the employer's family.
The definition cannot be interpreted to include househelp or laundrywomen
working in staffhouses of a company, like petitioner who attends to the needs of
the company's guest and other persons availing of said facilities. By the same
token, it cannot be considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its premises. They may
not be considered as within the meaning of a "househelper" or "domestic
servant" as above-defined by law.
The criteria is the personal comfort and enjoyment of the family of the employer
in the home of said employer. While it may be true that the nature of the work of
a househelper, domestic servant or laundrywoman in a home or in a company
staffhouse may be similar in nature, the difference in their circumstances is that
in the former instance they are actually serving the family while in the latter
case, whether it is a corporation or a single proprietorship engaged in business
or industry or any other agricultural or similar pursuit, service is being rendered
in the staffhouses or within the premises of the business of the employer. In
such instance, they are employees of the company or employer in the business
concerned entitled to the privileges of a regular employee.
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BOOK IV Healt, Safety and Social

Welfare Benefits
76. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) v. COURT OF
APPEALS and HEIRS OF ABRAHAM CATE, represented by DOROTHY
CATE
G.R. No. 124208
January 28, 2008
AZCUNA, J.:
LIBERAL CONSTRUCTION OF EMPLOYEES COMPENSATION ACT
DOCTRINE:
If in the present state of science, the proof referred by law to be present by the
deceased claimant was unavailable and impossible to comply with, the
condition must be deemed as not imposed.
FACTS:
On March 6, 1974, Abraham Cate joined the military service as a Rifleman of
the Philippine Navy. In 1975, he was designated as Action Clerk. On Feburary
22, 1986, he was transferred to the now defunct Philippine Constabulary with
the rank of Technical Sergeant and was later promoted to Master Sergeant. On
January 2, 1991, he was absorbed in the Philippine National Police with the
rank of Senior Police Officer IV.
He was diagnosed of having Osteoblastic Osteosarcoma in his left cheek. He
underwent Total Maxillectomy with Orbital Exenteration in the PGH. However,
his disease recurred and he underwent debulking of the recent tumor at PGH.
The post-operative course was uneventful and he underwent radiotherapy. He
was then compulsorily retired from the PNP. He filed a claim for income benefits
with the GSIS under PD No. 626 as amended. However, his claim was denied
by the GSIS on the ground Osteosarcoma is not considered an occupational
disease. After his death, his wife and 2 children appealed the decision of the
GSIS to the ECC.
ECC Ruling: The ECC affirmed the decision of the GSIS and dismissed the
case for lack of merit.
CA RULING: The CA reversed and set aside the decision of the ECC on the
ground the Employees Compensation Act should be liberally construed in favor
of applicant.
ISSUE:
Whether or not the ailment of the late Abraham is compensable under the
present law on employees compensation?
SC RULING:

Yes. The present law on compensation allows certain diseases to be

compensable if it is sufficiently proven that the risk of contract it is increased by
the working conditions. The application of the rules would mean that absent any
proof that the risk of contracting the ailment was increased by the working
conditions of the late Abraham, private respondents would not be entitled to
compensation. Considering, however, that it is practically undisputed that under
the present state of science, the proof referred by the law to be presented by
the deceased private respondent claimant was unavailable and impossible to
comply with, the condition must be deemed as not imposed.
Petitioners failure to present positive evidence of a causal relation of the illness
and his working conditions is due to the pure and simple lack of available proof
to be offered in evidence. Verily, to deny compensation to osteosarcoma victims
who will definitely be unable to produce a single piece of proof to that effect is
unrealistic, illogical and unfair. At the very least, on a very exceptional
circumstance, the rule on compensability should be relaxed and be allowed to
apply to such situations. To disallow the benefit will even more add up to the
sufferings, this time, for the ignorance of the inability of mankind to discover the
real truth about cancer.

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77. DOMINGA A. SALMONE v. COMPENSATION COMMISSION and

SOCIAL SECURITY SYSTEM G.R. No. 142392 September 26, 2000
PARDO, J.:
DEGREE OF PROOF REQUIRED UNDER PD NO. 626
DOCTRINE:
The claimant must show, at least, by substantial evidence that the development
of the disease is brought largely by the conditions present in the nature of the
job. What the law requires is a reasonable work-connection and not a direct
causal relation.
FACTS:
The Paul Geneve Entertainment Corporation employed petitioner Dominga A.
Salmone as a sewer. She was later promoted as the officer-in-charge and the
over-all custodian in the Sewing Department. However, she started to feel chest
pains, which forced her to file a leave of absence from work because they have
become unbearable. Upon medical examination, she was diagnosed with
Atherosclerotic heart disease, Atrial Fibrillation, Cardiac Arrhythmia. Upon
recommendation of her doctor, she resigned from her work hoping that with a
much-need complete rest, she will be cured. She then filed a disability claim
with the SSS from the Employees compensation fund. However, the SSS
denied her claim including her motion for reconsideration. Thus she appealed
the said decision to the ECC.
ECC Ruling: The ECC dismissed her appeal for want of merit.
CA RULING: The CA dismissed the petition on the ground that the petitioners
illness was not compensable because petitioner failed to adduce substantial
evidence proving any of the condition of compensability.
ISSUE: Whether or not the petitioners illness is compensable?
SC RULING:
Yes. Under the Labor Code, as amended, the law applicable to the case at bar,
in order for the employee to be entitled to sickness or death benefits, the
sickness or death resulting therefrom must be or must have resulted from either
(a) any illness definitely accepted as an occupational disease listed by the
Commission, or (b) any illness caused by employment, subject to proof that the
risk of contracting the same is increased by working conditions.
In this case, petitioner has shown by uncontroverted evidence that in the course
of her employment, due to work related stress, she suffered from severe chest
pains which caused her to take a rest, per physician's advice, and ultimately to
resign from her employment. She was diagnosed as suffering from
"atherosclerotic heart disease, atrial fibrillation, cardiac arrhythmia" which, as
heretofore stated, is included within the term cardiovascular diseases.

Indisputably, cardiovascular diseases, which, as herein above-stated include

atherosclerotic heart disease, atrial fibrillation, cardiac arrhythmia, are listed as
compensable occupational diseases in the Rules of the Employees'
Compensation Commission, hence, no further proof of casual relation between
the disease and claimant's work is necessary.
The degree of proof required under P. D. No. 626, is merely substantial
evidence, which means, "such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion." The claimant must show, at least,
by substantial evidence that the development of the disease is brought largely
by the conditions present in the nature of the job. What the law requires is a
reasonable work-connection and not a direct causal relation. It is enough that
the hypothesis on which the workmen's claim is based is probable. Medical
opinion to the contrary can be disregarded especially where there is some basis
in the facts for inferring a work- connection. Probability, not certainty, is the
touchtone.

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78. HEIRS OF DEAUNA v. FIL STAR

MARITIME CORPORATION G.R. No. 191563
June 20, 2012
REYES, J.:
THE DEATH OF A SEAFARER IS COMPENSABLE WHEN IT OCCURS
WHILE STILL IN THE EMPLOYENT
OF THE EMPLOYER.
DOCTRINE:
Article 22.1(b) considers an employment as terminated if a seafarer signs off
from the vessel due to sickness, but subject to the provisions of Article 29.
Article 29.1 of the IBF/AMOSUP/IMMAJ CBA provides that the death of a
seafarer, for any cause, is compensable when it occurs while he is in the
employment of the company. Article 29.4, on the other hand, clarifies that the
seafarer shall be considered as in the employment of the company for so long
as the provisions of Articles 25 and 26 apply and provided the death is directly
attributable to sickness or injury that caused the seafarer's employment to be
terminated in accordance with Article 22.1(b).
Under Article 25.3, a seafarer repatriated to the port of his engagement, unfit as
a result of sickness, shall be entitled to medical attention at the company's
expense for up to a maximum period of 130 days after repatriation, subject to
the submission of satisfactory medical reports. Article 26.2 further states that a
seafarer shall likewise be entitled to sick pay at the rate equivalent to his basic
wage while he remains sick up to a maximum of 130 days. Article 26.4 allows
continued entitlement to sick pay beyond the 130 day period, reckoned from
repatriation, provided satisfactory medical reports shall be submitted and
endorsed where necessary, by a company-appointed doctor.
FACTS:
Edwin boarded on August 1, 2004 for a nine -month engagement as Chief
Engineer of the Sanko. He suffered from abdominal pains and was found to
have kidney stones for which he was given medication. Edwin was then
repatriated. Respondents claimed that Edwin requested for an early termination
while petitioners averred that Edwin was repatriated due to the latter's body
weakness and head heaviness. Edwin was discovered to have Glioblastoma
WHO Grade 4 (GBM) . It was then noted that Edwin could have acquired the
cancer as a result of radiation or vinyl products, or had worked in the vicinity of
power lines.
Respondent claimed that out of compassion and intent to avoid legal battles,
they extended to Edwin an allowance of US $6,033.36. They also offered the
payment of US$60,000.00 disability benefits despite having no obligation to do
so on their part as GBM can only be considered as work -related if a person

who suffers therefrom had exposures to radiation or vinyl products, or had

worked in the vicinity of power lines. The respondents claimed that Edwin did
not have such exposure while under their employ. Petitioners then asked for
disability benefits, but were denied by respondents. They then filed a complaint
for disability benefits, medical and transportation reimbursements, moral and
exemplary damages and attorney's fees were filed before the National Labor
Relations Commission (NLRC). Edwin died on April 13, 2006 during the
pendency of the proceedings. He was substituted therein by the petitioners who
sought the payment of death benefits under the International Bargaining
Forum/Associated Marine Officers and Seamens Union of the
Philippines/International Mariners Management Association of Japan Collective
Bargaining Agreement (IBF/AMOSUP/IMMAJ CBA).
Voluntary Arbitrator Rene Ofreneo (VA Ofreneo), invoking the provisions of the
Philippine Overseas Employment Administration Standard Employment
Contract (POEA SEC) and the IBF/AMOSUP/IMMAJ CBA, awarded death
benefits to the petitioners. The Court of Appeals reversed the decision of VA
Ofreneo. Petitioners contend that they are entitled to death benefits.
ISSUE: Whether or not within the purview of the IBF/AMOSUP/IMMAJ CBA,
Edwin's death on April 13, 2006, or more than a year from his repatriation, can
be considered as one occurring while he was still in the employment of the
respondents.
SC RULING:
YES. Edwin's death can be considered can be considered as one occuring
while he was still in the employment of respondents. Under the
IBF/AMOSUP/IMMAJ CBA provisions, Edwin's death a little more than a year
from his repatriation can still be considered as one occurring while he was still
under the respondents' employ.
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From the foregoing, the SC concluded that at the time of Edwin's death on April
13, 2006 due to GBM, he was still in the employment of the respondents. While
it is true that Article 22.1 of the IBF/AMOSUP/IMMAJ CBA considers a seafarer
as terminated when he signs off from the vessel due to sickness, the foregoing
is subject to the provisions of Article 29. Under Article 29, a seafarer remains
under the respondents' employ as long as the former is still entitled to medical
assistance and sick pay, and provided that the death which eventually occurs is
directly attributable to the sickness which caused the seafarer's employment to
be terminated. As discussed above, the company-designated physician, Dr.
Cruz, in effect admitted that Edwin was repatriated due to symptoms which a
person suffering from GBM normally exhibits. The petitioners are, however, not
entitled to moral and exemplary damages and attorney's fees.
79. DEBAUDIN v. SSS
G.R. No. 148308 September 21,
2007 AZCUNA, J.:
FOR A NON-OCCUPATIONAL DISEASE(those not included in the list of
occupational disease enumerated under Annex "A" of P.D. 626) TO BE
COMPENSABLE, THE CLAIMANT MUST
SUBSTANTIATE HIS CLAIM WITH EVIDENCE THAT HIS EMPLOYMENT OR
WORKING CONDITIONS
CONTRIBUTED IN CONTRACTING THE AILMENT
DOCTRINE:
An employee is entitled to compensation benefits if the sickness is a result of an
occupational disease listed under the Rules on Employees' Compensation; or in
case of any other illness, if it is caused by employment, subject to proof that the
risk of contracting the same is increased by the working conditions. This is as it
should be because for an illness to be compensable, it must be (1) directly
caused by such employment; (2) aggravated by the employment; or (3) the
result of the nature of such employment. Jurisprudence provides that to
establish compensability of a non-occupational disease, reasonable proof of
work-connection and not direct causal relation is required.
FACTS:
Petitioner, Roberto Debaudin, is a seaman by profession as a utility staff who
performed cleaning chemical-spill-oil on deck, slat dislodging, and spraying
naphtha chemical and washing dirt and rusts inside the tank. 18 years after,
Debaudin sought medical assistance after he experienced episodes of bilateral
blurring of vision and was later diagnosed of chronic open angle glaucoma.
On account of his ailment, petitioner filed before the SSS a claim for
compensation benefits under P.D. No. 626 claiming that the strenuous tasks
required climbing, bending over and running for so many times acts which a

