4G – JAZMIN, Jendy F.

PAGE
CASE TITLE
NO.

People v. Chua, March 10, 2010 1

People v. Gallo, June 29, 2010 3
Yap v. Thenamaris Ship Management, May 30, 2011 5
People v. Panis, 142 SCRA 667 7
Trans Action v. DOLE Secretary, September 5, 1997 9
Republic v. Principalia Management Inc. April 19, 2006 11
Datuman v. First Cosmopolitan Manpower, November 14, 2008 13

MANALIGOD, Antonio Jun-Jun IV C.

PAGE
CASE TITLE
NO.
Stolt- Nielsen Transportation v. Medequillo, January 18, 2012 15
People v. Dela Piedra, January 24, 2001 17
Estate of Nelson Dulay v. Aboitiz Jebsen, June 13, 2012 19
Santiago v. CF Sharp Crew Management, July 10, 2007 21
Sameer Overseas Placement v. Cabilles, August 5, 2014 23
IPMS v. Arriola, March 7, 2016 25
Sunace International Management v. NLRC, January 25, 2006 28
Maersk- Filipinas Crewing Inc. v. Avestruz, February 18, 2015 30
Gagui v. Dejero, October 23, 2013 31
AMCOW v. GCC Approved Medical Centers, December 6, 2016
Gargallo v. DOHLE Seafront Crewing, August 17, 2016 33
Princess Talent Center v. Masagca, April 11, 2018 35
David v. Marquez, June 5, 2017 39
Powerhouse Staff Builders v. Romelia Rey, November 7, 2016 41

MANUEL, Justine Lei P.

PAGE
CASE TITLE
NO.

Corpuz v. Gerwil Crewing Philippines, January 18, 2021 44

Century Canning Corp v. CA, August 17, 2007 46
Bernardo v. NLRC, July 12, 1999 49
Javier v. Fly Ace, 15 February 2012. 52
South East International Rattan v. Coming, 12 March 2014 56
Tenazas v. R. Villegas Taxi Transport, 2 April 2014 59
Sagun v. ANZ Global, G.R. No. 220399, 22 August 2016 63
LVN Pictures Inc. v. Phil. Musicians Guild (110 Phil. 725) 66
 Paguio Transport Corporation v. NLRC, 28 August 1998. 68
Teng v. Pahagac, G.R. No. 169704, 17 November 2010. 71
Dy Keh Beng v. International Labor, L-32245, 25 May 1979. 74
Insular Life Assurance Co. v. NLRC, 15 November 1989. 77
Tongko v. Manufacturer’s Life Insurance, 29 June 2010 81
AFP Mutual Benefit Association v. NLRC, 28 January 1997. 86

MARQUEZ, Jones Harvey I.

PAGE
CASE TITLE
NO.

Encyclopedia Britannica v. NLRC, 4 November 1996 89

HSY Marketing v. Villastique, 17 August 2016 92
Coca Cola v. Climaco, 5 February 2007 96
Corporal v. NLRC, 2 October 2000, 341 SCRA 658. 99
Maraguinot v. NLRC, 22 January 1998, 284 SCRA 539. 101
Calamba Medical Center v. NLRC, 25 November 2008. 104
Jardin v. NLRC, 23 February 2000, 326 SCRA 299. 106
Sonza v. ABS-CBN Broadcasting Corporation, 10 June 2004. 109
Orozco v. Court of Appeal, 13 August 2008. 113
Television And Production v. Servaña, 28 January 2008. 118
Francisco v. NLRC, 31 August 2006. 121
WPP Marketing Communications, Inc. v. Galera, 25 March 2010. 124
Matling Industrial v. Coros, 13 October 2010. 127
Malcaba v. Prohealth Pharma Philippines, 6 June 2018. 129

MIGUEL, Reuchelle P.
PAGE
CASE TITLE
NO.
Republic v. Asiapro Cooperative, 23 November 2007. 134
Locsin et. al. v. PLDT, October 2, 2009 136
Professional Services v. CA, February 11, 2008 139
Tenazas et. al. v. R. Villegas Taxi Transport, April 2, 2014. 143
Dumpit Murillo v. CA, June 28, 2011 148
Bernarte v. PBA, September 14, 2011 150
Professional Services Inc. v. CA, February 11, 2008 152
Chavez v. NLRC, January 17, 2005 156
Coca-cola Bottlers Inc. v. Climaco, February 2007 159
Felix v. Buenaseda, January 7, 1995 162
Autobus Transport v. Bautista 164
David v. Macasio , July 4, 2014 167
Begino v. ABS-CBN, April 20, 2015 170
 Chevron Phils. v. Galit, October 7, 2015 172

PABLO, Jedia Jane M.

PAGE
CASE TITLE
NO.

Weslayan University Phils. v. Maglaya, January 23, 2017 174

Nestle Phil. v. Pineda, January 30, 2017 177
Valenzuela v. Alexandra Mining Ventures, October 5, 2016 179
Bishop Shinji Amari v. Villaflor, February 17, 2020 182
San Miguel Corporation v. Etcuban, 3 December 1999 185
Kawachi v. Del Quero, 27 March 2007 188
Eviota v. Court of Appeals, 29 July 2003 190
Indophil Textile Mills v. Adviento, 4 August 2014 192
Ramil v. Stoneleaf Inc. June 17, 2020 195
Autobus Transport Systems v. Bautista May 16, 2005 197
Songco et. al. v. NLRC, March 23, 1990 200
Millares et. al v. NLRC, March 29, 1999 202
SLL International Cables Specialist v. NLRC, March 2, 2011 204
Central Azucarera de Tarlac v. Central Azucarera de Tarlac
207
Labor Union, July 26, 2010

PAGGAO, Jaime Nikolai K.

PAGE
CASE TITLE
NO.
American Wire and Cable Daily Rated Employees Union v.
210
American Wire and Cable Co. Inc., April 29, 2005
TSPIC Corp v. TSPIC Employees Union (FFW), February 13,
212
2008
Lepanto Ceramics Inc. v. Lepanto Ceramics Employees
214
Association, March 2, 2010
Eastern Telecom Phils. v. Eastern Telecoms Employees Union,
216
February 8, 2012
Kondo v. Toyota, September 11, 2019 219
GSIS v. NLRC, November 17, 2010 222
Aliviado et. al. v. Proctor and Gamble Philippines, June 6, 2011 224
Mandaue Galleon Trade Inc. v. Andales, et. al, March 7, 2008 227
Spic n’span Services Corporation v. Paje et. al., August 25, 2010 229
Alaska case, November 21, 2019 (job contracting) 231
DBP v. NLRC, March 1, 1995 235
Hoegh Fleet Services Phil. v. Turallo, July 26, 2017 237
Gutierrez v. Nawraz November 27, 2019 240
PANTINO, Junna Lynne R.
PAGE
CASE TITLE
NO.

Alva v. High Capacity Security Force, November 8, 2017 243

SHS Perforated Materials Inc. v. Diaz, October 13, 2010 245
Panaligan v. Phyrith Enterprises Corp., June 21, 2017 247
P.I. Manufacturing Inc. v. P.I. Manufacturing Supervisors and
250
Forman Association, February 4, 2008
Bankard Employees Union-Workers Alliance Trade Unions v.
252
NLRC, February 17, 2004
People’s Broadcasting Service v. Secretary of Labor, March 6,
254
2012
Hanson v. Secretary of Labor, February 11, 2008 257
Balladares et. al. v. Peak Ventures Corporation , June 16, 2009 259
Allied Investigation Bureau v. Sec of Labor, November 24, 1999 262
Urbanes v. Sec of Labor, February 19, 2003 265
Zialcita v. PAL February 20, 1977 267
Star Paper Corporation v. Simbol, April 12, 2006 269
Domingo v. Rayala, February 18, 2008 271

QUINTON, Athenai Frances R.

PAGE
CASE TITLE
NO.
Phil. Aeolus Automotive United Corp. v. NLRC, April 28, 2000 274
LBC v. Palco, February 12, 2020 277
GSIS v. CA, January 2008 280
Salome v. ECC, September 26, 2000 283
Heirs of Deauna v. Fil Star Maritime Corporation, June 20, 2012 285
Debaudin v. SSS, September 21, 2007 288
Austria v. CA, August 12, 2002 290
Gatus v. SSS, January 26, 2011 292
Republic of the Phils. v. Mariano, March 28, 2003 295
Magsaysay Maritime Corporation v. Lobusta, January 25, 2012 298
SSS v. Azote, April 15, 2015 301
Marlow Navigation v. Ganal, June 7, 2017 303
Seapower Shipping v. Subanal, June 19, 2017 306
WILSON, Angeline V.
PAGE
CASE TITLE
NO.

GSIS v. Pauig, January 30, 2017 309

CF Sharp v. Castillo, April 19, 2017 311
Lemancito v. BSM Crew Service Center, February 3, 2020 313
Abundo v. Magsaysay Maritime, November 20, 2019 316
Phil. Transmarine Carrier v. Manzano, March 18, 2021 320
SSC v. Azcote, April 15, 2015 323
SSS v. Favilla, March 28, 2011 325
Mendoza v. People, August 3, 2010 328
SSS v. Signey, January 28, 2008 330
SSS v. Jarque, March 24, 2006 333
Gersip Association v. GSIS, October 16, 2013 335
GSIS v. De Leon, November 17, 2010 339
GSIS v. Alcaraz, February 6, 2013 341
 Page 1

Case Digest by: JAZMIN, JENDY F.

PEOPLE v CHUA
G.R. No. 184058. March 10, 2010.
Carpio-Morales, J.

DOCTRINE:
ILLEGAL RECRUITMENT
Any recruitment activities to be undertaken by non-licensee or non-
holder of contracts, or as in the present case, an agency with an
expired license, shall be deemed illegal and punishable under Article
39 of the Labor Code of the Philippines. And illegal recruitment is
deemed committed in large scale if committed against three or more
persons individually or as a group.

FACTS:
Melissa Chua was indicted for Illegal Recruitment (Large Scale)
and was convicted thereof by the Regional Trial Court of Manila. She
was also convicted for 3 counts of Estafa.

According to the plaintiffs, they paid appellant placement fees

upon the latter’s assurance that they could work in Taiwan as factory
workers. However, appellant welched on her promise to deploy them
and failed to refund their money despite demand. They later learned
that appellant was not a licensed recruiter and that Golden Gates’
license had already expired.

Chua denied the charges. She claimed that she worked as a

temporary cashier at the office of Golden Gate (owned by Marilyn
Calueng). She maintained that Golden Gate was a licensed
recruitment agency and that Josie, who is her godmother, was an
agent.She admitted receiving 80,000 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 Calueng whose present whereabouts she did not know.

ISSUE:
Whether or not Chua is guilty of illegal recruitment in large scale?

RULING:
YES. The term recruitment and placement is defined under Article
13(b) of the Labor Code of the Philippines as any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring
 Page 2

workers, and includes referrals, contract services, promising or

advertising for employment, locally or abroad, whether for profit or not.
Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement. On the other hand,
illegal recruitment is defined under Article 38, paragraph (a) of the
Labor Code, as amended.

From the foregoing provisions, it is clear that any recruitment

activities to be undertaken by non-licensee or non-holder of contracts,
or as in the present case, an agency with an expired license, shall be
deemed illegal and punishable under Article 39 of the Labor Code of
the Philippines. And illegal recruitment is deemed committed in large
scale if committed against three or more persons individually or as a
group.

Thus for illegal recruitment in large scale to prosper, the

prosecution has to prove three essential elements, 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.

Even if appellant 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 appellant 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
appellant was, aside from Estafa, convicted of such offense.
 Page 3

Case Digest by: JAZMIN, JENDY F.

PEOPLE v GALLO
G.R. No. 187730. June 29, 2010.
Velasco, Jr., J.

DOCTRINE:
SYNDICATED ILLEGAL RECRUITMENT
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; 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:
Rodolfo Gallo and his co-accused were charged with syndicated
illegal recruitment and 18 counts of estafa. According to the
complainants, Gallo informed them that the agency was able to send
many workers abroad. They were briefed about the placement fee of
150,000 with a downpayment of 45,000 and the balance to be paid
through salary deduction. With accused-appellant’s assurance that
many workers have been sent abroad, as well as the presence of the
two (2) Korean nationals and upon being shown the visas procured for
the deployed workers, Dela Caza was convinced to part with his money.

Two (2) weeks after paying MPM Agency, Dela Caza went back
to the agency’s office in Malate, Manila only to discover that the office
had moved to a new location at Batangas Street, Brgy. San Isidro,
Makati. He proceeded to the new address and found out that the
agency was renamed. Dela Caza decided to withdraw his application
and recover the amount he paid; Gallo even denied any knowledge
about the money. After two (2) more months of waiting in vain to be
deployed, Dela Caza and the other applicants decided to take action.

Accused-appellant 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; in order to facilitate the
processing of his papers, he agreed to perform some tasks for the
agency, such as taking photographs of the visa and passport of
 Page 4

applicants, running errands and performing such other tasks assigned

to him, without salary except for some allowance. He said that he only
saw Dela Caza one or twice at the agency’s office when he applied for
work abroad. Lastly, that he was also promised deployment abroad but
it never materialized.

ISSUE:
Whether or not accused-appellant is guilty of illegal recruitment
committed by as syndicate and estafa?

RULING:
YES. 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; 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.

Under Art. 13(b) of the Labor Code, recruitment and placement

refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad,
whether for profit or not.

Here, the evidence readily reveals that MPM Agency was never
licensed by the POEA to recruit workers for overseas employment.
Even with a license, however, illegal recruitment could still be
committed under Section 6 of Republic Act No. 8042 (R.A. 8042),
otherwise known as the Migrants and Overseas Filipinos Act of 1995.

In the instant case, accused-appellant committed the acts

enumerated in Sec. 6 of R.A. 8042. Testimonial evidence shows that,
in consideration of a promise of foreign employment, he received the
amount of Php 45,000.00 from Dela Caza. When accused-appellant
made misrepresentations concerning the agency’s purported power
and authority to recruit for overseas employment, and in the process,
collected money in the guise of placement fees, the former clearly
committed acts constitutive of illegal recruitment.
 Page 5

Case Digest by: JAZMIN, JENDY F.

YAP v THENAMARIS SHIP MANAGEMENT

G.R. No. 179532. May 30, 2011.
Nachura, J.

DOCTRINE:
SECTION 10 OF R.A. NO. 8042
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 is unconstitutional for being violative of the rights of Overseas
Filipino Workers (OFWs) to equal protection of the laws.

FACTS:
Claudia Yap was employed as an electrician of the vessel, M/T
SEASCOUT by Intermare Maritime Agencies, Inc., in behalf of its
principal, Vulture Shipping Limited for a duration of 12 months.
However, on or about November 8, 2001, before the expiration of the
contract, the vessel was sold. Yap received his seniority bonus,
vacation bonus, extra bonus along with the scrapping bonus. However,
with respect to the payment of his wage, he refused to accept the
payment of one-month basic wage. He insisted that he was entitled to
the payment of the unexpired portion of his contract since he was
illegally dismissed from employment. He alleged that he opted for
immediate transfer but none was made.

Petitioner filed a complaint for Illegal Dismissal with Damages and

Attorneys Fees before the Labor Arbiter (LA). He claimed that he was
entitled to the salaries corresponding to the unexpired portion of his
contract. Subsequently, he filed an amended complaint, impleading
Captain Francisco Adviento of respondents Intermare Maritime
Agencies, Inc. (Intermare) and Thenamaris Ships Management
(respondents), together with C.J. Martionos, Interseas Trading and
Financing Corporation, and Vulture Shipping Limited/Stejo Shipping
Limited.

Respondents for their part, contended that Yap was not illegally
dismissed. They alleged that following the sale of the M/T SEASCOUT,
Yap signed off from the vessel on 10 November 2001 and was paid his
wages corresponding to the months he worked or until 10 November
2001 plus his seniority bonus, vacation bonus and extra bonus. They
further alleged that Yap’s employment contract was validly terminated
due to the sale of the vessel and no arrangement was made for Yaps
transfer to Thenamaris other vessels.
 Page 6

The NLRC held that instead of an award of salaries corresponding

to nine months, petitioner was only entitled to salaries for three months
as provided under Section 10 of Republic Act (R.A.) No. 8042, as
enunciated in the ruling in Marsaman Manning Agency, Inc. v. National
Labor Relations Commission.

ISSUE:
Whether or not Section 10 of R.A. 8042, to the extent that it affords
an illegally dismissed migrant worker the lesser benefit of "salaries for
[the] unexpired portion of his employment contract for three (3) months
for every year of the unexpired term, whichever is less" is constitutional?

RULING:
NO. In the meantime, while this case was pending, the Court
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 in the case of Serrano v.
Gallant Maritime Services, Inc. on March 24, 2009 for being violative
of the rights of Overseas Filipino Workers (OFWs) to equal protection
of the laws.

The Court concludes that the subject clause contains a suspect

classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-
month cap on the claim of OFWs with an unexpired portion of one year
or more in their contracts, but none on the claims of other OFWs or
local workers with fixed-term employment. The subject clause singles
out one classification of OFWs and burdens it with a peculiar
disadvantage.

Moreover, this Court held therein that the subject clause does not
state or imply any definitive governmental purpose; hence, the same
violates not just therein petitioners right to equal protection, but also
his right to substantive due process under Section 1, Article III of the
Constitution. Consequently, petitioner therein was accorded his
salaries for the entire unexpired period of nine months and 23 days of
his employment contract, pursuant to law and jurisprudence prior to
the enactment of R.A. No. 8042.
 Page 7

Case Digest by: JAZMIN, JENDY F.

PEOPLE v PANIS
G.R. Nos. L-58674-77. July 11, 1990.
Cruz, J.

DOCTRINE:
ILLEGAL RECRUITMENT
The number of persons dealt with is NOT an essential ingredient of the
act of recruitment and placement of workers. The words “shall be
deemed” merely creates that presumption.

FACTS:
Four informations were filed in the Court of First Instance of
Zambales and Olongapo City alleging that Serapio Abug, private
respondent herein, "without first securing a license from the Ministry of
Labor as a holder of authority to operate a fee-charging employment
agency, did then and there wilfully, unlawfully and criminally operate a
private fee charging employment agency by charging fees and
expenses (from) and promising employment in Saudi Arabia" to four
separate individuals named therein, in violation of Article 16 in relation
to Article 39 of the Labor Code.

Abug 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.”

ISSUE:
Whether or not the crime of illegal recruitment be commited
against two or more persons?

RULING:
NO. The Court ruled that the number of persons is not an essential
ingredient of the act of recruitment and placement of workers. — “As
we see it, the proviso was intended neither to impose a condition on
the basic rule nor to provide an exception thereto but merely to create
a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with
two or more persons to whom, in consideration of a fee, an offer or
promise of employment is made in the course of the “canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers.” The number of persons dealt with is not an essential
 Page 8

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.”
 Page 9

Case Digest by: JAZMIN, JENDY F.

TRANS ACTION OVERSEAS CORPORATION v DOLE

SECRETARY
G.R. No. 109583. September 5, 1997.
Romero, J.

DOCTRINE:
CANCELLATION OR REVOCATION OF PRIVATE FEE-CHARGING
EMPLOYMENT AGENCY LICENSE
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:
Trans Action Overseas Corporation, 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 petitioner's employees, Luzviminda
Aragon, Ben Hur Domincil and his wife Cecille. The applicants paid
placement fees ranging from P1,000.00 to P14,000.00, but petitioner
failed to deploy them. Their demands for refund proved unavailing;
thus, they were constrained to institute complaints against petitioner
for violation of Articles 32 and 34(a) of the Labor Code, as amended.

Petitioner denied having received the amounts allegedly collected

from respondents, and averred that Aragon, whose only duty was to
pre-screen and interview applicants, and the spouses Domincil were
not authorized to collect fees from the applicants. Accordingly, it cannot
be held liable for the money claimed by respondents. Petitioner
maintains that it even warned respondents not to give any money to
unauthorized individuals.

ISSUE:
Whether or not the Secretary of Labor and Employment has
jurisdiction to cancel or revoke the license of a private fee-charging
employment agency?

RULING:
YES. 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 and Employment.
 Page 10

In the case of Eastern Assurance and Surety Corp v. SOLE, it was

held that the penalties of suspension and cancellation of license or
authority are prescribed for violations of the above quote provisions
among others. And the Secretary of Labor has the power under
Section 35 of the law to apply these sanctions, as well as the authority,
conferred by Section 36, not only to “restrict and regulate the
recruitment and placement activities of all agencies,” but also to
“promulgate rules and regulations to carry put the objectives and
implement the provisions” governing said activities.

This power conferred upon the Secretary of Labor and

Employment was echoed in People v. Diaz, viz.: A non-licensee or
non-holder of authority means any person, corporation or entity which
has not been issued a valid license or authority to engage in
recruitment and placement by the Secretary of Labor, or whose license
or authority has been suspended, revoked or cancelled by the POEA
or the Secretary.
 Page 11

Case Digest by: JAZMIN, JENDY F.

REPUBLIC v PRINCIPALIA MANAGEMENT AND

PERSONNEL CONSULTANTS INC.
G.R. No. 167639. April 19, 2006.
Ynares-Santiago, J.

DOCTRINE:
CANCELLATION OF THE LICENSE TO RECRUIT
The immediate execution of a suspension or cancellation of the license
to recruit and process documents for Filipino interested to work abroad
before final adjudication or pending appeal would be premature and
would amount to a violation of the right to recruit and deploy workers.

FACTS:
The case arises from two complaint filed in the POEA against
Principalia. The First complaint is issued by Concha who paid
Prinicpalia P20,000.00 out of the P150.000.00 for a job as caregiver of
Physical Therapist overseas. Likewise, the second complaint issued
by Boldoza who paid the same amount for a job as a Machine operator
in Qatar. Principalia failure to secure a job for both of the complainant
despite the payment.

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.

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 Principalia’s 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
 Page 12

employment for Baldoza within the period stipulated in the settlement

agreement but due to Baldoza’s lack of qualification, his application
was declined by its foreign principal.

ISSUE:
Whether or not a Writ of Preliminary Prohibitory Injunction will lie
against the immediate implementation of the Order of Suspension of
License issued by POEA Administrator?

RULING:
YES. The writ of preliminary prohibitory injunction will lie against
the order of suspension on the ground that 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 Principalia’s license before final adjudication by the
DOLE would be premature and would amount to a violation of the
latter’s right to recruit and deploy workers.

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 DOLE Secretary. 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
employer-clients and its prospective Filipino-applicants. Loss of the
former due to a tarnished reputation is not quantifiable.
 Page 13

Case Digest by: JAZMIN, JENDY F.

DATUMAN v FIRST COSMOPOLITAN MANPOWER

G.R. No. 156029. November 14, 2008.
Leonardo-De Castro, J.

DOCTRINE:
JOINT AND SOLIDARY LIABILITY OF PRINCIPAL EMPLOYER
AND AGENT
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, First Cosmopolitan Manpower & Promotion
Services, Inc. recruited Santosa Datuman to work abroad as a
saleslady for a period of 1 year and salary of US$370.00. When she
was deployed, her employer took her passport 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) or equivalent to US$100.00.
Datuman was also compelled by his employer to signed another
contract transferring her to another employer as housemaid with the
same salary for the duration of 2 years. Since her employer don’t want
to release her passport, she left with no choice ad 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 return to the Philippines and on May
1995, she instituted complaint against the respondent agency before
the POEA for underpayment and non-payment of salary, vacation
leave pay and refund of her plane fare. While the case was pending,
she also filed the instant case before the NLRC for underpayment of
salary for a period of one year and six months, nonpayment of vacation
pay and reimbursement of return airfare.

Respondent agency countered the allegation of Datuman and said

that she agreed to work in Bahrain ad housemaid for 1 year because it
was the only position available then but POEA do not allowed yet the
deployment of household helper, thus, they mutually agreed to submit
the contract to the POEA indicating petitioner's position as saleslady.
It also added that it was actually petitioner herself who violated the
 Page 14

terms of their contract when she allegedly transferred to another

employer without respondent's knowledge and approval.

ISSUE:
Whether or not the agency was liable only with the first contract?

RULING:
NO. The agent was not liable only with the first contract because
respondent is jointly and solidarily liable with the latter’s principal
employer abroad for her (petitioners) money claims. The signing of the
substitute contracts with the foreign employer/principal before the
expiration of the POEA-approved contract and any continuation of
petitioners employment beyond the original one-year term, against the
will of petitioner, are continuing breaches of the original POEA-
approved contract. 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. 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
petitioners foreign employer for petitioners money claims continues
although she was forced to sign another contract in Bahrain.
 Page 15

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

STOLT-NIELSEN V. MEDEQUILLO
G.R. No. 177498; January 18, 2012

The POEA Standard Employment Contract provides that

employment shall commence upon the actual departure of the seafarer
from the airport or seaport in the port of hire.

FACTS:
Sulpecio Medequillo (respondent) filed a complaint before the
Adjudication Office of the Philippine Overseas Employment
Administration (POEA) against the petitioners for illegal dismissal
under a first contract and for failure to deploy under a second contract.
He prayed for actual, moral and exemplary damages as well as
attorney’s 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. The parties were
required to submit their respective position papers before the Labor
Arbiter. However, petitioners failed to submit their respective
pleadings despite the opportunity given to them. The Labor Arbiter
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.

ISSUE:
Whether or not the first employment contract between
petitioners and the private respondent is different from and
independent of the second contract subsequently executed upon
repatriation of respondent to Manila which justifies termination of
respondent?

RULING:
We adhere to the terms and conditions of the contract so as to
credit the valid prior stipulations of the parties before the controversy
started. Else, the obligatory force of every contract will be useless.
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.

We rule that distinction must be made between the perfection of the

employment contract and the commencement of the employer-
employee relationship. The perfection of the contract, which in this
 Page 16

case coincided with the date of execution thereof, occurred when

petitioner 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, as earlier discussed, 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. 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.
 Page 17

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

PEOPLE V. DELA PIEDRA

G.R. No. 121777; January 24, 2001

Section 13 (b) encompasses what appellant apparently considers

as customary and harmless acts such as labor or employment
referral (referring an applicant, according to appellant, for
employment to a prospective employer) does not render the law
over broad. Evidently, appellant misapprehends concept of over
breadth.

FACTS:
Accused-appellant Carol M. dela Piedra was charged of illegal
recruitment in large scale by promising an employment abroad Maria
Lourdes Modesto y Gadrino, Nancy Araneta y Aliwanag and Jennelyn
Baez y Timbol, a job to Singapore without having previously obtained
from the Philippine Overseas Employment Administration, a license or
authority to engage in recruitment and overseas placement of workers.
In fact, said Maria Lourdes Modesto had already advanced the amount
of P2,000.00 to the accused for and in consideration of the promised
employment which did not materialize. Thus, causing damage and
prejudice to the latter in the said sum. 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. Ramos. An entrapment was then planned by the Criminal
Investigation Service (CIS) headed by Capt. Mendoza and successfully
arrested the accused-appellant. Later on, in the course of their
investigation, the CIS discovered that Carol Figueroa had many aliases,
among them, Carol Llena and Carol dela Piedra. At the trial, the
prosecution presented five (5) witnesses, namely, Erlie Ramos, SPO2
Erwin Manalopilar, Eileen Fermindoza, Nancy Araneta and Lourdes
Modesto and all of them positively testified that the accused offer them
a job to Singapore.
ISSUE:
WON Article 13 (b) of the Labor Code defining recruitment and
placement is void for vagueness and, thus, violates the due process
clause.

RULING:
NO. Article 13 (b) of the Labor Code is not a vague provision.
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
 Page 18

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. The court cannot sustain
the Appellant argument that the acts that constitute recruitment and
placement suffer from overbreadth since by merely referring a person
for employment, a person may be convicted of illegal recruitment.
Section 13 (b) encompasses what appellant apparently considers as
customary and harmless acts such as labor or employment
referral (referring an applicant, according to appellant, for
employment to a prospective employer) does not render the law
over broad. Evidently, appellant misapprehends concept of over
breadth.

A statute may be said to be over broad where it operates to inhibit the

exercise of individual freedoms affirmatively guaranteed by the
Constitution, such as the freedom of speech or religion. A generally
worded statute, when construed to punish conduct which cannot be
constitutionally punished is unconstitutionally vague to the extent that
it fails to give adequate warning of the boundary between the
constitutionally permissible and the constitutionally impermissible
applications of the statute.
 Page 19

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

ESTATE OF DULAY V. ABOITIZ JEBSEN

G.R. No. 172642; June 13, 2012

R.A. 8042 is a special law governing overseas Filipino workers.

However, there is no specific provision thereunder which provides
for jurisdiction over disputes or unresolved grievances regarding the
interpretation or implementation of a CBA. Section 10 of R.A. 8042,
which is cited by petitioner, simply speaks, in general, of "claims
arising out of an employer-employee relationship or 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:
Since 1986, Nelson Dulay was employed as an ordinary
seaman and later as bosun on contractual basis by General Charters,
Inc,, a subsidiary of Aboitiz Jebsen Maritime. From September 3,
1999 up to July 19, 2000, Nelson was detailed in petitionersvessel,
the MV Kickapoo Belle. At the time of his death on August 13, 2000,
he was a bona fide member of the AMOSUP, GCI collective
bargaining agent. Nelson widow, Merridy Jane, thereafter claimed
for death benefits through the grievance procedure of the CBA
between AMOSUP and GCI. However, on January 29, 2001, the
grievance procedure was "declared deadlocked" as petitioners
refused to grant the benefits sought by the widow. On March 5, 2001,
Merridy Jane filed a complaint with the NLRC against GCI for death
and medical benefits and damages. Merridy Jane claimed
$90,000.00 however, CGI awarded P20,000.00 to Nelson brother.
Merridy Jane is now claiming the $90,000.00 less the P20,000.00
that Nelson brother received. Respondents 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 latter death. Nelson also had no claims against
petitioners for sick leave allowance/medical benefit by reason of the
completion of his contract with GCI. The Labor Arbiter ruled in favor
of petitioner and ordered respondents 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
Nelson death was not work-related.
ISSUE:
Whether or not the CA committed error in ruling that the Labor
Arbiter has no jurisdiction over the case?
 Page 20

RULING:
The basic issue raised by Merridy Jane in her complaint filed
with the NLRC is: which provision of the subject CBA applies insofar
as death benefits due to the heirs of Nelson are concerned. The Court
agrees with the CA in holding that this issue clearly involves the
interpretation or implementation of the said CBA. Thus, the specific
or special provisions of the Labor Code govern. In any case, the
Court agrees with petitioner's contention that the CBA is the law or
contract between the parties. Upon this Court reading of the
pertinent provisions of the CBA, it is clear that the parties really
intended to bring to conciliation or voluntary arbitration any dispute
or conflict in the interpretation or application of the provisions of
their CBA. It is settled that when the parties have validly agreed on
a procedure for resolving grievances and to submit a dispute to
voluntary arbitration then that procedure should be strictly
observed. It may not be amiss to point out that the CBA are in
consonance with Rule VII, Section 7 of the present Omnibus Rules
and Regulations Implementing the Migrant Workers and Overseas
Filipinos Act of 1995, as amended by Republic Act No. 10022, which
states that "[f]or OFWs with collective bargaining agreements, the
case shall be submitted for voluntary arbitration in accordance with
Articles 261 and 262 of the Labor Code." The Court notes that the
said Omnibus Rules and Regulations were promulgated by the
Department of Labor and Employment (DOLE) and the Department
of Foreign Affairs (DFA) and that these departments were mandated
to consult with the Senate Committee on Labor and Employment
and the House of Representatives Committee on Overseas Workers
Affairs.
 Page 21

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

SANTIAGO V. C.F. SHARP CREW MANAGEMENT

G.R. No. 162419; July 10, 2007

A distinction must be made between the perfection of the

employment contract and the commencement of the employer-
employee relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well
as the rest of the terms and conditions therein.

FACTS:

Petitioner had been working as a seafarer for Smith Bell Management

Inc. for about 5 years. On February 3, 1998, he signed a new contract
of employment with respondent to be deployed on board the MSV
Seaspread, which was scheduled to leave for Canada on February 13,
1998. A week before the scheduled date of departure, the respondent’s
Vice President sent a message to the captain of MSV Seaspread saying
that the VP received a call from Santiago’s wife asking him not to send
her husband to MSV Seaspread and if he is allowed to depart, he will
jump ship in Canada just like his brother. On 9 February 1998,
petitioner 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. Petitioner filed a complaint for illegal
dismissal against respondent and its foreign principal.

On appeal by respondent, the NLRC ruled 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 and with a POEA-approved contract. The
CA agreed with the NLRC’s finding that petitioner’s non-deployment
was a valid exercise of respondent’s management prerogative. It added
that since petitioner had not departed from the Port of Manila, no
employer-employee relationship between the parties arose and any
claim for damages against the so-called employer could have no leg to
stand on.