medical book considered as contributory factors that would increase intraocular

pressure which causes glaucoma. He also adds that he was also subjected to
emotional strains of going through the perils of the sea and homesickness for
being away from his family during the entire duration of the contracts. He, thus,
alleges that his employment as a seaman contributed, even in a small degree,
to the development of his ailment.
His claim, however, was denied by SSS on the ground that there is no causal
relationship between the illness and his job as a seaman.
EMPLOYEES COMPENSTAION COMMISSION (EEC): EEC denied
Debaudins motion for reconsideration holding that Debaudins Chronic Open
Angle Glaucoma is not an occupational disease under the law. Thus, he is
required to show by substantial evidence that the nature of his job as a Seaman
had increased the risk of contracting the disease. However, appellant failed to
discharge the burden of proof required by the law.
CA RULING: The CA dismissed the case on the ground that petitioner failed to
adduce substantial evidence supporting the conclusion that the working
conditions as a seaman increased the risk of contracting his chronic open angle
glaucoma.
ISSUE: Whether or not the work of Debaudin as a seaman contributed even in
a small degree in or had increased the risk of contracting his chronic open angle
glaucoma.
SC RULING:
NO. In the present case, petitioners chronic open angle glaucoma is not listed
as an occupational disease; hence, he has the burden of proving by substantial
evidence, or such relevant evidence which a reasonable
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mind might accept as adequate to justify a conclusion, that the nature of his
employment or working conditions increased the risk of contracting the ailment
or that its progression or aggravation was brought about thereby.
It is enough that the hypothesis on which the workmen's claim is based is
probable. Probability, not the ultimate degree of certainty, is the test of proof in
compensation proceedings since in carrying out and interpreting the provisions
of the Labor Code and its implementing rules and regulations the primordial and
paramount consideration is the employees' welfare.
Other than positing petitioners allegations, petitioner presented no competent
medical history, records or physicians report to objectively substantiate the
claim that there is a reasonable nexus between his work and his ailment.
Without saying more, his bare allegations do not ipso facto make his illness
compensable. Awards of compensation cannot rest on speculations or
presumptions. The claimant must present concrete evidence to prove a positive
proposition.

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80. AUSTRIA v. CA and EMPLOYEES

COMPENSATION COMMISSION G.R. No. 146636
August 12, 2002
PUNO, J.:
THE DISABILITY IS TOTAL AND PERMANENT IF AS A RESULT OF THE
INJURY OR SICKNESS, THE
EMPLOYEE IS UNABLE TO PERFORM ANY GAINFUL OCCUPATION FOR A
CONTINUOUS PERIOD EXCEEDING 120 DAYS;
DOCTRINE:
The disability is total and permanent if as a result of the injury or sickness, the
employee is unable to perform any gainful occupation for a continuous period
exceeding 120 days; and It is partial and permanent if as a result of the injury or
sickness, the employee suffers a permanent partial loss of the use of any part of
his body.
FACTS:
Petitioner Pablo A. Austria was employed as bag piler at Central Azucarera de
Tarlac from June 1, 1977 to July 20, 1997. In 1994, petitioner began to feel
severe back pain. In 1998, it was revealed that he was suffering from
osteoarthritis of the lumbar spine. Thus petitioner filed with the SSS a claim for
compensation benefits under PD 626 as amended. The claim was granted and
petitioner was awarded permanent partial disability benefits. Petitioner
thereafter requested the SSS for conversion of his permanent partial disability
benefit to permanent total disability benefit. The SSS denied the request
ECC RULING: On appeal, the ECC affirmed the decision of the SSS. The ECC
held that considering the degree of his disability at the time he was separated
from the service, petitioner has already availed of the maximum benefits to
which he is entitled on account of his osteoarthritis.
CA RULING: The appellate court dismissed the petition, ruling that the law does
not allow the conversion of permanent partial disability to permanent total
disability
ISSUE: Whether or not the Honorable Court of Appeals erred in denying the
claim for additional benefits in favor of the petitioner and not allowing the
conversion of his (petitioner) permanent partial disability to permanent total
disability
SC RULING:
YES. The test of whether or not an employee suffers from permanent total
disability is a showing of the capacity of the employee to continue performing
his work notwithstanding the disability he incurred. Thus, if by reason of the
injury or sickness he sustained, the employee is unable to perform his

customary job for more than 120 days and he does not come within the
coverage of Rule X of the Amended Rules on Employees Compensability
(which, in more detailed manner, describes what constitutes temporary total
disability), then the said employee undoubtedly suffers from permanent total
disability regardless of whether or not he loses the use of any part of his body.
PD 626 as amended provides three types of disability benefits to qualified
employees: (1) temporary total disability, (2) permanent total disability, and (3)
permanent partial disability. In the case at bar, petitioner was granted by the
SSS, as affirmed by the ECC, permanent partial disability benefit, but he seeks
to avail of permanent total disability benefit. Under Section 2 Rule VII of the
Amended Rules on Employees Compensation, a disability is total and
permanent if as a result of the injury or sickness, the employee is unable to
perform any gainful occupation for a continuous period exceeding 120 days;
and a disability is partial and permanent if as a result of the injury or sickness,
the employee suffers a permanent partial loss of the use of any part of his body.
Total disability does not require that the employee be absolutely disabled, or
totally paralyzed. What is necessary is that the injury must be such that she
cannot pursue her usual work and earn therefrom. Applying the foregoing
standards, we find petitioner entitled to permanent total disability benefit under
the law. Petitioner has been employed as bag piler for twenty (20) years at the
Central Azucarera de Tarlac. His duties require him to carry heavy loads of
refined sugar and to perform other manual work. Since his work obviously taxes
so much on his back, his illness which affects his lumbar spine renders him
incapable of doing his usual work as bag piler. Hence, his disability to perform
his regular duties may be considered total and permanent.
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81. GATUS v. SSS

G.R. No. 174725 January 26, 2011
LEONARDO-DE CASTRO, J.:
A CLAIMANT MUST SHOW, AT LEAST BY SUBSTANTIAL EVIDENCE, THAT
THE DEVELOPMENT OF
THE DISEASE WAS BROUGHT ABOUT LARGELY BY THE CONDITIONS
PRESENT IN THE NATURE OF
THE JOB.
DOCTRINE:
His disease not being listed as an occupational disease, he was expected to
show that the illness or the fatal disease was caused by his employment and
the risk of contracting the disease was increased or aggravated by the working
conditions. His proof would constitute a reasonable basis for arriving at a
conclusion that the conditions of his employment had caused the disease or
that such working conditions had aggravated the risk of contracting the illness
or the fatal disease.
FACTS:
Gatus worked at the Central Azucarera de Tarlac beginning 1972. He was a
covered member of the SSS and was certified as being fit to work before
employment. He optionally retired from Central Azucarera de Tarlac upon
reaching 30 years of service at the age of 62. He was diagnosed to be suffering
from Coronary Artery Disease (CAD): Triple Vessel and Unstable Angina in
1995. His medical records showed him to be hypertensive for 10 years and a
smoker. Thus he was given by the SSS EC/SSS Permanent Partial Disability
(PPD) benefits. In 2003, an SSS audit revealed the need to recover the EC
benefits already paid to him on the ground that his CAD, being attributed to his
chronic smoking, was not work-related. He elevated the matter to the ECC,
which denied his appeal on December 10, 2004, essentially ruling that although
his CAD was a cardiovascular disease listed as an occupational disease under
Annex A of the Implementing Rules on Employees Compensation, nothing on
record established the presence of the qualifying circumstances for
responsibility; that it was incumbent upon him to prove that the nature of his
previous employment and the conditions prevailing therein had increased the
risk of contracting his CAD; and that he had failed to prove this requisite. Hence,
this recourse, wherein he contends that he had contracted the disease due to

the presence of harmful fuel smoke emission of methane gas from a nearby
biological waste digester and a railway terminal.
CA RULING: CA affirmed the ruling of SSS ruling that petitioner failed to submit
substantial evidence that might have shown that he was entitled to the benefits
he had applied for.
ISSUE: Whether the Court of Appeals committed grave abuse of discretion in
affirming the finding of the ECC that petitioners ailment is not compensable
under Presidential Decree No. 626, as amended
SC RULING: The court held NO. Gatus was diagnosed to have suffered from
CAD; Triple Vessel and Unstable Angina, diseases or conditions falling under
the category of Cardiovascular Diseases which are not considered occupational
diseases under the Amended Rules on Employees Compensation. His disease
not being listed as an occupational disease, he was expected to show that the
illness or the fatal disease was caused by his employment and the risk of
contracting the disease was increased or aggravated by the working conditions.
His proof would constitute a reasonable basis for arriving at a conclusion that
the conditions of his employment had caused the disease or that such working
conditions had aggravated the risk of contracting the illness or the fatal disease.
While he might have been exposed to various smoke emissions at work for 30
years, he did not submit satisfactory evidence proving that the exposure had
contributed to the development of his disease or had increased the risk of
contracting the illness. Neither did he show that the disease had progressed
due to conditions in his job as a factory worker. In fact, he did not present any
physicians report in order to substantiate his allegation that the working
conditions had increased the risk of acquiring the cardiovascular disease.
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82. REPUBLIC OF THE

PHILIPPINES v. MARIANO G.R. No.
139455 March 28, 2003
QUISUMBING, J.:
WHERE IT WAS ESTABLISHED THAT THE CLAIMANTS AILMENT
OCCURRED DURING AND IN THE
COURSE OF HIS EMPLOYMENT, IT MUST BE PRESUMED THAT THE
NATURE OF THE CLAIMANTS
EMPLOYMENT IS THE CAUSE OF THE DISEASE
DOCTRINE:
For the sickness to be compensable, the same must be an occupational
disease included in the list provided, with the conditions set therein satisfied;
otherwise, the claimant must show proof that the risk of contracting it is
increased by the working conditions.
FACTS:
For an eleven-year period, respondent Pedro Mariano was an employee of LGP
Printing Press. During his employment, Mariano worked in various capacities,
including that of a machine operator, paper cutter, monotype composer, film
developer, and supervisor of the printing press. Sometime in February 1994,
Marianos service abruptly ended when he could no longer perform any work
due to a heart ailment. An electrocardiograph test revealed that he was suffering
from Incomplete Right Bundle Branch Block. Respondent had consulted Dr.
Rogelio Mariano, whose diagnosis showed he was suffering from Parkinsons
disease and hypertension. Mariano filed a claim for employees compensation
benefit with the SSS. In its medical evaluation dated April 15, 1997, SSS denied
his claim on the ground that there was no causal connection between his
ailment and his job as film developer. The ECC ultimately dismissed the case on
the ground that the claimant failed to establish a causal connection between
Parkinsons disease and the conditions of the printing press.
CA RULING: The Court of Appeals found that the nature of petitioners work at
LGP resulted in his exposure to various toxic chemicals, which is a possible
cause of Parkinsons Disease. As to his hypertension, the appellate court ruled
that the respondents duties as machine operator and paper cutter involved
physical pressure and restlessness, since he was required to meet urgent
deadlines for rush print orders. This in turn caused respondent to suffer from
stress and anxiety. In sum, the appellate court held that respondent had
substantially established the connection between the cause of his ailments and
the nature of his work.
ISSUE: Whether or not Mariano was able to prove that his employment had a
causal relation that with his ailments: Parkinson's and Hypertension.

SC RULING:
YES. Workmens Compensation cases are governed by the law in force at the
time the claimant contracted his illness. In the instant case, the applicable rule
is Section 1 (b), Rule III, of the Rules Implementing P.D. No. 626. Under said
Rule, for the sickness to be compensable, the same must be an occupational
disease included in the list provided, with the conditions set therein satisfied;
otherwise, the claimant must show proof that the risk of contracting it is
increased by the working conditions.
As to Parkinsons disease, while it is true that this disease is not included in the
list of compensable diseases under the law then prevailing, it was found by the
Court of Appeals that the conditions prevailing at LGP largely led to the
progression of the ailment. The respondents functions entailed constant
exposure to hazardous or toxic chemicals such as carbon disulfate, carbon
monoxide, or manganese. As the ECC itself admitted in its judgment, the
exposure to these toxic substances is among the possible causes of this
disease. Where it was established that the claimants ailment occurred during
and in the course of his employment, it must be presumed that the nature of the
claimants employment is the cause of the disease.
Second, even if we were to assume that Parkinsons Disease is not
compensable, there can be no question that Essential Hypertension is a
compensable illness, following our ruling in Government Service Insurance
System v. Gabriel, that hypertension and heart ailments are compensable
illnesses.
In upholding respondent Marianos claim, the Court of Appeals found that among
the various jobs the respondent performed were those of a machine operator,
paper cutter, monotype composer, and later as supervisor, most of which are
physical and stressful in character. In established cases of Essential
Hypertension, the blood pressure fluctuates widely in response to emotional
stress and physical activity. Given the nature of his assigned job and the printing
business, with its tight deadlines entailing large amounts of rush
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work, indeed the emotional and physical stress of respondents work at the
printing press caused, and then exacerbated, his hypertension. On this score,
we hold that the Court of Appeals did not err in liberally construing the rules
implementing P.D. No. 626. In matters of labor and social legislation, it is well
established that doubts in the interpretation and application of the law are
resolved liberally in favor of the worker and strictly against the employer.

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83. MAGSAYSAY MARITIME CORPORATION and/or WASTFEL-LARSEN

MANAGEMENT A/S v. OBERTO
LOBUSTA
G.R. No. 177578
January 25, 2012
VILLARAMA, JR., J.
TEMPORARY TOTAL DISABILITY
DOCTRINE:
A temporary total disability only becomes permanent when so declared by the
company physician within the periods he is allowed to do so, or upon the
expiration of the maximum 240-day medical treatment period without a
declaration of either fitness to work or the existence of a permanent disability.
FACTS:
Petitioner Magsaysay Maritime Corporation is a domestic corporation and the
local manning agent of the vessel MV "Fossanger" and of petitioner WastfelLarsen Management A/S. Respondent Oberto S. Lobusta is a seaman who has
worked for Magsaysay Maritime Corporation. Lobusta boarded MV "Fossanger"
on March 16, 1998. After two months, he complained of breathing difficulty and
back pain. On May 12, 1998, while the vessel was in Singapore, Lobusta was
admitted at Gleneagles Maritime Medical Center and was diagnosed to be
suffering from severe acute bronchial asthma with secondary infection and
lumbosacral muscle strain. Dr. C K Lee certified that Lobusta was fit for
discharge on May 21, 1998, for repatriation for further treatment. Upon
repatriation, Lobusta was referred to Metropolitan Hospital. The medical
coordinator, Dr. Robert Lim, reported that Lobusta has been diagnosed to have
a moderate obstructive pulmonary disease which tends to be a chronic problem,
such that Lobusta needs to be on medications indefinitely. Petitioners "then
faced the need for confirmation and grading by a second opinion" and "it took
the parties time to agree on a common doctor, until they agreed on Dr. Camilo
Roa." According to Dr. Roa, Lobusta is not physically fit to resume his normal
work as a seaman due to the persistence of his symptoms. Magsaysay Maritime
Corporation suggested that Lobusta be examined by another company
-designated doctor for an independent medical examination. Dr. David opined
that Mr. Lobusta ought not to be considered fit to return to work as an Able
Seaman. As no settlement was reached despite the above findings, the Labor
Arbiter ordered the parties to file their respective position papers.
LA RULING: ordered petitioners to pay Lobusta (a) US$2,060 as medical
allowance, (b) US$20,154 as disability benefits, and (c) 5% of the awards as
attorneys fees. The Labor Arbiter held that provisions of the Labor Code, as
amended, on permanent total disability do not apply to overseas seafarers.

NLRC RULING: Lobusta appealed. The NLRC dismissed his appeal and
affirmed the Labor Arbiters decision. The NLRC ruled that Lobustas condition
may only be considered permanent partial disability.
CA RULING: The CA ruled that Lobusta's disability brought about by his
bronchial asthma is permanent and total as he had been unable to work since
May 14, 1998 up to the present or for more than 120 days, and because Dr.
David found him not fit to return to work as an able seaman.
ISSUE: Does the poea contract considers the mere lapse of more than one
hundred twenty (120) days as total and permanent disability?
SC RULING:
No. A temporary total disability only becomes permanent when so declared by
the company physician within the periods he is allowed to do so, or upon the
expiration of the maximum 240-day medical treatment period without a
declaration of either fitness to work or the existence of a permanent disability.
Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to work
or the degree of permanent disability has been assessed by the companydesignated physician[,] but in no case shall this period exceed one hundred
twenty (120) days.
Upon repatriation, Lobusta was first examined by the Pulmonologist and
Orthopedic Surgeon on May 22, 1998. The maximum 240-day (8-month)
medical -treatment period expired, but no declaration was made that Lobusta is
fit to work. Nor was there a declaration of the existence of Lobustas permanent
disability. On February 16, 1999, Lobusta was still prescribed medications for
his lumbosacral pain and was advised to return for reevaluation. May 22, 1998
to February 16, 1999 is 264 days or 6 days short of 9 months.
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Dr. Roas clinical summary also shows that as of December 16, 1999, Lobusta
was still unfit to resume his normal work as a seaman due to the persistence of
his symptoms. But neither did Dr. Roa declare the existence of Lobustas
permanent disability. Again, the maximum 240-day medical treatment period
had already expired. May 22, 1998 to December 16, 1999 is 19 months or 570
days. In Remigio, unfitness to work for 11 -13 months was considered
permanent total disability. So it must be in this case. And Dr. Davids much later
report that Lobusta "ought not to be considered fit to return to work as an Able
Seaman" validates that his disability is permanent and total as provided under
the POEA Standard Employment Contract and the Labor Code, as amended.
In fact, the CA has found that Lobusta was not able to work again as a seaman
and that his disability is permanent "as he has been unable to work since 14
May 1998 to the present or for more than 120 days." This period is more than
eight years, counted until the CA decided the case in August 2006. On the CA
ruling that Lobustas disability is permanent since he was unable to work "for
more than 120 days," SC have clarified in Vergara that this "temporary total
disability period may be extended up to a maximum of 240 days."

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84. MAGSAYSAY MITSUI OSK MARINE, INC. and/or MOL TANKSHIP

MANAGEMENT (ASIA) PTE LTD. v.
JUANITO G. BENGSON
G.R. No. 198528
October 13, 2014
WORK-RELATED COMPENSABLE ILLNESS
DOCTRINE:
Time and again, this Court has held that cardiovascular disease, coronary artery
disease, and other heart ailments are work-related and, thus, compensable.
FACTS:
Since 1986, Juanito Bengson has been working as a seafarer for Magsaysay,
Inc. He entered into his 22nd contract of employment with Magsaysay, Inc. Prior
to his deployment, Bengson underwent and passed the Pre-Employment
Medical Examination (PEME) and was found to be "fit for sea duty. On October
5, 2007, after doing his usual duties on board the vessel, [Bengson] suddenly
experienced difficulty in breathing and numbness on half of his body. He was
examined in Izola General Hospital in Slovenia. Due to his incapacity to work,
his immediate repatriation was arranged. Upon arrival in the Philippines, he was
immediately brought to the Manila Doctors Hospital for confinement under the
supervision of company -designated- physician Dr. Benigno F. Agbayani, Jr.
Bengsons Medical Abstract/Discharge Summary showed that he had a stroke.
Dr. Agbayani issued an Initial Out-Patient Consult Report which stated that
Bengsons illness was not work-related. Thus, Magsaysay, Inc. did not anymore
issue any assessment on [Bengsons] disability grade. [Bengson], on the other
hand, continuously took medications and was unable to return to his work as a
seaman due to the severity of his disability. [Bengson] thus filed his disability
compensation claim against x x x Magsaysay, Inc. However, during the
grievance proceedings before the Associated Marine Officers and Seamens
Union of the Philippines (AMOSUP), his claim was outrightly denied by x x x
Magsaysay, Inc.
LA RULING: illness of Bengson is related to his work and the strenuous nature
of his work and the conditions he was subjected to while working on board
petitioners vessel caused his illness.
NLRC RULING: under the POEA -SEC, hematoma is not included in the list of
compensable illnesses; this being the case, Bengson should have proved that
such illness was work-related and compensable, and it is not enough for him to
claim or show that it was contracted during his employment with petitioners.
CA RULING: Bengsons exposure to different hazards on board petitioners
vessel, the performance of his functions as Third Mate, and the extraordinary
physical and mental strain required by his position caused him to suffer his
present illness. Therefore, his illness is work-related.

ISSUE: Is cardiovascular disease an occupational disease and and, thus,

compensable?
SC RULING:
YES. In many cases decided in the past, this Court has held that cardiovascular
disease, coronary artery disease, and other heart ailments are compensable.
In the present case, petitioners flatly claim that Bengsons hypertensive cardiovascular disease is not compensable on the sole basis of its companydesignated physician Agbayanis declaration that such illness is not workrelated.
However, the Court finds that Bengsons illness is work -related. The undisputed
facts indicate that respondent has been working for petitioners since 1988; that
per his service record,37 he has been serving as Third Mate for twelve (12)
years; and that as Third Mate, he was saddled with heavy responsibilities
relative to navigation of the vessel, ship safety and management of
emergencies. It is beyond doubt that respondent was subjected to physical and
mental stress and strain: as Third Mate, he is the ships fourth in command, and
he is the ships safety officer; these responsibilities have been heavy burdens
on respondents shoulders all these years, and certainly contributed to the
development of his illness. Besides, "[i]t is already recognized that any kind of
work or labor produces stress and strain normally resulting in wear and tear of
the human body." "Notably, it is a matter of judicial notice that an overseas
worker, having to ward off homesickness by reason of being physically
separated from his family for the entire duration of his contract, bears a great
degree of emotional strain while making an effort to perform his work well. The
strain is even greater in the case of a seaman who is constantly subjected to the
perils of the sea while at work abroad and away from his family."
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Having worked for petitioners since 1988 under employment contracts that were
continuously renewed, it can be said that respondent spent much of his
productive years with petitioners; his years of service certainly took a toll on his
body, and he could not have contracted his illness elsewhere except while
working for petitioners. To be sure, the Court has ruled that "the list of
illnesses/diseases in Section 32-A does not preclude other illnesses/diseases
not so listed from being compensable. The POEA-SEC cannot be presumed to
contain all the possible injuries that render a seafarer unfit for further sea
duties." And equally significant, "it is not the injury which is compensated, but
rather it is the incapacity to work resulting in the impairment of ones earning
capacity."

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85. PEDRO LIBANG, JR. vs. INDOCHINA SHIP MANAGEMENT, INC.,

MR. MIGUEL SANTOS and
MAJESTIC CARRIERS, INC.
G.R. No. 189863
September 17, 2014
REYES, J.
ASSESSMENT BY COMPANY-DESIGNATED DOCTOR VS. ASSESSMENT
BY CLAIMANTS DOCTOR
DOCTRINE:
The respondents could not be allowed to benefit from their physicians inaction
or refusal to disclose the results of the diagnostic tests performed upon Libang,
the extent of the patients illnesses, and the effect of the severity of these
illnesses on his fitness or disability.
FACTS:
Libang entered into a nine-month employment contract with ISMI, a domestic
manning agency that acted for and in behalf of its foreign shipping company,
Majestic. Libang was engaged as a Cook 1 for the vessel M/V Baltimar Orion.
While Libang was on board M/V Baltimar Orion, he experienced numbness on
the left side of his face, difficulty in hearing from his left ear, blurred vision of his
left eye and speech problem. Libang was eventually repatriated. Two days later,
he reported to ISMI and was endorsed for medical attention to the company
-designated physician, Dr. Robert Lim (Dr. Lim) of the Marine Medical Services
in Metropolitan Hospital. Dr. Lim issued to Libang a medical certificate which
states that the hypertension of Libang could be pre-existing. Considering Dr.
Lims failure to assess Libangs disability despite his health status, the latter
sought medical attention and assessment from another doctor, Dr. Efren R.
Vicaldo (Dr. Vicaldo) of the Philippine Heart Center. A medical certificate issued
by Dr. Vicaldo states that Libang has Hypertensive Cardiovascular Disease,
Diabetes Mellitus and S/P Cerebrovascular accident and gave Impediment
Grade VI (50%). Libang filed with NLRC a complaint for disability benefit. The
respondents disputed any liability arguing that the disability was pre-existing.
LA RULING: granted claim for disability benefit. Without doubt, [Libang] had
gone through a thorough and rigid screening process of [ISMI and Santos]
(medical examinations included) before an agreement or the contract of
employment between the parties was reached and actualized. This is precisely
the reason why [ISMI and Santos], should not be allowed to make use of the
argument that [Libang] is not entitled to any disability benefits as he was
already suffering from a pre-existing illness when he entered into a contract
of employment with [ISMI and Santos].

NLRC RULING: In sustaining the LAs finding that Libang was entitled to
disability benefit, the NLRC considered the reasonable connection between the
nature of Libangs work as a cook and the development of his illness.
CA RULING: For the CA, the lone assessment made by Dr. Vicaldo could not
have justified the LAs and NLRCs finding of a Grade VI disability. The
Philippine Overseas Employment Administration- Standard Employment
Contract (POEA-SEC) requires the company-designated physician to be the
one to make a disability assessment of a seafarer.
ISSUE: Is Libang entitled to disability benefit?
SC RULING:
YES. Rather than making a full assessment of Libangs health condition,
disability or fitness, Dr. Lim only reasoned in his medical certificate dated that
Libangs hypertension could be pre-existing and that it was difficult to say
whether his diabetes mellitus and small pontine infarct are pre-existing or not.
His assessment was evidently uncertain and the extent of his examination for a
proper medical diagnosis was incomplete. The alleged concealment by Libang
of his hypertension during his pre-employment medical examination was also
unsubstantiated, but was a mere hearsay purportedly relayed to Dr. Lim by one
Dr. Aileen Corbilla, his co-attending physician. A categorical statement from Dr.
Lim that Libangs illnesses were pre-existing and non-work-related was made
only in his affidavit dated July 16, 2004, or after the subject labor complaint had
been filed. Still, Dr. Lim gave no explanation for his statement that Libangs
illnesses were not work-related.
Given the failure of Dr. Lim to fully evaluate Libangs illness, disability or fitness
to work, the seafarer was justified in seeking the medical expertise of his
physician of choice. The NLRC did not commit grave abuse of discretion in
considering Dr. Vicaldos assessment. As against an incomplete evaluation by
Dr. Lim, the medical certificate issued by Dr. Vicaldo included a determination of
the disability grade that applied to Libangs
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condition. Libang was diagnosed to have both Hypertensive Cardiovascular

Disease and Diabetes Mellitus with an Impediment Grade VI. He was declared
to be unfit to resume to work as a seafarer in any capacity.
The respondents could not be allowed to benefit from their physicians inaction
or refusal to disclose the results of the diagnostic tests performed upon Libang,
the extent of the patients illnesses, and the effect of the severity of these
illnesses on his fitness or disability. The respondents even failed to sufficiently
dispute the finding of the LA and NLRC that Libangs illnesses had resulted in a
Grade VI disability.