ISSUE:
Whether or not employer-employee relationship has already
commenced

RULING:
 Page 22

There is no question that the parties entered into an employment

contract on February 3, 1998, whereby petitioner was contracted by
respondent to render services on board “MSV Seaspread” for 9 months.
However, respondent failed to deploy petitioner from the port of
Manila to Canada. Considering that petitioner was not able to depart
from the airport or seaport in the point of hire, the employment
contract did not commence, and no employer-employee relationship
was created between the parties.

However, a distinction must be made between the perfection of the

employment contract and the commencement of the employer-
employee relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred when
petitioner 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. 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.
 Page 23

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

SAMEER OVERSEAS PLACEMENT AGENCY V. CABILES

G.R. No. 170139; August 5, 2014

The Court held that the award of the three-month equivalent of

respondent’s salary should be increased to the amount equivalent to
the unexpired term of the employment contract.

FACTS:

Petitioner, Sameer Overseas Placement Agency, Inc., is a

recruitment and placement agency. Respondent Joy Cabiles was hired
thus signed a one-year employment contract for a monthly salary of
NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd.
(Wacoal) on June 26, 1997. She alleged that in her employment
contract, she agreed to work as quality control for one year. In Taiwan,
she was asked to work as a cutter. Sameer claims that on July 14, 1997,
a certain Mr. Huwang from Wacoal informed Joy, without prior notice,
that she was terminated and that “she should immediately report to
their office to get her salary and passport.” She was asked to “prepare
for immediate repatriation.” Joy claims that she was told that from
June 26 to July 14, 1997, she only earned a total of NT$9,000.15
According to her, Wacoal deducted NT$3,000 to cover her plane ticket
to Manila. On October 15, 1997, Joy filed a complaint for illegal
dismissal with the NLRC against petitioner and Wacoal. LA dismissed
the complaint. NLRC reversed LA’s decision. CA affirmed the ruling of
the National Labor Relations Commission finding respondent illegally
dismissed and awarding her three months’ worth of salary, the
reimbursement of the cost of her repatriation, and attorney’s fees

ISSUE:
Whether or not Cabiles was entitled to the unexpired portion of
her salary due to illegal dismissal.

RULING:

YES. The Court held that the award of the three-month equivalent of
respondent’s salary should be increased to the amount equivalent to
the unexpired term of the employment contract. In Serrano v. Gallant
Maritime Services, Inc. and Marlow Navigation Co., Inc., this court
ruled that the clause “or for three (3) months for every year of the
unexpired term, whichever is less” is unconstitutional for violating the
equal protection clause and substantive due process. A statute or
provision which was declared unconstitutional is not a law. It “confers
no rights; it imposes no duties; it affords no protection; it creates no
office; it is inoperative as if it has not been passed at all.” The Court
 Page 24

said that they are aware that the clause “or for three (3) months for
every year of the unexpired term, whichever is less” was reinstated in
Republic Act No. 8042 upon promulgation of Republic Act No. 10022
in 2010.
 Page 25

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

INDUSTRIAL PERSONNEL V. JOSE G. DE VERA

G.R. No. 205703; March 07, 2016

The Court is of the view that these four (4) requisites must be complied
with before the employer could invoke the applicability of a foreign law
to an overseas employment contract. With these requisites, the State
would be able to abide by its constitutional obligation to ensure that
the rights and well-being of our OFWs are fully protected. Lacking any
one of the four requisites would invalidate the application of the
foreign law, and the Philippine law shall govern the overseas
employment contract.
FACTS:
Petitioner Industrial Personnel & Management Services, Inc.
(IPAMS) is a local placement agency duly organized and existing under
Philippine laws. Petitioner SNC Lavalin Engineers & Contractors, Inc.
(SNC-Lavalin) is the principal of IPAMS, a Canadian company with
business interests in several countries. Respondent Alberto Arriola, a
licensed general surgeon in the Philippines, was hired by SNC-Lavalin,
through its local manning agency, IPAMS, as a safety officer in its
Ambatovy Project site in Madagascar. After three months, Arriola
received a notice of pre-termination of employment due to diminishing
workload in the area of his expertise and the unavailability of
alternative assignments. Consequently, Arriola was repatriated and he
filed a complaint against the petitioners for illegal dismissal and non-
payment of overtime pay, vacation leave and sick leave pay before the
Labor Arbiter (LA). He claimed that SNC-Lavalin still owed him
unpaid salaries equivalent to the three-month unexpired portion of his
contract and asserted that the latter never offered any valid reason for
his early termination and that he was not given enough notice
regarding the same. He also insisted that the petitioners must prove
the applicability of Canadian law before the same could be applied to
his employment contract. The petitioner denied the charge of illegal
dismissal against them. They relied on a copy of the Employment
Standards Act (ESA) of Ontario, which was duly authenticated by the
Canadian authorities and certified by the Philippine Embassy. They
insisted that all of Arriola's employment documents were processed in
Canada, not to mention that SNC Lavalin's office was in Ontario, the
principle of lex loci celebrationis was applicable. Hence, they insisted
that Canadian laws governed the contract. The said foreign law did not
require any ground for early termination of employment, and the only
requirement was the written notice of termination. Even if Philippine
laws should apply, Arriola would still be validly dismissed because
domestic law recognized retrenchment and redundancy as legal
grounds for termination. The Labor Arbiter (LA) dismissed the
complaint of Arriola, while the NLRC reversed the LA's ruling stating
 Page 26

the Filipino workers are protected by our labor laws wherever they may
be working. The petitioners filed a petition for certiorari before the CA
arguing that it should be the ESA, or the Ontario labor law, that should
be applied in Arriola's employment contract, but the Court of Appeals
affirmed NLRC. Hence, this petition.
ISSUE:
Whether or not Canadian law shall be applied to this case.

RULING:
No, the foreign law invoked is contrary to the Constitution and the
Labor Code. As a rule, Philippine laws apply even to overseas
employment contracts. This rule is rooted in the constitutional
provision of Section 3, Article XIII that the State shall afford full
protection to labor, whether local or overseas. Hence, even if the OFW
has his employment abroad, it does not strip him of his rights to
security of tenure, humane conditions of work and a living wage under
our Constitution. As an exception, the parties may agree that a foreign
law shall govern the employment contract. A synthesis of the existing
laws and jurisprudence reveals that this exception is subject to the
following requisites:
1. That it is expressly stipulated in the overseas employment contract
that a specific foreign law shall govern;
2.That the foreign law invoked must be proven before the courts
pursuant to the Philippine rules on evidence;
3.That the foreign law stipulated in the overseas employment contract
must not be contrary to law, morals, good customs, public order, or
public policy of the Philippines; and
4.That the overseas employment contract must be processed through
the POEA.

The Court is of the view that these four (4) requisites must be complied
with before the employer could invoke the applicability of a foreign law
to an overseas employment contract. With these requisites, the State
would be able to abide by its constitutional obligation to ensure that
the rights and well-being of our OFWs are fully protected. Lacking any
one of the four requisites would invalidate the application of the
foreign law, and the Philippine law shall govern the overseas
employment contract.
In the present case, as correctly held by the CA, even though an
authenticated copy of the ESA was submitted, it did not mean that said
foreign law could be automatically applied to this case. The petitioners
miserably failed to adhere to the two other requisites. The petitioners
failed to comply with the first requisite because no foreign law was
expressly stipulated in the overseas employment contract with Arriola.
The petitioners did not directly cite any specific provision or
stipulation in the said labor contract which indicated the applicability
of the Canadian labor laws or the ESA. They failed to show on the face
of the contract that a foreign law was agreed upon by the parties.
 Page 27

Rather, they simply asserted that the terms and conditions of Arriola’s
employment were embodied in the Expatriate Policy, Ambatovy
Project - Site, Long Term.

The provisions of the ESA are patently inconsistent with the right to
security of tenure. Both the Constitution and the Labor Code provide
that this right is available to any employee. In a host of cases, the Court
has upheld the employee's right to security of tenure in the face of
oppressive management behavior and management prerogative.
Security of tenure is a right which cannot be denied on mere
speculation of any unclear and nebulous basis. Furthermore, not only
do these provisions collide with the right to security of tenure, but they
also deprive the employee of his constitutional right to due process by
denying him of any notice of termination and the opportunity to be
heard.

In fine, as the petitioners failed to meet all the four (4) requisites on
the applicability of a foreign law, then the Philippine labor laws must
govern the overseas employment contract of Arriola.
 Page 28

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

SUNACE INTERNATIONAL MANAGEMENT SERVICES V. NLRC

G.R. No. 161757; January 25, 2006

There being no substantial proof that Sunace knew of and

consented to be bound under the 2-year employment contract
extension, it cannot be said to be privy thereto. As such, it and its
"owner" cannot be held solidarily liable for any of Divina's claims
arising from the 2-year employment extension.
FACTS:
Petitioner, 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. The
deployment was with the assistance of a Taiwanese broker, Edmund
Wang, President of Jet Crown International Co., Ltd. After her 12-
month contract expired on February 1, 1998, Divina continued working
for her Taiwanese employer, Hang Rui Xiong, for two more years, after
which she returned to the Philippines on February 4, 2000. Shortly
after her return or on February 14, 2000, Divina filed a complaint
before the National Labor Relations Commission (NLRC) against
Sunace, one Adelaide Perez, the Taiwanese broker, and the employer-
foreign principal alleging that she was jailed for three months and that
she was underpaid. Reacting to Divina's Position Paper, Sunace filed
on April 25, 2000 an ". . . ANSWER TO COMPLAINANT'S POSITION
PAPER" alleging that Divina's 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, copy of each document was annexed to said

The Labor Arbiter, rejected Sunace's claim that the extension of

Divina's contract for two more years was without its knowledge and
consent.

ISSUE:
Whether the act of the foreigner-principal in renewing the
contract of Divina be attributable to Sunace
RULING:
No, the act of the foreigner-principal in renewing the contract of Divina
is not attributable to Sunace.

There being no substantial proof that Sunace knew of and consented to

be bound under the 2-year employment contract extension, it cannot
be said to be privy thereto. As such, it and its "owner" cannot be held
solidarily liable for any of Divina's claims arising from the 2-year
employment extension.
 Page 29

Furthermore, as Sunace correctly points out, there was an implied

revocation of its agency relationship with its foreign principal when,
after the termination of the original employment contract, the foreign
principal directly negotiated with Divina and entered into a new and
separate employment contract in Taiwan.
 Page 30

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

MAERSK-FILIPINAS CREWING V. TORIBIO C. AVESTRUZ

G.R. No. 207010; February 18, 2015

To justify the legal dismissal of an employee, there is a

requirement of substantial evidence as would sufficiently discharge the
burden of proving that Avestruz was legally dismissed.
FACTS:
Petitioner hired Avestruz as Chief Cook on board the vessel for a period
of six (6) months. Captain Woodward noticed that the cover of the
garbage bin in the kitchen was oily causing an argument to ensue
between them. Captain Woodward informed Avestruz that he would be
dismissed from service and be disembarked in India. Subsequently, he
filed a complaint for illegal dismissal. He alleged that no investigation
or hearing was conducted nor was he given the chance to defend
himself before he was dismissed

ISSUE:
Whether or not Avestruz was legally dismissed
RULING:
The Court finds that there was no just or valid cause for his
dismissal, hence, he was illegally dismissed.
Petitioners maintain that Avestruz was dismissed on the ground of
insubordination, consisting of his "repeated failure to obey his
superior's order to maintain cleanliness in the galley of the vessel"...
petitioners presented as evidence the e-mails sent by Captain
Woodward
The Court, however, finds these e-mails to be uncorroborated and self-
serving, and therefore, do not satisfy the requirement of substantial
evidence as would sufficiently discharge the burden of proving that
Avestruz was legally dismissed. On the contrary, petitioners failed to...
prove that he committed acts of insubordination which would warrant
his dismissal.
 Page 31

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

GAGUI V. DEJERO
G.R. No. 196036; October 23, 2013

The pertinent portion of Section 10, R.A. 8042 reads as follows:

The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and
several. This provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its
approval.
FACTS:
On 14 December 1993, respondents Simeon Dejero and Teodoro
Permejo filed separate Complaints for illegal dismissal, nonpayment of
salaries and overtime pay, refund of transportation expenses, damages,
and attorney fees against PRO Agency Manila, Inc., and Abdul Rahman
Al Mahwes. The Labor Arbiter Pedro Ramos rendered a decision
ordering respondents Pro Agecy Manila Inc., and Abdul Rahman Al
Mahwes to pay complainants. The LA also issued a Writ of Execution.
When the writ was returned unsatisfied, an Alias Writ of Execution was
issued, but was also returned unsatisfied. Respondents filed a Motion
to Implead Respondent Pro Agency Manila, Inc. Corporate Officers
and Directors as Judgment Debtor. It included petitioner as the Vice-
president/Stockholder/Director of PRO Agency, Manila, Inc. The LA
granted the motion. A 2nd Alias Writ of Execution was issued, which
resulted in the garnishment of petitioner bank deposit in the amount
of P85,430.48. Since, judgment remained unsatisfied, respondents
sought a 3rd alias writ of execution. The motion was granted resulting
in the levying of two parcels of lot owned by petitioner located in San
Fernando Pampanga.
ISSUE:
Whether or not petitioner may be held jointly and severally
liable with PRO Agency Manila, Inc. in accordance with Section 10
of R.A. 8042?
RULING:
In Sto. Tomas v. Salac, we had the opportunity to pass upon the
constitutionality of this provision. We have thus maintained: the Court
has already held, pending adjudication of this case, 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. Hence, for
petitioner to be found jointly and solidarily liable, there must be a
separate finding that she was remiss in directing the affairs of the
agency, resulting in the illegal dismissal of respondents. Examination
of the records would reveal that there was no finding of neglect on the
 Page 32

part of the petitioner in directing the affairs of the agency. In fact,

respondents made no mention of any instance when petitioner
allegedly failed to manage the agency in accordance with law, thereby
contributing to their illegal dismissal.
 Page 33

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

JAKERSON G. GARGALLO V. DOHLE SEAFRONT CREWING

AND MAYRONILO B. PADIZ
G.R. No. 215551; August 17, 2016

The [POEA-SEC] and the CBA clearly provide that when a

seafarer sustains a work-related illness or injury while on board the
vessel, his fitness or unfitness for work shall be determined by the
company-designated physician.
FACTS:
On July 20, 2012, petitioner filed a complaint for permanent total
disability benefits against respondents before the National Labor
Relations Commission (NLRC). The complaint stemmed from his
claim that: (a) he accidentally fell on deck while lifting heavy loads of
lube oil drum, with his left arm hitting the floor first, bearing his full
body weight; (b) he has remained permanently unfit for further sea
service despite major surgery and further treatment by the company-
designated physicians; and (c) his permanent total unfitness to work
was duly certified by his chosen physician whose certification must
prevail over the palpably self-serving and biased assessment of the
company-designated physicians. For their part, respondents
countered that the fit-to-work findings of the company-designated
physicians must prevail over that of petitioner’s independent doctor,
considering that: (a) they were the ones who continuously treated and
monitored petitioner’s medical condition; and (b) petitioner failed to
comply with the conflict-resolution procedure under the Philippine
Overseas Employment Administration-Standard Employment
Contract (POEA-SEC). Respondents further averred that the filing of
the disability claim was premature since petitioner was still
undergoing medical treatment within the allowable 240-day period at
the time the complaint was filed.

The Labor Arbiter (LA)11 and the NLRC12 gave more credence to the
medical report of petitioner’s independent doctor and, thus, granted
petitioner’s disability claim.

However, the CA disagreed with the conclusions of the LA and the

NLRC, and dismissed petitioner’s complaint. It ruled that the claim
was premature because at the time the complaint was filed.

ISSUE:
Whether or not, the independent doctor of the petitioner shall be
given credence to determine the disability of the petitioner.
RULING:
 Page 34

No. Moreover, petitioner failed to comply with the prescribed

procedure under the afore-quoted Section 20 (A) (3) of the 2010
POEA-SEC on the joint appointment by the parties of a third doctor, in
case the seafarer’s personal doctor disagrees with the company-
designated physician’s fit-to-work assessment. In the recent case
of Veritas Maritime Corporation v. Gepanaga, Jr. involving an almost
identical provision of the CBA, the Court reiterated the well-settled rule
that the seafarer’s non-compliance with the mandated conflict-
resolution procedure under the POEA-SEC and the CBA militates
against his claims, and results in the affirmance of the fit-to-work
certification of the company-designated physician, thus. The [POEA-
SEC] and the CBA clearly provide that when a seafarer sustains a work-
related illness or injury while on board the vessel, his fitness or
unfitness for work shall be determined by the company-designated
physician. If the physician appointed by the seafarer disagrees with the
company-designated physician’s assessment, the opinion of a third
doctor may be agreed jointly between the employer and the seafarer to
be the decision final and binding on them. Thus, while petitioner had
the right to seek a second and even a third opinion, the final
determination of whose decision must prevail must be done in
accordance with an agreed procedure. Unfortunately, the petitioner
did not avail of this procedure; hence, we have no option but to declare
that the company-designated doctor’s certification is the final
determination that must prevail.
 Page 35

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

PRINCESS TALENT CENTER V. MASAGCA

G.R. No. 191310; April 11, 2018

Dismissal from employment has two facets: first, the legality of the act
of dismissal, which constitutes substantive due process; and, second,
the legality of the manner of dismissal, which constitutes procedural
due process. The burden of proof rests upon the employer to show that
the disciplinary action was made for lawful cause or that the
termination of employment was valid.
FACTS:
Sometime in November 2002, respondent auditioned for a singing
contest at ABC-Channel 5 in Novaliches, Quezon City. Respondent
went to the office of petitioner PTCPI, a domestic corporation engaged
in the business of training and development of actors, singers, dancers,
and musicians in the movie and entertainment industry. At the office,
respondent met petitioner Moldes, President of petitioner PTCPI, who
persuaded respondent to apply for a job as a singer/entertainer in
South Korea. A Model Employment Contract for Filipino Overseas
Performing Artists (OPAS) To Korea (Employment Contract) was
executed on February 3, 2003 between respondent and petitioner
PTCPI as the Philippine agent of SAENCO, the Kore an
principal/promoter. Respondent left for South Korea on September 6,
2003 and worked there as a singer for nine months, until her
repatriation to the Philippines sometime in June 2004. Believing that
the termination of her contract was unlawful and premature,
respondent filed a complaint against petitioners and SAENCO with the
NLRC. Respondent alleged that she was made to sign two Employment
Contracts but she was not given the chance to read any of them despite
her requests. Respondent had to rely on petitioner Moldes’
representations that: (a) her visa was valid for one year with an option
to renew; (b) SAENCO would be her employer; (c) she would be singing
in a group with four other Filipinas at Seaman’s Seven Pub at 82 Dong,
JungGu, Ulsan, South Korea; (d) her Employment Contract had a
minimum term of one year, which was extendible for two years; and (e)
she would be paid a monthly salary of US$400.00, less US$100.00 as
monthly commission of petitioners. Subsequently, Park turned
respondent over to the South Korean immigration authorities for
deportation on the ground of overstaying in South Korea with an
expired visa. It was only at th moment when respondent found out that
petitioner Moldes did not renew her visa. Respondent filed the
complaint against petitioners and SAENCO praying that a decision be
rendered declaring them guilty of illegal dismissal and ordering them
to pay her unp aid salaries for one year, inclusive of her salaries for the
unexpired portion of her Employment Contract, backwages, moral and
exemplary damages, and attorney’s fees. The Petitioner on the other
 Page 36

hand averred that it dismissed the Respondent on the basis o violations

of club policies including her provocative and immoral conduct. The
Labor Arbiter dismissed Respondent’s complaint. Respondent
appealed the Labor Arbiter’s Decision before the NLRC. The NLRC
initially ruled in respondent’s favor but later on reversed itself and
found that the Respondent failed to prove her allegations.Respondent
sought remedy from the Court of Appeals by filing a Petition for
Certiorari discretion amounting to excess o , alleging that the NLRC
acted with grave abuse of r lack of jurisdiction in reinstating the Labor
Arbiter’s Decision. The appellate court then held that respondent was
dismissed from employment without just cause and without
procedural due process, and that petitioners and SAENCO were
solidarily liable to pay respondent her unpaid salaries for one year and
attorney’s fees.
ISSUE:
1. Whether Respondent was illegally dismissed.
2. Whether Petitioner is liable for the money claims of respondent.
RULING:
1. Yes. Per the plain language of respondent’s Employment Contract
with SAENCO, her employment would be enforced for the period of six
months commencing on the date respondent departed from the
Philippines, and extendible by another six months by mutual
agreement of the parties. Since respondent left for South K orea on
September 6, 2003, the original six Employment Contract ended on
March 5, 2004.month period of her Although respondent’s
employment with SAENCO was good for six months only (i.e.,
September 6, 2003 to March 5, 2004) as stated in the Employment Con
tract, the Court is convinced that it was extended under the same terms
and conditions for another six months (i.e., March 6, 2004 to
September 5, 2004). Respondent and petitioners submitted evidence
establishing that respondent continued to work for SAENC O in Ulsan,
South Korea even after the original six-month period under
respondent’s Employment Contract expired on March 5, 2004. Ideally,
the extension of respondent’s employment should have also been
reduced into writing and submitted/reported to the appropriate
Philippine labor authorities. Nonetheless, even in the absence of a
written contract evidencing the six-month extension of respondent’s
employment, the same is practically admitted by petitioners, subject
only to the defense that there is no proof of their knowledge of or
participation in said extension and so they cannot be held liable for the
events that transpired between respondent and SAENCO during the
extension period. Petitioners presented nine vouchers to prove that
respondent received her salaries from SAENCO for nine months.
Petitioners also did not deny that petitioner Moldes, President of
petitioner PTCPI, went to confront respondent about the latter’s
outstanding loan at the Seaman’s Seven Club in Ulsan, South Korea in
June 2004, thus, revealing that petitioners were aware that respondent
was still working for SAENCO up to that time. Hence, respondent had
 Page 37

been working for SAENCO in Ulsan, South Korea, pursuant to her

Employment Contract, extended for another six-month period or until
September 5, 2004 and repatriated to the Philippines by SAENCO in
June 2004, when she was dismissed.
Dismissal from employment has two facets: first, the legality of the act
of dismissal, which constitutes substantive due process; and, second,
the legality of the manner of dismissal, which constitutes procedural
due process. The burden of proof rests upon the employer to show that
the disciplinary action was made for lawful cause or that the
termination of employment was valid. Unsubstantiated suspicions,
accusations, and conclusions of the employer do not provide legal
justification for dismissing the employee.
When in doubt, the case should be resolved in favor of labor pursuant
to the social justice policy of our labor laws and the 1987 Constitution.
As previously discussed herein, SAENCO extended respondent’s
Employment Contract for another six months even after the latter’s
work visa already expired. Even though it is true that respondent could
not legitimately continue to work in South Korea without a work visa,
petitioners cannot invoke said reason alone to justify the premature
termination of respon dent’s extended employment. Neither
petitioners nor SAENCO can feign ignorance of the expiration of
respondent’s work visa at the same time as her original sixmonth
employment period as they were the ones who facilitated and
processed the requirements for respondent’s employment in South
Korea. Petitioners and SAENCO should also have been responsible for
securing respondent’s work visa for the extended period of her
employment. Petitioners and SAENCO should not be allowed to escape
liability for a wrong they themselves participated in or were
responsible for.
To reiterate, respondent could only be dismissed for just and
authorized cause, and after affording her notice and hearing prior to
her termination. SAENCO had no valid cause to terminate
respondent’s employment. Neither did SAENCO serve two written
notices upon respondent informing her of her alleged club policy
violations and of her dismissal from employment, nor afforded her a
hearing to defend herself. The lack of valid cause, together with the
failure of SAENCO to comply with the twin-notice and hearing
requirements, underscored the illegality surrounding respondent’s
dismissal.

2. Yes. The law is plain and clear, the joint and several liability of the
principal/employer, recruitment/placement agency, and the corporate
officers of the latter, for the money claims and damages of an overseas
Filipino worker is absolute and without qualification. It is intended to
give utmost protection to the overseas Filipino worker, who may not
have the resources to pursue her money claims and damages against
the foreign principal/employer in another country. The overseas
Filipino worker is given the right to seek recourse against the only link
 Page 38

in the country to the foreign principal/employer, i.e., the

recruitment/placement agency and its corporate officers. As a result,
the liability of SAENCO, as principal/employer, and petitioner PTCPI,
as recruitment/placement agency, for the monetary awards in favor of
respondent, an illegally dismissed employee, is joint and several. In
turn, since petitioner PTCPI is a juridical entity, petitioner Moldes, as
its corporate officer, is herself jointly and solidarily liable with
petitioner PTCPI for respondent’s monetary awards, regardless of
whether she acted with malice or bad faith in dealing with respondent.
 Page 39

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

EILEEN P. DAVID V. GLENDA S. MARQUEZ

G.R. No. 209859; June 5, 2017

The express provision of the law is clear that the filing of criminal
actions arising from illegal recruitment before the RTC of the province
or city where the offended party actually resides at the time of the
commission of the offense is allowed.
FACTS:
Respondent Glenda Marquez alleged, among others, that she is a
resident of Sampaloc, Manila and that sometime in March 2005,
petitioner approached her in Kidapawan City and represented that she
could recruit her to work abroad. It was further alleged that petitioner
demanded payment of placement fees and other expenses from the
respondent for the processing of the latter's application, to which the
respondent heeded. Respondent's application was, however, denied
and worse, the money that she put out therefore was never returned.
In her Counter-Affidavit and Counter Charge, petitioner averred that
it was physically impossible for her to have committed the said acts as
she was in Canada at the alleged time of recruitment as evidenced by
the entries in her passport. Petitioner further averred that she was
never engaged in the recruitment business. The petitioner alleged that
the amount deposited in her account was not for her but was just
coursed through her to be given to her friend in Canada who was the
one processing respondent's application, as evidenced by a
certification to that effect issued by the said friend. Further, petitioner
argued before the Prosecutor that assuming arguendo that the
allegations of recruitment were true, the case should be filed in
Kidapawan City and not in Manila.
ISSUE:
1. Whether or not the RTC of Manila have jurisdiction over the cases
of Illegal Recruitment and Estafa.

2. Whether or not the respondent, on her own, have legal personality

to file the petition for certiorari before the CA.
RULING:
1. Yes. The RTC of Manila has jurisdiction over the cases of Illegal
Recruitment and Estafa. The express provision of the law is clear that
the filing of criminal actions arising from illegal recruitment before the
RTC of the province or city where the offended party actually resides at
the time of the commission of the offense is allowed. Likewise, with the
case of Estafa arising from such illegal recruitment activities, the
outright dismissal thereof due to lack of jurisdiction was not proper,
considering that as per the allegations in the Information, the same
was within the jurisdiction of Manila. During the• preliminary
investigation of the cases, respondent even presented evidence that
 Page 40

some of the essential elements of the crime were committed within

Manila, such as the payment of processing and/or placement fees,
considering that these were deposited in certain banks located in
Manila.

2. Yes. The respondent has the legal personality to file a petition for
certiorari under Rule 65. Court has ruled that a private offended party
can file a special civil action for certiorari questioning ttie trial court's
order acquitting the accused or dismissing the case, viz: In such special
civil action for certiorari filed under Rule 65 of the Rules of Court,
wherein it is alleged that the trial court committed a grave abuse of
discretion amounting to lack of jurisdiction or on other jurisdictional
grounds, the rules state that the petition may be filed by the person
aggrieved. In such case, the aggrieved parties are the State and the
private offended party or complainant. The complainant has an
interest in the civil aspect of the case so he/she may file such special
civil action questioning the decision or action of the respondent court
on jurisdictional grounds. In so doing, complainant should not bring
the action in the name of the People of Philippines. The action may be
prosecuted in the name of said complainant.
 Page 41

Case Digests by: MANALIGOD, ANTONIO JUN-JUN IV C.

POWERHOUSE STAFFBUILDERS INTERNATIONAL V. ROMELIA

REY, ET AL.
G.R. No. 190203; November 7, 2016

The well-entrenched rule, especially in labor cases, is th a t

fin d in g s o f fa c t o f qu asi-ju d icial b o d ie s, like th e N atio n al
La bor Relations C o m m i s s i o n ( N L R C ) , a r e a c c o r d e d w i t h
r e s p e c t , e v e n f i n a l i t y , i f supported by substantial evidence—
The well-entrenched rule, especially in labor cases, is that findings
of fact of quasi-judicial bodies, like the NLRC, are accorded with
respect, even finality, if supported by substantial evidence.
Particularly when passed upon and upheld by the CA, they are
binding and conclusive upon the Supreme Court and will not normally
be disturbed.
FACTS:
Powerhouse hired respondents Romelia Rey, Liza Cabad,
Evangeline Nicmic, Eva Lameyra, Rosario Abordaje, Lilybeth
Magalang, Venia Buyag, Jaynalyn Nolledo, Iren Nicolas, Aileen
Samalea, Susan Ybañez, Cheryl Ann Oria, Ma. Liza Seraspi and
Katherine Oracion (respondent employees) as operators for its foreign
principal, Catcher Technical Co. Ltd./Catcher Industrial Co. Ltd.
(Catcher), based in Taiwan, each with a monthly salary of
NT$15,840.00 for the duration of two years commencing upon their
arrival at the jobsite. They were deployed on June 2, 2000. Sometime
in February 2001, Catcher informed respondent employees that they
would be reducing their working days due to low orders and financial
difficulties. The respondent employees were repatriated to the
Philippines on March 11, 2001.
On March 22, 2001, respondent employees filed separate complaints
for illegal dismissal, refund of placement fees, moral and exemplary
damages, as well as attorney's fees, against Powerhouse and Catcher
before the Labor Arbiter (LA) which were later consolidated upon their
motion.
Initially, they refused to be repatriated but they eventually gave in
because Catcher stopped providing them food and they had to live by
the donations/dole outs from sympathetic friends and the church.
O... n the other hand, Powerhouse maintained that respondent
employees voluntarily gave up their jobs following their rejection of
Catcher's proposal to reduce their working days. It contended that
before their repatriation, each of the respondents’ accepted payments
by way of settlement, with the assistance of Labor Attached Romulo
Salud.
The LA, in a Decision dated September 27, 2002, ruled in favor of the
respondents, finding the respondent employees' dismissal and/or pre-
termination of their employment contracts illegal.
 Page 42

On appeal, the NLRC, in its Decision dated July 31, 2006, affirmed the
LA's Decision with modification. The NLRC absolved JEJ from liability,
upon the NLRC's findings that it was not privy to the respondents'
deployment. It also held Powerhouse jointly and severally liable with
William Go, Catcher, and Chen Wei to reimburse to respondents
Magalang, Nicolas, Ybañez and Oria their placement fee of P19,000.00
each and P17,000.00 each to respondents Rey, Cabad, Nicmic,
Lameyra, Abordaje, Buyag, Nolledo, Samalea, Seraspi and Oracion.
ISSUE:
WHETHER OR NOT THERE IS ILLEGAL DISMISSAL IF WORKERS
CHOOSE TO LEAVE THEIR PLACE OF WORK.WHETHER OR NOT
MONETARY AWARDS IN LABOR CASES MAY BE AWARDED
BASED ON MERE ALLEGATIONS.
WHETHER OR NOT THE TRANSFER OF ACCREDITATION TO
ANOTHER RECRUITMENT AND PLACEMENT AGENCY, AS WELL
AS THE ASSUMPTION OF ANY LIABILITY AS A CONSEQUENCE OF
THIS TRANSFER, RELIEVED THE ORIGINAL RECRUITMENT AND
PLACEMENT AGENCY FROM ANY LIABILITY.
RULING:
Respondent employees were illegally dismissed.The onus of
proving that an employee was not dismissed or, if dismissed, his
dismissal was not illegal, fully rests on the employer, and the failure to
discharge the onus would mean that the dismissal was not justified and
was illegal. The burden of proving the allegations rests ufon the party
alleging and the proof must be clear, positive, and convincing.[50]Here,
there is no reason to overturn the factual findings of the Labor Arbiter,
the NLRC and the CA, all of which have unanimously declared that
respondent employees were made to resign against their will after the
foreign principal, Catcher, stopped providing them food for their
subsistence as early as March 2, 2001, when they were informed that
they would be repatriated, until they were repatriated on March 11,
2001.The filing of complaints for illegal dismissal immediately after
repatriation belies the claim that respondent employees voluntarily
chose to be separated and repatriated. Voluntary repatriation, much
like resignation, is inconsistent with the filing of the complaints.
Respondent employees are entitled to the payment of monetary
claims.We also agree that respondent employees are entitled to money
claims and full reimbursement of their respective placement fees.
However, the award of the three-month equivalent of respondent
employees' salaries should be increased to the amount equivalent to
the unexpired term of the employment contract in accordance with our
rulings in Serrano v. Gallant Maritime Services, Inc.[52] and Sameer
Overseas Placement Agency, Inc. v. Cabiles.
Powerhouse is liable for the monetary claims.We likewise agree with
the CA and the NLRC that JEJ could not be held liable for the monetary
claims of respondent employees on account of the alleged transfer of
accreditation to it.
 Page 43

The terms of Section 10 of R.A. No. 8042 clearly states the solidary
liability of the principal and the recruitment agency to the employees
and this liability shall not be affected by any substitution, amendment
or modification for the entire duration of the employment contract, to
wit:Sec. 10. Monetary Claims. - Notwithstanding any provision of law
to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction
to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages.The liability of the
principal/employer and the recruitment/placement agency for any and
all claims under this section shall be joint and several. This provision
shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond
to be filed by the recruitment/placement agency, as provided by law,
shall be answerable for all monetary claims or damages that may be
awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as the
case may be, shall themselves be jointly and solidarity liable with the
corporation or partnership for the aforesaid claims and damages.Such
liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the
said contract.
 Page 44
Case Digest by: MANUEL, JUSTINE LEI P.