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86. INTERORIENT MARITIME ENTERPRISES, INC. vs. VICTOR M. CREER III

G.R. No. 181921 September 17,
2014 DEL CASTILLO, J.:
ELEMENTS FOR DISABILITY TO BE COMPENSABLE
DOCTRINE:
For an illness to be compensable, Section 20(B)(6) of the 2000 Amended
Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean- Going Vessels (2000 Amended Standard Terms and
Conditions), deemed incorporated in the POEA Contract, requires the
concurrence of two elements: first, that the illness mustbe work-related; and
second, that the work- related illness must have existed during the term of the
seafarers employment contract.
FACTS:
InterOrient hired Victor as Galley Boy on board the vessel M/V MYRTO owned
by Calidero Shipping Company, Ltd. (Calidero). Victor alleged that when he was
about to get provisions from the cold storage sometime in November 2001, he
felt a sudden pain in his chest that radiated to his back. Since then, he
experienced incessant cough, nasal congestion, difficulty in breathing, physical
weakness, chills and extreme apprehension. According to him, this condition
persisted until the expiration of his contract on May 7, 2002. On May 9, 2002,
Victor arrived in Manila. The following day, he reported to the office of
InterOrient and informed the company about the pain he experienced while he
was on board. Victor averred that InterOrient merely advised him to consult a
doctor without giving him any doctors referral. He did, however, sign a Receipt
and Release where he acknowledged receipt of the full payment of his
monetary entitlements under the employment contract. According to him, he
underwent medical examinations in different hospitals and that he shouldered all
the expenses. Victor consulted another physician, Dr. Vicaldo, at the Philippine
Heart Center. After conducting a medical examination and evaluation, Dr.
Vicaldo issued a medical certificate indicating that Victor was diagnosed with
Hypertension, Stage II, and Pulmonary Tuberculosis. He gave Victor an
impediment grade VIII (33.59%) and further declared him unfit to resume work
as a seaman in any capacity, and that his illness was considered workaggravated. Victor claimed for disability benefit.
LA RULING: denied claim. Labor Arbiter noted that there is nothing on record to
show that Victor ever made any formal claim for sickness allowance, medical
benefits and disability benefits while on board the vessel or immediately after
his repatriation. Neither did he submit to, nor apply for any post-employment
medical examination within three days from his repatriation a requirement for
claims for sickness and disability benefits.

NLRC RULING: affirmed in toto the Decision of the Labor Arbiter and dismissed
Victors appeal.
CA RULING: granted the same and awarded him permanent disability benefits
and attorneys fees. Applying Section 32-A of the POEA Contract, the CA
declared Victors illness, pulmonary tuberculosis, included inthe list of
occupational diseases. It found that Victor was overworked and over-fatigued as
a result of the long hours of work required by his duties and that he was
exposed todaily rapid variations in temperature.
ISSUE: Is Victor entitled to disability benefits?
SC RULING:
No. For a seamans claim for disability to prosper, it is mandatory that within
three days from his repatriation, he is examined by a company-designated
physician. Non -compliance with this mandatory requirement results in the
forfeiture of the right to claim for compensation and disability benefits. It is
undisputed that on May 7, 2002, Victors employment contract was completed.
He arrived in Manila on May 9, 2002; the following day, or on May 10, 2002, he
reported to the office of InterOrient. Although he averred that he informed
InterOrient about the pain he experienced whileon board the vessel, the
company allegedly only advised him to consult a doctor but did not give any
referral.
SC is not persuaded. His repatriation was not due to any medical reasons but
because his employment contract had already expired. Other than his selfserving allegation that he experienced pain while on board, he was not able to
substantiate the same. There was no showing that he reported his injury to his
officers while on board the vessel; neither did he prove that he sought medical
attention but was refused. Likewise, other than his bare and self-serving
assertion that he informed InterOrient about his pain, he presented no evidence
ortangible
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proof that he indeed requested for medical attention, much more that he was
rebuffed.
On the contrary, the records show that when he reported to InterOrient
immediately after his repatriation, he signed a Receipt and Release stating that
he has not contracted or suffered any illness or injury from work and that he
was discharged in good and perfect health.
Victors illness is not compensable.
Even if we disregard the mandatory three-day rule on post-employment medical
examination by the company-designated physician, Victors claim for disability
benefits must still fail for not being compensable. For an illness to be
compensable, Section 20(B)(6) of the 2000 Amended Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board OceanGoing Vessels (2000 Amended StandardTerms and Conditions), deemed
incorporated in the POEA Contract, requires the concurrence of two elements:
first, that the illness mustbe work-related; and second, that the work- related
illness must have existed during the term of
the seafarers employment contract.
a) Victor failed to show that his illness existed during the term of his contract
- As already mentioned, the reason for Victors repatriation was the
completion/expiration of his contract and not because of any sickness.
Other than his uncorroborated and self-serving assertion that he
experienced chest pains while on board the vessel, there was absolutely
no proof at all that he consulted a doctor while on board, or that he
reported the same to his superiors so that he will be provided with medical
assistance. On the contrary, upon repatriation, he signed a Receipt and
Release wherein he acknowledged that he worked under normal
conditions on board the vessel; that he did not contract or suffer any
injury; and that he was discharged in good health. Victor never alleged
that he was coerced into signing the Receipt and Release or that he did
not understand the same.
b) Victor failed to show that his illness is work-related - While pulmonary
tuberculosis is listed as an occupational disease, the Court is not
convinced that Victors pulmonary tuberculosis is work-acquired or workaggravated because if it were so, then at the outset, Victor should have
already been diagnosed with pulmonary tuberculosis when he sought
medical help one month from his repatriation. Instead, Dr. Ayuyao
diagnosed him with Community Acquired Pneumonia I and Bronchial
Asthma sicknesses which aside from being different from pulmonary
tuberculosis, were not shown to have any relation thereto.

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87. RICARDO A. DALUSONG vs. EAGLE CLARC SHIPPING PHILIPPINES,

INC., NORFIELD OFFSHORE
AS, and/or CAPT. LEOPOLDO T. ARCILLAR, and COURT OF APPEALS
G.R. No. 204233,
September 3, 2014
CARPIO, Acting C.J.
ASSESSMENT BY COMPANY-DESIGNATED DOCTOR VS. ASSESSMENT
BY CLAIMANTS DOCTOR
DOCTRINE:
The doctor who have had a personal knowledge of the actual medical condition,
having closely, meticulously and regularly monitored and actually treated the
seafarers illness, is more qualified to assess the seafarers disability.
FACTS:
Private respondents hired petitioner as Able Seaman on board their vessel MV
Malene Ostervold with a basic salary of US$ 800 per month. On 13 December
2009, while petitioner was drilling to attach an overboard safety equipment on
the vessel, a sudden swell caused some movement ofthe vessel. As a result,
one of the crew fell directly on petitioner, inflicting injury on petitioners right foot.
Petitioner was repatriated to the Philippines for further examination and medical
treatment.
Dr. Nicomedes Cruz, the company-designated doctor, gave petitioner an interim
disability grading based on the Philippine Overseas Employment Administration
(POEA) schedule of disability of "grade 8 that is moderate rigidity or one third
loss of motion or lifting power of the trunk." Petitioner disagreed with the
disability assessment and consulted Dr. Nicanor Escutin, a physician of his own
choice, who found petitioner to be suffering from "PARTIAL PERMANENT
DISABILITY and concluded that petitioner is "unfit for seaduty in whatever
capacity as seaman."
Petitioner filed with the NLRC a complaint against private respondents, claiming
disability benefits, sick wages, damages, and attorneys fees. Petitioner
maintained that he is entitled to full disability benefits of US$80,000, while
private respondents insisted that petitioner is only entitled to US$12,551 based
on the disability assessment of the company-designated doctor.
ISSUE: Is Dalusong entitled to full disability benefits?
LA RULING: ruled in favor of private respondents. The Labor Arbiter did not
give probative value to the medical report presented by petitioner.
NLRC RULING: modified the Labor Arbiters decision.
CA RULING: ruled that it is the company-designated doctor who initially
determines the degree of disability of petitioner.

SC RULING:
NO. SC agree with the Court of Appeals ruling, giving more credence to the
medical findings of the company-designated doctor. Contrary to the ruling of the
NLRC, petitioners doctor did not categorically give petitioner a grade 1 disability
rating which is equivalent to total and permanent disability. Petitioners physician
found petitioner to be suffering from "PARTIAL PERMANENT DISABILITY," and
"is UNFIT FOR SEA DUTY in whatever capacity as seaman." Aside from this
seemingly inconsistent assessment by petitioners doctor, there was no
evidence submitted of medical procedures, examinations or tests which would
support his conclusion that petitioner is unfit for sea duty in whatever capacity
as a seaman. In contrast, the company-designated doctor gave petitioner a final
disability grading under the POEA schedule of disabilities of "grade 11
-complete immobility of an ankle joint in normal position," only after petitioner
had undergone a series of medical tests and examinations, and physical
therapy over a period of six months, during which the company designated
doctor issued periodic medical reports. As the Court aptly stated in Philman
Marine Agency, Inc. (now DOHLE-PHILMAN Manning Agency, Inc.) v.
Cabanban, "the doctor who have had a personal knowledge of the actual
medical condition, having closely, meticulously and regularly monitored and
actually treated the seafarers illness, is more qualified to assess the seafarers
disability." Based on the Disability Report of petitioners doctor, it appears that
he only conducted a physical examination on petitioner before issuing his final
diagnosis and disability rating on petitioners condition. Clearly, the findings of
the company-designated doctor, who, with his team of specialists which
included an orthopedic surgeon and a physical therapist, periodically treated
petitioner for months and monitored his condition, deserve greater evidentiary
weight than the single medical report of
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petitioners doctor, who appeared to have examined petitioner only once.

Petitioner argues that since his treatment lasted for more than 120 days, then
his disability is deemed total and permanent. Petitioners contention is not
entirely correct.
Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to work
or the degree of permanent disability has been assessed by the companydesignated physician but in no case shall this period exceed one hundred
twenty (120) days.
Just because the seafarer is unable to perform his job and is undergoing
medical treatment for more than 120 days does not automatically entitle the
seafarer to total and permanent disability compensation. In this case,
petitioner's medical treatment lasted more than 120 days but less than 240
days, after which the company-designated doctor gave petitioner a final
disability grading under the POEA schedule of disabilities of "grade 11 complete immobility of an ankle joint in normal position." Thus, before the
maximum 240- day medical treatment period expired, petitioner was issued a
final disability grade 11 which is merely equivalent to a permanent partial
disability, since under Section 32 of the POEA-SEC, only those classified under
grade 1 are considered total and permanent disability. Clearly, petitioner is only
entitled to permanent partial disability compensation, since his condition cannot
be considered as permanent total disability.

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88. ROBERT KUA, CAROLINE N. KUA, AND MA. TERESITA N. KUA, v.

GREGORIO SACUPAYO AND
MAXIMINIANO PANERIO
G.R. No. 191237
September 24, 2014
PEREZ, J.:
DOCTRINE:
Probable cause is affirmed against an employer who failed to remit SSS
contributions and payments on loans of its employees if it was only under threat
of criminal liability that the employers subsequently remitted what they had long
deducted from the wages of said employees.
FACTS:
Petitioners are members of the Board of Directors and the officers of Vicmar
Development Corporation (Vicmar). Respondents Sacupayo and Panerio were
VICMAR employees.
As required by law, Vicmar, deducted the SSS contributions of respondents from
their wages. A certain amount from Sacupayos wage representing the monthly
amortization from a he loan he obtained from the SSS. The deductions were
initially remitted to SSS.
However, sometime in 2003 and 2004, unknown to respondents and despite the
continued SSS and amortization deductions from their wages, Vicmar stopped
remitting the same. Meantime in 2004, Sacupayo and Panerio were dismissed
from employment. Both filed complaints for illegal dismissal.
Panerio was thereafter afflicted with Chronic Persistent Asthma but when he
applied for sickness benefits before the SSS the same was denied for the
reason that no contributions or payments were made for 12 months prior to the
semester of confinement. Sacupayo, for his part, filed another loan application
but this was also denied outright for non-payment of a previous loan which
should have been fully paid if not for the failure of Vicmar to remit the amounts
due to the SSS.
Aggrieved respondents filed complaints before the Office of the City Prosecutor.
Vicmar then remitted to SSS the contributions and loan payments of
respondents. Nevertheless 3 separate Informations were filed against
petitioners officers of Vicmar for violation of Section 22 (a) in relation to Section
28 (e) of RA 8282 otherwise known as the Social Security Act of 1997.
MTC RULING: Dismissed outright for lack of jurisdiction
RTC RULING: Given due course but later on granted the Motion of petitioners
to withdraw the criminal cases.