CORPUZ V. GERWILL CREWING PHILIPPINES, INC.

G.R. No. 205725. January 18, 2021.
Gesmundo, J.

DOCTRINE:

RECRUITMENT AND PLACEMENT OF OFWs

Licensed recruitment agencies are subject to a continuing liability
to ensure the welfare of the Filipino workers they deploy abroad. Their
carelessness and wanton disregard of such responsibility that result to
the substitution of employment contracts previously approved by the
DOLE,

FACTS:

Respondent Gerwil Crewing Phils. Inc. recruited petitioner

Marcelo M. Corpuz, Jr. to work as an Able Seaman for a period of
twelve (12) months with Echo Cargo & Shipping LLC on board the
vessel MT Azarakhsh with a monthly salary of Four Hundred Sixty-One
dollars. Respondent deployed petitioner on August 5, 2008.

On May 17, 2009, petitioner was brough to the Sheik Khalifa

Medical City in the United Arab Emirates due to severe headaches and
vomiting after he allegedly sustained a fall while lifting heavy motor
parts on board the vessel. He experienced an episodic low back pain
accompanied by severe pain in the foot.

Petitioner arrived in Manila on a wheelchair and requested for

medical assistance. However, such was denied by the respondent’s
CEO. He consulted with several medical practitioners and classified
his illness as a Grade I disability. Thus, he demanded for payment of
disability benefits from respondent to no avail.

ISSUE:

Whether or not petitioner’s illness is work-related and is therefore

entitled to claim benefits from the respondent

RULING:

No, petitioner’s right to receive disability benefits is determined by

his employment contract. Under the 2000 POEA Standard
Employment Contract, two elements must first concur for an injury to
be compensable. First, the injury or illness must be work-related; and
second, the work-related injury or illness must have existed during the
 Page 45

term of the seafarer’s employment contract. It is also required that the

seafarer submit to a post-employment medical examination within
three (3) days from repatriation.

While the rule vests in the employer the burden to prove that the
seafarer was referred to a company-designated physician for a post-
employment examination, the same presupposes that the seafarer had
first reported to the employer’s office.

Here, respondent submitted copies of its visitor logbook to

disprove petitioner’s claim that he visited their office immediately after
his repatriation. Petitioner remained silent and did not rebut or address
the same in his pleadings.

Moreover, the three-day period from return of the seafarer or sign-

of from the vessel, whether to undergo a post-employment medical
examination or report the seafarer’s physical incapacity, should always
be complied with to determine whether the injury or illness is work-
related. Hence, petitioner’s failure to comply with the mandatory
reporting requirement resulted in the forfeiture of his right to claim
disability benefits and proved fatal to his cause.

However, while petitioner may have forfeited his right to claim

disability benefits, it is proper to award him with moral damages,
exemplary damages, and attorney’s fees.

R.A. No. 8042 did not limit the responsibility of recruitment

agencies to the recruitment and deployment of Filipino workers to
foreign countries. As DOLE-accredited agencies, they entered into a
covenant with the State to promote the safety and welfare of Filipino
workers. They have, in fact, undertaken to ensure that the “contracts
of employment are in accordance with the standard employment
contract and other applicable laws, rules, and regulations and
collective bargaining agreements.” This responsibility exists during the
lifetime of the employment contract and shall continue despite the
substitution, amendment or modification of the agreement.
 Page 46
Case Digest by: MANUEL, JUSTINE LEI P.

CENTURY CANNING CORP. V. COURT OF APPEALS

G.R. No. 152894. August 17, 2007.
Carpio, J.

DOCTRINE:

ARTICLE 57 OF THE LABOR CODE

Department Order No. 68-04, which provides the guidelines in
the implementation of the Apprenticeship and Employment Program of
the government, specifically states that no enterprise shall be allowed
to hire apprentices unless its apprenticeship program is registered and
approved by TESDA.

The TESDA's approval of the employer's apprenticeship

program is required before the employer is allowed to hire apprentices.
Prior approval from the TESDA is necessary to ensure that only
employers in the highly technical industries may employ apprentices
and only in apprenticeable occupations.19 Thus, under RA 7796,
employers can only hire apprentices for apprenticeable occupations
which must be officially endorsed by a tripartite body and approved for
apprenticeship by the TESDA.

FACTS:

On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria

C. Palad (Palad) as “fish cleaner” at petitioner’s tuna and sardines
factory. Palad signed on an apprenticeship agreement with petitioner.
Palad received an apprentice allowance of P138.75 daily. On 25 July
1997, petitioner 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
1997, the TESDA approved petitioner’s apprenticeship program.

According to petitioner, a performance evaluation was conducted on

15 November 1997, where petitioner 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, petitioner issued a termination notice5 dated 22
November 1997 to Palad, informing her of her termination effective at
the close of business hours of 28 November 1997.

Palad then filed a complaint for illegal dismissal, underpayment of

wages, and non-payment of pro-rated 13th month pay for the year
1997.
 Page 47

ISSUE:

Whether or not the respondent is an apprentice; and

Whether or not there is a valid cause for her termination

RULING:

Registration and Approval by the TESDA of Apprenticeship

Program Required Before Hiring of Apprentices

The apprenticeship agreement between petitioner and private

respondent was executed on May 28, 1990 allegedly employing the
latter as an apprentice in the trade of “care maker/molder.” On the
same date, an apprenticeship program was prepared by petitioner and
submitted to the Department of Labor and Employment. However, the
apprenticeship agreement was filed only on June 7, 1990.
Notwithstanding the absence of approval by the Department of Labor
and Employment, the apprenticeship agreement was enforced the day
it was signed.

Prior approval by the Department of Labor and Employment of

the proposed apprenticeship program is, therefore, a condition sine
qua non before an apprenticeship agreement can be validly entered
into.

The act of filing the proposed apprenticeship program with the

Department of Labor and Employment is a preliminary step towards its
final approval and does not instantaneously give rise to an employer-
apprentice relationship. Hence, since the apprenticeship agreement
between petitioner and private respondent has no force and effect in
the absence of a valid apprenticeship program duly approved by the
DOLE, private respondent’s assertion that he was hired not as an
apprentice but as a delivery boy (“kargador” or “pahinante”) deserves
credence. He should rightly be considered as a regular employee of
petitioner as defined by Article 280 of the Labor Code.

Republic Act No. 779615 (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 TESDA’s approval of the apprenticeship program as a
pre-requisite for the hiring of apprentices.

Since Palad is not considered an apprentice because the

apprenticeship agreement was enforced before the TESDA’s approval
of petitioner’s 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 petitioner’s business as a tuna and
 Page 48

sardines factory. Under Article 28021 of the Labor Code, an

employment is deemed regular where the employee has been
engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer.

Illegal Termination of Palad

To constitute valid dismissal from employment, two requisites must

concur: (1) the dismissal must be for a just or authorized cause; and
(2) the employee must be afforded an opportunity to be heard and to
defend himself.

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. Even if petitioner did conduct a performance evaluation on
Palad, petitioner failed to warn Palad of her alleged poor performance.
In fact, Palad denies any knowledge of the performance evaluation
conducted and of the result thereof. Petitioner likewise admits that
Palad did not receive the notice of termination because Palad allegedly
stopped reporting for work. 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.
 Page 49
Case Digest by: MANUEL, JUSTINE LEI P.

BERNARDO V. NLRC
G.R. No. 122917. July 12, 1999.
Panganiban, J.

DOCTRINE:

ARTICLE 57 OF THE LABOR CODE

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 of petitioners (deaf-mutes) is not a hindrance to
their work. The eloquent proof of this statement is the repeated renewal
of their employment contracts. Why then should they be dismissed,
simply because they are physically impaired? 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.

FACTS:

Petitioners are deaf–mutes who were hired on various periods

from 1988 to 1993 by respondent Far East Bank and Trust Co. as
Money Sorters and Counters through a uniformly worded agreement
called ‘Employment Contract for Handicapped Workers. Subsequently,
they are dismissed.

Petitioners maintain that they should be considered regular

employees, because their task as money sorters and counters was
necessary and desirable to the business of respondent bank. They
further allege that their contracts served merely to preclude the
application of Article 280 and to bar them from becoming regular
employees.

Private respondent, on the other hand, submits that petitioners

were hired only as “special workers and should not in any way be
considered as part of the regular complement of the Bank.” Rather,
they were “special” workers under the Labor Code.

ISSUE:

Whether or not the petitioners shall be considered as regular

employees
 Page 50

RULING:

Yes, the petitioners are considered as regular employees.

The uniform employment contracts of the petitioners stipulated

that they shall be trained for a period of one month, after which the
employer shall determine whether or not they should be allowed to
finish the 6-month term of the contract. Furthermore, the employer
may terminate the contract at any time for a just and reasonable
cause. Unless renewed in writing by the employer, the contract shall
automatically expire at the end of the term.

Respondent bank entered into the aforesaid contract with a total

of 56 handicapped workers and renewed the contracts of 37 of
them. In fact, two of them worked from 1988 to 1993. 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 of the Magna Carta provides:

“Section 5. Equal Opportunity for Employment.—

No disabled person shall be denied access to
opportunities for suitable employment. A qualified
disabled employee shall be subject to the same terms
and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able bodied
person.”

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, which provides:

“ART. 280. Regular and Casual Employment. — The provisions

of written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade
of the employer, x x x”
 Page 51

“The primary standard, therefore, of determining regular

employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or
business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the
employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also if the employee has
been performing the job for at least one year, even if the performance
is not continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity, and while such activity exists.”

Respondent bank entered into the aforesaid contract with a total

of 56 handicapped workers and renewed the contracts of 37 of
them. In fact, two of them worked from 1988 to 1993. 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.

Without a doubt, the task of counting and sorting bills is

necessary and desirable to the business of respondent bank. With the
exception of sixteen of them, petitioners performed these tasks for
more than six months.
 Page 52
Case Digest by: MANUEL, JUSTINE LEI P.

JAVIER V. FLY ACE

G.R. No. 192558. February 15, 2012.
Panganiban, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP
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.”

The petitioner has the burden to pass the well-settled tests to

determine the existence of an employer-employee relationship, viz: (1)
the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct. Of these elements, the most important criterion is
whether the employer controls or has reserved the right to control the
employee not only as to the result of the work but also as to the means
and methods by which the result is to be accomplished.

FACTS:

Javier an employee of Fly Ace performing various work for the

latter filed a complaint before the NLRC for underpayment of salaries
and other labor standard benefits.

He alleged that he reported for work from Monday to Saturday

from 7:00 o’clock in the morning to 5:00 o'clock in the afternoon; that
during his employment, he was not issued an identification card and
pay slips by the company; that he reported for work but he was no
longer allowed to enter the company premises by the security guard
upon the instruction of Ruben Ong (Mr. Ong), his superior; that after
several minutes of begging to the guard to allow him to enter, he saw
Ong whom he approached and asked why he was being barred from
entering the premises; that Ong replied by saying, “Tanungin mo anak
mo”; that he discovered that Ong had been courting his daughter
Annalyn after the two met at a fiesta celebration in Malabon City; that
Annalyn tried to talk to Ong and convince him to spare her father from
trouble but he refused to accede; 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.

Fly Ace denied the existence of employer-employee relationship

between them and Javier as the latter was only called roughly 5 to 6
 Page 53

times only in a month whenever the vehicle of its contracted hauler,

Milmar Hauling Services, was not available. Labor Arbiter dismissed
the complaint ruling that 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 pakyaw basis.

On appeal, NLRC reversed the decision of the LA. It was of the

view that a pakyaw-basis arrangement did not preclude the existence
of employer-employee relationship. Payment by result 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. The
NLRC further averred that it did not follow that a worker was a job
contractor and not an employee, just because the work he was doing
was not directly related to the employers trade or business or the work
may be considered as extra helper as in this case; and that the
relationship of an employer and an employee was determined by law
and the same would prevail whatever the parties may call it. Finding
Javier to be a regular employee, the NLRC ruled that he was entitled
to a security of tenure. For failing to present proof of a valid cause for
his termination, Fly Ace was found to be liable for illegal dismissal of
Javier who was likewise entitled to backwages and separation pay in
lieu of reinstatement. However, on appeal, CA reversed the ruling of
NLRC.

The CA ruled that Javier's failure to present salary vouchers,

payslips, or other pieces of evidence to bolster his contention, pointed
to the inescapable conclusion that he was not an employee of Fly Ace.
Further, it found that Javier’s work was not necessary and desirable to
the business or trade of the company, as it was only when there were
scheduled deliveries, which a regular hauling service could not deliver,
that Fly Ace would contract the services of Javier as an extra helper.
Lastly, the CA declared that the facts alleged by Javier did not pass
the control test.

He contracted work outside the company premises; he was not

required to observe definite hours of work; he was not required to
report daily; and he was free to accept other work elsewhere as there
was no exclusivity of his contracted service to the company, the same
being co-terminous with the trip only. Since no substantial evidence
was presented to establish an employer-employee relationship, the
case for illegal dismissal could not prosper. Hence, this appeal.

ISSUE:

Whether or not there exists an employer-employee relationship

between petitioner and respondent
 Page 54

RULING:

No, there is no existing employer-employee relationship in this

case.

The LA and the CA found Javier's claim of employment with Fly

Ace as wanting and deficient. The Court is constrained to agree. Labor
officials are enjoined to use reasonable means to ascertain the facts
speedily and objectively with little regard to technicalities or formalities
but nowhere in the rules are they provided a license to completely
discount evidence, or the lack of it. The quantum of proof required,
however, must still be satisfied. Hence, when confronted with
conflicting versions on factual matters, it is for them in the exercise of
discretion to determine which party deserves credence on the basis of
evidence received, subject only to the requirement that their decision
must be supported by substantial evidence. Accordingly, the petitioner
needs to show by substantial evidence that he was indeed an
employee of the company against which he claims illegal dismissal.

In sum, 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. Sadly, Javier
failed to adduce substantial evidence as basis for the grant of relief.

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.

While Javier remains firm in his position that as an employed

stevedore of Fly Ace, he was made to work in the company premises
during weekdays arranging and cleaning grocery items for delivery to
clients, no other proof was submitted to fortify his claim. The lone
affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javier’s cause.

The Court is of the considerable view that on Javier lies the

burden to pass the well-settled tests to determine the existence of an
employer-employee relationship, viz: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employee’s conduct. Of
these elements, the most important criterion is whether the employer
controls or has reserved the right to control the employee not only as
to the result of the work but also as to the means and methods by which
the result is to be accomplished.
 Page 55

In this case, Javier was not able to persuade the Court that the
above elements exist in his case. He could not submit competent proof
that Fly Ace engaged his services as a regular employee; that Fly Ace
paid his wages as an employee, or that Fly Ace could dictate what his
conduct should be while at work. In other words, Javier’s allegations
did not establish that his relationship with Fly Ace had the attributes of
an employer-employee relationship on the basis of the above-
mentioned four-fold test. Worse, Javier was not able to refute Fly Ace’s
assertion that it had an agreement with a hauling company to
undertake the delivery of its goods. It was also baffling to realize that
Javier did not dispute Fly Ace’s denial of his services’ exclusivity to the
company. In short, all that Javier laid down were bare allegations
without corroborative proof.
 Page 56
Case Digest by: MANUEL, JUSTINE LEI P.

SOUTH EAST INTERNATIONAL RATTAN V. COMING

G.R. No. 186621. March 12, 2014.
Villarama, Jr., J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

In order to establish the existence of an employer-employee

relationship, the four-fold test is used, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employee conduct, or the
so-called control test.

In resolving the issue of whether such relationship exists in a

given case, substantial evidence or that amount of relevant evidence,
which a reasonable mind might accept, as adequate to justify a
conclusion is sufficient.

FACTS:

Petitioner South East International Rattan, Inc. (SEIRI) is a

domestic corporation engaged in the business of manufacturing and
exporting furniture to various countries with principal place of business
at Paknaan, Mandaue City, while petitioner EstanislaoAgbay, as per
records, is the President and General Manager of SEIRI.

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 attorney fees against
Petitioner.

Respondent alleged that on March 17, 1984, petitioners hired

him as Sizing Machine Operator. He worked from 8:00 a.m. to 5:00
p.m. At first, his compensation was on pakyaw basis but sometime in
June 1984, it was fixed at P150.00 per day paid to him on a weekly
basis. In 1990, without any apparent reason, his employment was
interrupted as he was told by petitioners to resume work in two months
time. Being an uneducated person, respondent was persuaded by the
management as well as his brother not to complain, as otherwise
petitioners might decide not to call him back for work. Fearing such
consequence, respondent accepted his fate. Nonetheless, after two
months he reported back to work upon order of management.
 Page 57

Despite being an employee for many years with his work

performance never questioned by petitioners, respondent was
dismissed on January 1, 2002 without lawful cause. He was told that
he will be 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. He filed the complaint before the regional arbitration
branch.

As their defense, petitioners denied having hired respondent

asserting that SEIRI was incorporated only in 1986, and that
respondent actually worked for SEIRI furniture suppliers because
when the company started in 1987 it was engaged purely in buying and
exporting furniture and its business operations were suspended from
the last quarter of 1989 to August 1992. They stressed that respondent
was not included in the list of employees submitted to the Social
Security System (SSS). Moreover, respondent brother, Vicente
Coming, executed an affidavit8 in support of petitionersposition while
Allan Mayol and Faustino Apondarissued notarized certifications9 that
respondent worked for them instead.

The Labor Arbiter ruled that respondent is a regular employee of

SEIRI and that the termination of his employment was illegal.

Petitioners appealed to the National Labor Relations

Commission (NLRC)-Cebu City. The NLRC set aside the decision of
the LA compelling the respondent to file a petition for certiorari under
Rule 65 before the Court of Appeals. The CA ruled in favor of the
respondent and declared that there existed an employer-employee
relationship between petitioners and respondent who was dismissed
without just and valid cause. Petitioners moved for reconsideration but
the same was denied. Hence, the present petition for review on
certiorari.

ISSUE:

Whether or not there exists an employer-employee relationship

between petitioner and respondent

RULING:

Yes, there is an existing employer-employee relationship in this

case.

In order to establish the existence of an employer-employee

relationship, the four-fold test is used, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power
 Page 58

of dismissal; and (4) the power to control the employee conduct, or the
so-called control test.

In resolving the issue of whether such relationship exists in a

given case, substantial evidence or that amount of relevant evidence,
which a reasonable mind might accept, as adequate to justify a
conclusion is sufficient.

The petitioners presented the following to support their stance

that respondent is not their employee: (1) Employment Reports to the
SSS from 1987 to 2002; (2) the Certifications issued by Mayol and
Apondar; (3) two affidavits of Vicente Coming; (4) payroll sheets (1999-
2000); (5) individual pay envelopes and employee earnings records
(1999-2000); (6) and affidavit of Angelina Agbay(Treasurer and Human
Resources Officer).

The respondent, on the other hand, submitted the affidavit

executed by Eleoterio Brigoli, Pedro Brigoli, Napoleon Coming,
EfrenComing and Gil Coming who all attested that respondent was
their co-worker at SEIRI.

The Court in Tan v. Lagrama, 436 Phil. 190, held that 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. Nor does the fact that respondent
name does not appear in the payrolls and pay envelope records
submitted by petitioners negate the existence of employer-employee
relationship.

As a regular employee, respondent enjoys the right to security of

tenure under Article 279 of the Labor Code and may only be dismissed
for just or authorized causes. Otherwise, the dismissal becomes illegal.

Since respondent dismissal was without valid cause, he is

entitled to reinstatement without loss of seniority rights and other
privileges and to his full back wages, inclusive of allowances and other
benefits of their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

However, where reinstatement is no long feasible as an option,

back wages shall be computed from the time of the illegal termination
up to the finality of the decision. As an alternative to this, separation
pay equivalent to one month salary for every year of service should
likewise be awarded in case reinstatement is not possible.
 Page 59
Case Digest by: MANUEL, JUSTINE LEI P.

TENAZAS V. R. VILLEGAS TAXI TRANSPORT

G.R. No. 192998. April 2, 2014.
Reyes, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

In determining the presence or absence of an employer-

employee relationship, the Court has consistently looked for the
following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer's power to control the employee on the means and
methods by which the work is accomplished. The last element, the so-
called control test, is the most important element.

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.

FACTS:

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M.

Francisco (Francisco) filed a complaint for illegal dismissal against R.
Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and
Andy Villegas (Andy) (respondents). At that time, a similar case had
already been filed by Isidro G. Endraca (Endraca) against the same
respondents. The two (2) cases were subsequently consolidated.In
their position paper, Tenazas, Francisco and Endraca (petitioners)
alleged that they were hired and dismissed by the respondents.

Relaying the circumstances of his dismissal, Tenazas alleged

that on July 1, 2007, the taxi unit assigned to him was sideswiped by
another vehicle, causing a dent on the left fender near the driver seat.
The cost of repair for the damage was estimated at 500.00. Upon
reporting the incident to the company, he was scolded by respondents
Romualdo and Andy and was told to leave the garage for he is already
fired. He was even threatened with physical harm should he ever be
seen in the company's premises again. Despite the warning, Tenazas
reported for work on the following day but was told that he can no
longer drive any of the company's units as he is already fired.
 Page 60

Francisco, on the other hand, averred that his dismissal was

brought about by the company's unfounded suspicion that he was
organizing a labor union. He was instantaneously terminated, without
the benefit of procedural due process, on June 4, 2007.

Endraca, for his part, alleged that his dismissal was instigated by
an occasion when he fell short of the required boundary for his taxi unit.
He related that before he was dismissed, he brought his taxi unit to an
auto shop for an urgent repair. He was charged the amount of 700.00
for the repair services and the replacement parts. As a result, he was
not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his
driver’s license was confiscated and was told to settle the deficiency in
his boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.

For their part, the respondents admitted that Tenazas and

Endraca were employees of the company, the former being a regular
driver and the latter a spare driver. The respondents, however, denied
that Francisco was an employee of the company or that he was able
to drive one of the company's units at any point in time.

The respondents further alleged that Tenazas was never

terminated by the company. They claimed that on July 3, 2007,
Tenazas went to the company garage to get his taxi unit but was
informed that it is due for overhaul because of some mechanical
defects reported by the other driver who takes turns with him in using
the same. He was thus advised to wait for further notice from the
company if his unit has already been fixed. On July 8, 2007, however,
upon being informed that his unit is ready for release, Tenazas failed
to report back to work for no apparent reason.

As regards Endraca, the respondents alleged that they hired him

as a spare driver in February 2001. They allow him to drive a taxi unit
whenever their regular driver will not be able to report for work. In July
2003, however, Endraca stopped reporting for work without informing
the company of his reason. Subsequently, the respondents learned
that a complaint for illegal dismissal was filed by Endraca against them.
They strongly maintained, however, that they could never have
terminated Endraca in March 2006 since he already stopped reporting
for work as early as July 2003. Even then, they expressed willingness
to accommodate Endraca should he wish to work as a spare driver for
the company again since he was never really dismissed from
employment anyway.

The Labor Arbiter (LA) rendered a Decision declaring that there

was no illegal dismissal in the case at bar.
 Page 61

The NLRC rendered a Decision, reversing the appealed decision

of the LA, holding that the additional pieces of evidence belatedly
submitted by the petitioners sufficed to establish the existence of
employer-employee relationship and their illegal dismissal. On July 24,
2009, the respondents filed a motion for reconsideration but the NLRC
denied the same.

Unperturbed, the respondents filed a petition for certiorari with

the CA. On March 11, 2010, the CA rendered a Decision, affirming with
modification the Decision dated June 23, 2009 of the NLRC. The CA
agreed with the NLRCs finding that Tenazas and Endraca were
employees of the company, but ruled otherwise in the case of
Francisco for failing to establish his relationship with the company. It
also deleted the award of separation pay and ordered for reinstatement
of Tenazas and Endraca.

ISSUE:

Whether or not there exists an employer-employee relationship

between petitioner and respondent

RULING:

No, there is no existing employer-employee relationship in this

case.

In determining the presence or absence of an employer-

employee relationship, the Court has consistently looked for the
following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer's power to control the employee on the means and
methods by which the work is accomplished. The last element, the so-
called control test, is the most important element.

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 documentary evidence like attendance logbook,
payroll, SSS record or any personnel file that could somehow depict
his status as an employee. Anent his claim that 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
 Page 62

employer, as his co-petitioner Tenazas did. He could have also

presented testimonial evidence showing the respondent's exercise of
control over the means and methods by which he undertakes his work.
This is imperative in light of the respondent's denial of his employment
and the claim of another taxi operator, Emmanuel Villegas
(Emmanuel), that he was his employer. Specifically, in his Affidavit,
Emmanuel alleged that Francisco was employed as a spare driver in
his taxi garage from January 2006 to December 2006, a fact that the
latter failed to deny or question in any of the pleadings attached to the
records of this case. The utter lack of evidence is fatal to Francisco's
case especially in cases like his present predicament when the law has
been very lenient in not requiring any particular form of evidence or
manner of proving the presence of employer-employee relationship.

In Opulencia Ice Plant and Storage v. NLRC, this Court

emphasized, thus: “No particular form of evidence is required to prove
the existence of an employer-employee relationship. Any competent
and relevant evidence to prove the relationship may be admitted. For,
if only documentary evidence would be required to show that
relationship, no scheming employer would ever be brought before the
bar of justice, as no employer would wish to come out with any trace
of the illegality he has authored considering that it should take much
weightier proof to invalidate a written instrument.”

Here, Francisco simply relied on his allegation that he was an

employee of the company without any other evidence supporting his
claim. Unfortunately for him, a mere allegation in the position paper is
not tantamount to evidence. Bereft of any evidence, the CA correctly
ruled that Francisco could not be considered an employee of the
respondents.
 Page 63
Case Digest by: MANUEL, JUSTINE LEI P.

SAGUN V. ANZ GLOBAL SERVICES AND OPERATIONS

MANILA, INC.
G.R. No. 220399. August 22, 2016.
Perlas-Bernabe, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

An employment contract, like any other contract, is perfected at

the moment the parties come to agree upon its terms and conditions,
and thereafter, concur in the essential elements thereof. In this relation,
the contracting parties may establish such stipulations, clauses, terms,
and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order or public policy.

FACTS:

Sagun was employed at HSBC-EDPI when he applied online for

the position of Payments and Cash Processing Lead at respondent
ANZ Global Services and Operations (Manila), Inc. (ANZ).After
passing the interview and online examination, ANZ, thru SVP
(Cruzada), offered him the position of Customer Service Officer,
Payments and Cash Resolution, which the latter accepted on June 8,
2011. The letter of confirmation/ employment agreement provided:
employment is conditional on ANZ being satisfied that the results of:
any other required background or other checks are to the satisfaction
of ANZ, if, in the opinion of ANZ, any of your background checks,
reference checks or visas are not satisfactory, ANZ may choose not to
commence your employment, or where you have already started, to
end your employment immediately, with no liability to pay
compensation to you.
The Schedules provided that petitioner was to be placed on a
probationary status for a period of six (6) months and that his
appointment would take effect from the date of reporting, which was to
be not later than July 11, 2011.

On June 11, 2011, petitioner tendered his resignation at HSBC-

EDPI and the acknowledged copy thereof was transmitted to ANZ
together with his other pre-employment documentary requirements.
On July 11, 2011, petitioner was handed a letter of retraction signed
by ANZ's Human Resources Business Partner, (Alcaraz), informing
him that the job offer had been withdrawn on the ground that the
company found material inconsistencies in his declared information
 Page 64

and documents provided after conducting a background check with his

previous employer, particularly at Siemens.

Petitioner filed a complaint for illegal dismissal with money claims

against ANZ, Cruzada, and Alcaraz (respondents) before the NLRC
insisting that employment contract had already been perfected upon
his acceptance of the offer on June 8, 2011.

ISSUE:

Whether or not there exists an employer-employee relationship

between petitioner and respondent

RULING:

No, there is no existing employer-employee relationship in this

case.

An employment contract, like any other contract, is perfected at

the moment the parties come to agree upon its terms and conditions,
and thereafter, concur in the essential elements thereof. In this relation,
the contracting parties may establish such stipulations, clauses, terms,
and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order or public policy.

In this case, the Court agrees with the finding of the CA that there
was already a perfected contract of employment when petitioner
signed ANZ's employment offer and agreed to the terms and conditions
that were embodied therein. Nonetheless, the offer of employment
extended to petitioner contained several conditions before he may be
deemed an employee of ANZ. Among those conditions for employment
was the "satisfactory completion of any checks (e.g. background,
bankruptcy, sanctions and reference checks) that may be required by
ANZ." 40 Accordingly, petitioner's employment with ANZ depended on
the outcome of his background check, which partakes of the nature of
a suspensive condition, and hence, renders the obligation of the would-
be employer, i.e., ANZ in this case, conditional. Article 1181 of the Civil
Code provides:

Art. 1181. In conditional obligations, the acquisition of rights, as

well as the extinguishment or loss of those already acquired, shall
depend upon the happening of the event which constitutes the
condition.

In the realm of civil law, a condition is defined as "every future

and uncertain event upon which an obligation or provision is made to
depend. It is a future and uncertain event upon which the acquisition
or resolution of rights is made to depend by those who execute the
 Page 65

juridical act." Jurisprudence states that when a contract is subject to a

suspensive condition, its effectivity shall take place only if and when
the event which constitutes the condition happens or is fulfilled. A
contract is one of the five (5) sources of obligations as stated in the
Civil Code. An obligation is defined as the juridical necessity to give, to
do or not to do. While a contract may be perfected in the manner of
operation described above, the efficacy of the obligations created
thereby may be held in suspense pending the fulfillment of particular
conditions agreed upon. In other words, a perfected contract may exist,
although the obligations arising therefrom - if premised upon a
suspensive condition - would yet to be put into effect.

Here, the subject employment contract required a satisfactory

completion of petitioner's background check before he may be deemed
an employee of ANZ. Considering, however, that petitioner failed to
explain the discrepancies in his declared information and documents
that were required from him relative to his work experience at Siemens,
namely: (a) that he was only a Level 1 and not a Level 2 Technical
Support Representative that conducts troubleshooting for both
computer hardware and software problems; and (b) that he was found
to have been terminated for cause and not merely resigned from his
post, that rendered his background check unsatisfactory, ANZ's
obligations as a would-be employer were held in suspense and thus,
had yet to acquire any obligatory force. To reiterate, in a contract with
a suspensive condition, if the condition does not happen, the obligation
does not come into effect. Thus, until and unless petitioner complied
with the satisfactory background check, there exists no obligation on
the part of ANZ to recognize and fully accord him the rights under the
employment contract. In fact, records also show that petitioner failed
to report for work on or before July 11, 2011, which was also a
suspensive condition mandated under sub-paragraph 4 of Schedule 1
of the contract.

Consequently, no employer-employee relationship was said to

have been created between petitioner and ANZ under the
circumstances, and the dismissal of the farmer's complaint for illegal
termination from work, as held by the NLRC, was correctly sustained
by the CA.
 Page 66
Case Digest by: MANUEL, JUSTINE LEI P.

LVN PICTURES, INC. V. PHILIPPINE MUSICIANS GUILD

G.R. No. L-12598. January 28, 1961
Concepcion, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

It is well settled that "an employer-employee relationship exists .

. . where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to
be used in reaching such end . . . ." (Alabama Highway Express Co.,
Express Co., v. Local 612, 108S. 2d. 350.)

FACTS:

Philippine Musicians Guild is a duly registered legitimate labor

organization. LVN Pictures, Inc., Sampaguita Pictures, Inc., and
Premiere Productions, Inc. are corporations, duly organized under the
Philippine laws, engaged in the making of motion pictures and in the
processing and distribution thereof; that said companies employ
musicians for the purpose of making music recordings for title music,
background music, musical numbers, finale music and other incidental
music. Ninety-five (95%) percent of all the musicians playing for the
musical recordings of said companies are members of the Philippine
Musicians Guild.