ISSUE: Validity of the order of the trial court directing the withdrawal from its
dockets of Criminal Case Nos. 2006-072, 2006-073 and 2006-074 for violation
of Sec. 22 (a) and (d) in relation to Sec. 28 (e) of R.A. No. 8282.
SC RULING:
The factual milieu obtaining herein does not denote a simple delay in payment.
Again, petitioners initially failed to remit the SSS contributions and payments of
respondents such that respondents were denied benefits under the SS Law
which they wanted to avail of. It was only under threat of criminal liability that
petitioners subsequently remitted what they had long deducted from the wages
of respondents.
The culpability of the accused under the indictment is not yet before us. Yet to
be determined during the ensuing trial are considerations such as the extent
and reason for the delay, the date of actual remittance and all other
circumstances that attended such remittance. All these are matters of defense
that need proof during trial.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in
CA- G.R. SP No. 01569-MIN is AFFIRMED. Criminal Case Nos. 2006-072,
2006 -073 and 2006-074 pending before the Regional Trial Court, Branch 20,
Cagayan de Oro City are REINSTATED and the Presiding Judge thereof is
DIRECTED to dispose of the cases with dispatch.

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89. GOVERNMENT SERVICE INSURANCE SYSTEM v. JOSE M. CAPACITE

G.R. No. 199780 September 24,
2014 BRION, J.:
DOCTRINE:
For sickness and the resulting death of an employee to be compensable, the
claimant must show either: (1) that it is a result of an occupational disease listed
under Annex "A" of the Amended Rules on Employees' Compensation with the
conditions set therein satisfied; or (2) if not so listed, that the risk of contracting
the disease was increased by the working conditions.
FACTS:
Provincial Office who successively held the following positions: Junior
Statistician, Bookkeeper, Bookkeeper II, and finally as Accountant I. Due to
persistent cough coupled with abdominal pain, Elma was admitted at the
Bethany Hospital where the pathology examination showed that she was
suffering from Adenocarcinoma, moderately differentiated, probably cecal origin
with metastases to mesenteric lymph node and seeding of the peritoneal
surface.c i Elma died due to Respiratory Failure secondary to Metastatic Cancer
to the lungs; Bowel cancer with Hepatic and Intraperitoneal Seeding and
Ovarian cancer. Elmas surviving spouse, Jose, filed a claim for ECC death
benefits before the GSIS Branch Office, alleging that Elmas stressful working
condition caused the cancer that eventually led to her death.
GSIS: denied Joses claim for failure to present direct evidence to prove a
causal connection between Elmas illness and her work.
ECC: also denied it holding that colorectal cancer is not listed as an
occupational and compensable disease under Annex A of the Amended Rules
on Employees Compensation. Although its item 17 provides that cancer of the
lungs, liver and brain shall be compensable, the rules required that it had been
incurred by employees working as vinyl chloride workers, or plastic workers.
CA RULING: reversed ECC. That it was enough that the nature of her
employment contributed to the development of the disease. As a bookkeeper,
Elma had been exposed to voluminous dusty records and other harmful
substances that aggravated her respiratory disease.
ISSUE: Whether CA erred in ruling that Metastasized to the lungs is an ailment
akin to respiratory disease under ANNEX A of P.D. NO. 626, as amended, o
that such disease is work-related.
SC RULING:
PD 626, as amended, defines compensable sickness as any illness definitely
accepted as an occupational disease listed by the Commission, or any illness
caused by employment subject to proof by the employee that the risk of

contracting the same is increased by the working conditions. Of particular

significance in this definition is the use of the conjunction or, which indicates
alternative situations.
Based on this definition, we ruled in GSIS v. Vicencio that for sickness and the
resulting death of an employee to be compensable, the claimant must show
either: (1) that it is a result of an occupational disease listed under Annex "A" of
the Amended Rules on Employees' Compensation with the conditions set
therein satisfied; or (2) if not so listed, that the risk of contracting the disease
was increased by the working conditions.
While item 17, Annex A of the Amended Rules of Employees Compensation
considers lung cancer to be a compensable occupational disease, it likewise
provides that the employee should be employed as a vinyl chloride worker or a
plastic worker. In this case, however, Elma did not work in an environment
involving the manufacture of chlorine or plastic, for her lung cancer to be
considered an occupational disease. There was, therefore, no basis for the CA
to simply categorize her illness as an occupational disease without first
establishing the nature of Elmas work. Both the law and the implementing rules
clearly state that the given alternative conditions must be satisfied for a disease
to be compensable.
Aside from Joses general allegations proving the stressful duties of his late
wife, no reasonable proof exists to support the claim that her respiratory
disease, which is similar to lung cancer, was aggravated by her working
conditions. The records do not support the contention that she had been
exposed to voluminous and dusty records, nor do they provide any definite
picture of her working environment.
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90. OSG
SHIPMANAGEMENT
MANILA,
INC.,
MERCEDES
M.
RAVANOPOLOUS, OSG SHIPMANAGEMENT (UK) LTD. & M/T DELPHINA,
v. JOSELITO B. PELLAZAR
G.R. No. 198367
August 06, 2014
BRION, J.:
DOCTRINE:
In the present case, since there is a conflict in the assessment of the companydesignated physicians and an employees physician of choice, the matter should
have been referred to a third doctor for final determination as required by the
POEA-SEC and the parties CBA. Since the employee was responsible for the
non-referral to the third doctor because of his failure to inform the manning
agency that he would be consulting a doctor of his choice, he should suffer the
consequences of the absence of a binding third opinion.
FACTS:
Pellazar was deployed to the M/T Delphina under an employment contract for
eight months. While he was on duty onboard the vessel, his right hand was
injured after it was struck by a solid iron pipe. He was given medical attention in
a hospital in Braziland was later on medically repatriated.
Upon his arrival in Manila, Pellazar reported to OSG Manila and was referred to
the company-designated physicians, Dr. De Guzman and Dr. Banaga. Pellazars
working diagnosis was complete fracture, distal part of 5th finger, right hand
post- casting. The company -designated physicians gave Pellazar a Grade 10
disability rating7 for loss of grasping power for large objects between fingers
and palm of one hand.
Pellazar consulted a physician of his choice,Dr. Sabado who diagnosed him
with loss of grasping power of 5th finger, loss of opposition between finger and
thumb (r) and ankylosis of the 5thfinger (r), and certified that he was
permanently unfit for any sea duty.
Petitioners denied liability alleging that Pellazar failed to comply with his duty to
observe the dispute resolution provisions of the CBA. Also, that Pellazar was
not entitled to disability compensation higher than what was provided under a
Grade 10 disability rating as that was the company -designated physicians
assessment of his disability. A Grade 10 disability is compensated
US$10,075.00 under the POEA Standard Employment Contract (POEA-SEC).
LA RULING: in favor of Pellazar

NLRC: affirmed but modified the labor arbiters decision ruling that Pellazar is
entitled only to an award of $10,075.01 which is the equivalent of a Grade 10
disability in accordance with the disability rating given to him by the companydesignated physicians
CA RULING: reversed the challenged NLRC rulings and, reinstated LAs award
of permanent total disability benefits to Pellazar
ISSUE: Whether Pellazar is entitled to a Grade 10 disability or a permanent
total disability.
SC RULING:
Entitlement to disability benefits by seamen on overseas work is a matter
governed, not only by medical findings but, by Philippine law and by the contract
between the parties. The material statutory provisions are Articles 191 to 193
under Chapter VI (Disability Benefits) of the Labor Code, in relation with Rule X
of the Rules and Regulations Implementing Book IV of the Labor Code. By
contract, Department Order No. 4, series of 2000 of the Department of Labor
and Employment (the POEA Standard Employment Contract) and the parties'
CBA bind the seaman and his employer to each other. The terms under the
POEA-SEC are to be read in accordance with what the Philippine law provides.
Under the POEA-SEC and the AMOSUP/IMEC TCCC CBA, the degree of
disability arising from a work-connected injury or illness of a seafarer or his
fitness to work shall be assessed by the company-designated physician to make
the employer liable. Controversy arose, however, when Pellazar consulted a
physician of his
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choice, whose findings are in conflict with those of the company-designated

physicians. This conflict invariably leads to the question of whose findings
should prevail.
In the present case, since there is a conflict in the assessment of the companydesignated physicians and Dr. Sabados certification in relation to Pellazars
fitness or unfitness to work, the matter should have been referred to a third
doctor for final determination as required by the POEA-SEC and the parties
CBA. Since Pellazar was responsible for the non- referral to the third doctor
because of his failure to inform the manning agency that he would be consulting
Dr. Sabado, he should suffer the consequences of the absence of a binding
third opinion. Thus, the NLRC was well within the bounds of its jurisdiction, in
upholding the disability assessment of Drs. De Guzman and Banaga as against
Pellazars physician of choice.
Since the company-designated physicians gave Pellazar only a Grade 10
disability - and not a permanent total disability - he cannot be entitled to the full
disability benefits of US$75,000.00 under the CBA
91. ESTRELLA D. S. BAEZ v. SOCIAL SECURITY SYSTEM AND
DE LA SALLE UNIVERSITY G.R. No. 189574 July 18, 2014
DOCTRINE:
For death benefits the law requires proof by substantial evidence, or such
relevant evidence which a reasonable mind might accept as adequate to justify
a conclusion, that the nature of his employment or working conditions increased
the risk of contracting the ailment or that its progression or aggravation was
brought about thereby.
FACTS:
Baylon, the husband of petitioner, was employed by DLSU. From 21991-2006,
Baylon worked as a Laboratory Technician at the Chemistry Department.
In 2006, Baylon was confined at Manila Doctors Hospital due to fever,
weakness, dysuria and flank pains. He was diagnosed to be suffering from
urinary tract infection. A month later he was confined again for functional
dyspepsia. Later, he was diagnosed to be suffering from Systemic Lupus
Erythematosus (SLE).
Dr. Castillo prepared a clinical abstract/toxicologic assessment on Baylon and
she stated that based on the occupational history of the patient, x x x the
probability of a chemically induced disease cannot be discounted.
Baylon succumbed to the complications of his disease on 27 August 2006.
Baylons attending physician, Dr. Torres, issued a Medical Certificate stating that
Baylon who was confined and expired in Medical Center Manila for Systemic
Lupus Erythematosus may have been precipitated by the chronic exposure to

chemicals which is an occupational hazard in his performance of being a

laboratory technician. Based on medical opinions of Dr. Castillo and Dr. Torres,
petitioner filed a claim for death benefits under the Employees Compensation
Law before the Social Security System (SSS).
SSS: Denied claim on two grounds: 1) the cause of death, cardiac complication
of SLE, is not considered work-related; and 2) SLE is not included in the list of
occupational diseases.
ECC: Also denied claim on the ground that SLE is caused by a genetic
tendency to mount an abnormal immune response against ones own tissues or
organs leading to their destruction or malfunction.
CA RULING: dismissed petition for review for being filed out of time.
ISSUE: Whether petitioners claim should prosper.
SC RULING:
NO. In order for the beneficiary of an employee to be entitled to death benefits
under the SSS, the cause of death of the employee must be a sickness listed as
an occupational disease by ECC; or any other illness caused by employment,
subject to proof that the risk of contracting the same is increased by the working
conditions.
It is undisputed that SLE is not listed as an occupational disease under Annex
A of the Rules on Employees Compensation. Thus, petitioner has to prove by
substantial evidence the causal relationship between her husbands illness and
his working conditions.
While there are certain chemicals accepted as increasing the risks of
contracting SLE such as chlorinated
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pesticides and crystalline silica, the law requires proof by substantial evidence,
or such relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion, that the nature of his employment or working conditions
increased the risk of contracting the ailment or that its progression or
aggravation was brought about thereby.
Petitioner relied unqualifiedly on the toxicological report which failed to prove
the causal relationship between Baylons work and his illness. The report made
an indirect link between SLE and chemicals through drug-induced lupus.
SLE and Drug-Induced Lupus Erythematosus are both autoimmune diseases.
Drug-induced lupus is a temporary and mild form of lupus caused by certain
prescription medications. They include some types of high blood pressure drugs
(such as hydralazine, ACE inhibitors, and calcium channel blockers) and
diuretics (hydrochlorothiazide). Symptoms resolve once the medication is
stopped.
Furthermore, the toxicological report made mention of certain drugs with
chemical structures related to aromatic amines or substituted hydrazines, listed
in the inventory of the school, can affect the immune system. This would include
Benzenes, Naphthylamine, Toluene, Dinitrophenylhydrazine, etc. However,
these drugs were not proven to have been administered on Baylon. These
substances which can induce the disease all pertain to drugs which are orally
administered on the patient. There is no showing that the drugs given to Baylon
had increased his risk of contracting Drug-Induced Lupus and SLE.
92. ALPHA SHIP MANAGEMENT CORPORATION/JUNEL M CHAN
and/or CHUO-KAIUN COMPANY,
LIMITED v. ELEOSIS v. CALO
G.R. No. 192034
January 13, 2014
DEL CASTILLO, J.:
DOCTRINE:
An employees disability becomes permanent and total when so declared by the
company- designated physician, or, in case of absence of such a declaration
either of fitness or permanent total disability, upon the lapse of the 120 or
24045-day treatment period, while the employees disability continues and he is
unable to engage in gainful employment during such period, and the companydesignated physician fails to arrive at a definite assessment of the employees
fitness or disability. This is true "regardless of whether the employee loses the
use of any part of his body.
FACTS:
Respondent Calo worked for petitioners Alpha Ship, Junel M. Chan and their
foreign principal, (CKCL) under 7 employment contracts.
While MV Iris was in China, respondent suffered back pain on the lower part of
his lumbar region and urinated with solid particles. On checkup, the doctor