The Guild prayed that it be certified as the sole and exclusive

bargaining agency for all musicians working in the aforementioned
companies. In their respective answers, the latter denied that they
have any musicians as employees, and alleged that the musical
numbers in the filing of the companies are furnished by independent
contractors.

The lower court sustained the theory of the Guild. A

reconsideration of the order complained of having been denied by the
Court en banc, LVN Pictures, inc., and Sampaguita Pictures, Inc., filed
these petitions for review for certiorari.

ISSUE:

Whether or not the musicians are considered as employees of the

companies
 Page 67

RULING:

Yes, there is an existing employer-employee relationship in this

case.

The musical directors above referred to have no such control

over the musicians involved in the present case. Said musical directors
control neither the music to be played, nor the musicians playing it. The
film companies summon the musicians to work, through the musical
directors. The film companies, through the musical directors, fix the
date, the time and the place of work. The film companies, not the
musical directors, provide the transportation to and from the studio.
The film companies furnish meal at dinner time.

What is more — in the language of the order appealed from —

"during the recording sessions, the motion picture director who is an
employee of the company" — not the musical director — "supervises
the recording of the musicians and tells them what to do in every
detail". The motion picture director — not the musical director — "solely
directs and performance of the musicians before the camera". The
motion picture director "supervises the performance of all the actors,
including the musicians who appear in the scenes, so that in the actual
performance to be shown in the screen, the musical director's
intervention has stopped." Or, as testified to in the lower court, "the
movie director tells the musical director what to do; tells the music to
be cut or tells additional music in this part or he eliminates the entire
music he does not (want) or he may want more drums or move violin
or piano, as the case may be". The movie director "directly controls the
activities of the musicians." He "says he wants more drums and the
drummer plays more" or "if he wants more violin or he does not like
that.".

It is well settled that "an employer-employee relationship exists .

. . where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to
be used in reaching such end . . . ." (Alabama Highway Express Co.,
Express Co., v. Local 612, 108S. 2d. 350.) The decisive nature of said
control over the "means to be used", is illustrated in the case of
Gilchrist Timber Co., et al., Local No. 2530, in which, by reason of said
control, the employer-employee relationship was held to exist between
the management and the workers, notwithstanding the intervention of
an alleged independent contractor, who had, and exercise, the power
to hire and fire said workers. The aforementioned control over the
means to be used" in reading the desired end is possessed and
exercised by the film companies over the musicians in the cases before
us.
 Page 68
Case Digest by: MANUEL, JUSTINE LEI P.

PAGUIO TRANSPORT CORP. V. NLRC

G.R. No. 119500. August 28, 1998.
Panganiban, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

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. In the lease of
chattels, the lessor loses complete control over the chattel leased. In
the case of jeepney owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The fact that the
drivers do not receive fixed wages but get only the excess of that so-
called boundary they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and
employee. The doctrine is applicable in the present case. Thus, private
respondents were employees because they had been engaged to
perform activities which were usually necessary or desirable in the
usual trade or business of the employer.

FACTS:

Complainant Wilfredo Melchor was hired by respondent

company as a taxi driver on 25 December 1992 under the boundary
system. He was engaged to drive the taxi unit assigned to him on a 24-
hour schedule per trip every two (2) days, for which he used to earn an
average income from P500 to P700 per trip, exclusive of the P650.00
boundary and other deductions imposed on him. On 24 November
1993, complainant allegedly met a vehicular accident along Quirino
Avenue near the PNR Station and Plaza Dilao when he accidentally
bumped a car which stopped at the intersection even when the traffic
light was green and go. After he submitted the traffic accident report to
the office of respondents, he was allegedly advised to stop working
and have a rest. After several days, he allegedly reported for work only
to be told that his service was no longer needed. Hence, the complaint
for illegal dismissal, among others.

Respondents for their part maintained that complainant was not

illegally dismissed, there being in the first place no employer-employee
relationship between them. In amplification, it was argued that the
element of control which was a paramount test to determine the
existence of such a relationship was lacking. So too, it argued the
element of the payment of compensation. Considering that in lieu of
 Page 69

the latter, payment of boundary is instead made allegedly makes the

relationship between them of a wase-agreement. Respondents then
argued that even if an employer-employee relationship were to be
presumed as present, still complainants termination arose out of a valid
cause and after he refused to articulate his stand on the investigation
being conducted on him. Respondents then harped on the supposed
three occasions when complainant figured in a vehicular accident
involving the taxi unit he was driving, viz: On August 3, which resulted
in damages to the respondent in the amount of P150.00; On August 4
which again resulted [in] the damages to the respondent in the amount
of P615.00; and again on 4 November 1993, the mishap costing the
respondents this time P25,370.00 in damages. As a result of the
alleged compounded damages which the respondents had to shoulder
on account of the supposed reckless driving of the complainant, the
former was allegedly left with no alternative but to ask complainants
explanation why he should still be allowed to drive. Complainant,
despite several chances, allegedly failed to do so.

ISSUE:

Whether or not there exists an employer-employee relationship in

the case

RULING:

Yes, there is an existing employer-employee relationship in this

case.

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. In the lease of
chattels, the lessor loses complete control over the chattel leased. In
the case of jeepney owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The fact that the
drivers do not receive fixed wages but get only the excess of that so-
called boundary they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and
employee. The doctrine is applicable in the present case. Thus, private
respondents were employees because they had been engaged to
perform activities which were usually necessary or desirable in the
usual trade or business of the employer.

Under the boundary system, private respondent was engaged to

drive petitioners taxi unit on a 24-hour schedule every two days. On
each such trip, private respondent remitted to petitioner a boundary of
P650. Whatever he earned in excess of that amount was considered
his income.
 Page 70

Petitioner argues that under said arrangement, he had no control

over the number of hours private respondent had to work and the
routes he had to take. Therefore, he concludes that the employer-
employee relationship cannot be deemed to exist.
 Page 71
Case Digest by: MANUEL, JUSTINE LEI P.

TENG V. PAHAGAC
G.R. No. 169704. November 17, 2010.
Brion, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

More importantly, the element of control – which we have ruled

in a number of cases to be a strong indicator of the existence of an
employer-employee relationship – is present in this case. Petitioner not
only owned the tools and equipment, he directed how the respondent
workers were to perform their job as checkers; they, in fact, acted as
Teng’s eyes and ears in every fishing expedition.

FACTS:

Albert Teng Fish Trading is engaged in deep sea fishing and, for
this purpose, owns boats (basnig), equipment, and other fishing
paraphernalia. As owner of the business, Teng claims that he
customarily enters into joint venture agreements with master fishermen
(maestros) who are skilled and are experts in deep sea fishing; they
take charge of the management of each fishing venture, including the
hiring of the members of its complement. He avers that the maestros
hired the respondent workers as checkers to determine the volume of
the fish caught in every fishing voyage.

The respondent workers alleged that Teng hired them, without

any written employment contract, to serve as his "eyes and ears"
aboard the fishing boats; to classify the fish caught by bara; to report
to Teng via radio communication the classes and volume of each catch;
to receive instructions from him as to where and when to unload the
catch; to prepare the list of the provisions requested by the maestro
and the mechanic for his approval; and, to procure the items as
approved by him. They also claimed that they received regular monthly
salaries, 13th month pay, Christmas bonus, and incentives in the form
of shares in the total volume of fish caught.

They asserted that sometime in September 2002, Teng

expressed his doubts on the correct volume of fish caught in every
fishing voyage. In December 2002, Teng informed them that their
services had been terminated. Respondent workers filed a complaint
for illegal dismissal against Albert Teng Fish Trading, Teng, and Chua
before the NCMB, Region Branch No. IX, Zamboanga City.
 Page 72

The VA rendered a decision in Tengs favor and declared that no

employer-employee relationship existed between Teng and the
respondent workers. Respondent workers filed a motion for
reconsideration but the same was denied. The VA reasoned out that
Section 6, Rule VII of the 1989 Procedural Guidelines in the Conduct
of Voluntary Arbitration Proceedings (1989 Procedural Guidelines)
does not provide the remedy of a motion for reconsideration to the
party adversely affected by the VAs order or decision.

Respondents filed an appeal to the CA, where the VA decision

was reversed. Teng moved for reconsideration but the same was
denied. Hence, this petition.

ISSUE:

Whether or not there exists an employer-employee relationship in

the case

RULING:

Yes, there is an existing employer-employee relationship in this

case.

The element of control is a strong indicator of the existence of an

employer-employee relationship.

While Teng alleged that it was the maestros who hired the
respondent workers, it was his company that issued to the respondent
workers identification cards (IDs) bearing their names as employees
and Tengs signature as the employer. Generally, in a business
establishment, IDs are issued to identify the holder as a bona fide
employee of the issuing entity.

For the 13 years that the respondent workers worked for Teng,
they received wages on a regular basis, in addition to their shares in
the fish caught. The worksheet showed that the respondent workers
received uniform amounts within a given year, which amounts annually
increased until the termination of their employment in 2002. Tengs
claim that the amounts received by the respondent workers are mere
commissions is incredulous, as it would mean that the fish caught
throughout the year is uniform and increases in number each year.
Teng not only owned the tools and equipment, he directed how the
respondent workers were to perform their job as checkers; they, in fact,
acted as Tengs eyes and ears in every fishing expedition.

Teng cannot hide behind his argument that the respondent

workers were hired by the maestros. To consider the respondent
workers as employees of the maestros would mean that Teng
 Page 73

committed impermissible labor-only contracting. As a policy, the Labor

Code prohibits labor-only contracting.

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 persons are
performing activities which are directly related to the principal business
of such employer.

In the present case, the maestros did not have any substantial
capital or investment. Teng admitted that he solely provided the capital
and equipment, while the maestros supplied the workers. The power
of control over the respondent workers was lodged not with the
maestros but with Teng. As checkers, the respondent workers main
tasks were to count and classify the fish caught and report them to
Teng. They performed tasks that were necessary and desirable in
Tengs fishing business. Taken together, these incidents confirm the
existence of a labor-only contracting which is prohibited in our
jurisdiction, as it is considered to be the employers attempt to evade
obligations afforded by law to employees.

Accordingly, we hold that employer-employee ties exist between

Teng and the respondent workers. A finding that the maestros are
labor-only contractors is equivalent to a finding that an employer-
employee relationship exists between Teng and the respondent
workers. As regular employees, the respondent workers are entitled to
all the benefits and rights appurtenant to regular employment.
 Page 74
Case Digest by: MANUEL, JUSTINE LEI P.

DY KEH BENG V. INTERNATIONAL LABOR AND

MARINE UNION OF THE PHILIPPINES
G.R. No. L-32245. May 25, 1979.
Brion, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

While this Court upholds the control test under which an

employer-employee relationship exists "where the person for whom
the services are performed reserves a right to control not only the end
to be achieved but also the means to be used in reaching such end, "
it finds no merit with petitioner's arguments as stated above. It should
be borne in mind that the control test calls merely for the existence of
the right to control the manner of doing the work, not the actual
exercise of the right.

FACTS:

A charge of unfair labor practice was filed against Dy Keh Beng,

proprietor of a basket factory, for discriminatory acts within the
meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No.
875, by dismissing Carlos N. Solano and Ricardo Tudla for their union
activities. After preliminary investigation was conducted, a case was
filed in the Court of Industrial Relations for in behalf of the International
Labor and Marine Union of the Philippines and two of its members,
Solano and Tudla.

An employee-employer relationship was found to have existed

between Dy Keh Beng and complainants Tudla and Solano, although
Solano was admitted to have worked on piece basis.

According to Dy Keh Beng, however, Solano was not his

employee for the following reasons:

1. Solano never stayed long enought at Dy’s establishment;

2. Solano had to leave as soon as he was through with the
order given him by Dy;
3. When there were no orders needing his services there was
nothing for him to do;
4. When orders came to the shop that his regular workers
could not fill it was then that Dy went to his address in
Caloocan and fetched him for these orders; and
5. Solano’s work with Dy’s establishment was not continuous.
 Page 75

According to petitioner, these facts show that respondents

Solano and Tudla are only piece workers, not employees under
Republic Act 875, where an employee is referred to as “shall include
any employee and shag not be limited to the employee of a particular
employer unless the Act explicitly states otherwise and shall include
any individual whose work has ceased as a consequence of, or in
connection with any current labor dispute or because of any unfair
labor practice and who has not obtained any other substantially
equivalent and regular employment.”

While an employer “includes any person acting in the interest of

an employer, directly or indirectly but shall not include any labor
organization (otherwise than when acting as an employer) or anyone
acting in the capacity of officer or agent of such labor organization.”

ISSUE:

Whether or not there exists an employer-employee relationship

between petitioner Dy Keh Beng and the respondents Solano and
Tudla

RULING:

No, there is no existing employer-employee relationship in this

case.

While this Court upholds the control test under which an

employer-employee relationship exists "where the person for whom
the services are performed reserves a right to control not only the end
to be achieved but also the means to be used in reaching such end, "
it finds no merit with petitioner's arguments as stated above. It should
be borne in mind that the control test calls merely for the existence of
the right to control the manner of doing the work, not the actual
exercise of the right. Considering the finding by the Hearing Examiner
that the establishment of Dy Keh Beng is "engaged in the manufacture
of baskets known as kaing, it is natural to expect that those working
under Dy would have to observe, among others, Dy's requirements of
size and quality of the kaing. Some control would necessarily be
exercised by Dy as the making of the kaing would be subject to Dy's
specifications. Parenthetically, since the work on the baskets is done
at Dy's establishments, it can be inferred that the proprietor Dy could
easily exercise control on the men he employed.

As to the contention that Solano was not an employee because

he worked on piece basis, this Court agrees with the Hearing Examiner
that circumstances must be construed to determine indeed if payment
by the piece is just a method of compensation and does not define the
 Page 76

essence of the relation. Units of time ... and units of work are in
establishments like respondent just yardsticks whereby to determine
rate of compensation, to be applied whenever agreed upon. We cannot
construe payment by the piece where work is done in such an
establishment so as to put the worker completely at liberty to turn him
out and take in another at pleasure.

At this juncture, it is worthy to note that Justice Perfecto,

concurring with Chief Justice Ricardo Paras who penned the decision
in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83
Phil..518, 523), opined that judicial notice of the fact that the so-called
"pakyaw" system mentioned in this case as generally practiced in our
country, is, in fact, a labor contract -between employers and
employees, between capitalists and laborers.
 Page 77
\
Case Digest by: MANUEL, JUSTINE LEI P.

INSULAR LIFE ASSURANCE CO., LTD., V. NLRC

G.R. No. 84484. November 15, 1989.
Narvasa, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

Logically, the line should be drawn between rules that merely

serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or
restrict the party hired to the use of such means. The first, which aim
only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used
to achieve it. The distinction acquires particular relevance in the case
of an enterprise affected with public interest, as is the business of
insurance, and is on that account subject to regulation by the State with
respect, not only to the relations between insurer and insured but also
to the internal affairs of the insurance company.

FACTS:

Petitioner Insular Life entered into a contract with respondent

Basiao where the latter is authorized to solicit for insurance policies.
Sometime later, the parties entered into another contract which caused
Basiao to organize an agency in order to fulfill its terms. The contract
being subsequently terminated by petitioner, Basiao sued the latter
which prompted also for the termination of their engagement under the
first contract. Basiao thus filed before the Ministry of Labor seeking to
recover alleged unpaid commissions. Petitioner contends that Basiao
is not an employee but an independent contractor for which they have
no obligation to pay said commissions. The Labor Arbiter found for
Basiao ruling that there exists employer-employee relationship
between him and petitioner.

ISSUE:

Whether or not an employer-employee relationship existed

between petitioner and Basiao

RULING:
 Page 78

No, there is no existing employer-employee relationship in this

case.

The Company's thesis, that no employer-employee relation in the

legal and generally accepted sense existed between it and Basiao, is
drawn from the terms of the contract they had entered into, which,
either expressly or by necessary implication, made Basiao the master
of his own time and selling methods, left to his judgment the time, place
and means of soliciting insurance, set no accomplishment quotas and
compensated him on the basis of results obtained. He was not bound
to observe any schedule of working hours or report to any regular
station; he could seek and work on his prospects anywhere and at
anytime he chose to, and was free to adopt the selling methods he
deemed most effective.

Without denying that the above were indeed the expressed

implicit conditions of Basiao's contract with the Company, the
respondents contend that they do not constitute the decisive
determinant of the nature of his engagement, invoking precedents to
the effect that the critical feature distinguishing the status of an
employee from that of an independent contractor is control, that is,
whether or not the party who engages the services of another has the
power to control the latter's conduct in rendering such services.
Pursuing the argument, the respondents draw attention to the
provisions of Basiao's contract obliging him to "... observe and conform
to all rules and regulations which the Company may from time to time
prescribe ...," as well as to the fact that the Company prescribed the
qualifications of applicants for insurance, processed their applications
and determined the amounts of insurance cover to be issued as
indicative of the control, which made Basiao, in legal contemplation, an
employee of the Company.

It is true that the "control test" expressed in the following

pronouncement of the Court in the 1956 case of Viana vs. Alejo Al-
Lagadan: ... In determining the existence of employer-employee
relationship, the following elements are generally considered, namely:
(1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employees' conduct — although the latter is the most important
element ... has been followed and applied in later cases, some fairly
recent. Indeed, it is without question a valid test of the character of a
contract or agreement to render service. It should, however, be
obvious that not every form of control that the hiring party reserves to
himself over the conduct of the party hired in relation to the services
rendered may be accorded the effect of establishing an employer-
employee relationship between them in the legal or technical sense of
the term. A line must be drawn somewhere, if the recognized
distinction between an employee and an individual contractor is not to
 Page 79

vanish altogether. Realistically, it would be a rare contract of service

that gives untrammelled freedom to the party hired and eschews any
intervention whatsoever in his performance of the engagement.

Logically, the line should be drawn between rules that merely

serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or
restrict the party hired to the use of such means. The first, which aim
only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used
to achieve it. The distinction acquires particular relevance in the case
of an enterprise affected with public interest, as is the business of
insurance, and is on that account subject to regulation by the State with
respect, not only to the relations between insurer and insured but also
to the internal affairs of the insurance company. Rules and regulations
governing the conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is, therefore,
usual and expected for an insurance company to promulgate a set of
rules to guide its commission agents in selling its policies that they may
not run afoul of the law and what it requires or prohibits. Of such a
character are the rules which prescribe the qualifications of persons
who may be insured, subject insurance applications to processing and
approval by the Company, and also reserve to the Company the
determination of the premiums to be paid and the schedules of
payment. None of these really invades the agent's contractual
prerogative to adopt his own selling methods or to sell insurance at his
own time and convenience, hence cannot justifiably be said to
establish an employer-employee relationship between him and the
company.

In Investment Planning Corporation of the Philippines vs. Social

Security System a case almost on all fours with the present one, this
Court held that there was no employer-employee relationship between
a commission agent and an investment company, but that the former
was an independent contractor where said agent and others similarly
placed were: (a) paid compensation in the form of commissions based
on percentages of their sales, any balance of commissions earned
being payable to their legal representatives in the event of death or
registration; (b) required to put up performance bonds; (c) subject to a
set of rules and regulations governing the performance of their duties
under the agreement with the company and termination of their
services for certain causes; (d) not required to report for work at any
time, nor to devote their time exclusively to working for the company
nor to submit a record of their activities, and who, finally, shouldered
their own selling and transportation expenses.
 Page 80

The respondents limit themselves to pointing out that Basiao's

contract with the Company bound him to observe and conform to such
rules and regulations as the latter might from time to time prescribe.
No showing has been made that any such rules or regulations were in
fact promulgated, much less that any rules existed or were issued
which effectively controlled or restricted his choice of methods — or
the methods themselves — of selling insurance. Absent such showing,
the Court will not speculate that any exceptions or qualifications were
imposed on the express provision of the contract leaving Basiao "...
free to exercise his own judgment as to the time, place and means of
soliciting insurance."

The Court, therefore, rules that under the contract invoked by

him, Basiao was not an employee of the petitioner, but a commission
agent, an independent contractor whose claim for unpaid commissions
should have been litigated in an ordinary civil action. The Labor Arbiter
erred in taking cognizance of, and adjudicating, said claim, being
without jurisdiction to do so, as did the respondent NLRC in affirming
the Arbiter's decision. This conclusion renders it unnecessary and
premature to consider Basiao's claim for commissions on its merits.
 Page 81
Case Digest by: MANUEL, JUSTINE LEI P.

TONGKO V. THE MANUFACTURER’S LIFE

G.R. No. 167622. January 25, 2011.
Brion, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

From jurisprudence, an important lesson that the first Insular Life

case teaches us is that a commitment to abide by the rules and
regulations of an insurance company does not ipso facto make the
insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agent’s conduct necessarily indicate
"control" as this term is defined in jurisprudence. Guidelines indicative
of labor law "control," as the first Insular Life case tells us, should not
merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating the
means or methods to be employed in attaining the result, or of fixing
the methodology and of binding or restricting the party hired to the use
of these means.

FACTS:

Manufacturers Life Insurance, Co. is a domestic corporation

engaged in life insurance business. De Dios was its President and
Chief Executive Officer. Petitioner Tongko started his relationship with
Manulife in 1977 by virtue of a Career Agent's Agreement.
Pertinent provisions of the agreement state that:

It is understood and agreed that the Agent is an independent

contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between
the Company and the Agent.

a. The Agent shall canvass for applications for Life Insurance,

Annuities, Group policies and other products offered by the
Company, and collect, in exchange for provisional receipts
issued by the Agent, money due or to become due to the
Company in respect of applications or policies obtained by
or through the Agent or from policyholders allotted by the
Company to the Agent for servicing, subject to subsequent
confirmation of receipt of payment by the Company as
evidenced by an Official Receipt issued by the Company
directly to the policyholder.
 Page 82

b. The Company may terminate this Agreement for any

breach or violation of any of the provisions hereof by the
Agent by giving written notice to the Agent within fifteen
(15) days from the time of the discovery of the breach. No
waiver, extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this Agreement by the
Company shall be construed for any previous failure to
exercise its right under any provision of this Agreement.

c. Either of the parties hereto may likewise terminate his

Agreement at any time without cause, by giving to the other
party fifteen (15) days notice in writing.

Sometime in 2001, De Dios addressed a letter to Tongko, then

one of the Metro North Managers, regarding meetings wherein De Dios
found Tongko's views and comments to be unaligned with the
directions the company was taking. De Dios also expressed his
concern regarding the Metro North Managers' interpretation of the
company's goals. He maintains that Tongko's allegations are
unfounded. Some allegations state that some Managers are unhappy
with their earnings, that they're earning less than what they deserve
and that these are the reasons why Tonko's division is unable to meet
agency development objectives. However, not a single Manager came
forth to confirm these allegations. Finally, De Dios related his worries
about Tongko's inability to push for company development and growth.

De Dios subsequently sent Tongko a letter of termination in

accordance with Tongko's Agents Contract. Tongko filed a complaint
with the NLRC against Manulife for illegal dismissal, alleging that he
had an employer-employee relationship with De Dios instead of a
revocable agency by pointing out that the latter exercised control over
him through directives regarding how to manage his area of
responsibility and setting objectives for him relating to the business.
Tongko also claimed that his dismissal was without basis and he was
not afforded due process. The NLRC ruled that there was an employer-
employee relationship as evidenced by De Dios's letter which
contained the manner and means by which Tongko should do his work.
The NLRC ruled in favor of Tongko, affirming the existence of the
employer-employee relationship.

The Court of Appeals, however, set aside the NLRC's ruling. It

applied the four-fold test for determining control and found the
elements in this case to be lacking, basing its decision on the same
facts used by the NLRC. It found that Manulife did not exert control
over Tongko, there was no employer-employee relationship and thus
the NLRC did not have jurisdiction over the case.
 Page 83

The Supreme Court reversed the ruling of the Court of Appeals

and ruled in favor of Tongko. However, the Supreme Court issued
another Resolution dated June 29, 2010, reversing its decision.
Tongko filed a motion for reconsideration, which is now the subject of
the instant case.

ISSUE:

Did the Court err in issuing the Ju e 29, 2010 resolution, reversing
its earlier decision that an employer-employee relationship between
the parties existed between the parties?

RULING:

No, the Supreme Court finds no reason to reverse the June 29,
2010 decision.

The Court cannot consider the present case purely from a labor
law perspective, oblivious that the factual antecedents were set in the
insurance industry so that the Insurance Code primarily governs.
Chapter IV, Title 1 of this Code is wholly devoted to "Insurance Agents
and Brokers" and specifically defines the agents and brokers
relationship with the insurance company and how they are governed
by the Code and regulated by the Insurance Commission.

A glaring evidentiary gap for Tongko in this case is the lack of

evidence on record showing that Manulife ever exercised means-and-
manner control, even to a limited extent, over Tongko during his ascent
in Manulife’s sales ladder. In 1983, Tongko was appointed unit
manager. Inexplicably, Tongko never bothered to present any
evidence at all on what this designation meant. This also holds true for
Tongko’s appointment as branch manager in 1990, and as Regional
Sales Manager in 1996. The best evidence of control – the agreement
or directive relating to Tongko’s duties and responsibilities – was never
introduced as part of the records of the case. The reality is, prior to de
Dios’ letter, Manulife had practically left Tongko alone not only in doing
the business of selling insurance, but also in guiding the agents under
his wing. As discussed below, the alleged directives covered by de
Dios’ letter, heretofore quoted in full, were policy directions and
targeted results that the company wanted Tongko and the other sales
groups to realign with in their own selling activities. This is the reality
that the parties’ presented evidence consistently tells us.

What, to Tongko, serve as evidence of labor law control are the

codes of conduct that Manulife imposes on its agents in the sale of
insurance. The mere presentation of codes or of rules and regulations,
 Page 84

however, is not per se indicative of labor law control as the law and
jurisprudence teach us.

As already recited above, the Insurance Code imposes

obligations on both the insurance company and its agents in the
performance of their respective obligations under the Code, particularly
on licenses and their renewals, on the representations to be made to
potential customers, the collection of premiums, on the delivery of
insurance policies, on the matter of compensation, and on measures
to ensure ethical business practice in the industry.

The general law on agency, on the other hand, expressly allows

the principal an element of control over the agent in a manner
consistent with an agency relationship. In this sense, these control
measures cannot be read as indicative of labor law control. Foremost
among these are the directives that the principal may impose on the
agent to achieve the assigned tasks, to the extent that they do not
involve the means and manner of undertaking these tasks. The law
likewise obligates the agent to render an account; in this sense, the
principal may impose on the agent specific instructions on how an
account shall be made, particularly on the matter of expenses and
reimbursements. To these extents, control can be imposed through
rules and regulations without intruding into the labor law concept of
control for purposes of employment.

From jurisprudence, an important lesson that the first Insular Life

case teaches us is that a commitment to abide by the rules and
regulations of an insurance company does not ipso facto make the
insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agent’s conduct necessarily indicate
"control" as this term is defined in jurisprudence. Guidelines indicative
of labor law "control," as the first Insular Life case tells us, should not
merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating the
means or methods to be employed in attaining the result, or of fixing
the methodology and of binding or restricting the party hired to the use
of these means. In fact, results-wise, the principal can impose
production quotas and can determine how many agents, with specific
territories, ought to be employed to achieve the company’s objectives.
These are management policy decisions that the labor law element of
control cannot reach. Our ruling in these respects in the first Insular
Life case was practically reiterated in Carungcong.

Under this legal situation, the only conclusion that can be made
is that the absence of evidence showing Manulife’s control over
Tongko’s contractual duties points to the absence of any employer-
employee relationship between Tongko and Manulife. In the context of
the established evidence, Tongko remained an agent all along;
 Page 85

although his subsequent duties made him a lead agent with leadership
role, he was nevertheless only an agent whose basic contract yields
no evidence of means-and-manner control.
 Page 86
Case Digest by: MANUEL, JUSTINE LEI P.

AFP MUTUAL BENEFIT ASSOCIATION V. NLRC

G.R. No. 102199. January 29, 1997.
Panganiban, J.

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP

To restate, the significant factor in determining the relationship of

the parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service being
rendered, and the degree to which the principal may intervene to
exercise such control. The presence of such power of control is
indicative of an employment relationship, while absence thereof is
indicative of independent contractorship. In other words, the test to
determine the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control
of the employer except only as to the result of the work.

FACTS:

Private respondent Eutiquio Bustamante was an insurance

underwriter of petitioner AFP Mutual Benefit Association until he was
dismissed for misrepresentation and for simultaneously selling
insurance for another life insurance company in violation of their
agreement. Respondent signed a quitclaim after receiving his
commissions but later on discovered that he was entitled to more than
the received amount. Thus, he filed a complaint with the Office of the
Insurance Commissioner but was advised to file before the Department
of Labor, which then ruled in his favor citing that employer-employee
relationship exists between him and petitioner. NLRC tribunal affirmed.

ISSUE:

Whether or not an employer-employee relationship existd

between the parties

RULING:

No, there was no employer-employee relationship that existed

from this case.

Well-settled is the doctrine that the existence of an employer-

employee relationship is ultimately a question of fact and that the
findings thereon by the labor arbiter and the National Labor Relations
 Page 87

Commission shall be accorded not only respect but even finality when
supported by substantial evidence. The determinative factor in such
finality is the presence of substantial evidence to support said finding,
otherwise, such factual findings cannot bind this Court.

To this, respondent Commission added that the Sales Agent's

Agreement specifically provided that petitioner may assign private
respondent a specific area of responsibility and a production quota.
From there, it concluded that apparently there is that exercise of control
by the employer which is the most important element in determining
employer- employee relationship.

We hold, however, that respondent Commission misappreciated

the facts of the case. Time and again, the Court has applied the "four-
fold" test in determining the existence of employer-employee
relationship. This test considers the following elements: (1) the power
to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the
power to control, the last being the most important element.

The difficulty lies in correctly assessing if certain factors or

elements properly indicate the presence of control. Anent the issue of
exclusivity in the case at bar, the fact that private respondent was
required to solicit business exclusively for petitioner could hardly be
considered as control in labor jurisprudence. Under Memo Circulars
No. 2-81 12 and 2-85, dated December 17, 1981 and August 7, 1985,
respectively, issued by the Insurance Commissioner, insurance agents
are barred from serving more than one insurance company, in order to
protect the public and to enable insurance companies to exercise
exclusive supervision over their agents in their solicitation work. Thus,
the exclusivity restriction clearly springs from a regulation issued by
the Insurance Commission, and not from an intention by petitioner to
establish control over the method and manner by which private
respondent shall accomplish his work. This feature is not meant to
change the nature of the relationship between the parties, nor does it
necessarily imbue such relationship with the quality of control
envisioned by the law.

To restate, the significant factor in determining the relationship of

the parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service being
rendered, and the degree to which the principal may intervene to
exercise such control. The presence of such power of control is
indicative of an employment relationship, while absence thereof is
indicative of independent contractorship. In other words, the test to
determine the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control
of the employer except only as to the result of the work. Such is exactly
 Page 88

the nature of the relationship between petitioner and private

respondent.

Although petitioner could have, theoretically, disapproved any of

private respondent's transactions, what could be disapproved was only
the result of the work, and not the means by which it was
accomplished.

The "control" which the above factors indicate did not sum up to
the power to control private respondent's conduct in and mode of
soliciting insurance. On the contrary, they clearly indicate that the
juridical element of control had been absent in this situation. Thus, the
Court is constrained to rule that no employment relationship had ever
existed between the parties.
 Page 89

Case Digest by: Jones Harvey I. Marquez

Encyclopedia Britannica v.
NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 87098. November 04, 1996.
Torres, Jr., J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

In determining the existence of an employer-employee

relationship the following elements must be present: 1) selection and
engagement of the employee; 2) payment of wages; 3) power of
dismissal; and 4) the power to control the employee's conduct. Of the
above, control of employee's conduct is commonly regarded as the
most crucial and determinative indicator of the presence or absence of
an employer-employee relationship. Under the control test, an
employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end to
be achieved, but also the manner and means to use in reaching that
end.

FACTS:

Private respondent Benjamin Limjoco was a Sales Division

Manager of petitioner Encyclopaedia Britannica and was in charge of
selling petitioner's products through some sales representatives. As
compensation, private respondent received commissions from the
products sold by his agents. He was also allowed to use petitioner's
name, goodwill and logo. It was, however, agreed upon that office
expenses would be deducted from private respondent's commissions.

On June 14, 1974, private respondent Limjoco resigned from

office to pursue his private business. Then on October 30, 1975, he
filed a complaint against petitioner Encyclopaedia Britannica with the
Department of Labor and Employment, claiming for non-payment of
separation pay and other benefits, and also illegal deduction from his
sales commissions.