found him suffering from urinary tract infection and renal colic, and was given
antibiotics. When respondents condition did not improve, he consulted another
doctor in Chile and was found to have kidney problems and urinary tract
infection but was declared fit for work on a "light duty" basis. In Japan,
respondent was diagnosed with suspected renal and/or ureter calculus and was
declared "unfit for work.
Respondent was thus repatriated and was referred by petitioners to Dr. Cruz,
the company-designated physician who continously examined respondent from
2004-2005.
Respondent, who felt that his condition has not improved consulted another
specialist in internal medicine, Dr. Vicaldo, who issued the following diagnosis:
that it was Impediment Grade X, that he is now unfit to resume work as seaman
in any capacity and that his illness is considered work aggravated/related.
Respondent filed a claim for disability benefits with petitioners, but the claim
was denied.
LA: granted permanent total disability benefits and attorneys fees to
respondent, but denied his claim for moral and exemplary damages.
NLRC: Appeal is granted. The decision of the Labor Arbiter was vacated and
set aside. The complaint for dismissed for lack of merit.
CA RULING: NLRC decision was reversed. Decision of the
Labor Arbiter was reinstated. ISSUE: Whether respondents
claim for disability benefits should prosper.
SC RULING:
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YES. An employees disability becomes permanent and total when so declared

by the company-designated physician, or, in case of absence of such a
declaration either of fitness or permanent total disability, upon the lapse of the
120 or 24045-day treatment period, while the employees disability continues
and he is unable to engage in gainful employment during such period, and the
company-designated physician fails to arrive at a definite assessment of the
employees fitness or disability. This is true "regardless of whether the employee
loses the use of any part of his body."
Respondent was repatriated on October 12, 2004 and underwent treatment by
the company-designated physician, Dr. Cruz, until October 14, 2005, or for a
continuous period of over one year or for more than the statutory 120-day47
or even 240-day48 period. During said treatment period, Dr. Cruz did not arrive
at a definite assessment of respondents fitness or disability; thus, respondents
medical condition remained unresolved. It was only on July 18, 2006 that
respondent was declared fit to work by Dr. Cruz. Such declaration, however,
became irrelevant, for by then, respondent had been under medical treatment
and unable to engage in gainful employment for more than 240 days. Pursuant
to the doctrine in Kestrel, the conclusive presumption that the respondent is
totally and permanently disabled thus arose.
In the same manner, the issue of which among the two diagnoses or opinions
should prevail that of Dr. Cruz or Dr. Vicaldo is rendered irrelevant in view of
the lapse of the said 240-day period. As far as the parties are concerned,
respondents medical treatment and disability continued for more than 240 days
without any finding or diagnosis by the company-designated physician that he
was fit to resume work. Thus, consonant with law and jurisprudence, respondent
is entitled to a declaration of permanent total disability, as well as the
corresponding benefit attached thereto in the amount of US$60,000.00.
93. INC. SHIPMANAGEMENT, INC., CAPTAIN SIGFREDO E. MONTERROYO
AND/OR INTERORIENT NAVIGATION LIMITED, v. ALEXANDER L.
MORADAS G.R. No. 178564 January 15, 2014
PAYMENT OF DISABILITY BENEFITS
DOCTRINE:
An employer shall be liable for the injury or illness suffered by a seafarer during
the term of his contract. There is no need to show that such injury is workrelated except that it must be proven to have been contracted during the term of
the contract. The rule, however, is not absolute and the employer may be
exempt from liability if he can successfully prove that the cause of the seamans
injury was directly attributable to his deliberate or willful act.
FACTS:
Respondent was employed as wiper for the vessel MV Commander by
petitioner INC Shipmanagement, Inc. for its principal, petitioner Interorient

Navigation, Ltd. Respondent claimed while working, certain chemicals splashed

all over his body because of an explosion. Respondent demanded for the
payment of his full disability benefits under Section 20 (B) in relation to Sections
30 and 30-A of the Philippine Overseas Employment Agency (POEA) Standard
Employment Contract (POEA-SEC), in the amount of US$60,000.00, which
petitioners refused to heed. Thus, respondent filed a complaint against
petitioners for the same.
Petitioners denied respondents claims, contending that his injury was selfinflicted and, hence, not compensable under Section 20 (D) of the POEA-SEC.
They denied that there was an explosion and claimed that respondent poured
thinners on himself and set himself on fire. They averred that he was led to
commit such act because he was to be dismissed for stealing supplies. They
also stated that before they discovered respondent burning, he caused flooding
in the engine room.
LA RULING: The LA ruled in favor of petitioners, dismissing respondents
complaint for lack of merit. The LA held that respondents injury was selfinflicted and that no incinerator explosion occurred that would have caused the
latters injuries.
NLRC RULING: The NLRC sustained the findings of the LA. It pointed out that
respondents mental or physical fitness was not at issue since he was motivated
to inflict injury to himself for reasons related to his impending discharge and not
because of his disposition.
CA RULING: CA found that the NLRC gravely abused its discretion. It found no
logical and causal connection between the act of pilferage as well as the act of
causing the flooding in the engine room and the conclusion that respondents
injury was self-inflicted. It added that it was contrary to human nature and
experience for respondent to burn himself.
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ISSUE: Is the petitioner liable to pay the permanent total disability benefits?
SC RULING:
NO. The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on
compensation and benefits for injury or illness was that an employer shall be
liable for the injury or illness suffered by a seafarer during the term of his
contract. There was no need to show that such injury was work-related except
that it must be proven to have been contracted during the term of the contract.
The rule, however, is not absolute and the employer may be exempt from
liability if he can successfully prove that the cause of the seamans injury was
directly attributable to his deliberate or willful act as provided under Section 20
(D) thereof.
Petitioners have successfully discharged the burden of proving by substantial
evidence that respondents injury was directly attributable to himself.
First, records bear out circumstances which all lead to the reasonable
conclusion that respondent was responsible for the flooding and burning
incidents. The LA and NLRC gave credence to the corroborating testimonies of
the crewmen pointing to respondent as the person who deliberately caused the
flooding incident. Second, respondents version that the burning was caused by
an accident is hardly supported by the evidence on record. In addition to
testimonies, an inspection of the incinerator after the incident showed that there
were unburnt cardboard cartons found inside with no sign of explosion and the
steel plates surrounding it were cool to the touch. Third, petitioners theory that
respondents burns were self-inflicted gains credence through the existence of
motive. Both the LA and the NLRC made a factual finding that prior to the
burning incident, respondent was caught pilfering the vessels supplies for which
he was told that he was to be relieved from his duties. This adequately supports
the reasonable conclusion that respondent may have harbored a grudge against
the captain and the chief steward who denied giving him the questioned items.
At the very least, it was natural for him to brood over feelings of resentment
considering his impending dismissal. These incidents shore up the theory that
he was motivated to commit an act of sabotage which, however, backfired into
his own burning.
All told, petitioners having established through substantial evidence that
respondents injury was self-inflicted and, hence, not compensable pursuant to
Section 20 (D) of the 1996 POEA-SEC.

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94. UNITED PHILIPPINE LINES, INC. AND HOLLAND AMERICA LINE, v.

GENEROSO E. SIBUG
G.R. No. 201072
April 2, 2014
VILLARAMA, JR., J.:
PHYSICIAN ASSESMENT RE: PERMANENT AND TOTAL DISABILITY
DOCTRINE:
Company-designated physicians must arrive at a definite assessment of the
seafarers fitness to work or permanent disability within the period of 120 or 240
days. If he fails to do so and the seafarers medical condition remains
unresolved, the latter shall be deemed totally and permanently disabled.
FACTS:
Petitioners hired Sibug as waste handler on the vessel M/S Volendam. While
cleaning, Sibug fell from a ladder and suffered from Anterior Cruciate Ligament
(ACL) which required surgery. After being declared fit for work, Sibug was
rehired by petitioners for the vessel M/S Ryndam. Sibug met another accident
injuring his right hand and wrist. He was repatriated and arrived in the
Philippines on Jan. 15, 2007. On Sep. 7, 2007, the company doctor issued a
medical report that Sibug has a permanent but incomplete disability. In an email
dated Sep. 28, 2007, the company doctor classified Sibugs disability as a grade
10 disability. Sibug filed two complaints for disability benefits, illness allowance,
damages and attorneys fees against petitioners.
LA RULING: Dismissed the Volendam case on the ground that Sibug was
declared fit to work after his ACL reconstruction surgery. As regards the Ryndam
case, the Labor Arbiter awarded to Sibug US$10,075 which is the equivalent
award for the grade 10 disability rating issued by the company-designated
doctor.
NLRC RULING: Reversed the LAs Decision granting Sibug permanent and total
disability benefit of US$60,000 for his Volendam injury and another US$60,000
for his Ryndam injury. On reconsideration it reinstated the LA decision.
CA RULING: Reinstated the NLRCs first decision ruling that Sibug was unable
to perform his customary work for more than 120 days on account of his
Volendam and Ryndam injuries. Thus, he is entitled to permanent and total
disability benefit for both injuries.
ISSUE: Is Sibug entitled to permanent and total disability benefits?
SC RULING:
Volendam Injury No.
Ryndam Injury Yes.

Sibug is not entitled to permanent and total disability benefit for his Volendam
injury since he became already fit to work again as a seaman. As regards his
Ryndam injury, Sibug is entitled to permanent and total disability benefit
amounting to US$60,000. The company-designated doctor failed to issue a
certification with a definite assessment of the degree of Sibugs disability
for his Ryndam injury within 240 days. In Fil-Pride Shipping Company, Inc., et
al. v. Balasta, we held that the "company-designated physician must arrive at a
definite assessment of the seafarers fitness to work or permanent disability
within the period of 120 or 240 days, pursuant to Article 192 (c)(1) of the Labor
Code and Rule X, Section 2 of the Amended Rules on Employees
Compensation. If he fails to do so and the seafarers medical condition remains
unresolved, the latter shall be deemed totally and permanently disabled." This
definite assessment of the seamans permanent disability must include the
degree of his disability, as required by Section 20-B of the POEA-SEC.
In this case, Sibug was repatriated and arrived in the country on January 15,
2007 after his Ryndam injury. On September 7, 2007, the company-designated
doctor issued a medical report that Sibug has a permanent but incomplete
disability. But this medical report failed to state the degree of Sibugs disability.
Only in an email dated September 28, 2007, copy of which was attached as
Annex 3 of petitioners position paper, was Sibugs disability from his Ryndam
injury classified as a grade 10 disability by the company-designated doctor. By
that time, however, the 240-day extended period when the company -designated
doctor must give the definite assessment of Sibugs disability had lapsed. From
January 15, 2007 to September 28, 2007 is 256 days. Hence, Sibugs disability
is already deemed permanent and total.
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95. MAGSAYSAY MARITIME CORPORATION, v.