Petitioner Encyclopedia Britannica alleged that Limjoco was not its

employee but an independent dealer authorized to promote and sell its
products and in return, received commissions therefrom. Limjoco did
not have any salary and his income from the petitioner company was
dependent on the volume of sales accomplished. He also had his own
separate office, financed the business expenses, and maintained his
 Page 90

own workforce. The salaries of his secretary, utility man, and sales
representatives were chargeable to his commissions.

Thus, petitioner argued that it had no control and supervision over

the complainant as to the manner and means he conducted his
business operations. The latter did not even report to the office of the
petitioner and did not observe fixed office hours. Consequently, there
was no employer-employee relationship.

Limjoco maintained otherwise. He alleged that he was hired by the

petitioner in July 1970, was assigned in the sales department, and was
earning an average of P4,000.00 monthly as his sales commission. He
was under the supervision of the petitioner's officials who issued to him
and his other personnel, memoranda, guidelines on company policies,
instructions and other orders. He was, however, dismissed by the
petitioner when the Laurel-Langley Agreement expired. As a result,
Limjoco asserts that in accordance with the established company
practice and the provisions of the collective bargaining agreement, he
was entitled to termination pay equivalent to one month salary, the
unpaid benefits (Christmas bonus, midyear bonus, clothing allowance,
vacation leave, and sick leave), and the amounts illegally deducted
from his commissions which were then used for the payments of office
supplies, office space, and overhead expenses.

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.

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. NLRC ruled that
there existed an employer-employee relationship and petitioner failed
to disprove this finding.

ISSUE:

Whether there exists an Employer-Employee Relationship

between Encyclopaedia Britannica and Limjoco
.
RULING:

NO, the Supreme Court ruled that in determining the existence of

an employer-employee relationship the following elements must be
present: 1) selection and engagement of the employee; 2) payment of
wages; 3) power of dismissal; and 4) the power to control the
employee's conduct. Of the above, control of employee's conduct is
 Page 91

commonly regarded as the most crucial and determinative indicator of

the presence or absence of an employer-employee relationship.

Under the control test, an employer-employee relationship exists

where the person for whom the services are performed reserves the
right to control not only the end to be achieved, but also the manner
and means used in reaching that end.

The fact that petitioner issued memoranda to private respondents

and to other division sales managers did not prove that petitioner had
actual control over them. The different memoranda were merely
guidelines on company policies which the sales managers follow and
impose on their respective agents. It should be noted that in petitioner's
business of selling encyclopedias and books, the marketing of these
products was done through dealership agreements.

The sales operations were primarily conducted by independent

authorized agents who did not receive regular compensations but only
commissions based on the sales of the products. These independent
agents hired their own sales representatives, financed their own office
expenses, and maintained their own staff. Thus, there was a need for
the petitioner to issue memoranda to private respondent so that the
latter would be apprised of the company policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were
free to conduct and promote their sales operations.

Private respondent was merely an agent or an independent dealer

of the petitioner. He was free to conduct his work and he was free to
engage in other means of livelihood. At the time he was connected with
the petitioner company, private respondent was also a director and
later the president of the Farmers' Rural Bank. Had he been an
employee of the company, he could not be employed elsewhere and
he would be required to devote full time for petitioner. If private
respondent was indeed an employee, it was rather unusual for him to
wait for more than a year from his separation from work before he
decided to file his claims
 Page 92

Case Digest by: Jones Harvey I. Marquez

HSY Marketing Ltd., Co. v. Virgilio O. Villastique

G.R. No. 219569. August 17, 2016.
Perlas-Bernabe, Jr., J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

Liability for the payment of separation pay is but a legal

consequence of illegal dismissal where reinstatement is no longer
viable or feasible. As a relief granted in lieu of reinstatement, it goes
without saying that an award of separation pay is inconsistent with a
finding that there was no illegal dismissal. This is because an
employee who had not been dismissed, much less illegally dismissed,
cannot be reinstated. Moreover, as there is no reinstatement to speak
of, respondent cannot invoke the doctrine of strained relations to
support his prayer for the award of separation pay

FACTS:

On January 3, 2003, petitioner hired respondent as a field driver

for Fabulous Jeans & Shirt & General Merchandise. On January 10,
2011, respondent figured in an accident. Fabulous Jeans shouldered
the hospitalization and medical expenses of Dorataryo in the amount
of P64,157.15, which respondent was asked to reimburse, but to no
avail. Respondent was allegedly required to sign a resignation letter,
which he refused to do. Convinced that he was already terminated on
February 26, 2011, he filed a complaint for illegal dismissal with money
claims before the NLRC.

Petitioner, et al. contended that respondent had committed

several violations in the course of his employment, and had been found
by his superior and fellow employees to be a negligent and reckless
driver, which resulted in the vehicular mishap involving Dorataryo.
Respondent alledgedly went on absence without leave, presumably to
evade liability for his recklessness. Since respondent was the one who
refused to report for work, he should be considered as having
voluntarily severed his own employment.

The Labor Arbiter (LA) dismissed the charge of illegal dismissal,

finding no evidence to substantiate respondent’s claim that he was
dismissed from his job. There was likewise no evidence submitted by
petitioner that respondent had indeed voluntarily resigned. He ruled
that the employer-employee relationship between the parties should
 Page 93

be maintained. Finding however, strained relations between the parties,

he did not order the reinstatement of respondent, and instead directed
petitioner to pay him the amount of P86,580.00 as separation pay. On
appeal, the NLRC and the Court of Appeals affirmed the finding of the
LA that there was no illegal dismissal to speak of.

ISSUES:

(a) Whether an employment relationship existed between the

parties in this case;

(b) Whether the award of separation pay is proper; and

(c) Whether the award of service incentive leave pay is proper.

RULING:

(a) YES. The Supreme Court ruled that considering that the LA,
the NLRC, and the CA consistently found petitioner liable as
the employer of respondent, the Court sees no compelling
reason to depart from their judgment on this score.

In fact, it is even worth noting that respondent claimed

in his Position Paper before the LA that he was hired by
petitioner and was required to report for work at its store in
Cagayan de Oro City. This was confirmed by petitioner in its
own Position Paper, declaring respondent to be "a field driver
for the Cagayan de Oro Branch of (petitioner) HSY
MARKETING LTD., CO., (NOVO JEANS & SHIRT)." Clearly,
petitioner should be bound by such admission and must not
be allowed to continue to deny any employer-employee
relationship with respondent.

(b) NO. The Supreme Court upholds the unanimous conclusion

of the lower tribunals that respondent had not been dismissed
at all. Other than the latter's unsubstantiated allegation of
having been verbally terminated from his work, no substantial
evidence was presented to show that he was indeed
dismissed or was prevented from returning to his work. In the
absence of any showing of an overt or positive act proving that
petitioner had dismissed respondent, the latter's claim of
illegal dismissal cannot be sustained, as such supposition
would be self-serving, conjectural, and of no probative value.

Similarly, petitioner's claims of respondent's voluntary

resignation and/or abandonment deserve scant
consideration, considering petitioner's failure to discharge the
 Page 94

burden of proving the deliberate and unjustified refusal of

respondent to resume his employment without any intention
of returning. It was incumbent upon petitioner to ascertain
respondent's interest or non-interest in the continuance of his
employment, but to no avail.

Hence, since there is no dismissal or abandonment to

speak of, the appropriate course of action is to reinstate the
employee without, however, the payment of backwages.

Properly speaking, liability for the payment of

separation pay is but a legal consequence of illegal
dismissal where reinstatement is no longer viable or
feasible. As a relief granted in lieu of reinstatement, it goes
without saying that an award of separation pay is inconsistent
with a finding that there was no illegal dismissal. This is
because an employee who had not been dismissed, much
less illegally dismissed, cannot be reinstated. Moreover,
as there is no reinstatement to speak of, respondent
cannot invoke the doctrine of strained relations to support
his prayer for the award of separation pay

In fine, petitioner is ordered to reinstate respondent to

his former position without the payment of backwages. If
respondent voluntarily chooses not to return to work, he must
then be considered as having resigned from employment.
This is without prejudice, however, to the willingness of both
parties to continue with their former contract of employment
or enter into a new one whenever they so desire

(c) YES. Service incentive leave is a right which accrues to every

employee who has served 'within 12 months, whether
continuous or broken, reckoned from the date the employee
started working, including authorized absences and paid
regular holidays unless the working days in the establishment
as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case
said period shall be considered as one year.' It is also
commutable to its money equivalent if not used or exhausted
at the end of the year. In other words, an employee who has
served for one year is entitled to it. He may use it as leave
days or he may collect its monetary value.

Respondent is not a field personnel as defined above

because of the nature of his job as a company driver.
Expectedly, respondent is directed to deliver the goods at a
specified time and place and he is not given the discretion to
 Page 95

solicit, select, and contact prospective clients. Respondent in

his Position Paper claimed that he was required to report for
work from 8:00 a.m. to 8:00 p.m. at the company's store
located at Velez-Gomez Street, Cagayan de Oro City.
Certainly then, respondent was under the control and
supervision of petitioners. Respondent, therefore, is a regular
employee whose task is usually necessary and desirable to
the usual trade and business of the company. Thus, he is
entitled to the benefits accorded to regular employees,
including service incentive leave pay.
 Page 96

Case Digest by: Jones Harvey I. Marquez

Coca-Cola Bottlers Phils & Eric Montinola

v. Dr. Dean Climaco
G.R. No. 146881. February 05, 2007.
Azcuna, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

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 employee’s
conduct, or the so-called "control test," considered to be the most
important element

FACTS:

Dr. Dean N. Climaco is a medical doctor who was hired by

petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer
Agreement, and as a consequence of which the former made a
Comprehensive Medical Plan for the employees of the latter.

The Retainer Agreement, which began on January 1, 1988, was

renewed annually. The last one expired on December 31, 1993.
Despite the non-renewal of the Retainer Agreement, respondent
continued to perform his functions as company doctor to Coca- Cola
until he received a letter 4 dated March 9, 1995 from petitioner
company concluding their retainership agreement effective 30 days
from receipt thereof.

As early as September 1992, petitioner was already making

inquiries regarding his status with petitioner company. First, he wrote
a letter addressed to Dr. Willie Sy, the Acting President and
Chairperson of the Committee on Membership, Philippine College of
Occupational Medicine. In response, Dr. Sy wrote a letter to the
Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating
that respondent should be considered as a regular part-time physician,
having served the company continuously for four (4) years. He likewise
stated that respondent must receive all the benefits and privileges of
an employee under Article 157 (b) 6 of the Labor Code.

Petitioner company, however, did not take any action. Hence,

respondent made another inquiry directed to the Assistant Regional
 Page 97

Director, Bacolod City District Office of the Department of Labor and

Employment (DOLE), who referred the inquiry to the Legal Service of
the DOLE, Manila. In his letter dated May 18, 1993, Director Dennis P.
Ancheta, Legal Service, DOLE, stated that he believed that an
employer-employee relationship existed between petitioner and
respondent based on the Retainer Agreement and the Comprehensive
Medical Plan, and the application of the "four-fold" test. An inquiry was
likewise addressed to the Social Security System (SSS). Thereafter,
Mr. Romeo R. Tupas, OIC-FID of SSS-Bacolod City, wrote a letter to
the Personnel Officer of Coca-Cola Bottlers Phils., Inc. informing the
latter that the legal staff of his office was of the opinion that the services
of respondent partake of the nature of work of a regular company
doctor and that he was, therefore, subject to social security coverage.
Respondent inquired from the management of petitioner company
whether it was agreeable to recognizing him as a regular employee.
The management refused to do so.

On February 24, 1994, respondent filed a Complaint before the

NLRC, Bacolod City, seeking recognition as a regular employee of
petitioner company and prayed for the payment of all benets of a
regular employee, including 13th Month Pay, Cost of Living Allowance,
Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. A
few weeks before the filing of the action, respondent received from the
petitioner a letter that it was terminating the Retainership Agreement,
and thus another complaint was filed for Illegal Dismissal.

The Labor Arbiter ruled that Dr. Climaco was not an employee of
Respondent. Further, the NLRC affirmed the LA and dismissed the
cases for lack of merit. On appeal, the Court of Appeals overturned the
rulings ratiocinating using the Control Test:

It was averred by Coca-Cola in its comment that they exercised

no control over petitioner for the reason that the latter was not directed
as to the procedure and manner of performing his assigned tasks. It
went as far as saying that "petitioner was not told how to immunize,
inject, treat or diagnose the employees of the respondent. The
appellate court believe that if the "control test" would be interpreted this
strictly, it would result in an absurd and ridiculous situation wherein we
could declare that an entity exercises control over another's activities
only in instances where the latter is directed by the former on each and
every stage of performance of the particular activity. Anything less than
that would be tantamount to no control at all.

As an addition, it noted that 6 years of unbroken service rendered

by the Respondent and affirmed his status as a regular employee
based on Art. 240 of the Labor Code.
 Page 98

ISSUE:

Whether Respondent is the Petitioner’s Employee by virtue of

the Control the latter exercised over the former

RULING:

NO, the Supreme Court ruled that the Labor Arbiter and the NLRC
correctly found that petitioner company lacked the power of control
over the performance by respondent of his duties.

The Labor Arbiter reasoned that the Comprehensive Medical Plan,

which contains the respondent's objectives, duties and obligations,
does not tell respondent "how to conduct his physical examination, how
to immunize, or how to diagnose and treat his patients, employees of
[petitioner] company, in each case."

It also cited Neri v. NLRC where it was stated that guidelines were
not for the purpose of controlling how the work was done, but merely
to ensure that the desired results were achieved. As to the argument
that respondent was on-call for emergencies, and that there was a
schedule of work that he was bound to follow, the Court found 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.
 Page 99

Case Digest by: Jones Harvey I. Marquez

Osias I. Corporal, Sr., Pedro Tolentino, Manuel Caparas,

Elpidio Lacap, Simplicio Pedelos, Patricia Nas, and
Teresita Flores vs. NATIONAL LABOR RELATIONS
COMMISSION, Lao Enteng Company, Inc. and/or
Trinidad Lao Ong
G.R. No. 129315. October 02, 2000.
Quisumbing, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

The power to control refers to the existence of the power and not
necessarily to the actual exercise thereof, nor is it essential for the
employer to actually supervise the performance of duties of the
employee. It is enough that the employer has the right to wield that
power

FACTS:

Herein petitioners worked as barbers and manicurists in New Look

Barber Shop, it was a single proprietorship owned and managed by Mr.
Vicente Lao. Upon incorporation of the Lao Enteng Co. in 1982,
respondents-owners (the children of Vicente Lao) of the company took
over the assets, equipments and properties of the New Look Barber
Shop and continued the business of their father. All the petitioners
were allowed to continue working with the new company. Sometime in
April, 1995, petitioners' services had to be terminated because the
barber shop was closed due to serious losses.

Petitioners filed complaint for illegal dismissal against respondents

praying for illegal deduction, separation pay, 13th month pay and
salary differentials. Private respondent in its position paper averred
that the petitioners were joint venture partners and were receiving fifty
percent commission of the amount charged to customers. Thus, there
was no employer-employee relationship between them and petitioners.
And assuming arguendo, that there was an employer-employee
relationship, still petitioners are not entitled to separation pay because
the cessation of operations of the barber shop was due to serious
business losses

The Labor Arbiter and the NLRC dismissed the complaint, finding:
there was no employer-employee relationship between respondent
 Page 100

and petitioners; and respondent had no control over petitioners who

were free to come and go as they wished.

ISSUE:

Whether Respondent is the Petitioner’s Employee by virtue of

the Control the latter exercised over the former

RULING:

YES, the Supreme Court ruled that petitioners were employees of

respondent company, because: they were not carrying on an
independent business but we’re performing work necessary and
desirable in the business of the respondent company; respondent
company's control over petitioners refers to the existence of the power
and not necessarily the actual exercise thereof; respondent company
and/or private respondents took over the barber shop owned by their
father, retained the services of the petitioners and continuously paid
their wages for fifteen (15) years; it is unlikely that respondent company
would report petitioners as their workers and pay SSS contributions
and their wages if it were not true that they were employees; finally,
petitioners are entitled only to separation and 13th month pay because
the barber shop was closed due to serious losses
 Page 101

Case Digest by: Jones Harvey I. Marquez

Alejandro Maraguinot, Jr. and Paulino Enero vs.

NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 120969. January 22, 1998.
Davide, Jr., J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

Once a project or work pool employee has been: (1) continuously,

as opposed to intermittently, re-hired by the same employer for the
same tasks or nature of tasks; and (2) these tasks are vital, necessary
and indispensable to the usual business or trade of the employer, then
the employee must be deemed a regular employee, pursuant to Article
280 of the Labor Code and jurisprudence

FACTS:

Maraguinot and Enero were separately hired by Vic Del Rosario

under Viva Films as part of the filming crew. Sometime in May 1992,
sought the assistance of their supervisor to facilitate their request that
their salary be adjusted in accordance with the minimum wage law.

On June 1992, Mrs. Cesario, their supervisor, told them that Mr.
Vic Del Rosario would agree to their request only if they sign a blank
employment contract. Petitioners refused to sign such document. After
which, the Mr. Enero was forced to go on leave on the same month
and refused to take him back when he reported for work. Mr.
Maraguinot on the other hand was dropped from the payroll but was
returned days after. He was again asked to sign a blank employment
contract but when he refused, he was terminated.

Consequently, the petitioners sued for illegal dismissal before the

Labor Arbiter. The private respondents claim the following: (a) that
VIVA FILMS is the trade name of VIVA PRODUCTIONS, INC. and that
it was primarily engaged in the distribution & exhibition of movies- but
not then making of movies; (b) That they hire contractors called
“producers” who act as independent contractors as that of Vic Del
Rosario; and (c) As such, there is no employee-employer relation
between petitioners and private respondents.

The Labor Arbiter held that the complainants are employees of the
private respondents. That the producers are not independent
contractor but should be considered as labor-only contractors and as
 Page 102

such act as mere agent of the real employer. Thus, the said employees
are illegally dismissed.

The private respondents appealed to the NLRC which reversed

the decision of the Labor Arbiter declaring that the complainants were
project employees due to the ff. reasons: (a) Complainants were hired
for specific movie projects and their employment was co-terminus with
each movie project; (b)The work is dependent on the availability of
projects. As a result, the total working hours logged extremely varied;
(c) The extremely irregular working days and hours of complainants’
work explains the lump sum payment for their service; and (d) The
respondents alleged that the complainants are not prohibited from
working with other movie companies whenever they are not working
for the independent movie producers engaged by the respondents.

A motion for reconsideration was filed by the complainants but was

denied by NLRC. In effect, they filed an instant petition claiming that
NLRC committed a grave abuse of discretion in: (a) Finding that
petitioners were project employees; (b) Ruling that petitioners were not
illegally dismissed; and (c) Reversing the decision of the Labor Arbiter.

In the instant case, the petitioners allege that the NLRC acted in
total disregard of evidence material or decisive of the controversy.

ISSUE:

Whether there exists an employee - employer relationship

between the petitioners and the private respondents.

RULING:

YES, the Supreme Court ruled that there exists an employee-

employer relationship between the petitioners and the private
respondents because of the ff. reasons that nowhere in the
appointment slip does it appear that it was the producer who hired the
crew members. Moreover, it was VIVA’s corporate name appearing on
heading of the slip. It can likewise be said that it was VIVA who paid
for the petitioners’ salaries.

Respondents also admit that the petitioners were part of a work

pool wherein they attained the status of regular employees because of
the ff. requisites: (a) There is a continuous rehiring of project
employees even after cessation of a project; (b) The tasks performed
by the alleged “project employees” are vital, necessary and
indispensable to the usual business or trade of the employer; and (c)
However, the length of time which the employees are continually re-
hired is not controlling but merely serves as a badge of regular
employment.
 Page 103

Since the producer and the crew members are employees of VIVA
and that these employees’ works deal with the making of movies. It can
be said that VIVA is engaged of making movies and not on the mere
distribution of such.

The producer is not a job contractor because of the ff. reasons:

(Sec. Rule VII, Book III of the Omnibus Rules Implementing the Labor
Code.)

(a) A contractor carries on an independent business and

undertakes the contract work on his own 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
the work except as to the results thereof. The said producer
has a fix time frame and budget to make the movies.

(b) The contractor should have substantial capital and materials

necessary to conduct his business. The said producer, Del
Rosario, does not have his own tools, equipment,
machinery, work premises and other materials to make
motion pictures. Such materials were provided by VIVA.

(c) It can be said that the producers are labor-only contractors.

Under Article 106 of the Labor Code (reworded) where the
contractor does not have the requisites as that of the job
contractors
 Page 104

Case Digest by: Jones Harvey I. Marquez

Calamba Medical Center, Inc.

vs. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 176484. November 25, 2008.
Carpio Morales, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

Under the "control test," an employment relationship exists

between a physician and a hospital if the hospital controls both the
means and the details of the process by which the physician is to
accomplish his task. Where a person who works for another does so
more or less at his own pleasure and is not subject to definite hours or
conditions of work, and is compensated according to the result of his
efforts and not the amount thereof, the element of control is absent.
For control test to apply, it is not essential for the employer to actually
supervise the performance of duties of the employee, it being enough
that it has the right to wield the power

FACTS:

The Calamba Medical Center (petitioner), a privately-owned

hospital, engaged the services of medical doctors-spouses Ronaldo
Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha)
in March 1992 and August 1995, respectively, as part of its team of
resident physicians. On March 7, 1998, Dr. Meluz Trinidad (Dr.
Trinidad), also a resident physician at the hospital, inadvertently
overheard a telephone conversation of respondent Dr. Lanzanas with
a fellow employee, Diosdado Miscala, through an extension telephone
line. Apparently, Dr. Lanzanas and Miscala were discussing the low
"census" or admission of patients to the hospital. Dr. Desipeda whose
attention was called to the above-said telephone conversation issued
to Dr. Lanzanas a Memorandum of March 7, 1998.

In the meantime, then Sec. Cresenciano Trajano of the

Department of Labor and Employment (DOLE) certified the labor
dispute to the NLRC for compulsory arbitration and issued on April 21,
1998 return-to-work Order to the striking union officers and employees
of petitioner pending resolution of the labor dispute.

Petitioner later sent Dr. Lanzanas a notice of termination indicating

as grounds therefor his failure to report back to work despite the DOLE
 Page 105

order and his supposed role in the striking union, which is not allowed
under the Labor Code for he is a managerial employee

The Labor Arbiter ruled that there was no Illegal Suspension for
there was no employer-employee relationship because the hospital
has no control over Ronaldo as he is a doctor who even gets shares
from the hospital’s earnings.

The National Labor Relations Commission as well as the Court of

Appeals reversed the LA.

ISSUE:

Whether there exists an employee - employer relationship

between the petitioner and the private respondent.

RULING:

YES. The Supreme Court ruled that under the control test, an
employment relationship exists between a physician and a hospital if
the hospital controls both the means and the details of the process by
which the physician is to accomplish his task. There is control in this
case because of the fact that Desipeda schedules the hours of work
for Ronaldo and his wife.

The doctors are also registered by the hospital under the SSS
which is premised on an employer-employee relationship.

There is Illegal Dismissal committed against Rolando for there was

no notice and hearing held. It was never shown that Rolando joined
the strike. But even if he did, he has the right to do so for he is not a
part of the managerial or supervisory employees. As a doctor, their
decisions are still subject to revocation or revision by Desipeda.

There is Illegal Dismissal committed against Merceditha for the

ground therefor was not mentioned in Article 282 of the Labor Code
 Page 106

Case Digest by: Jones Harvey I. Marquez

Angel Jardin, et. al. vs. NATIONAL LABOR RELATIONS

COMMISSION and Goodman Taxi
G.R. No. 119268. February 23, 2000.
Quisumbimg, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

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. 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

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. Petitioners earned an average of P400 daily.
Nevertheless, Private respondent deducts P30 from each of them daily
supposedly for the washing of the taxi units.

Petitioners decided to form a labor union to protect their rights and

interests. Upon learning of their plan, Goodman Taxi refused to let
petitioners drive their taxicabs when they reported for work. Petitioners
suspected that they were singled out because they were leaders and
active members of the proposed union.

The incident caused them to file with the labor arbiter a complaint
against private respondent, Goodman Taxi for unfair labor practice,
illegal dismissal and illegal deduction of washing fees.

The Labor Arbiter dismissed the complaint for lack of merit. On

appeal, the NLRC reversed and set aside the decision of the labor
 Page 107

arbiter. The NLRC declared that petitioners are employees of private

respondent, and, as such, their dismissal must be for just cause and
after due process.
Private respondent filed its first motion for reconsideration, which
was denied. However, upon filing a second motion for reconsideration,
the NLRC ruled that it lacks jurisdiction over the case as petitioners
and private respondent had no employer-employee relationship. It held
that the relationship is leasehold, which is covered by the Civil Code
rather than the Labor Code.

Petitioners sought reconsideration of the NLRC's latest decision,

which was denied. Hence, this petition special civil action for certiorari
to annul the decision of the NLRC.

ISSUES:

(a) Whether there exists employer-employee relationship

(b) Whether the NLRC err in entertaining the 2nd Motion for
Reconsideration of the private respondent.

RULING:

(a) YES. The Supreme Court 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. 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

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. The Court have applied by analogy the above
stated 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. Here, petitioners are
 Page 108

considered employees of the private respondent as taxi

drivers perform activities which are usually necessary or
desirable in the usual business or trade of their employer

(b) YES, the Supreme Court ruled that the second motion for
reconsideration filed by private respondent is indubitably a
prohibited pleading which should have not been entertained
at all. Public respondent cannot just disregard its own rules
on the pretext of "satisfying the ends of justice," especially
when its disposition of a legal controversy ran afoul with a
clear and long-standing jurisprudence in this jurisdiction as
elucidated in the subsequent discussion. Clearly,
disregarding a settled legal doctrine enunciated by this Court
is not a way of rectifying an error or mistake. In our view,
public respondent gravely abused its discretion in taking
cognizance and granting private respondent's second
motion for reconsideration as it wrecks the orderly procedure
in seeking reliefs in labor cases.
 Page 109

Case Digest by: Jones Harvey I. Marquez

Jose Y. Sonza vs. ABS-CBN Broadcasting Corporation

G.R. No. 138051. June 10, 2004.
Carpio, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

Being an exclusive talent does not by itself mean that one is an

employee. In the broadcast industry, exclusivity is not necessarily the
same as control

FACTS:

ABS-CBN signed an Agreement with Mel and Jay Management

and Development Corporation (MJMDC), as “AGENT” of Sonza, as
President and GM, and Carmela Tiangco, as EVP and Treasurer.
MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN
as talent for radio and television.

On April 1, 1996, Sonza wrote to ABS-CBN’s President Eugenio

Lopez III serving a notice of rescission of the Agreement at their
instance effective as of date thereby waiving and renouncing recovery
of the remaining amount stipulated but reserving the right to seek
recovery to other benefits pursuant to Sonza’s resignation in view of
recent events concerning his programs and career due to ABS-CBN’s
act and breach violative of the Agreement.

Sonza filed a complaint against ABS-CBN before the DOLE, NCR

in QC on the ground 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.
Meanwhile ABS-CBN continued to remit Sonza’s monthly talent fees.

The Labor Arbiter denied the motion to dismiss and directed the
parties to file their position papers ruling that Sonza, for having invoked
a claim that he was an employee and was not paid certain claims, is
sufficient enough to confer jurisdiction over the case. On February 24,
1997, the position papers were submitted.

Sonza filed a Reply with Motion to Expunge the affidavits of ABS-

CBN’s witnesses Soccoro Vidanes and Rolando Cruz which stated that
 Page 110

the prevailing practice in the tv and broadcast industry is to treat talents

as independent contractors. LA dismissed the complaint for lack of
jurisdiction on the ground that a talent cannot be considered as an
employee by reason of the peculiar circumstances surrounding the
engagement of his services:

(1) He was free to perform the services he undertook to render in

accordance with his own style, his benefits were very much
higher than those given to employees, and he was not bound
to render 8 hours of work per day.

(2) Whatever benefits Sonza enjoyed arose from specific

agreement by the parties and not by reason of the employer-
employee relationship. All these benefits are merely talent fees
and other contractual benefits and should not be deemed as
salaries, wages, and/or other remuneration accorded to an
employee, notwithstanding the nomenclature appended to
these benefits. Apropos to this is the rule that the term or
nomenclature given to a stipulated benefit is not controlling,
but the intent of parties to the Agreement conferring such
benefit.

(3) The fact that Sonza was made subject to ABS-CBN’s Rules
and Regulations does not detract from the absence of
employer-employee relationship as such merely served as
guidelines toward the achievement of the mutually desired
result without dictating the means or methods to be employed
in attaining it.

On appeal, the NLRC affirmed the LA’s decision, hence, this

petition.

ISSUE:

Whether there exists employer-employee relationship between

Sonza and ABS - CBN

RULING:

NO. The Supreme Court ruled that independent contractors often

present themselves to possess unique skills, expertise, or talent to
distinguish them from ordinary employees. The specific selection and
hiring of Sonza because of his unique skills, talent, and celebrity status
not possessed by ordinary employees is a circumstance indicative, but
not conclusive, of an independent contractual relationship. If SONZA
did not possess such unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement with SONZA but
 Page 111

would have hired him through its personnel department just like any
other employee.

All the talent fees and benefits paid to Sonza were the result of
negotiations that led to the Agreement. If Sonza were ABS-CBN’s
employee, there would be no need for the parties to stipulate on the
benefits as such are automatically incorporated into every employer-
employee contract by the law. Whatever benefits Sonza enjoyed arose
from contract and not because of an employer-employee relationship.
The payment of talent fees directly to SONZA and not to MJMDC does
not negate the status of SONZA as an independent contractor. The
parties expressly agreed on such mode of payment.

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. During the life of the
Agreement, even if it suffered severe business losses, ABS-CBN could
not retrench Sonza because it remained obligation to pay Sonza’s
talent fees. This circumstance indicates an independent contractual
relationship between Sonza and ABS-CBN. Even after ABS-CBN
ceased broadcasting his programs, ABS-CBN still paid him his talent
fees.

Furthermore, while Sonza did actually resign from ABS-CBN, he

also, as president of MJMDC, rescinded the Agreement.

The control test is the most important test the courts apply in
distinguishing an employee from an independent contractor. It 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 as an independent contractor.

Control over the means and methods of work:

ABS-CBN engaged SONZA’s services specifically to cohost the

“Mel & Jay” programs. ABS-CBN did not assign any other work to
SONZA. To perform his work, SONZA only needed his skills and talent.
How SONZA delivered his lines, appeared on television, and sounded
on radio were outside ABS-CBN’s control. SONZA did not have to
render eight hours of work per day.

The Agreement required SONZA to attend only rehearsals and

tapings of the shows, as well as pre- and post-production staff
meetings, as well as pre- and post-production staff meetings. ABS-
CBN could not dictate the contents of SONZA’s script. However, the
Agreement prohibited SONZA from criticizing in his shows ABS-CBN
 Page 112

or its interests. 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. ABS-CBN was not involved in the actual
performance that produced the finished product of Sonza’s work. ABS-
CBN merely reserved the right to modify the program format and
airtime schedule “for more effective programming.” ABS-CBN’s sole
concern was the quality of the shows and their standing in the ratings.
Clearly, ABS- CBN did not exercise control over the means and
methods of performance of SONZA’s work. A radio broadcast
specialist who works under minimal supervision is an independent
contractor.

Subjected to rules and standards of performance:

The Agreement stipulates the Sonza shall abide with the rules and
standards of performance covering talents of ABS-CBN. One could still
be an independent contractor although the hirer reserved certain
supervision to insure the attainment of the desired result. The hirer,
however, must not deprive the one hired from performing his services
according to his own initiative.

Exclusivity clause:

Being an exclusive talent does not by itself mean that SONZA is

an employee of ABS-CBN. In the broadcast industry, exclusivity is not
necessarily the same as control. The hiring of exclusive talents is a
widespread and accepted practice in the entertainment industry since
the broadcast station normally spends substantial amounts of money,
time and effort in building up its talents and programs they appear in.

Sonza’s claim that the practice to treat talents as independent

contractors is void for violating the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in the Constitution
arises only if there is an employer- employee relationship under labor
laws. Not every performance of services for a fee creates an employer-
employee relationship. To hold that every person who renders services
to another for a fee is an employee - to give meaning to the security of
tenure clause - will lead to absurd results.

The Court will not interpret the right of labor to security of tenure
to compel artists and talents to render their services only as employees.
If radio and television program hosts can render their services only as
employees, the station owners and managers can dictate to the radio
and television hosts what they say in their shows. This is not conducive
to freedom of the press.
 Page 113

Case Digest by: Jones Harvey I. Marquez

Wilhelmina S. Orozco vs. The Fifth Division

of the Honorable Court of Appeals
G.R. No. 155207. August 13, 2008.
Nachura, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

The line should be drawn between rules that merely serve as

guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it,
and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike
the second, which address both the result and the means used to
achieve it.

FACTS:

In March 1990, Philippine Daily Inquirer (PDI) engaged the

services of petitioner Wilhelmina S. Orozco to write a weekly column
for its Lifestyle section. She religiously submitted her articles every
week, except for a six-month stint in New York City when she,
nonetheless, sent several articles through mail.

On November 7, 1992, petitioner’s column appeared in the PDI for

the last time. Petitioner claims that her then editor, Ms. Lita T. Logarta,
told her that respondent Leticia Jimenez Magsanoc, PDI Editor in
Chief, wanted to stop publishing her column for no reason at all.

On the other hand, PDI claims it agreed to cut down the number
of columnists by keeping only those whose columns were well-written,
with regular feedback and following. In their judgment, petitioner’s
column failed to improve, continued to be superficially and poorly
written, and failed to meet the high standards of the newspaper.
Hence, they decided to terminate petitioner’s column.

Aggrieved by the newspaper’s action, petitioner filed a complaint

for illegal dismissal.

The Labor Arbiter and the NLRC ruled that Respondent company
exercised full and complete control over the means and method by
which complainant’s work – that of a regular columnist – had to be
 Page 114

accomplished. This control might not be found in an instruction, verbal

or oral, given to complainant defining the means and method she
should write her column. Rather, this control is manifested and
certained in respondents’ admitted prerogative to reject any article
submitted by complainant for publication.

Moreover, this control is already manifested in column title,

"Feminist Reflection" allotted complainant. Under this title,
complainant’s writing was controlled and limited to a woman’s
perspective on matters of feminine interests. That respondent had no
control over the subject matter written by complainant is strongly belied
by this observation. Even the length of complainant’s articles were set
by respondents.

If complainant did not have to report for work eight (8) hours a day,
six (6) days a week, it is because her task was mainly mental. Lastly,
the fact that her articles were published weekly for three (3) years show
that she was respondents’ regular employee, not a once-in-a-blue-
moon contributor.

On appeal, the Court of Appeals does not agree with NLRC’s

conclusion. First, private respondent admitted that she was and had
never been considered by petitioner PDI as its employee. Second, it is
not disputed that private respondent had no employment contract with
petitioner PDI. In fact, her engagement to contribute articles for
publication was based on a verbal agreement between her and the
petitioner’s Lifestyle Section Editor. Moreover, it was evident that/
private respondent was not required to report to the office eight (8)
hours a day. Further, it is not disputed that she stayed in New York for
six (6) months without petitioner’s permission as to her leave of
absence nor was she given any disciplinary action for the same. These
undisputed facts negate private respondent’s claim that she is an
employee of petitioner.

Moreover, with regards to the control test, the public respondent

NLRC’s ruling that the guidelines given by petitioner PDI for private
respondent to follow, e.g. in terms of space allocation and length of
article, is not the form of control envisioned by the guidelines set by the
Supreme Court. The length of the article is obviously limited so that all
the articles to be featured in the paper can be accommodated. Other
than said given limitations, if the same could be considered limitations,
the topics of the articles submitted by private respondent were all her
choices. Thus, the petitioner PDI in deciding to publish private
respondent’s articles only controls the result of the work and not the
means by which said articles were written
Hence, this petition, which the petitioner argues that several
factors exist to prove that respondents exercised control over her and
her work, namely:
 Page 115

a. As to the Contents of her Column – The PETITIONER had to

insure that the contents of her column hewed closely to the
objectives of its Lifestyle Section and the over-all principles
that the newspaper projects itself to stand for. As admitted,
she wanted to write about death in relation to All Souls Day
but was advised not to.

b. As to Time Control – The PETITIONER, as a columnist, had

to observe the deadlines of the newspaper for her articles to
be published.

c. As to Control of Space – The PETITIONER was told to submit

only two or three pages of article for the column, "Feminist
Reflections" per week

ISSUE:

Whether there exists employer-employee relationship between

petitioner and private respondent

RULING:

NO. The Supreme Court ruled that as constantly adhered to the

"four-fold test" to determine whether there exists an employer-
employee relationship between parties. The four elements of an
employment relationship are: (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’s conduct.

Of these four elements, it is the power of control which is the most

crucial and most determinative factor, so important, in fact, that the
other elements may even be disregarded. In other words, the test is
whether the employer controls or has reserved the right to control the
employee, not only as to the work done, but also as to the means and
methods by which the same is accomplished.

Petitioner has misconstrued the "control test," as did the Labor

Arbiter and the NLRC.

Not every form of control that the hiring party reserves to himself
over the conduct of the party hired in relation to the services rendered
may be accorded the effect of establishing an employer-employee
relationship between them in the legal or technical sense of the term.

Logically, the line should be drawn between rules that merely

serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
 Page 116

attaining it, and those that control or fix the methodology and bind or
restrict the party hired to the use of such means. The first, which aim
only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used
to achieve it.

The main determinant therefore is whether the rules set by the

employer are meant to control not just the results of the work but also
the means and method to be used by the hired party in order to achieve
such results.

A careful examination reveals that the factors enumerated by the

petitioner are inherent conditions in running a newspaper. In other
words, the so-called control as to time, space, and discipline are
dictated by the very nature of the newspaper business itself.

The Inquirer is the publisher of a newspaper of general circulation

which is widely read throughout the country. As such, public interest
dictates that every article appearing in the newspaper should subscribe
to the standards set by the Inquirer, with its thousands of readers in
mind. It is not, therefore, unusual for the Inquirer to control what would
be published in the newspaper. What is important is the fact that such
control pertains only to the end result, i.e., the submitted articles.

Petitioner has not shown that PDI, acting through its editors,
dictated how she was to write or produce her articles each week. Aside
from the constraints presented by the space allocation of her column,
there were no restraints on her creativity; petitioner was free to write
her column in the manner and style she was accustomed to and to use
whatever research method she deemed suitable for her purpose.

The perceived constraint on petitioner’s column was dictated by

her own choice of her column’s perspective. The column title "Feminist
Reflections" was of her own choosing, as she herself admitted, since
she had been known as a feminist writer. Thus, respondent PDI, as
well as her readers, could reasonably expect her columns to speak
from such perspective.

Respondent PDI did not dictate how she wrote or what she wrote
in her column. Neither did PDI’s guidelines dictate the kind of research,
time, and effort she put into each column. In fact, petitioner herself said
that she received "no comments on her articles…except for her to
shorten them to fit into the box allotted to her column." Therefore, the
control that PDI exercised over petitioner was only as to the finished
product of her efforts, i.e., the column itself, by way of either shortening
or outright rejection of the column.
 Page 117

Aside from the control test, this Court has also used the economic
reality test. This is especially appropriate when, as in this case, there
is no written agreement or contract on which to base the relationship.
Petitioner’s main occupation is not as a columnist for respondent but
as a women’s rights advocate working in various women’s
organizations. Likewise, she herself admits that she also contributes
articles to other publications. Thus, it cannot be said that petitioner was
dependent on respondent PDI for her continued employment in
respondent’s line of business.
 Page 118

Case Digest by: Jones Harvey I. Marquez

Television and Production Exponents, Inc.

vs. Roberto C. Servaña
G.R. No. 167648. January 28, 2008.
Quisimbing, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

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. The most important factor involves the control test.
Under the control test, 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:

Petitioner Television And Production Exponents (TAPE) is is a

domestic corporation engaged in the production of television
programs, such as the long-running variety program, Eat Bulaga!. Its
president is Antonio P. Tuviera (Tuviera). Respondent Roberto C.
Servaa had served as a security guard for TAPE from March 1987 until
he was terminated on March 03, 2000.

Respondent alleged that he was first connected with Agro-

Commercial Security Agency but was later on absorbed by TAPE as a
regular company guard. He was detailed at Broadway Centrum in
Quezon City where Eat Bulaga! regularly staged its productions. On 2
March 2000, respondent received a memorandum informing him of his
impending dismissal on account of TAPEs decision to contract the
services of a professional security agency. At the time of his
termination, respondent was receiving a monthly salary of P6,000.00.

Respondent filed a complaint for illegal dismissal and nonpayment

of benefits against TAPE before the NLRC. Respondent insisted that
he was a regular employee having been engaged to perform an activity
that is necessary and desirable to TAPEs business for thirteen (13)
years. TAPE for its part averred that respondent was an independent
 Page 119

contractor falling under the talent group category and was working
under a special arrangement which is recognized in the industry.
The Labor Arbiter Daisy G. Cauton-Barcelona declared
respondent to be a regular employee of TAPE. The Labor Arbiter relied
on the nature of the work of respondent, which is securing and
maintaining order in the studio, as necessary and desirable in the usual
business activity of TAPE. The Labor Arbiter also ruled that the
termination was valid on the ground of redundancy, and ordered the
payment of respondents separation pay equivalent to one (1)-month
pay for every year of service.

The National Labor Relations Commission (NLRC) reversed the

Labor Arbiter and considered respondent a mere program employee.
On appeal, the Court of Appeals denied the Motion for Reconsideration
filed by TAPE.

TAPE asseverates that the Court of Appeals erred in applying the

four-fold test in determining the existence of employer-employee
relationship between it and respondent. With respect to the elements
of selection, wages and dismissal, TAPE proffers the following
arguments: that it never hired respondent, instead it was the latter who
offered his services as a talent to TAPE; that the Memorandum dated
2 March 2000 served on respondent was for the discontinuance of the
contract for security services and not a termination letter; and that the
talent fees given to respondent were the pre-agreed consideration for
the services rendered and should not be construed as wages. Anent
the element of control, TAPE insists that it had no control over
respondent in that he was free to employ means and methods by which
he is to control and manage the live audiences, as well as the safety
of TAPEs stars and guests.

ISSUE:

Whether there exists employer-employee relationship between

petitioner and respondent in the case at bar

RULING:

YES. The Supreme Court ruled that the Memorandum informing

respondent of the discontinuance of his service proves that TAPE had
the power to dismiss respondent. Control is manifested in the bundy
cards submitted by respondent in evidence. He was required to report
daily and observe definite work hours. Aside from possessing
substantial capital or investment, a legitimate job 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
 Page 120

connected with the performance of the work except as to the results

thereof. TAPE failed to establish that respondent is an independent
contractor. More importantly, respondent had been continuously under
the employ of TAPE from 1995 until his termination in March 2000, or
for a span of 5 years. Regardless of whether or not respondent had
been performing work that is necessary or desirable to the usual
business of TAPE, respondent is still considered a regular employee
under Article 280 of the Labor Code
 Page 121

Case Digest by: Jones Harvey I. Marquez

Angelina Francisco vs.

NATIONAL LABOR RELATIONS COMMISSION, et.al
G.R. No. 170087. August 31, 2006.
Ynares-Santiago, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP.

The better approach to determine the existence of a ER-EE

relationship would 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.

FACTS:

Kasei Corporation, private respondent herein, hired petitioner

Angelina Francisco during its incorporation stage as an Accountant,
Corporate Secretary and its Liaison Officer. A year after, petitioner was
designated Acting Manager, and performed her duty as such for five
(5) years.

Thereafter, petitioner was replaced but was assured that she was
still connected with Kasei Corporation as Technical Assistant to the
corporation’s Technical Consultant.

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a

month was not paid of her mid-year bonus. When she claimed for such,
she was informed that she is no longer connected with the company.

Petitioner filed a case for constructive dismissal against

respondent before the Labor Arbiter.

As a defense, Kasei Corporation averred that petitioner is not its

employee. That she is technical consultant, performing her work at her
own discretion without control and supervision of Kasei Corporation.
The company never interfered with her work except that from time to
time, the management would ask her opinion on matters relating to her
profession. Petitioner did not go through the usual procedure of
selection of employees, and that the money received by petitioner from
the corporation was her professional fee.
 Page 122

The Labor Arbiter found that petitioner was illegally dismissed

ordering respondents to reinstate complainant to her former position
without loss of seniority rights and to pay her money claims. NLRC
affirmed LA decision modifying only the amount that shall be paid to
petitioner.

The Court of Appeals reversed the NLRC decision and denied

petitioners motion for reconsideration, hence, the present recourse.

ISSUES:

(a) Whether there exists employer-employee relationship in the

case at bar;

(b) Whether petitioner was illegally dismissed

RULING:

(a) YES. The Supreme Court ruled that there was an employer-
employee relationship between petitioner and private
respondent Kasei Corporation

The better approach to determine the existence of a ER-

EE relationship would 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 control test provides that 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.

In the economic activity test, existence of ER-EE

relationship depends upon the ff: (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.
 Page 123

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 the
corporations Head Technical Consultant.

Under the broader economic reality test, the petitioner

is 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. Thus,
petitioner is economically dependent on respondent
corporation for her continued employment in the latter’s line
of business.

(b) YES. The Supreme Court ruled that petitioner was illegally
dismissed. The corporation constructively dismissed
petitioner when it reduced her salary. A diminution of pay is
prejudicial to the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable
or unlikely; when there is a demotion in rank or a diminution
in pay; or when a clear discrimination, insensibility or disdain
by an employer becomes unbearable to an employee.
 Page 124

Case Digest by: Jones Harvey I. Marquez

WPP Marketing Communications, Inc., etal

vs. Jocelyn M. Galera
G.R. No. 169207/G.R. No. 169239. March 25, 2010.
Carpio, Acting C.J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP (Corporate Officer).

Corporate officers are given such character either by the

Corporation Code or by the corporation’s by-laws. An appointment as
a corporate officer during a special meeting of the Board of Directors
is an appointment to a non-existent corporate office. Therefore, the
appointed officer to the non-existent corporate office is an employee
and the Labor Arbiter and the NLRC have jurisdiction.

FACTS:

Jocelyn Galera (GALERA), an American citizen who was recruited

from the United States of America by private respondent John
Steedman, Chairman-WPP Worldwide and Chief Executive Officer of
Mindshare, Co., a corporation based in Hong Kong, China, to work in
the Philippines for private respondent WPP Marketing
Communications, Inc. (WPP), a corporation registered and operating
under the laws of Philippines.

Employment of GALERA with private respondent WPP became

effective on September 1, 1999 solely on the instruction of the CEO
and upon signing of the contract, without any further action from the
Board of Directors of private respondent WPP.

Four months had passed when private respondent WPP filed

before the Bureau of Immigration an application for petitioner GALERA
to receive a working visa, wherein she was designated as Vice
President of WPP. Petitioner alleged that she was constrained to sign
the application in order that she could remain in the Philippines and
retain her employment.

On December 14, 2000, petitioner GALERA alleged she was

verbally notified by private respondent STEEDMAN that her services
had been terminated from private respondent WPP. A termination
letter followed the next day. Thus, a complaint for illegal dismissal was
filed against WPP.
 Page 125

The Labor Arbiter held that WPP, Steedman, Webster, and

Lansang liable for illegal dismissal and damages. Arbiter Madriaga
stated that Galera was not only illegally dismissed but was also not
accorded due process. The NLRC reversed the LA decision. The
NLRC stressed that Galera was WPPs Vice-President, and therefore,
a corporate officer at the time she was removed by the Board of
Directors. Such being the case, the imperatives of law require that we
hold that the Arbiter below had no jurisdiction over Galeras case as,
again, she was a corporate officer at the time of her removal.

On appeal, the CA reversed the NLRC decision. It ruled that a

person could be considered a "corporate officer" only if appointed as
such by a corporation’s Board of Directors, or if pursuant to the power
given them by either the Articles of Incorporation or the By-Laws.

ISSUE:

Whether the Labor Arbiter and the NLRC have jurisdiction over the
present case

RULING:

YES. The Supreme Court ruled that under Section 25 of the

Corporation Code, the corporate officers are the president, secretary,
treasurer and such other officers as may be provided in the by-laws.

An examination of WPPs by-laws resulted in a finding that Galeras

appointment as a corporate officer (Vice-President with the operational
title of Managing Director of Mindshare) during a special meeting of
WPP's Board of Directors is an appointment to a non-existent
corporate office. WPPs by-laws provided for only one Vice-President.
At the time of Galeras appointment on 31 December 1999, WPP
already had one Vice-President in the person of Webster. Galera
cannot be said to be a director of WPP also because all five
directorship positions provided in the by-laws are already occupied.
Finally, WPP cannot rely on its Amended By-Laws to support its
argument that Galera is a corporate officer. The Amended By-Laws
provided for more than one Vice-President and for two additional
directors. Even though WPPs stockholders voted for the amendment
on 31 May 2000, the SEC approved the amendments only on 16
February 2001. Galera was dismissed on 14 December 2000. WPP,
Steedman, Webster, and Lansang did not present any evidence that
Galeras dismissal took effect with the action of WPP's Board of
Directors.

Galera being an employee, then the Labor Arbiter and the NLRC
have jurisdiction over the present case.
 Page 126

WPPs dismissal of Galera lacked both substantive and procedural

due process. Apart from Steedman's letter dated 15 December 2000
to Galera, WPP failed to prove any just or authorized cause for Galeras
dismissal.

The law further requires that the employer must furnish the worker
sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of
the employers decision to dismiss him. Failure to comply with the
requirements taints the dismissal with illegality. WPPs acts clearly
show that Galeras dismissal did not comply with the two-notice rule.

The employment permit must be acquired prior to employment.

The law and the rules are consistent in stating that the employment
permit must be acquired prior to employment. The Labor Code states:
"Any alien seeking admission to the Philippines for employment
purposes and any domestic or foreign employer who desires to engage
an alien for employment in the Philippines shall obtain an employment
permit from the Department of Labor."

Galera cannot come to this Court with unclean hands. To grant

Galeras prayer is to sanction the violation of the Philippine labor laws
requiring aliens to secure work permits before their employment. We
hold that the status quo must prevail in the present case and we leave
the parties where they are. Hence, Galera is not entitled to monetary
awards. This ruling, however, does not bar Galera from seeking relief
from other jurisdictions
 Page 127

Case Digest by: Jones Harvey I. Marquez

Matling Industrial and Commercial Corporation, et al

vs. Ricardo R. Coros
G.R. No. 157802. October 13, 2010.
Bersamin, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP (Corporate Officer).

As a rule, the illegal dismissal of an officer or other employee of a

private employer is properly cognizable by the Labor Arbiter. This is
pursuant to Article 217(a)2 of the Labor Code, as amended. Where the
complaint for illegal dismissal concerns a corporate officer, however,
the controversy falls under the jurisdiction of the Securities and
Exchange Commission (SEC).

FACTS:

After his dismissal by Matling as its Vice President for Finance and
Administration, the respondent filed a complaint for illegal suspension
and illegal dismissal against Matling and some of its corporate officers
in the National Labor Relations Commission (NLRC). The petitioners
moved to dismiss the complaint, raising the ground, among others, that
the complaint pertained to the jurisdiction of the Securities and
Exchange Commission (SEC) due to the controversy being intra-
corporate inasmuch as the respondent was a member of Matling’s
Board of Directors aside from being its Vice-President for Finance and
Administration prior to his termination.

The respondent opposed the petitioners’ motion to dismiss,

insisting that his status as a member of Matling’s Board of Directors
was doubtful, considering that he had not been formally elected as
such; that he did not own a single share of stock in Matling, considering
that he had been made to sign in blank an undated indorsement of the
certificate of stock he had been given in 1992; that Matling had taken
back and retained the certificate of stock in its custody; and that even
assuming that he had been a Director of Matling, he had been removed
as the Vice President for Finance and Administration, not as a Director,
a fact that the notice of his termination dated April 10, 2000 showed.

ISSUE:

Whether the Securities and Exchange Commission have

jurisdiction over the present case
 Page 128

RULING:

NO. The Supreme Court ruled that The Securities and Exchange
Commission has no jurisdiction to hear the case.

As a rule, the illegal dismissal of an officer or other employee of a

private employer is properly cognizable by the LA. Where the
complaint for illegal dismissal concerns a corporate officer, however,
the controversy falls under the jurisdiction of the Securities and
Exchange Commission (SEC), because the controversy arises out of
intra-corporate or partnership relations between and among
stockholders, members, or associates, or between any or all of them
and the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively; and between such
corporation, partnership, or as sociation and the State insofar as the
controversy concerns their individual franchise or right to exist as such
entity; or because the controversy involves the election or appointment
of a director, trustee, officer, or manager of such corporation,
partnership, or association. Such controversy, among others, is known
as an intra-corporate dispute.

Upon the passage of Republic Act No. 8799, or the Securities

Regulation Code, the SEC’s jurisdiction over all intra-corporate dispute
is transferred to the jurisdiction of the Regional Trial Courts.

In this case, however the corporate enumerated in the Corporation

Code or the By-laws of Matlin are the exclusive Officers of the
corporation and the Board has no power to create other offices without
amending first the corporate by-laws of the corporation. However, the
Board may create appointive positions other than the positions of
corporate officers, but the person occupying such positions are not
considered as corporate officers within the meaning of Section 25 of
the Corporation Code and are not empowered to exercise the functions
of the corporate officers, except for those legally delegated to them.

In this case, respondent was appointed vice president for

nationwide expansion by Malonzo, petitioner’s general manager, not
by the board of directors of petitioner. It was also Malonzo who
determined the compensation package of respondent. Thus,
respondent was an employee, not a corporate officer. Therefore, the
Securities and Exchange Commission has no jurisdiction to hear the
case
 Page 129

Case Digest by: Jones Harvey I. Marquez

Nicanor F. Malcaba, et al
vs. Prohealth Pharma Philippines, Inc., et al
G.R. No. 209085. June 06, 2018.
Leonen, J

DOCTRINE:

EMPLOYER-EMPLOYEE RELATIONSHIP (Jurisdiction).

Under the Labor Code, the Labor Arbiter exercises original and
exclusive jurisdiction over termination disputes between an employer
and an employee while the National Labor Relations Commission
exercises exclusive appellate jurisdiction over these cases. The
presumption under this provision is that the parties have an employer-
employee relationship. Otherwise, the case would be cognizable in
different tribunals even if the action involves a termination dispute.

FACTS:

ProHealth Pharma Philippines, Inc. is a corporation engaged in

the sale of pharmaceutical products and health food on a wholesale
and retail basis. Generoso Del Castillo is the Chair of the Board of
Directors and Chief Executive Officer while Dante Busto is the
Executive Vice President. Malcaba, Tomas Adona, Jr., Nepomuceno,
and Palit-Ang were employed as its President, Marketing Manager,
Business Manager, and Finance Officer, respectively.

Malcaba had been employed with ProHealth since it started in

1997. He was one of its incorporators together with Del Castillo and
Busto, and they were all members of the Board of Directors in 2004.
He held 1,000,000 shared in the corporation. He was initially the Vice
President for Sales then became President in 2005.

Malcaba alleged that Del Castillo did acts that made his job
difficult. He asked to take a leave on October 23, 2007. When he
attempted to return on November 5, 2007, Del Castillo insisted that had
already resigned and had his things removed from his office. He
attested that he was paid a lower salary in December 2007 and his
benefits were withheld. On Janaury 7, 2008, Malcaba tendered his
resignation effective February 1, 2008.

Nepomuceno, for his part alleged that he applied for a vacation

leave for the dates April 24, 25, and 28, 2008, which Busto approved.
When he left for Malaysia on April 23, 2008, ProHealth sent him a
 Page 130

Memorandum dated April 24, 2008 asking him to explain his absence.
He replayed through email that he tried to call ProHealth to inform them
that his flight on April 22, 2008 and not on April 23, 2008 but was
unable to connect on the phone. On May 7, 2008, Nepomuceno was
given a notice of termination, which was effective May 5, 2008, on the
ground of fraud and willful breach of trust.

Palit-Ang, on the other hand, was issued a show cause

memorandum on November 27, 2007 for her failure to release the cash
advance. She was also relieved of her duties and reassigned to the
office of the Personnel and Administration Manager. In her
explanation, she alleged that when Gamboa saw that she was busy
reciveing cash sales from another District Business Manager, he told
her that he would just return the next day to collect his cash advance.
Del Castillo, being dissatisfied with her explanation, transferred her to
another office. She was then invited to a fact-finding investigation,
where Palit-Ang was asked to explain her actions. On December 17,
2007, she was handed a notice of termination effective December 31,
2007, for disobeying the order of ProHealth’s highest official.

Malcaba, Nepomuceno, and Palit-Ang, and Adona separately filed

Complaints before the Labor Arbiter for illegal dismissal, nonpayment
of salaries and 13th month pay, damages, and attorney’s fees.

The LA found that Malcaba constructively dismissed. He found

that ProHealth never controverted the allegation that Del Castillo made
it difficult for Malcaba to effectively fulfill his duties. The LA also
declared that Nepomuceno’s failure to state the actual date of his flight
was an excusable mistake on his part, considering that this was his
first infraction in his nine (9) years of service. Palit-Ang’s dismissal was
also found to have been illegal as delay in complying with a lawful order
was not tantamount to disobedience. The LA further noted that delay
in giving cash advance for car maintenance would not have affected
the company’s operations.

ProHealth appealed to the NLRC. On September 29, 2019, the

NLRC rendered its Decision, affirming the Labor Arbiter’s Decision with
modifications.

ProHealth moved for reconsideration but was denied by the

NLRC. Thus, ProHealth, Del Castillo, and Busto filed a Petition for
Certiorari before the Court of Appeals. On February 19, 2013, the
Court of Appeals rendered its Decision reversing and setting aside the
NLRC Decision. Malcaba, Nepomuceno, and Palit-Ang moved for
reconsideration but were denied. Hence a petition was filed before the
Supreme Court.
 Page 131

Petitioners argue that Nepomuceno and Palit-Ang were illegally

dismissed. They claim that petitioner Nepomuceno committed an
“honest and negligible mistake” that should not have warranted
dismissal considering his loyal service for nine (9) years. Petitioners
maintain that Palit-Ang believed in good faith that Gamboa would just
claim his cash advance the day after he tried to claim it and there was
nothing in her actions that would prove that she intended to disobey or
defy respondent Del Castillo’s instructions. They insist that delay in
complying with orders is not tantamount to disobedience and would not
constitute just cause for petitioner Palit-Ang’s dismissal.

ISSUES:

(a) Whether the LA and the NLRC Commission had jurisdiction

over petitioner Malcaba’s termination dispute considering
the allegation that he was a corporate officer, and not a mere
employee;

(b) Whether petitioner Nepomuceno was validly dismissed for

willful breach of trust;

(c) Whether Palit-Ang was validly dismissed for willful

disobedience.

RULING:

(a) NO. The Supreme Court ruled that Under the Labor Code,
the Labor Arbiter exercises original and exclusive jurisdiction
over termination disputes between an employer and an
employee while the National Labor Relations Commission
exercises exclusive appellate jurisdiction over the cases
provided in Article 244.

Under Section 25 of the Corporation Code, the

President of a corporation is considered a corporate officer.
The dismissal of a corporate officer is considered an intra-
corporate dispute, not a labor dispute. Thus, in Matling
Industrial and Commercial Corporation v. Coros, the
Supreme Court stated that jurisdiction over intra-corporate
disputes involving the illegal dismissal of corporate officers
was with the Regional Trial Court, not with the Labor Arbiter.
Finding that petitioner Malcaba is the President of
respondent corporation and a corporate officer, any issue on
his alleged dismissal is beyond the jurisdiction of the Labor
Arbiter or the National Labor Relations Commission. Their
adjudication on his money claims is void for Lack of
jurisdiction.
 Page 132

(b) NO. The Supreme Court ruled that for an act to be

considered a loss of trust and confidence, it must be first,
work-related, and second, founded on clearly established
facts. The breach of trust must likewise be willful, that is, “it
is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.

As found by the LA and the NLRC, petitioner turned over

all of his pending work to a reliever before he left for Malaysia.
He was able to reach his sales quota and surpass his sales
target even before taking his vacation leave. Respondents
did not suffer any financial damage as a result of his
absence. This was also petitioner Nepomuceno's first
infraction in his nine (9) years of service with respondents.
None of these circumstances constitutes a willful breach of
trust on his part. The penalty of dismissal, thus, was too
severe for this kind of infraction. Considering that petitioner
Nepomuceno's dismissal was done without just cause, he is
entitled to reinstatement and full back wages.

(c) NO. The Supreme Court ruled that for disobedience to be

considered as just cause for termination, two (2) requisites
must concur: first, "the employee's assailed conduct must
have been wilful or intentional," and second, "the order
violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he [or
she] had been engaged to discharge." For disobedience to
be willful, it must be "characterized by a wrongful and
perverse mental attitude rendering the employee's act
inconsistent with proper subordination.”

When Gamboa went to collect the money from petitioner

Palit-Ang, he was told to return the next day as she was still
busy. When petitioner Palit-Ang found out that the money
was to be used for a car tune-up, she suggested to Gamboa
to just get the money from his mobilization fund and that she
just would reimburse it after. The Court of Appeals found that
these circumstances characterized petitioner Palit-Ang's
"arrogance and hostility," in failing to comply with respondent
Del Castillo's order, and thus, warranted her dismissal. On
the contrary, there was no ill will between Gamboa and
petitioner Palit-Ang. Petitioner Palit-Ang's failure to
immediately give the money to Gamboa was not the result
of a perverse mental attitude but was merely because she
was busy at the time. Neither did she profit from her failure
to immediately give the cash advance for the car tune-up nor
did respondents suffer financial damage by her failure to
 Page 133

comply. Petitioner Palit-Ang, nonetheless, is considered to

have been illegally dismissed, her penalty not having been
proportionate to the infraction committed. Thus, she is
entitled to reinstatement and full back wages
 Page 134

Case Digest by: MIGUEL, REUCHELLE P.

REPUBLIC v. ASIAPRO COOPERATIVE

G.R. No. 172101, 23 November 2007
Chico-Nazario, J.

DOCTRINE:
In determining the existence of an employer-employee
relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) the payment of
wages by whatever means; (3) the power of dismissal; and (4) the
power to control the worker‘s conduct, with the latter assuming
primacy in the overall consideration.

FACTS:
Respondent Asiapro Cooperative is composed of owners-
members with primary objectives of providing them savings and
credit facilities and livelihood services. In discharge of said
objectives, Asiapro entered into several service contracts with
Stanfilco. Sometime later, the cooperative owners-members
requested Stanfilco!s help in registering them with SSS and
remitting their contributions. Petitioner SSS informed Asiapro that
being actually a manpower contractor supplying employees to
Stanfilco, it must be the one to register itself with SSS as an
employer and remit the contributions. Respondent continuously
ignoring the demand of SSS the latter filed before the SSC.
Asiapro alleges that there exists no employer-employee
relationship between it and its owners-members. SSC ruled in
favor of SSS. On appeal, CA reversed the decision.

ISSUE:
Whether or not there is employer-employee relationship between
Asiapro and its owners-members.

RULING:
YES.

In determining the existence of an employer-employee

relationship, the following elements are considered: (1) the
selection and engagement of the workers; (2) the payment of
 Page 135

wages by whatever means; (3) the power of dismissal; and (4) the
power to control the worker"s conduct, with the latter assuming
primacy in the overall consideration. All the aforesaid elements
are present in this case.

First. It is expressly provided in the Service Contracts that it is the

respondent cooperative which has the exclusive discretion in the
selection and engagement of the owners-members as well as its
team leaders who will be assigned at Stanfilco.

Second. It cannot be doubted then that those stipends or shares

in the service surplus are indeed wages, because these are given
to the owners-members as compensation in rendering services to
respondent cooperative"s client, Stanfilco.

Third. It is also stated in the above-mentioned Service Contracts

that it is the respondent cooperative which has the power to
investigate, discipline and remove the owners-members and its
team leaders who were rendering services at Stanfilco.

Fourth. In the case at bar, it is the respondent cooperative which

has the sole control over the manner and means of performing the
services under the Service Contracts with Stanfilco as well as the
means and methods of work. Also, the respondent cooperative is
solely and entirely responsible for its owners-members, team
leaders and other representatives at Stanfilco. All these clearly
prove that, indeed, there is an employer-employee relationship
between the respondent cooperative and its owners-members.
 Page 136

Case Digest by: MIGUEL, REUCHELLE P.

LOCSIN ET. AL. v. PLDT

G.R. No. 185251, October 2, 2009
Velasco, Jr., J.

DOCTRINE:
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.”

FACTS:

On November 1, 1990, respondent PLDT and the Security

and Safety Corporation of the Philippines (SSCP) entered into
a Security Services Agreement whereby SSCP would provide
armed security guards to PLDT to be assigned to its various
offices. Petitioners Raul Locsin and Eddie Tomaquin, among
other security guards, were posted at a PLDT office. On
August 30, 2001, respondent issued a Letter terminating the
Agreement effective October 1, 2001. 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 Locsin!s
payslips for the period of January to September 2002. Then,
on September 30, 2002, their services were terminated.
Petitioners filed a complaint before the Labor Arbiter for illegal
dismissal and recovery of money claims such as overtime
pay, holiday pay, and premium pay for holiday and rest day,
service incentive leave pay, Emergency Cost of Living
Allowance, and moral and exemplary damages against PLDT.