OSCAR D. CHIN, JR. G.R. No. 199022 April 7,
2014
ABAD, J.:
PERMANENT AND TOTAL DISABILITY BENEFIT LOSS OF EARNING
CAPACITY
DOCTRINE:
After an award of disability compensation, an additional award for loss of
earnings will result in double recovery. In a catena of cases, the Court has
consistently ruled that disability should not be understood more on its medical
significance but on the loss of earning capacity. Permanent total disability
means disablement of an employee to earn wages in the same kind of work, or
work of similar nature that he was trained for or accustomed to perform, or any
kind of work which a person of his mentality and attainment could do. Disability,
therefore, is not synonymous with "sickness" or "illness." What is compensated
is ones incapacity to work resulting in the impairment of his earning capacity.
FACTS:
Thome Ship Management Pte. Ltd., acting through its agent petitioner
Magsaysay Maritime Corporation hired respondent Chin as seaman on board
MV Star Siranger. Chin sustained injuries while working on his job aboard the
vessel. Chin filed a claim for disability with Pandiman Phils., Inc. which is the
local agent of P&I Club of which Magsaysay Maritime is a member. Pandiman
offered US$30,000.00 as disability compensation which Chin accepted. He then
executed a Release and Quitclaim in favor of Magsaysay Maritime. Chin later
filed a complaint with (NLRC), claiming underpayment of disability benefits and
attorneys fees.
The LA dismissed it for lack of merit, which the NLRC affirmed. The CA reversed
the NLRC and ruled that Chin was entitled to permanent total disability benefit
of US$60,000.00. It remanded the case to the LA for determination of other
monetary awards. Magsaysay paid the deficiency award of US$30,000.00.
LA RULING: The LA ordered Magsaysay to pay Chin: a) P19,279.75 as
reimbursement for medical expenses; b) US$147,026.43 as loss of future
wages; c) P200,000.00 as moral damages; d) P75,000.00 as exemplary
damages; and e) 10% of the total award as attorneys fees.
NLRC RULING: modified the Labor Arbiters Decision by deleting the awards of
loss of future wages and moral and exemplary damages for lack of factual and
legal bases.
CA RULING: reversed NLRC; reinstated LA ruling

ISSUE: Is Chin entitled to an award of loss of future earnings on top of his

disability benefits?
SC RULING:
NO. The Labor Arbiters award of loss of earning is unwarranted since Chin had
already been given disability compensation for loss of earning capacity. An
additional award for loss of earnings will result in double recovery. In a catena of
cases, the Court has consistently ruled that disability should not be understood
more on its medical significance but on the loss of earning capacity. Permanent
total disability means disablement of an employee to earn wages in the same
kind of work, or work of similar nature that he was trained for or accustomed to
perform, or any kind of work which a person of his mentality and attainment
could do. Disability, therefore, is not synonymous with "sickness" or "illness."
What is compensated is ones incapacity to work resulting in the impairment of
his earning capacity.
Moreover, the award for loss of earning lacks basis since the Philippine
Overseas Employment Agency (POEA) Standard Contract of Employment
(POEA SCE), the governing law between the parties, does not provide for such
a grant. What Section 20, paragraph (G) of the POEA SCE provides is that
payment for injury, illness, incapacity, disability, or death of the seafarer covers
"all claims arising from or in relation with or in the course of the seafarers
employment, including but not limited to damages arising from the contract, tort,
fault or negligence under the laws of the Philippines or any other country." The
permanent disability compensation of US$60,000 clearly amounts to reasonable
compensation for the injuries and loss of earning capacity of the seafarer
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96. CARLO F. SUNGA, v. VIRJEN SHIPPING CORPORATION, NISSHO

ODYSSEY SHIP MANAGEMENT PTE. LTD., and/or CAPT. ANGEL
ZAMBRANO,
G.R. No. 198640
April 23, 2014
BRION, J.:
DISABILITY BENEFITS
DOCTRINE:
An accident pertains to an unforeseen event in which no fault or negligence
attaches to the defendant. It is "a fortuitous circumstance, event or happening;
an event happening without any human agency, or if happening wholly or partly
through human agency, an event which under the circumstances is unusual or
unexpected by the person to whom it happens."
FACTS:
Sunga was hired as fitter by Virjen Shipping Corporation (Virjen), acting in
behalf of its foreign principal, Nissho Odyssey Ship Management Pte. Ltd. While
on board the MT Sunway vessel, Sunga started to experience an on-and-off
right flank pain, making it difficult for him to work. Dr. Cruz issued a medical
certificate recommending a Grade 8 disability based on the POEA Standard
Employment Contract; and another recommending a disability rating of 25% in
accordance with the CBA. Based on these two certificates, Virjen offered US$
16,795.00 in accordance with the POEA -SEC. Sunga rejected the offer and
demanded disability benefits pursuant to the CBA. Virjen denied Sungas
demand prompting the latter to file a complaint for disability benefits. Virjen
claimed that the CBA requires that for permanent disability to be compensable,
the disability should be the result of an accident incurred during the course of
the seafarers employment. Virjen argued that Sunga failed to present any proof
that his disability was indeed the result of an accident.
LA RULING: In favour of Sunga. Ordered Virjen to pay US$110,000 pursuant to
the CBA. The result of the MRI revealed that Sunga had a herniated disc is
already a manifestation that the injury resulted from an accident, commonly
incurred through falling or by lifting heavy objects.
NLRC RULING: Affirmed the LA
CA RULING: Reversed the NLRC. The injury was not accidental since carrying
heavy objects can cause injury and that lifting and carrying heavy objects are
part of his duties as fitter. Thus, a back injury is reasonably anticipated. It
cannot serve as basis for Sunga to be entitled to disability benefits.
ISSUE: Is Sunga entitled to the benefits under the CBA?
SC RULING:

YES. Sunga did not incur the injury while solely performing his regular duties;
an intervening event transpired which brought upon the injury. To repeat, the
two other oilers who were supposed to help carry the weight of the 200-kilogram
globe valve lost their grasp of the globe valve. As a result, Sungas back
snapped when the entire weight of the item fell upon him. Notably, this incident
cannot be considered as foreseeable, nor can it be reasonably anticipated.
Sungas duty as a fitter involved changing the valve, not to routinely carry a
200-kilogram globe valve singlehandedly.
In Jarco Marketing Corporation, et al., v. Court of Appeals, we ruled that an
accident pertains to an unforeseen event in which no fault or negligence
attaches to the defendant. It is "a fortuitous circumstance, event or happening;
an event happening without any human agency, or if happening wholly or partly
through human agency, an event which under the circumstances is unusual or
unexpected by the person to whom it happens."
Since Sunga encountered an accident on board MT Sunway, the CA thus
grossly misappreciated and misread the ruling of the NLRC, leading the
appellate court to find a grave abuse of discretion sufficient for a reversal of the
NLRC ruling. In other words, as the NLRC found, Sunga's disability benefits
should fall within the coverage of the parties' CBA.

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97. D. M. CONSUNJI, INC., v. COURT OF APPEALS

and MARIA J. JUEGO G.R. No. 137873 April 20,
2001
KAPUNAN, J.:
EXCEPTION TO THE WAIVER BY ELECTION
DOCTRINE:
An injured worker has a choice of either to recover from the employer the fixed
amounts set by the Workmens Compensation Act or to prosecute an ordinary
civil action against the tortfeasor for higher damages but he cannot pursue both
courses of action simultaneously. However, if the choice of the first remedy was
based on ignorance or a mistake of fact, the choice is nullified as it was not an
intelligent choice.
FACTS:
On Nov. 2, 1990, Jose Juego, a construction worker of D. M. Consunji, Inc., fell
14 floors from the Renaissance Tower, resulting to his death. Jose Juegos
widow, Maria, filed in the RTC a complaint for damages against the deceaseds
employer, D.M. Consunji, Inc. The employer raised, among other defenses, the
widows prior availment of the benefits from the State Insurance Fund. Petitioner
argues that private respondent had previously availed of the death benefits
provided under the Labor Code and is, therefore, precluded from claiming from
the deceaseds employer damages under the Civil Code.
RTC RULING: Ruled in favour of Juego, awarding among others, damages.
CA RULING: Affirmed the RTC.
ISSUE: Is Juego precluded from recovering damages?
SC RULING:
No. An injured worker has a choice of either to recover from the employer the
fixed amounts set by the Workmens Compensation Act or to prosecute an
ordinary civil action against the tortfeasor for higher damages but he cannot
pursue both courses of action simultaneously. However, if the choice of the first
remedy was based on ignorance or a mistake of fact, the choice is nullified as it
was not an intelligent choice.
When a party having knowledge of the facts makes an election between
inconsistent remedies, the election is final and bars any action, suit, or
proceeding inconsistent with the elected remedy, in the absence of fraud by the
other party. The choice of a party between inconsistent remedies results in a
waiver by election. The claimant, by his choice of one remedy, is deemed to
have waived the other. However, ignorance of a material fact negates waiver.
Waiver cannot be established by a consent given under a mistake or

misapprehension of fact. That lack of knowledge of a fact that nullifies the

election of a remedy is the basis for the exception.
It bears stressing that what negates waiver is lack of knowledge or a mistake of
fact.
Private respondents case came under the exception because private
respondent was unaware of petitioners negligence when she filed her claim for
death benefits from the State Insurance Fund. Private respondent filed the civil
complaint for damages after she received a copy of the police investigation
report and the Prosecutors Memorandum dismissing the criminal complaint
against petitioners personnel.
There is also no showing that private respondent knew of the remedies
available to her when the claim before the ECC was filed. On the contrary,
private respondent testified that she was not aware of her rights.

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98. THE HEIRS OF THE LATE DELFIN DELA CRUZ, REPRESENTED BY HIS
SPOUSE, CARMELITA DELA CRUZ v. PHILIPPINE TRANSMARINE
CARRIERS, INC., REPRESENTED BY MR. CARLOS C. SALINAS
AND/OR TECTO BELGIUM N.V.
G.R. No. 196357
April 20, 2015
DEL CASTILLO, J.
THE 3-DAY MANDATORY REPORTING REQUIREMENT MUST BE
STRICTLY OBSERVED.
DOCTRINE:
The 3 -day mandatory reporting requirement must be strictly observed since
within 3 days from repatriation, it would be fairly manageable for the physician
to identity whether the disease was contracted during the term of his
employment or that his working conditions increased the risk of contracting the
ailment.
FACTS:
The late Delfin Dela Cruz was contracted for the position of Oiler by Philippine
Transmarine Carriers, a local manning agent for and in behalf of the latter's
principal, Tecto Belgium N.V. Delfin was declared Fit for Sea Servce and left the
Philippines on 16 August 2000 and immediately embarked the vessel "Lady
Hilde" on 17 August 2000.
While on board, he felt gradual chest pains and pain in his upper abdominal
region. In 2001, while performing his regular duties, he was hit by a metal board
on his back. He, thereafter, requested medical attention and was given
medications and advised to be given light duties for the rest of the week. Upon
the vessel's arrival at a convenient port on 16 August 2001, his contract expired
and he was signed off from the vessel. He reported to respondents as required.
He also sought medical assistance but was not extended such.
On 13 November 2003, Delfin sought for proper medical attention. Afterwards,
he was not employed by respondents because he was already incapacitated to
engage in his customary work. He filed his claim for sickness allowance from
the same manning agency but the same was not granted. His condition
deteriorated and was later diagnosed to be suffering from malignant peripheral
nerve sheath tumor [MPNST].
On 4 December 2003, he filed a complaint before the NLRC to, claim payment
for sickness allowance and disability compensation. Delfin averred that he is
entitled to sickness allowance because his inability to work and perform his
usual occupation after he acquired the sickness while on board, lasted for more
than 120 days.

Respondents, on the other hand, averred that the medical condition of Delfin
was not acquired or suffered during the term of his employment, that said
medical condition is not work-related, and, therefore, the said illness is not
compensable under the POEA Standard Employment Contract. Furthermore,
respondents asseverated that more than two years had elapsed from the time of
the termination of Delfin's employment in August 2001 up to the time the claim
was filed in November 2003, and thus the illness was not acquired during the
period of employment.
LA RULING: Delfin is ENTITLED to his claims. The LA opined that Delfin
contracted his illness during the period of his employment with respondents and
that such illness is a compensable occupational disease. Hence,
NLRC RULING: It REVERSED the LA decision.
CA RULING: AFFIRMED NLRC
ISSUE: Are petitioners, in behalf of the late Delfin Dela Cruz, entitled to
permanent disability benefits and sickness allowance?
SC RULING:
NO. The 1996 POEA SEC clearly provides that a seafarer must submit himself
to a post-employment medical examination within three days from his arrival in
the Philippines (mandatory reporting requirement) so that his claim for disability
and sickness allowance can prosper. The 3-day mandatory reporting
requirement must be strictly observed since within 3 days from repatriation, it
would be fairly manageable for the physician to identity whether the disease
was contracted during the term of his employment or that his working conditions
increased the risk of contracting the ailment.
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Whoever claims entitlement to the benefits provided by law should establish his
right to the benefits by substantial evidence" or "such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if
other equally reasonable minds might conceivably opine otherwise." Absent a
showing thereof, any decision set forth will only be based on unsubstantiated
allegations. Accordingly, the Court cannot grant a claim for disability benefits
without adequate substantiation for to do so will offend due process.
Petitioners failed to show the steps supposedly undertaken by Delfin to comply
with the mandatory reporting requirement. To the Court's mind, this lapse on
petitioners' part only demonstrates that Delfin did not comply with what was
incumbent upon him. The reasonable conclusion, therefore, is that at the time of
his repatriation, Delfin was not suffering from any physical disability requiring
immediate medical attendance. Otherwise, and even if his request for medical
assistance went unheeded, he would have submitted himself for check-up with
his personal physician. After all, the injury complained of by Delfin was a serious
one and it would seem illogical for him to just suffer in silence and bear the pain
for a considerable length of time. Moreover, while the rule on mandatory
reporting requirement is not absolute as a seafarer may show that he was
physically incapable to comply with the same by submitting a written notice to
the agency within the same three-day period, nowhere in the records does it
show that Delfin submitted any such notice. Clearly, petitioners failed to show
that Delfin complied with the mandatory reporting requirement. Thus, he is
deemed to have forfeited his right to claim disability benefits and sickness
allowance.