Labor Arbiter rendered a Decision finding PLDT liable for

illegal dismissal. It held that petitioners were employees of
PLDT and not of SSCP for petitioners continued to serve as
guards of PLDT!s offices. As such employees, they were
entitled to substantive and procedural due process before
 Page 137

termination of employment. PLDT appealed to NLRC which

rendered a Resolution affirming in toto the Arbiter!s Decision.
Thus, PDLT filed a Motion for Reconsideration of the NLRC!s
Resolution which was also denied. Hence, PLDT filed a
Petition for Certiorari with the CA which rendered the assailed
decision granting PLDT!s petition and dismissing petitioners"!
complaint. The CA applied the fourfold 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. Anent the payslips that were presented by petitioners,
the CA noted that those were issued by SSCP and not PLDT;
hence, SSCP continued to pay the salaries of petitioners after
the Agreement. This fact allegedly proved that petitioners
continued to be employees of SSCP albeit performing their
work at PLDT!s premises. Hence, this petition.

ISSUE:
Whether petitioners became employees of respondent after
the Agreement between SSCP and respondent was
terminated.
RULING:
Yes.

The SC held that there was no employer-employee

relationship between the parties from the time of petitioners"!
first assignment to respondent by SSCP in 1988 until the
alleged termination of the Agreement between respondent
and SSCP. The petitioners were among those declared to be
employees of their respective security agencies and not of
PLDT. However, the petitioners became the employees of
respondent after the agreement between SSCP and
respondent was terminated. 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,
 Page 138

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 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. Evidently, respondent having the power of
control over petitioners must be considered as petitioners"!
employer––from the termination of the Agreement onwards–
–as this was the only time that any evidence of control was
exhibited by respondent over petitioners. Thus, as aptly
declared by the NLRC, petitioners were entitled to the rights
and benefits of employees of respondent, including due
process requirements in the termination of their services. Both
the Labor Arbiter and NLRC found that respondent did not
observe such due process requirements. Having failed to do
so, respondent is guilty of illegal dismissal.
 Page 139

Case Digest by: MIGUEL, REUCHELLE P.

PROFESSIONAL SERVICES v. CA
G.R. No. 126297, Feb. 11, 2008
Sandoval-Gutierrez, J.

DOCTRINE:

While "consultants" are not, technically employees, a point which

respondent hospital asserts in denying all responsibility for the
patient!s condition, the control exercised, the hiring, and the right to
terminate consultants all fulfill the important hallmarks of an employer-
employee 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 employer-employee relationship in effect exists between hospitals
and their attending and visiting physicians.

FACTS:

On April 4, 1984, Natividad Agana was admitted at the Medical City

because of difficulty of bowel movement and bloody anal discharge.
Dr. Ampil diagnosed her to be suffering from "cancer of the sigmoid."
Thus, on April 11, 1984, Dr. Ampil, assisted by the medical staff of
Medical City, performed an anterior resection surgery upon her. During
the surgery, he found that the malignancy in her sigmoid area had
spread to her left ovary, necessitating the removal of certain portions
of it. Thus, Dr. Ampil obtained the consent of Atty. Enrique Agana,
Natividad!s husband, to permit Dr. Juan Fuentes, to perform
hysterectomy upon Natividad.

Dr. Fuentes performed and completed the hysterectomy. Afterwards,

Dr. Ampil took over, completed the operation and closed the incision.
However, the operation appeared to be flawed. There were two (2)
lacking sponges.

After a couple of days, 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 performed upon her. Dr. Ampil recommended that Natividad
 Page 140

consult an oncologist to treat the cancerous nodes which were not

removed during the operation.

Her daughter found a piece of gauze protruding from her vagina. Dr.
Ampil was immediately informed. He proceeded to Natividad!s house
where he managed to extract by hand a piece of gauze measuring 1.5
inches in width. Dr. Ampil then assured Natividad that the pains would
soon vanish.

Despite Dr. Ampil!s assurance, the pains intensified, prompting

Natividad to seek treatment at the Polymedic General Hospital. While
confined thereat, Dr. Ramon Gutierrez detected the presence of a
foreign object in her vagina -- a foul-smelling gauze measuring 1.5
inches in width. The gauze had badly infected her vaginal vault. A
recto-vaginal fistula had formed in her reproductive organ which forced
stool to excrete through the vagina. Another surgical operation was
needed to remedy the situation. Thus, in October 1984, Natividad
underwent another surgery.

Natividad and her husband filed with the Regional Trial Court Quezon
City a complaint for damages against PSI (owner of Medical City), Dr.
Ampil and Dr. Fuentes.

Natividad died.

RTC Ruling: Trial court rendered judgment in favor of spouses Agana

finding PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable.

CA Ruling: 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. On January 31, 2007, the Court,, rendered a
Decision holding that PSI is jointly and severally liable with Dr. Ampil
for the following reasons:

first, there is an employer-employee relationship between Medical City

and Dr. Ampil, holding that for the purpose of apportioning
responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and
visiting physicians;

second, PSI!s 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; and
 Page 141

third, PSI!s 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.

ISSUE:

Whether or not an employer- employee relationship exist.

RULING:

The motion lacks merit.

In other words, 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 patient!s condition,
the control exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an employer-
employee 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 employer-employee relationship
in effect exists between hospitals and their attending and visiting
physicians. This being the case, the question now arises as to
whether or not respondent hospital is solidarily liable with respondent
doctors for petitioner!s condition.

The basis for holding an employer solidarily responsible for the

negligence of its employee is found in Article 2180 of the Civil Code
which considers a person accountable not only for his own acts but
also for those of others based on the former!s responsibility under a
relationship of partia ptetas.

Clearly, in Ramos, the Court considered the peculiar relationship

between a hospital and its consultants on the bases of certain factors.
One such factor is the "control test" wherein the hospital exercises
control in the hiring and firing of consultants, like Dr. Ampil, and in the
conduct of their work.

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.

Atty. Agana categorically testified that one of the reasons why he

chose Dr. Ampil was that he knew him to be a staff member of
Medical City, a prominent and known hospital.
 Page 142

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.6 In these cases, the circumstances yield a positive answer
to the question.

doctrine of corporate responsibility- responsibility includes the proper

supervision of the members of its medical staff. Accordingly, the
hospital has the duty to make a reasonable effort to monitor and
oversee the treatment prescribed and administered by the physicians
practicing in its premises.

This renders PSI, not only vicariously liable for the negligence of Dr.
Ampil under Article 2180 of the Civil Code, but also directly liable for
its own negligence under Article 2176.
 Page 143

Case Digest by: MIGUEL, REUCHELLE P.

TENAZAS ET. AL v. R. VILLEGAS TAXI

TRANSPORT
G.R. No. 192998, April 2, 2014
Reyes, J.

DOCTRINE:

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.

FACTS:

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M.

Francisco (Francisco) filed a complaint for illegal dismissal against R.
Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and
Andy Villegas (Andy) (respondents). At that time, a similar case had
already been filed by Isidro G. Endraca (Endraca) against the same
respondents. The two (2) cases were subsequently consolidated.In
their position paper, Tenazas, Francisco and Endraca (petitioners)
alleged that they were hired and dismissed by the respondents.

Relaying the circumstances of his dismissal, Tenazas alleged that on

July 1, 2007, the taxi unit assigned to him was sideswiped by another
vehicle, causing a dent on the left fender near the driver seat. The cost
of repair for the damage was estimated at 500.00. Upon reporting the
incident to the company, he was scolded by respondents Romualdo
and Andy and was told to leave the garage for he is already fired. He
was even threatened with physical harm should he ever be seen in the
company's premises again. Despite the warning, Tenazas reported for
work on the following day but was told that he can no longer drive any
of the company's units as he is already fired.

Francisco, on the other hand, averred that his dismissal was brought
about by the company's unfounded suspicion that he was organizing a
 Page 144

labor union. He was instantaneously terminated, without the benefit of

procedural due process, on June 4, 2007.

Endraca, for his part, alleged that his dismissal was instigated by an
occasion when he fell short of the required boundary for his taxi unit.
He related that before he was dismissed, he brought his taxi unit to an
auto shop for an urgent repair. He was charged the amount of 700.00
for the repair services and the replacement parts. As a result, he was
not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his
drivers license was confiscated and was told to settle the deficiency in
his boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.

For their part, the respondents admitted that Tenazas and Endraca
were employees of the company, the former being a regular driver and
the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to
drive one of the company's units at any point in time.

The respondents further alleged that Tenazas was never terminated

by the company. They claimed that on July 3, 2007, Tenazas went to
the company garage to get his taxi unit but was informed that it is due
for overhaul because of some mechanical defects reported by the
other driver who takes turns with him in using the same. He was thus
advised to wait for further notice from the company if his unit has
already been fixed. On July 8, 2007, however, upon being informed
that his unit is ready for release, Tenazas failed to report back to work
for no apparent reason.

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M.

Francisco (Francisco) filed a complaint for illegal dismissal against R.
Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and
Andy Villegas (Andy) (respondents). At that time, a similar case had
already been filed by Isidro G. Endraca (Endraca) against the same
respondents. The two (2) cases were subsequently consolidated.In
their position paper, Tenazas, Francisco and Endraca (petitioners)
alleged that they were hired and dismissed by the respondents.

Relaying the circumstances of his dismissal, Tenazas alleged that on

July 1, 2007, the taxi unit assigned to him was sideswiped by another
vehicle, causing a dent on the left fender near the driver seat. The cost
of repair for the damage was estimated at 500.00. Upon reporting the
incident to the company, he was scolded by respondents Romualdo
and Andy and was told to leave the garage for he is already fired. He
was even threatened with physical harm should he ever be seen in the
company's premises again. Despite the warning, Tenazas reported for
 Page 145

work on the following day but was told that he can no longer drive any
of the company's units as he is already fired.

Francisco, on the other hand, averred that his dismissal was brought
about by the company's unfounded suspicion that he was organizing a
labor union. He was instantaneously terminated, without the benefit of
procedural due process, on June 4, 2007.

Endraca, for his part, alleged that his dismissal was instigated by an
occasion when he fell short of the required boundary for his taxi unit.
He related that before he was dismissed, he brought his taxi unit to an
auto shop for an urgent repair. He was charged the amount of 700.00
for the repair services and the replacement parts. As a result, he was
not able to meet his boundary for the day. Upon returning to the
company garage and informing the management of the incident, his
drivers license was confiscated and was told to settle the deficiency in
his boundary first before his license will be returned to him. He was no
longer allowed to drive a taxi unit despite his persistent pleas.

For their part, the respondents admitted that Tenazas and Endraca
were employees of the company, the former being a regular driver and
the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to
drive one of the company's units at any point in time.

The respondents further alleged that Tenazas was never terminated

by the company. They claimed that on July 3, 2007, Tenazas went to
the company garage to get his taxi unit but was informed that it is due
for overhaul because of some mechanical defects reported by the
other driver who takes turns with him in using the same. He was thus
advised to wait for further notice from the company if his unit has
already been fixed. On July 8, 2007, however, upon being informed
that his unit is ready for release, Tenazas failed to report back to work
for no apparent reason.

As regards Endraca, the respondents alleged that they hired him as a

spare driver in February 2001. They allow him to drive a taxi unit
whenever their regular driver will not be able to report for work. In July
2003, however, Endraca stopped reporting for work without informing
the company of his reason. Subsequently, the respondents learned
that a complaint for illegal dismissal was filed by Endraca against them.
They strongly maintained, however, that they could never have
terminated Endraca in March 2006 since he already stopped reporting
for work as early as July 2003. Even then, they expressed willingness
to accommodate Endraca should he wish to work as a spare driver for
 Page 146

the company again since he was never really dismissed from

employment anyway.

The Labor Arbiter (LA) rendered a Decision declaring that there was
no illegal dismissal in the case at bar.

The NLRC rendered a Decision, reversing the appealed decision of the

LA, holding that the additional pieces of evidence belatedly submitted
by the petitioners sufficed to establish the existence of employer-
employee relationship and their illegal dismissal. On July 24, 2009, the
respondents filed a motion for reconsideration but the NLRC denied
the same.

Unperturbed, the respondents filed a petition for certiorari with the CA.
On March 11, 2010, the CA rendered a Decision, affirming with
modification the Decision dated June 23, 2009 of the NLRC. The CA
agreed with the NLRCs finding that Tenazas and Endraca were
employees of the company, but ruled otherwise in the case of
Francisco for failing to establish his relationship with the company. It
also deleted the award of separation pay and ordered for reinstatement
of Tenazas and Endraca.
ISSUE:

Whether there is an employer-employee relationship and whether

there was an illegal dismissal
RULING:

In determining the presence or absence of an employer-employee

relationship, the Court has consistently looked for the following
incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called
control test, is the most important element.

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 documentary evidence like attendance logbook, payroll, SSS
record or any personnel file that could somehow depict his status as
an employee. Anent his claim that he was not issued with employment
records, he could have, at least, produced his social security records
 Page 147

which state his contributions, name and address of his employer, as

his co-petitioner Tenazas did. He could have also presented
testimonial evidence showing the respondent's exercise of control over
the means and methods by which he undertakes his work. This is
imperative in light of the respondent's denial of his employment and
the claim of another taxi operator, Emmanuel Villegas (Emmanuel),
that he was his employer. Specifically, in his Affidavit, Emmanuel
alleged that Francisco was employed as a spare driver in his taxi
garage from January 2006 to December 2006, a fact that the latter
failed to deny or question in any of the pleadings attached to the
records of this case. The utter lack of evidence is fatal to Francisco's
case especially in cases like his present predicament when the law has
been very lenient in not requiring any particular form of evidence or
manner of proving the presence of employer-employee relationship.
 Page 148

Case Digest by: MIGUEL, REUCHELLE P.

DUMPIT MURILLO v. CA
G.R. No. 164652. June 8, 2007
Quisumbing, J.

DOCTRINE:

The primary standard of determining regular employment is the

reasonable connection between the particular activity performed
by the employee vis-a-vis the usual trade or business of the
employer.

FACTS:
On October 2, 1995, under talent contract no. NT95-1805, private
respondent Associated Broadcasting Company (ABC) hired petitioner
Thelma Dumpit-Murillo as a newscaster and co-anchor of Balitang-
Balita, an early evening news program. The contract was for a period
of 3 months. It renewed under talent contract nos. NT95-1915, NT96-
3002, NT98-4984, and NT99-5649. In addition, petitioner’s services
were engaged for the program “Live on Five.” On September 30, 1999,
after 4 years of repeated renewals, petitioner’s talent contract expired.
Two weeks after the expiration of the last contract, petitioner sent a
letter to Mr. Jose Javier, Vice President for news and public affairs of
ABC, informing the latter that she was still interested in renewing her
contract subject to a salary increase, thereafter, petitioner stopped
reporting for work. On November 5, 1999 she wrote Mr. Javier another
letter.

ISSUE:
Whether or not the continuous renewal of petitioner’s talent contracts
constitute regularity in the employment status.

RULING:
Yes. An employer-employee relationship was created when the private
respondents started to merely renew the contracts repeatedly 15 times
for 4 consecutive years.

Petitioner was a regular employee under contemplation of law. The

practice of having fixed-term contracts in the industry does not
 Page 149

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 elements to determine the existence of an employment

relationship are: a.) The selection and engagement of the employee;
b.) The payment of wages; c.) The power of dismissal; and d.) The
employer’s control of the employee’s conduct, not only as to the result
of the work to be done, but also as to the means and methods to
accomplish it.

The duties of petitioner as enumerated in her employment contract

indicate that ABC had control over the work or petitioner. Aside from
control, ABC also dictated the work assignments and payment of
petitioner’s wages. ABC also had power to dismiss her. All these being
present, clearly there existed an employment relationship between
petitioner and ABC.

Concerning regular employment, the law provides for 2 kinds of

employees, namely: 1.) Those who are engaged to perform activities
which are usually necessary or desirable in the usual business or trade
of the employer; and 2.) Those who have rendered at least one year of
service, whether continuous or broken with respect to the activity in
which they are employed. In other words, regular status arises from
either the nature of work of the employee or the duration of his
employment.

The primary standard of determining regular employment is the

reasonable connection between the particular activity performed by the
employee vis-a-vis the usual trade or business of the employer. This
connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or
trade in its entirety. If the employee has been performing the job for at
least a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not
indispensability of that activity to the business.
 Page 150

Case Digest by: MIGUEL, REUCHELLE P.

BERNARTE v. PBA
G.R. No. 192084 September 14, 2011
Carpio, J.

DOCTRINE:

The primary standard of determining regular employment is the

reasonable connection between the particular activity performed
by the employee vis-a-vis the usual trade or business of the
employer.

FACTS:

Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they
were invited to join the PBA as referees. During the leadership of
Commissioner Emilio Bernardino, they were made to sign contracts on
a year-to-year basis. During the term of Commissioner Eala, however,
changes were made on the terms of their employment.

Complainants were not illegally dismissed because they were not

employees of the PBA. Their respective contracts of retainer were
simply not renewed. PBA had the prerogative of whether or not to
renew their contracts, which they knew were fixed.

The Labor Arbiter declared petitioner an employee whose dismissal by

respondents was illegal.The NLRC affirmed the Labor Arbiter's
judgment. The Court of Appeals, which overturned the decisions of the
NLRC and Labor Arbiter. 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.
ISSUE:

Whether petitioner is an employee of respondents, which in turn

determines whether petitioner was illegally dismissed.
 Page 151

RULING:

The petitioners are not employees of respondents.

The existence of an employer-employee relationship is ultimately a

question of fact. As a general rule, factual issues are beyond the
province of this Court. However, this rule admits of exceptions, one of
which is where there are conflicting findings of fact between the Court
of Appeals, on one hand, and the NLRC and Labor Arbiter, on the
other, such as in the present case.

To determine the existence of an employer-employee 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 employer's 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 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 petitioner's 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.
 Page 152

Case Digest by: MIGUEL, REUCHELLE P.

PROFESSIONAL SERVICES v. CA
G.R. No. 126297, Feb. 11, 2008
Sandoval-Gutierrez, J.

DOCTRINE:

While "consultants" are not, technically employees, a point which

respondent hospital asserts in denying all responsibility for the
patient!s condition, the control exercised, the hiring, and the right to
terminate consultants all fulfill the important hallmarks of an employer-
employee 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 employer-employee relationship in effect exists between hospitals
and their attending and visiting physicians.

FACTS:

On April 4, 1984, Natividad Agana was admitted at the Medical City

because of difficulty of bowel movement and bloody anal discharge.
Dr. Ampil diagnosed her to be suffering from "cancer of the sigmoid."
Thus, on April 11, 1984, Dr. Ampil, assisted by the medical staff of
Medical City, performed an anterior resection surgery upon her. During
the surgery, he found that the malignancy in her sigmoid area had
spread to her left ovary, necessitating the removal of certain portions
of it. Thus, Dr. Ampil obtained the consent of Atty. Enrique Agana,
Natividad!s husband, to permit Dr. Juan Fuentes, to perform
hysterectomy upon Natividad.

Dr. Fuentes performed and completed the hysterectomy. Afterwards,

Dr. Ampil took over, completed the operation and closed the incision.
However, the operation appeared to be flawed. There were two (2)
lacking sponges.

After a couple of days, 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 performed upon her. Dr. Ampil recommended that Natividad
 Page 153

consult an oncologist to treat the cancerous nodes which were not

removed during the operation.

Her daughter found a piece of gauze protruding from her vagina. Dr.
Ampil was immediately informed. He proceeded to Natividad!s house
where he managed to extract by hand a piece of gauze measuring 1.5
inches in width. Dr. Ampil then assured Natividad that the pains would
soon vanish.

Despite Dr. Ampil!s assurance, the pains intensified, prompting

Natividad to seek treatment at the Polymedic General Hospital. While
confined thereat, Dr. Ramon Gutierrez detected the presence of a
foreign object in her vagina -- a foul-smelling gauze measuring 1.5
inches in width. The gauze had badly infected her vaginal vault. A
recto-vaginal fistula had formed in her reproductive organ which forced
stool to excrete through the vagina. Another surgical operation was
needed to remedy the situation. Thus, in October 1984, Natividad
underwent another surgery.

Natividad and her husband filed with the Regional Trial Court Quezon
City a complaint for damages against PSI (owner of Medical City), Dr.
Ampil and Dr. Fuentes.

Natividad died.

RTC Ruling: Trial court rendered judgment in favor of spouses Agana

finding PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable.

CA Ruling: 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. On January 31, 2007, the Court,, rendered a
Decision holding that PSI is jointly and severally liable with Dr. Ampil
for the following reasons:

first, there is an employer-employee relationship between Medical City

and Dr. Ampil, holding that for the purpose of apportioning
responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and
visiting physicians;

second, PSI!s 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; and
 Page 154

third, PSI!s 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.

ISSUE:

Whether or not an employer- employee relationship exist.

RULING:

The motion lacks merit.

In other words, 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 patient!s condition,
the control exercised, the hiring, and the right to terminate
consultants all fulfill the important hallmarks of an employer-
employee 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 employer-employee relationship
in effect exists between hospitals and their attending and visiting
physicians. This being the case, the question now arises as to
whether or not respondent hospital is solidarily liable with respondent
doctors for petitioner!s condition.

The basis for holding an employer solidarily responsible for the

negligence of its employee is found in Article 2180 of the Civil Code
which considers a person accountable not only for his own acts but
also for those of others based on the former!s responsibility under a
relationship of partia ptetas.

Clearly, in Ramos, the Court considered the peculiar relationship

between a hospital and its consultants on the bases of certain factors.
One such factor is the "control test" wherein the hospital exercises
control in the hiring and firing of consultants, like Dr. Ampil, and in the
conduct of their work.

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.

Atty. Agana categorically testified that one of the reasons why he

chose Dr. Ampil was that he knew him to be a staff member of
Medical City, a prominent and known hospital.
 Page 155

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.6 In these cases, the circumstances yield a positive answer
to the question.

doctrine of corporate responsibility- responsibility includes the proper

supervision of the members of its medical staff. Accordingly, the
hospital has the duty to make a reasonable effort to monitor and
oversee the treatment prescribed and administered by the physicians
practicing in its premises.

This renders PSI, not only vicariously liable for the negligence of Dr.
Ampil under Article 2180 of the Civil Code, but also directly liable for
its own negligence under Article 2176.
 Page 156

Case Digest by: MIGUEL, REUCHELLE P.

CHAVEZ v. NLRC
G.R. No. 1146530 January 17, 2005
Callejo SR., J.

DOCTRINE:

The existence of an employer-employee relationship cannot be

negated by expressly repudiating it in a contract and providing therein
that the employee is an independent contractor when the facts clearly
show otherwise. Employment status is defined by law and not by what
the parties say it should be.

FACTS:

The respondent company, Supreme Packaging Inc., is in the business

of manufacturing cartons and other packaging materials for export and
distribution. The petitioner, Pedro Chavez, was a truck driver (from
October 25, 1984) tasked to deliver the respondent company’s
products to its various customers. The respondent furnished petitioner
with a truck that all deliveries were made in accordance with the routing
slips issued by the respondent company indicating the order, time and
urgency of delivery.

On 1992, the petitioner expressed his desire to avail the benefits that
a regular employee were receiving such as overtime pay, nightshift
differential pay, and 13th month pay, among others but nothing was
complied. On February 20, 1995, petitioner filed a complaint for
regularization with the Regional Arbitration Branch No. III of NLRC in
San Fernando, Pampanga. Before the case could be heard,
respondent terminated the services of the petitioner.

Hence, the petitioner filed an amended complaint for illegal dismissal,

unfair labor practice and non-payment of overtime pay, nightshift
differential, and 13th month pay, among others.
 Page 157

ISSUE:
Whether there exists an employer-employee relationship?

RULING:

Yes an employer-employee do exist. The elements to determine the

existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the employer!s power to control the employee!s
conduct. The most important element is the employer!s control of the
employee!s conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it.

First. Undeniably, it was the respondents who engaged the services of

the petitioner without the intervention of a third party.

Second. Wages are defined as "remuneration or earnings, however

designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece or commission basis, or
other method of calculating the same, which is payable by an employer
to an employee under a written or unwritten contract of employment for
work done or to be done, or for service rendered or to be rendered.
The petitioner is paid on a per trip basis is not significant. This is merely
a method of computing compensation.

Third. The respondent!s 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 petitioner!s
services albeit in the guise of severance of contractual relation due
allegedly to the latter!s breach of his contractual obligation.

Fourth. 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
 Page 158

an independent contractor enjoys independence and freedom from the

control and supervision of his principal. An employee is subject to the
employer!s power to control the means and methods by which the
employee!s work is to be performed and accomplished. A careful
review of the records shows that the latter performed his work under
the respondents#!supervision and control.

The existence of an employer-employee relationship cannot be

negated by expressly repudiating it in a contract and providing therein
that the employee is an independent contractor when the facts clearly
show otherwise. Employment status is defined by law and not by what
the parties say it should be.
 Page 159

Case Digest by: MIGUEL, REUCHELLE P.

COCA-COLA BOTTLERS INC. v. CLIMACO

G.R. No. 146881 Feb. 5, 2007
Azcuna, J.

DOCTRINE:

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.

FACTS:

Respondent Dr. Dean N. Climaco is a medical doctor The Retainer

Agreement, which began on January 1, 1988, was renewed annually
(original contract was only good for one year). The last one expired on
December 31, 1993. Despite the non-renewal of the Retainer
Agreement, respondent continued to perform his functions as company
doctor to Coca-Cola until he received a letter dated March 9, 1995 from
petitioner company concluding their retainership agreement effective
30 days from receipt thereof.

It is noted that as early as September 1992, petitioner was already

making inquiries regarding his status with petitioner company.
Petitioner company, however, did not take any action. Hence,
respondent made another inquiry with the DOLE and SSS. Thereafter,
respondent inquired from the management of petitioner company
whether it was agreeable to recognizing him as a regular employee.
The management refused to do so.

FILED TWO COMPLAINTS IN THE NLRC: (1) seeking recognition as

a regular employee of petitioner company and prayed for the payment
of all benefits of a regular employee, including 13th Month Pay, Cost
of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and
Christmas Bonus; (2) a complaint for illegal dismissal against petitioner
company with the NLRC, Bacolod City.
 Page 160

LABOR ARBITER!S DECISION: Case (1) Dismissed, found that

petitioner company lacked the power of control over respondent!s
performance of his duties, and recognized as valid the Retainer
Agreement between the parties; (2) dismissed the case for illegal
dismissal in view of the previous finding of Labor Arbiter that
complainant therein, respondent is not an employee of Coca-Cola
Bottlers Phils., Inc.

Respondent appealed both decisions to the NLRC, Fourth Division,

Cebu City; Dismissed for lack of merit. MR denied.

APPEAL WITH THE CA: that an employer-employee relationship

existed between petitioner company and respondent after applying the
four-fold test.

MR BY PETITIONER: The Court of Appeals clarified that respondent

was a "regular part-time employee and should be accorded all the
proportionate benefits due to this category of employees of [petitioner]
Corporation under the CBA.” It sustained its decision on all other
matters sought to be reconsidered. Hence, this petition.

ISSUE:
Whether or not there exists an employer-employee relationship
between the parties; The resolution of the main issue will determine
whether the termination of respondent!s employment is illegal.

RULING:

NO employer-employee relationship.

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 employee!s conduct, or the so-called "control test,”
considered to be the most important element.

The Court agrees with the finding of the Labor Arbiter and the NLRC
that the circumstances of this case show that no employer-employee
relationship exists between the parties. The Labor Arbiter and the
NLRC correctly found that petitioner company lacked the power of
control over the performance by respondent of his duties. The Labor
Arbiter reasoned that the Comprehensive Medical Plan, which
contains the respondent!s objectives, duties and obligations,
 Page 161

does not tell respondent "how to conduct his physical

examination, how to immunize, or how to diagnose and treat his
patients, employees of [petitioner] company, in each case.”

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.

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.

Respondent is not at all further required to just sit around in the

premises and wait for an emergency to occur so as to enable him from
using such hours for his own benefit and advantage. In fact,
complainant maintains his own private clinic attending to his private
practice in the city, where he services his patients, bills them
accordingly — and if it is an employee of respondent company who is
attended to by him for special treatment that needs hospitalization or
operation, this is subject to a special billing.

An employee is required to stay in the employer!s workplace or

proximately close thereto that he cannot utilize his time
effectively and gainfully for his own purpose. Such is not the
prevailing situation here. 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 also notes that the Retainership Agreement granted to both
parties the power to terminate their relationship upon giving a 30-day
notice. Hence, petitioner company did not wield the sole power of
dismissal or termination.

Considering that there is no employer-employee relationship between

the parties, the termination of the Retainership Agreement, which is in
accordance with the provisions of the Agreement, does not constitute
illegal dismissal of respondent.
 Page 162

Case Digest by: MIGUEL, REUCHELLE P.

FELIX v. BUENASEDA
G.R. No. 109704 January 17, 1995
En Banc

DOCTRINE:

It is crystal clear, from the facts of the case at bench, that the petitioner
accepted a temporary appointment (Medical Specialist I). As
respondent Civil Service Commission has correctly pointed out, the
appointment was for a definite and renewable period which, when it
was not renewed, did not involve a dismissal but an expiration of the
petitioner!s term.

FACTS:

A direct appeal seeking to annul the Resolution issued by the Civil

Service Commission (CSC) which Felix claims to be in violation of his
constitutional right to security of tenure. Facts: Felix worked as Medical
Specialist I for the government [National Center of Mental Health
(NCMH)]. He started as a Resident Physician with an annual salary.
Later he got promoted to Senior Resident Physician [permanent],
which he held for some time, and thereafter accepted the appointment
as Medical Specialist I [temporary] – which Felix held for three years
without remonstrations. Pursuant to an Executive Order [EO No. 119]
a general reorganization in the government ensued. In view of this,
DoH effected a reorganization, and one of the guidelines [DoH DO No.
478] made Felix unfit for the position [he was not yet accredited by the
Psychiatry Specilaty Board]. His appointment was extended pending
review of the Medical Committee [of NCMH], which eventually
recommended nonrenewal of Felix!s appointment and informed him of
the same.

Felix was still allowed to continue his service even after he was
informed of his termination. The Chief of Service [of NCMH] conducted
an emergency to discuss, inter alia, Felix!s performance. The overall
consensus expressed nonrenewal of Felix!s contract [due to poor
performance, frequent tardiness and inflexibility]. The matter was
referred to CSC which ruled that appointment of Felix can be
terminated at any time and that renewal was within the discretion of
the appointing authority [NCMH] by virtue of the incidental power of the
power to appoint [the power to renew a temporary appointment] and
 Page 163

further. The removal of Felix has thus been affirmed by CSC. Felix!s
appeal was dismissed and his subsequent motion for reconsideration
has been denied by CSC. Petitioner now questions the validity of such
removal. Hence, this direct appeal.

ISSUE:
(1). Is the position held by Felix as Resident Physician a permanent
one?

(2). Is an employee, after not challenging his appointment from a

permanent to a temporary position within a reasonable period,
deemed to have accepted his appointment?

RULING:

(1). No. Residency is never meant to be a permanent position. It is a

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 subspecialist in a given field. To
specialize on a medical field [be it Psychiatry or Cardiology], one has
to go through a stringent process. This process is to guarantee the
specialist!s minimum standards and skills – which is an assurance to
the community that a specialist is not set loose without the basic
knowledge and skills of his specialty as lives are ultimately at stake.
The purpose is thus geared towards training the resident physician.

(2). Yes. Felix!s acceptance as temporary Medical Specialist I for

three years was subject to peer and superior evaluation, for which
Felix fell short. Regardless, Felix never questioned his temporary
assignment [for three years] until DoH, as a result of his performance
evaluation, ordered non-renewal of his temporary position. In view of
his silence to question his appointment from permanent to temporary,
warrants the presumption that Felix has either given up his claim or
that he has already settled into the new position, which is the concept
of laches, which therefore estops him from questioning the same
[three years later]. Stated otherwise, Felix has abandoned his right to
claim to question his conversion from permanent employee to
temporary employee through laches, and henceforth, is deemed to
have accepted his appointment from permanent to temporary
position.
 Page 164

Case Digest by: MIGUEL, REUCHELLE P.

AUTO BUS TRANSPORT v. BAUTISTA

G.R. No. 156367 May 16, 2005
Chico-Nazario, J.

DOCTRINE:

As defined, field personnel are those whose performance of service is

unsupervised by the employer, the workplace being away from the
principal place of business and whose hours and days of work cannot
be determined with reasonable certainty.

FACTS:

Bautista, a driver-conductor of the Autobus transport, was dismissed

after his failure to pay an amount demanded by the company for the
repair of the bus damaged in an accident caused by him.

He receives compensation by way of commission per travel.