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Social Security System

(SSS) Law
99. SOCIAL SECURITY COMMISSION v.
EDNA A. AZOTE G.R. No. 209741 April
15, 2015
MENDOZA, J.
DESIGNATION OF BENEFICIARY MUST CONFORM TO THE STATUTE.
DOCTRINE:
Although an SSS member is free to designate a beneficiary, the designation
must always conform to the statute. To blindly rely on the form submitted by the
deceased-member would subject the entire social security system to the whims
and caprices of its members and would render the SS Law inutile.
FACTS:
On June 19, 1992, respondent Edna and Edgardo, a member of the Social
Security System (SSS), were married. Their union produced six children. In
1994, Edgardo submitted Form E- 4 to the SSS with Edna and their three older
children as designated beneficiaries. Thereafter or on September 7, 2001,
Edgardo submitted another Form E-4 to the SSS designating his three younger
children as additional beneficiaries.
On January 13, 2005, Edgardo passed away. Shortly thereafter, Edna filed her
claim for death benefits with the SSS as the wife of a deceased-member. It
appeared, however, from the SSS records that Edgardo had earlier submitted
another Form E-4 on November 5, 1982 with a different set of beneficiaries,
namely: Rosemarie Azote (Rosemarie), as his spouse; and Elmer Azote
(Elmer), as dependent, born on October 9, 1982. Consequently, Ednas claim
was denied. Her children were adjudged as beneficiaries and she was
considered as the legal guardian of her minor children. The benefits, however,
would be stopped once a child would attain the age of 21.
On March 13, 2007, Edna filed a petition with the SSC to claim the death
benefits, lump sum and monthly pension of Edgardo. 7 She insisted that she was
the legitimate wife of Edgardo. In its answer, the SSS averred that there was a
conflicting information in the forms submitted by the deceased. Summons was
published in a newspaper of general circulation directing Rosemarie to file her
answer. Despite the publication, no answer was filed and Rosemarie was
subsequently declared in default.
SSC RULING: Edna is NOT ENTITLED to the benefits. The SSC dismissed
Ednas petition for lack of merit. Citing Section 24(c) of the SS Law, it explained
that although Edgardo filed the Form E-4 designating Edna and their six
children as beneficiaries, he did not revoke the designation of Rosemarie as his
wife-beneficiary, and Rosemarie was still presumed to be his legal wife.

CA RULING: Reversed SSC decision.

ISSUE: Is respondent entitled to claim the SSS death benefit and pension of
Edgardo?
SC RULING:
NO. Under R. A. No. 8282, the law in force at the time of Edgardos death, only
the legal spouse of the deceased- member is qualified to be the beneficiary of
the latters SS benefits. In this case, there is a concrete proof that Edgardo
contracted an earlier marriage with another individual as evidenced by their
marriage contract and Edgardos acknowledgment of his married status when
he filled out the 1982 Form E-4 designating Rosemarie as his spouse.
The updated Form E-4 of Edgardo was not determinative of Ednas status and
eligibility to claim the death benefits of deceased- member. Although an SSS
member is free to designate a beneficiary, the designation must always conform
to the statute. To blindly rely on the form submitted by the deceased- member
would subject the entire social security system to the whims and caprices of its
members and would render the SS Law inutile.
Although the SSC is not intrinsically empowered to determine the validity of
marriages, it is required by Section 4(b) (7) of R.A. No. 8282 to examine
available statistical and economic data to ensure that the benefits fall into the
rightful beneficiaries. The existence of two Form E- 4s designating, on two
different dates, two different women as his spouse is already an indication that
only one of them can be the legal spouse. It should be
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emphasized that the SSC determined Ednas eligibility on the basis of available
statistical data and documents on their database as expressly permitted by
Section 4(b) (7) of R.A. No. 8282.

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100. SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM

vs. TERESA G. FAVILA
G.R. No. 170195
March 28, 2011
DEL CASTILLO, J.
FACTORS FOR SPOUSE TO BE CONSIDERED AS PRIMARY BENEFICIARY
DOCTRINE:
A spouse who claims entitlement to death benefits as a primary beneficiary
under the Social Security Law must establish two qualifying factors, to wit: (1)
that he/she is the legitimate spouse; and (2) that he/she is dependent upon the
member for support.
FACTS:
On August 5, 2002, respondent Teresa G. Favila (Teresa) filed a Petition before
petitioner SSC. She averred therein that after she was married to Florante
Favila (Florante) on January 17, 1970, the latter designated her as the sole
beneficiary in the E-1 Form he submitted before petitioner Social Security
System (SSS) . When they begot their children Jofel, Floresa and Florante II,
her husband likewise designated each one of them as beneficiaries. When
Florante died on February 1, 1997, his pension benefits under the SSS were
given to their only minor child at that time, Florante II, but only until his
emancipation at age 21. Believing that as the surviving legal wife she is likewise
entitled to receive Florantes pension benefits, Teresa subsequently filed her
claim for said benefits before the SSS.
In its Answer, SSS averred that the claim for Florantes pension benefits was
initially settled in favor of Teresa as guardian of the minor Florante II. SSS also
alleged that Estelita Ramos, sister of Florante, wrote a letter stating that her
brother had long been separated from Teresa. She alleged therein that the
couple lived together for only ten years and then decided to go their separate
ways because Teresa had an affair with a married man.
SSC RULING: The SSC ruled that she is DISQUALIFIED from claiming the
death benefits because she was deemed not dependent for support from
Florante due to marital infidelity.
CA RULING: The CA REVERSED the SSC decision. It gave weight to the fact
that she is a primary beneficiary because she is the lawful surviving spouse of
Florante and in addition, she was designated by Florante as such beneficiary.
ISSUE:
Is Teresa a primary beneficiary in contemplation of the Social Security Law as to
be entitled to death benefits accruing from the death of Florante?
SC RULING:

NO. A spouse who claims entitlement to death benefits as a primary beneficiary

under the Social Security Law must establish two qualifying factors, to wit: (1)
that he/she is the legitimate spouse; and (2) that he/she is dependent upon the
member for support.
There is no question that Teresa was Florantes legal wife. However, Teresa
failed to show that despite their separation she was dependent upon Florante
for support at the time of his death. Aside from Teresas bare allegation that she
was dependent upon her husband for support and her misplaced reliance on the
presumption of dependency by reason of her valid and then subsisting marriage
with Florante, Teresa has not presented sufficient evidence to discharge her
burden of proving that she was dependent upon her husband for support at the
time of his death. She could have done this by submitting affidavits of reputable
and disinterested persons who have knowledge that during her separation with
Florante, she does not have a known trade, business, profession or lawful
occupation from which she derives income sufficient for her support and such
other evidence tending to prove her claim of dependency. While we note from
the abovementioned SSS Memorandum that Teresa submitted affidavits
executed by Napoleon Favila and Josefina Favila, same only pertained to the
fact that she never remarried nor cohabited with another man. On the contrary,
what is clear is that she and Florante had already been separated for about 17
years prior to the latters death as Florante was in fact, living with his common
law wife when he died. Suffice it to say that "whoever claims entitlement to the
benefits provided by law should establish his or her right thereto by substantial
evidence."
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101. ROMARICO J. MENDOZA vs. PEOPLE

OF THE PHILIPPINES G.R. No. 183891 August
3, 2010
CARPIO MORALES, J.
MANAGING HEAD- MEANING
DOCTRINE:
The term "managing head" in Section 28(f) is used, in its broadest connotation,
not to any specific organizational or managerial nomenclature.
FACTS:
An Information was filed against petitioner, being the proprietor of Summa Alta
Tierra Industries, Inc. (SATII), for failure and/or refusal to remit the SSS
premium contributions in favor of its employees, in violation of Sec. 22(a) and
(d) in relation to Sec. 28 of Republic Act No. 8282, as amended.
The monthly premium contributions of SATII employees to SSS which petitioner
admittedly failed to remit covered the period August 1998 to July 1999
amounting to P421, 151.09 inclusive of penalties. After petitioner was advised
by the SSS to pay the above-said amount, he proposed to settle it over a period
of 18 months which proposal the SSS approved.
Despite the grant of petitioners request for several extensions of time to settle
the delinquency in installments, petitioner failed, hence, his indictment.
Petitioner maintains that the managing head or president or general manager of
a corporation is not among those specifically mentioned as liable in the abovequoted Section 28(f). And he calls attention to an alleged congenital infirmity in
the Information in that he was charged as "proprietor" and not as director of
SATII.
RTC RULING: Found Mendoza GUILTY for failure to remit the Social Security
System (SSS) premium contributions of employees of the SATII of which he
was president.
CA RULING: AFFIRMED the RTC decision
ISSUE:
Is Mendoza guilty of violation of RA 8282 (SSS Law)?
SC RULING:
YES. Section 28(f) of the Act reads:
(f) If the act or omission penalized by this Act be committed by an
association, partnership, corporation or any other institution, its managing
head, directors or partners shall be liable for the penalties provided in this
Act for the offense.

The provision of the law being clear and unambiguous, petitioners interpretation
that a "proprietor," as he was designated in the Information, is not among those
specifically mentioned under Sec. 28(f) as liable, does not lie. For the word
connotes management, control and power over a business entity. No need to
resort to statutory construction for Section 28(f) of the Social Security Law
imposes penalty on: (1) the managing head; (2) directors; or (3) partners, for
offenses committed by a juridical person. The term "managing head" in Section
28(f) is used, in its broadest connotation, not to any specific organizational or
managerial nomenclature. To heed petitioners reasoning would allow
unscrupulous businessmen to conveniently escape liability by the creative
adoption of managerial titles.

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102. YOLANDA SIGNEY vs. SOCIAL SECURITY SYSTEM, EDITHA

ESPINOSA-CASTILLO, and GINA SERVANO, representative of GINALYN
and RODELYN SIGNEY
G.R. No. 173582
January 28, 2008
TINGA, J.
QUALIFIED DEPENDENTS UNDER SSS LAW
DOCTRINE:
The dependent shall be the following:
(1)The legal spouse entitled by law to receive support from the member;
(2)The legitimate, legitimated, or legally adopted, and illegitimate child who is
unmarried, not gainfully employed and has not reached twenty-one years
(21) of age, or if over twenty-one (21) years of age, he is congenitally or
while still a minor has been permanently incapacitated and incapable of
self-support, physically or mentally; and
(3)The parent who is receiving regular support from the member.
FACTS:
Rodolfo Signey, Sr., a member of the SSS, died on 21 May 2001. In his
members records, he had designated Yolanda Signey (petitioner) as primary
beneficiary and his four children with her as secondary beneficiaries. On 6 July
2001, petitioner filed a claim for death benefits with the public respondent SSS.
She revealed in her SSS claim that the deceased had a common-law wife, Gina
Servano (Gina), with whom he had two minor children namey, Ginalyn Servano
(Ginalyn), born on 13 April 1996, and Rodelyn Signey (Rodelyn), born on 20
April 2000.
Petitioners declaration was confirmed when Gina herself filed a claim for the
same death benefits on 13 July 2001 in which she also declared that both she
and petitioner were common-law wives of the deceased and that Editha
Espinosa (Editha) was the legal wife.
In addition, in October 2001, Editha also filed an application for death benefits
with the SSS stating that she was the legal wife of the deceased.
The SSS denied the death benefit claim of petitioner. Thereafter, petitioner filed
a petition with the SSC in which she attached a waiver of rights executed by
Editha.
SSC RULING: DENIED the claim of petitioner Yolanda. The SSC gave more
weight to the SSS field investigation and the confirmed certification of marriage
showing that the deceased was married to Editha on 29 October 1967, than to
the aforestated declarations of Editha in her waiver of rights.
CA RULING: AFFIRMED the SSC decision.

ISSUE: Who is entitled to the social security benefits of a Social Security

System (SSS) member who was survived not only by his legal wife, but also by
two common-law wives with whom he had six children?
SC RULING:
Ginalyn and Rodelyn, the minor children of the deceased with Gina.
The records disclosed that the deceased had one legitimate child, Ma. Evelyn
Signey, who predeceased him, and several illegitimate children with petitioner
and with Gina. Based on their respective certificates of live birth, the deceased
SSS members four illegitimate children with petitioner could no longer be
considered dependents at the time of his death because all of them were over
21 years old when he died on 21 May 2001, the youngest having been born on
31 March 1978. On the other hand, the deceased SSS members illegitimate
children with Gina were qualified to be his primary beneficiaries for they were
still minors at the time of his death, Ginalyn having been born on 13 April 1996,
and Rodelyn on 20 April 2000.
Section 8(e) and (k) of R.A. No. 8282 provides:
SEC. 8. Terms Defined.For the purposes of this Act, the following terms
shall, unless the context indicates otherwise, have the following
meanings:
xxx
(e) Dependents The dependent shall be the following:
(1) The legal spouse entitled by law to receive support from the
member;