Bautista complained for illegal dismissal with money claims for

nonpayment of 13th month pay and service incentive leave pay
against Autobus.

Auto Bus#!Defenses:

1. Bautista!s employment was replete with offenses involving

reckless imprudence, gross negligence, and dishonesty
supported with copies of letters, memos, irregularity reports,
warrants of arrest;
2. In the exercise of management prerogative, Bautista was
terminated only after providing for an opportunity to explain:
Labor Arbiter dismissed the complaint however awarded Bautista his
13th month pay and service incentive leave pay.

Auto Bus appealed. NLRC deleted the 13th month pay award. In the
CA, NLRC!s decision was affirmed.
 Page 165

ISSUE:
Whether or not respondent is entitled to service incentive leave pay.

RULING:

Yes.

Under Article 95 of the Labor Code, every employee who has

rendered at least one year or service shall be entitled to a yearly
service incentive leave of five days with pay. In Section 1, Rule V,
Book III of the Implementing Rules and Regulations of the Labor
Code, the rule shall apply to all, except… (d) Field personnel and
other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis,
purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the
performance thereof.

Petitioner!s contention that Bautista is not entitled to service incentive

leave because he is paid on a purely commission basis must fail. The
phrase following "Field personnel” should not be construed as a
separate classification of employees but is merely an amplification of
the definition of field personnel defined under the Labor Code.

Bautista neither falls under the category field personnel. As defined,

field personnel are those whose performance of service is
unsupervised by the employer, the workplace being away from the
principal place of business and whose hours and days of work cannot
be determined with reasonable certainty. Bus companies have ways
of determining the hours worked by their drivers and conductors with
reasonable certainty. The courts have taken judicial notice of the
following:

1. Along the routes traveled, there are inspectors assigned at

strategic places who board the bus to inspect the passengers,
the punched tickets, and the conductor!s reports;
2. There is a mandatory once-a week car barn or shop day, where
the bus is regularly checked;
3. The drivers and conductors must be at specified place and
time, as they observe prompt departure and arrival;
4. At every depot, there is always a dispatcher whose function is
to see to it that the bus and crew leaves and arrives at the
estimated proper time.
 Page 166

By these reasons, drivers and conductors are therefore under

constant supervision while in the performance of their work.
 Page 167

Case Digest by: MIGUEL, REUCHELLE P.

DAVID v. MACASIO
G.R. No. 195466 July 2, 2014
Brion, J.

DOCTRINE:

In sum, the existence of employment relationship between the parties

is determined by applying the "four-fold" test; engagement on "pakyaw"
or task basis does not determine the parties#!relationship as it is simply
a method of pay computation. Accordingly, Macasio is David!s
employee, albeit engaged on "pakyaw" or task basis.

FACTS:

Macasio filed before the LA a complaint against petitioner for non-

payment of overtime pay, holiday pay and 13th month pay. He also
claimed payment for moral and exemplary damages and attorney!s
fees, and payment for service incentive leave (SIL).

Macasio alleged that he had been working as a butcher for David since
January 6, 1995.That David exercised effective control and supervision
over his work, pointing out that 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, which was
increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in
2005; and (3) approved and disapproved his leaves.

Macasio added that David owned the hogs delivered for chopping, as
well as the work tools and implements; the latter also rented the
workplace.

David!s defense: He claimed that he hired Macasio as a butcher or

chopper on "pakyaw" or task basis who is, therefore, not entitled to
overtime pay, holiday pay and 13th month pay pursuant to the
provisions of the IRR of the Labor Code.

LABOR ARBITER: The LA dismissed respondent!s claims for lack of

merit and gave credence to David!s claim that he engaged Macasio on
 Page 168

"pakyaw" or task basis. The LA noted the following facts to support this
finding:
(1) Macasio received the fixed amount of P700.00 for every work done,
regardless of the number ofhours that he spent in completing the
task and of the volume or number of hogs that he had to chop per
engagement;
(2) Macasio usually worked for only four hours, beginning from 10:00
p.m. up to 2:00 a.m. of the following day; and (3) the P700.00 fixed
wage far exceeds the then prevailing daily minimum wage of
P382.00. The LA added that the nature of David!s business as hog
dealer supports this "pakyaw" or task basis arrangement concluded
that as Macasio was engaged on "pakyaw" or task basis, he is not
entitled to overtime, holiday, SIL and 13th month pay. The LA
concluded that as Macasio was engaged on "pakyaw" or task basis,
he is not entitled to overtime, holiday, SIL and 13th month pay.
NLRC Affirmed the LA ruling. CA The CA reversed the NLRC!s
ruling for having been rendered with grave abuse of discretion and
awarded Macasio!s claim for holiday, SIL and 13th month pay for
three years, with 10% attorney!s fees on the total monetary award.
The CA, however, denied Macasio!s claim for moral and exemplary
damages for lack of basis.

ISSUE:
Whether the CA correctly found the NLRC in grave abuse of
discretion in ruling that Macasio is entitled to these labor standards
benefits. (The issue revolves around the proper application and
interpretation of the labor law provisions on holiday, SIL and 13th
month pay to a worker engaged on "pakyaw" or task basis. In the
context of the Rule 65 petition before the CA, the issue is whether the
CA correctly found the NLRC in grave abuse of discretion in ruling
that Macasio is entitled to these labor standards benefits.)

RULING:

Engagement on "pakyaw" or task basis does not characterize the

relationship that may exist between the parties, i.e., whether one of
employment or independent contractorship. A distinguishing
characteristic of "pakyaw" or task basis engagement, as opposed to
straight-hour wage payment, is the non-consideration of the time spent
in working. In a task-basis work, the emphasis is on the task itself, in
the sense that payment is reckoned in terms of completion of the work,
not in terms of the number of time spent in the completion of work.

Once the work or task is completed, the worker receives a fixed amount
as wage, without regard to the standard measurements of time
generally used in pay computation. In Macasio!s case, the established
 Page 169

facts show that he would usually start his work at 10:00 p.m.
Thereafter, regardless of the total hours that he spent at the workplace
or of the total number of the hogs assigned to him for chopping,
Macasio would receive the fixed amount of ₱700.00 once he had
completed his task. Clearly, these circumstances show a "pakyaw" or
task basis engagement that all three tribunals uniformly found.

In sum, the existence of employment relationship between the parties

is determined by applying the "four-fold" test; engagement on "pakyaw"
or task basis does not determine the parties#!relationship as it is simply
a method of pay computation. Accordingly, Macasio is David!s
employee, albeit engaged on "pakyaw" or task basis.
 Page 170

Case Digest by: MIGUEL, REUCHELLE P.

BEGINO v. ABS-CBN
G.R. No. 199166 April 20, 2015
Perez, J.

DOCTRINE:

Of the criteria to determine whether there is an employer-employee

relationship, the so-called "control test" is generally regarded as the most
crucial and determinative indicator of the said relationship.

FACTS:

Respondent ABS-CBN, through Respondent Villafuerte, engaged the

services of Petitioners as cameramen, editors or reporters for TV
Broadcasting. Petitioners signed regularly renewed Talent Contracts
(3 months - 1 year) and Project Assignment Forms which detailed the
duration, budget and daily technical requirements of a particular
project. Petitioners were tasked with coverage of news items for
subsequent daily airings in Respondents#!TV Patrol Bicol Program.

The Talent Contract has an exclusivity clause and provides that

nothing therein shall be deemed or construed to establish an employer-
employee relationship between the parties.

Petitioners filed against Respondents a complaint for regularization

before the NLRC's Arbitration branch.

In support of their complaint, Petitioners claimed that they worked

under the direct control of Respondent Villafuerte - they were
mandated to wear company IDs, they were provided the necessary
equipment, they were informed about the news to be covered the
following day, and they were bound by the company!s policy on
attendance and punctuality.

Respondents countered that, pursuant to their Talent Contracts and

Project Assignment Forms, Petitioners were hired as talents to act as
reporters, editors and/or cameramen. Respondents further claimed
they never imposed control as to how Petitioners discharged their
duties. At most, they were briefed regarding the general requirements
of the project to be executed.

While the case was pending, Petitioners contracts were terminated,

prompting the latter to file a second complaint for illegal dismissal.
 Page 171

The Arbitration Branch ruled that Petitioners were regular employees,

and ordered Respondents to reinstate the Petitioners.

The NLRC affirmed the ruling, but the CA overturned the decision.

ISSUE:
W/N Petitioners are regular employees of Respondents.

RULING:

Yes.

Of the criteria to determine whether there is an employer-employee

relationship, the so-called "control test" is generally regarded as the
most crucial and determinative indicator of the said relationship.

Under this test, an employer-employee relationship is said to exist

where the person for whom the services are performed reserves the
right to control not only the end result but also the manner and means
utilized to achieve the same.

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.

As cameramen, editors and reporters, it appears that Petitioners were

subject to the control and supervision of Respondents which provided
them with the equipment essential for the discharge of their functions.
The exclusivity clause and prohibitions in their Talent Contract were
likewise indicative of Respondents' control over them, however
obliquely worded.

Also, the presumption is that when the work done is an integral part of
the regular business of the employer and when the worker does not
furnish an independent business or professional service, such work is
a regular employment of such employee and not an independent
contractor.
 Page 172

Case Digest by: MIGUEL, REUCHELLE P.

CHEVRON PHILS. v. GALIT

G.R. No. 186114 October 7, 2015
Peralta, J.

DOCTRINE:

Of the criteria to determine whether there is an employer-employee

relationship, the so-called "control test" is generally regarded as the
most crucial and determinative indicator of the said relationship.

FACTS:

CHEVRON Phils. Inc. RESPONDENTS: Vitaliano C. Galit SJS and

Sons Construction Corporation and Mr. Reynaldo Salomon
SUMMARY: Vitalino Galit (Galit) filed before the NLRC a Complaint for
illegal dismissal, underpayment/non-payment of 13th month pay,
separation pay and emergency cost of living allowance against Caltex
Philippines, Inc., now Chevron Phils. Inc., (Chevron) SJS and Sons
Construction Corporation (SJS), and its president, Reynaldo Salomon
(Salomon). In SJS #!position paper, it claimed that Galit was hired by
SJS in 1993 as a project employee and was assigned to Chevron as a
janitor based on a contract between the two companies. When the
contract ended, Galit was severed from the employment but he was
paid separation pay by SJS. On the other hand, Chevron!s position
paper with motion to dismiss essentially claimed that Galit was
employed by SJS and was subject to the supervision, discipline and
control of SJS.

Thus, Chevron was surprised that Galit filed an action against them.
The Labor Arbiter dismissed the complaint against Chevron for lack of
jurisdiction on the ground that there was no employer-employee
relationship between Chevron and Galit. The complaint was also
dismissed against SJS and Solomon for lack of merit on the basis of
the finding that Galit's employment with SJS simply expired as a result
of the completion of the project for which he was engaged. The NLRC
affirmed the decicion of the LA but the CA reversed and found that
Chevron was the employer of Galit and that it was guilty of illegal
dismissal. Hence this petition.
 Page 173

ISSUE:

(1) Whether there existed an employer-employee relationship

between Chevron and Galit
(2) Whether Chevron is liable to Galit for the termination of his
employment
(3) Whether SJS is an independent contractor or a labor only
contractor RULING:

HELD:
(1) No, using the "Control Test,” the provisions of the contract
between Chevron and SJS showed that the latter had the
earmarks of an employer by having control over its employees#!
conduct including Galit. This fact was strengthened by Galit!s
admission that it was SJS which assigned him to work at
Chevron!s Pandacan Depot.
(2) No, because again, the employer of Galit was SJS and not
Chevron. Moreover, Galit was dismissed from employment by
reason of the termination of the service contract between SJS and
Chevron, and it was not because Chevron ended his employment.
(3) Independent contractor, the evidence showed that SJS had an
independent business by paying business taxes and fees and that
it was registered as an employer with the Social Security System.
 Page 174

Case Digests by: PABLO, JEDIA JANE M.

WESLEYAN UNIVERSITY PHILS v. MAGLAYA

G.R. No. 212774. January 23, 2017.
Peralta, C. J.

DOCTRINE:
EMPLOYER-EMPLOYEE RELATIONSHIP

A corporate officer’s dismissal is always a corporate act, or an

intra-corporate controversy which arises between the stockholder and
and the corporation, and the nature is not altered by reason or
wisdom with which the Board of Directors may have in taking such
action. The issue of the alleged termination involving a corporate
officer, not a mere employee, is not a simple labor problem but a
matter that comes within the area of corporate affairs and
management and is a corporate controversy in contemplation of the
Corporation code.

The determination of the rights of a corporate officer dismissed

from his employment, as well as the corresponding liability of the
corporation, if any, is an intra-corporate dispute subject to the
jurisdiction of regular courts.

FACTS:
Petitioner Wesleyan University Philippines (WUP) is a non-stock,
non-profit, non-sectarian education duly organize d and existing under
the Philippine laws.

Responded Atty. Guilleno T. Maglaya, Sr., was appointed as a

corporate member of WUP on January 1, 2004 and was subsequently
elected as a member of the Board of Trustees, both for a term of 5
years. On May 5, 2004, respondent was elected as a president for a
five-year term followed by his re-election as a trustee on May 5, 2007.

In a memorandum dated November 28, 2008 the incumbent

Bishop of the United Methodist Church apprised all the corporate
members of the expiration of their terms on December 31, 2008, unless
renewed by the former. The members including respondent sought the
renewal of their term.

Dr. Dominador Cabasal, Chairman of the Board, however,

informed the Bishops that some of the vacancies may only be filled by
the Bishops upon recommendation by the Board.
 Page 175

Respondent later on learned that the Bishops created an Ad Hoc

committee for the turnover of the administration of WUP and that
incoming corporate members and trustees were already appointed.

The Bishops, through a formal notice introduced the new

corporate members, trustees, and officers. The said notice also
indicated that the new Board met, organized, and elected the new set
of officers on April 20, 2009. Manuel Palomo, the new Chairman of the
Board, then informed respondent Maglaya of the termination of his
services and authority as the President of the University on April 27,
2009.

Respondent subsequently filed a complaint for illegal dismissal

with the Labor Arbiter. Maglaya claimed that he was unceremoniously
dismissed in a wanton, reckless, oppressive, and malevolent manner.
He alleged that he is an employee of WUP, presenting the following
evidence: copies of his appointment as President, his Identification
Card, the WUP Administration and Personnel Policy Manual which
specified the retirement of the university president, and the check
disbursement in his favor evidencing his salary.

WUP, on the other hand, alleged that respondent was a

corporate officer, and hence, the matter is an intra-corporate
controversy not subject to the Labor Arbiter’s jurisdiction but rather the
RTC’s.

ISSUE:
Whether or not respondent is a corporate officer.

RULING:
Yes. Respondent was a corporate officer. Defining a corporate
officer, the court stated:

"Corporate officers" in the context of Presidential Decree No. 902-

A are those officers of the corporation who are given that character by
the Corporation Code or by the corporation's by-laws. There are three
specific officers whom a corporation must have under Section 25 of the
Corporation Code. These are the president, secretary, and the
treasurer. The number of officers is not limited to these three. A
corporation may have such other officers as may be provided for by its
by-laws like, but not limited to, the vice-president, cashier, auditor, or
general manager. The number of corporate officers is thus limited by
law and by the corporation's by-laws.”
 Page 176

The president, vice-president, secretary, and treasurer are

commonly regarded as the principal or executive officers of a
corporation, and they are usually designated as the officers of the
corporation. However, other officers are sometimes created by the
charter or by-laws of a corporation, or the board of directors may be
empowered under the bylaws of a corporation to create additional
offices as may be necessary. This Court expounded that an "office" is
created by the charter of the corporation and the officer is elected by
the directors or stockholders, while an "employee" usually occupies no
office and generally is employed not by action of the directors or
stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee.

It is apparent from the By-laws of WUP that the president was one
of the officers of the corporation and was an honorary member of the
Board. He was appointed by the Board and not by a managing officer
of the corporation. We held that one who is included in the by-laws of
a corporation in its roster of corporate officers is an officer of said
corporation and not a mere employee.

The alleged "appointment" of Maglaya instead of "election" as

provided by the by-laws neither convert the president of university as
a mere employee, nor amend its nature as a corporate officer. With the
office specifically mentioned in the by-laws, the NLRC erred in taking
cognizance of the case, and in concluding that Maglaya was a mere
employee and subordinate official because of the manner of his
appointment, his duties and responsibilities, salaries and allowances,
and considering the Identification Card, the Administration and
Personnel Policy Manual which specified the retirement of the
university president, and the check disbursement as pieces of
evidence supporting such finding.

A corporate officer's dismissal is always a corporate act, or an

intra-corporate controversy which arises between a stockholder and a
corporation, and the nature is not altered by the reason or wisdom with
which the Board of Directors may have in taking such action. The issue
of the alleged termination involving a corporate officer, not a mere
employee, is not a simple labor problem but a matter that comes within
the area of corporate affairs and management and is a corporate
controversy in contemplation of the Corporation Code.

To emphasize, the determination of the rights of a corporate officer

dismissed from his employment, as well as the corresponding liability
of a corporation, if any, is an intra-corporate dispute subject to the
jurisdiction of the regular courts.
 Page 177

Case Digests by: PABLO, JEDIA JANE M.

NESTLE PHILIPPINES INC. v. BENNY PUEDAN

G.R. No. 220617. January 30, 2017.
Perlas-Bernabe, J.

DOCTRINE:
EMPLOYER-EMPLOYEE RELATIONSHIP

The imposition of minimum standards concerning sales, marketing,

finance and operations is nothing more than an exercise of sound
business practice to increase sales and maximize profits for the benefit
of both Steelcase and its distributors. For as long as these
requirements do not impinge on a distributor's independence,then
there is nothing wrong with placing reasonable expectations on them.

FACTS:
Respondents alleged that on various dates, Ocho de Septiembre,
Inc. (ODSI) and NPI hired them to sell various NPI products in the
assigned covered area. After some time, respondents demanded that
they be considered regular employees of NPI, but they were directed
to sign contracts of employment with ODSI instead. When respondents
refused to comply with such directives, NPI and ODSI terminated them
from their position. Thus, they were constrained to file a complaint
claiming that: (a) ODSI is a labor-only contractor and, thus, they should
be deemed regular employees of NPI; and (b) there was no just or
authorized cause for their dismissal.

ODSI averred that it is a company engaged in the business of

buying, selling, distributing, and marketing of goods and commodities
of every kind and it enters into all kinds of contracts for the acquisition
thereof. ODSI admitted that on various dates, it hired respondents as
its employees and assigned them to execute the Distributorship
Agreement it entered with NPI. However, the business relationship
between NPI and ODSI turned sour, which led to the closure of its NPI
unit, and that respondents were not dismissed but merely put in floating
status.

ISSUE:
Whether or not ODSI is a labor-only contractor and consequently,
NPI is respondents' true employer and, thus, deemed jointly and
severally liable with ODSI for respondents' monetary claims.

RULING:
 Page 178

No. A closer examination of the Distributorship Agreement reveals

that the relationship of NPI and ODSI is not that of a principal and a
contractor (regardless of whether labor-only or independent), but that
of a seller and a buyer/re-seller. As stipulated in the Distributorship
Agreement, NPI agreed to sell its products to ODSI at discounted
prices, which in turn will be re-sold to identified customers, ensuring in
the process the integrity and quality of the said products based on the
standards agreed upon by the parties. As aptly explained by NPI, the
goods it manufactures are distributed to the market through various
distributors, e.g., ODSI, that in turn, re-sell the same to designated
outlets through its own employees such as the respondents. Therefore,
the reselling activities allegedly performed by the respondents properly
pertain to ODSI, whose principal business consists of the "buying,
selling, distributing, and marketing goods and commodities of every
kind" and "[entering] into all kinds of contracts for the acquisition of
such goods [and commodities]."

Thus, contrary to the CA's findings, the aforementioned

stipulations in the Distributorship Agreement hardly demonstrate
control on the part of NPI over the means and methods by which ODSI
performs its business, nor were they intended to dictate how ODSI
shall conduct its business as a distributor. Otherwise stated, the
stipulations in the Distributorship Agreement do not operate to control
or fix the methodology on how ODSI should do its business as a
distributor of NPI products, but merely provide rules of conduct or
guidelines towards the achievement of a mutually desired result —
which in this case is the sale of NPI products to the end consumer.

Verily, it was only reasonable for NPI — it being a local arm of one
of the largest manufacturers of foods and grocery products worldwide
— to require its distributors, such as ODSI, to meet various conditions
for the grant and continuation of a distributorship agreement for as long
as these conditions do not control the means and methods on how
ODSI does its distributorship business, as shown in this case. This is
to ensure the integrity and quality of the products which will ultimately
fall into the hands of the end consumer.

Thus, the foregoing circumstances show that ODSI was not a

labor-only contractor of NPI; hence, the latter cannot be deemed the
true employer of respondents. Consequently, NPI cannot be held
jointly and severally liable to ODSI's monetary obligations towards
respondents.
 Page 179

Case Digests by: PABLO, JEDIA JANE M.

VALENZUELA v. ALEXANDRA MINING VENTURES

G.R. No. 222419. October 5, 2016.
Reyes, J.

DOCTRINE:
EMPLOYER-EMPLOYEE RELATIONSHIP

In determining the existence of an employer-employee

relationship, jurisprudence spelled out the four-fold test, to wit: (1)the
selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the employer's power to control the
employee with respect to the means and methods by which the work
is to be accomplished.

FACTS:
Valenzuela alleged that he was hired as a company driver of
AMOVI, with an eight-hour work shift from 8:00 a.m. to 5:00 p.m. and
with a monthly salary of P12,000.00. After five years and five months
of service, he was told that he can no longer continue to work as there
were no forthcoming funds to pay for his salary.

Respondents alleged that Valenzuela was actually hired as a

family driver of the Deteras. They alleged, however, that the
P12,000.00 monthly salary of Valenzuela was charged to AMOVFs
account for convenience. They averred that on June 15, 2013,
Valenzuela informed Cesar's wife, Annlynn, that he was going home
to his province to visit his parents. Annlynn granted him leave but when
she asked him whether he can return for work the following Monday,
Valenzuela told her that he would give her a call. Come Monday,
Valenzuela did not show up for work and did not also call to inform the
Deteras of the reason behind his absence. This caused them
inconvenience as their daughter's schooling has started and it was
Valenzuela's responsibility to bring her to and from school.

A week later, Valenzuela showed up at the Deteras' residence and

informed them that he was resigning and asked for his separation pay.
To obviate further verbal altercation, Annlynn agreed but asked him to
submit a resignation letter. Ultimately, Annlynn told him to make up his
mind but Valenzuela just walked out and never returned.
 Page 180

In his Reply, 8 Valenzuela emphasized that he did not just suffer

to work for the company but also drove for the members of the Detera
family. He denied that he ever asked permission to visit his parents in
Bicol, as the Deteras knew that his parents had long been dead.
Moreover, the remains of his deceased parents were buried in Pateros.
He alleged that he actually reported for work on June 17, 2013, but
was prevented by Cesar who told him that his service is no longer
needed as there were no funds forthcoming to pay for his salary.

ISSUE:
1) Whether or not Valenzuela was an employee of AMOVI.
2) Whether or not Valenzuela was illegally dismissed.

RULING:
1. Yes.
The question regarding who may be deemed the real
employer of Valenzuela had been unanimously resolved and
agreed by the LA, NLRC and the CA to be AMOVI. The labor
tribunals and the CA were all in accord that Valenzuela was an
employee of AMOVI as evidenced by the identification card and
payslips stating the. company as his employer. Moreover, the CA
held that, utilizing the four-fold test of employer-employee
relationship, the result would show that Valenzuela was under
the control of AMOVI. It ruled thus:

In determining the existence of an employer-employee

relationship, jurisprudence spelled out the four-fold test, to wit: (1)
the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the employer's
power to control the employee with respect to the means and
methods by which the work is to be accomplished.

It was [AMOVI] which hired [Valenzuela] in January 2008,

and which issued an identification card showing that [Valenzuela]
was an employee. [Valenzuela] was likewise included in the
payroll of [AMOVI], although it was claimed that it was merely "for
convenience." We do not see what kind of convenience is
afforded to [AMOVI].

The power to discipline and to dismiss is also present, and

it was exercised by [Cesar] as President of [AMOVI] which
incidentally is a family corporation.

Finally, the control test is likewise satisfied. [Valenzuela] had

no choice as to who his passengers would be. He was a
company driver who was required to render service to the
 Page 181

President of the Corporation, including his nuclear family. It was

them who controlled and dictated the manner by which he
performed his job.

2) Yes.
For a worker's dismissal to be considered valid, it must
comply with both procedural and substantive due process. The
legality of the manner of dismissal constitutes procedural due
process, while the legality of the act of dismissal constitutes
substantive due process.
Procedural due process in dismissal cases consists of the
twin requirements of notice and hearing. The employer must
furnish the employee with two written notices before the
termination of employment can be effected: (1) the first notice
apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the second notice informs
the employee of the employer's decision to dismiss him. Before
the issuance of the second notice, the requirement of a hearing
must be complied with by giving the worker an opportunity to
be heard. It is not necessary that an actual hearing be
conducted.

Substantive due process, on the other hand, requires that

dismissal by the employer be made under a just or authorized
cause under Articles 282 to 284 of the Labor Code.

Evidently, the respondents raised no valid ground to justify

Valenzuela's dismissal. As admitted by Cesar, Valenzuela was
terminated at will. This was corroborated by Valenzuela's claim
that when he returned for work on June 17, 2013, he was simply
told that he can no longer continue to work as there were no
funds forthcoming topay off his salary.

Further, the twin requirement of notice and hearing for a valid

termination was not observed by the respondents. Valenzuela
was not at all informed of the ground of his dismissal and was
deprived the opportunity to explain his side. He was rashly
dismissed from service without a valid ground and the required
notices.

Consistent with the finding that Valenzuela had been illegally

dismissed, he is, therefore, entitled to reinstatement and full
backwages.
 Page 182

Case Digests by: PABLO, JEDIA JANE M.

BISHOP SHINJI AMARI OF ABIKI BAPTIST CHURCH v.

VILLAFLOR
G.R. No. 224521. February 17, 2020.
Gesmundo, J.

DOCTRINE:
EMPLOYER-EMPLOYEE RELATIONSHIP

An ecclesiastical affair is ‘one that concerns doctrine, creed, or

form of worship of the church, or the adoption and enforcement within
a religious association of needful laws and regulations for the
government of the membership, and the power of excluding from such
associations those deemed unworthy of membership.’ Based on this
definition, an ecclesiastical affair involves the relationship between the
church and its members and relates to matters of faith, religious
doctrines, worship, and governance of the congregation.

Secular matters, on the other hand, have no relation whatsoever

with the practice of faith, worship, or doctrines of the church.

FACTS:
In 1999, respondent Ricardo R. Villaflor Jr. became a missionary
sponsored by Bishop Shinji Amari of the Abiko Baptist Church
(BSAABC). He was appointed as an instructor at the Shinji Amari &
Missionary Baptist Institute and Seminary (MBIS; petitioner) effective
June 1999.

In a letter dated Nov. 24, 2011, respondent was informed of his

removal as a missionary of the Abiko Baptist Church, cancellation of
his American Baptist Association (ABA) recommendation as a national
missionary, and exclusion of his membership in the Abiko Baptist
Church in Japan. Aggrieved, he filed a complaint for illegal dismissal
against petitioners.

Petitioners invoked the defense that he was not their employee.

On the other hand, respondent argued that he already established the
presence of the elements of selection of employee, payment of wages,
and power of dismissal and that the power of control is likewise present
to establish employer-employee relationship between petitioners and
him.

ISSUE:
 Page 183

Whether or nor Villaflor was illegally dismissed despite the fact

that the dispute involves an ecclesiastical affair?

RULING:
No. At the outset, the Court finds the need to distinguish a purely
ecclesiastical affair from a secular matter. While the State is prohibited
from interfering in purely ecclesiastical affairs, the Church is likewise
barred from meddling in purely secular matters.

An ecclesiastical affair is "'one that concerns doctrine, creed, or

form of worship of the church, or the adoption and enforcement within
a religious association of needful laws and regulations for the
government of the membership, and the power of excluding from such
associations those deemed unworthy of membership.' Based on this
definition, an ecclesiastical affair involves the relationship between the
church and its members and relate[s] to matters of faith, religious
doctrines, worship and governance of the congregation. To be
concrete, examples of these so-called ecclesiastical affairs in which
the State cannot meddle are proceedings for excommunication,
ordinations of religious ministers, administration of sacraments and
other activities with attached religious significance."

Secular matters, on the other hand, have no relation whatsoever

with the practice of faith, worship or doctrines of the church.

To the mind of the Court, the exclusion of membership from Abiko

Baptist Church in Japan and the cancellation of ABA recommendation
as a national missionary are ecclesiastical matters which this
jurisdiction will not touch upon. These matters are exclusively
determined by the church in accordance with the standards they have
set. The Court cannot meddle in these affairs since the church has the
discretion to choose members who live up to their religious standards.
The ABA recommendation as a nationalmissionary is likewise
discretionary upon the church since it is a matter of governance of
congregation.

The Court is left to determine whether Villaflor's removal as a

missionary of Abiko Baptist Church is an ecclesiastical affair. Indeed,
the matter of terminating an employee, which is purely secular in
nature, is different from the ecclesiastical act of expelling a member
from the religious congregation.

In order to settle the issue, it is imperative to determine the

existence of an employer-employee relationship. Unfortunately,
Villaflor failed to prove his own affirmative allegation in accordance with
the four-fold test, to wit:
 Page 184

(a) The selection and engagement of the employee;

(b) The payment of wages;

(c) The power of dismissal; and

(d) The power to control the employee's conduct.

First, the evidence presented – the Appointment Paper – refers to

Villaflor’s appointment as an instructor; but, to emphasize, Villaflor was
removed as a missionary of Abiko Baptist Church, not as an instructor
of MBIS.

Second, there is no concrete evidence of the alleged monthly

compensation of Villaflor. Absent any clear indication that the amount
respondent was allegedly receiving came from BSAABC or MBIS, or
at the very least that ABA, Abiko Baptist Church of Japan, and
BSAABC and MBIS are one and the same, the Court cannot concretely
establish the payment of wages.

Third, the Court finds that dismissal is inherent in religious

congregations as they have the power to discipline their members, but
this alone cannot establish employer-employee relationship.

Lastly, there is no power of control. Other than the Appointment

Paper (asan instructor), no other evidence was adduced by Villaflor to
show an employer-employee relationship
 Page 185

Case Digests by: PABLO, JEDIA JANE M.

SAN MIGUEL CORPORATION v. ETCUBAN

G.R. No. 127639. December 3, 1999.
Peralta, C. J.

DOCTRINE:
REASONABLE CAUSAL CONNECTION RULE

Jurisprudence has developed the "reasonable causal connection

rule." Under this rule, if there is a reasonable causal connection
between the claim asserted and the employer-employee relations,
then the case is within the jurisdiction of our labor courts. In the
absence of such nexus, it is the regular courts that have jurisdiction.

FACTS:
In 1981, San Miguel Corporation (SMC) informed its Mandaue City
Brewery employees that it was suffering from heavy losses and
financial distress which could eventually lead to its total closure .In
several meetings convened by SMC with its employee, it was
explained to them that the distressed state of SMC was caused by its
poor sales performance which, in order to survive, called for a cutback
in production and a corresponding reduction in the work force.
Because of this, SMC offered its "Retrenchment to Prevent Loss
Program" to its employees.

Hence, in order to survive, there must be a cutback in production

and a corresponding reduction in the work force. Because of this, SMC
offered its "Retrenchment to Prevent Loss Program" to its employees.
Convinced by the representations and importunings of SMC,
respondents, who had been employees of SMC since the 1960s,
availed of the retrenchment program at various times in 1981, 1982
and 1983. After their inclusion in the retrenchment program,
respondents were given their termination letters and separation pay.

Sometime in May of 1986, respondents got hold of an SMC

publication allegedly revealing that SMC was never in financial distress
during the time when they were being retrenched but was, in fact,
enjoying a growth in sales. Respondents also learned that, during their
retrenchment, SMC was engaged in hiring new employees. Thus,
respondents concluded that SMC's financial distress story and
retrenchment program were merely schemes to rid itself of regular
employees and, thus, avoid the payment of their actual benefits.
 Page 186

Respondents filed a complaint National Labor Relations

Commission (NLRC) for the declaration of nullity of the retrenchment
program. In their complaint, respondents alleged that they were former
regular employees of SMC who were deceived into severing their
employment due to SMC's concocted financial distress story and
fraudulent retrenchment program. Respondents prayed for
reinstatement, backwages and damages Thereafter, the Labor Arbiter
dismissed the complaint because their cause of action already
prescribed, the cases having been filed after the three-year
prescriptive period. On appeal, the NLRC affirmed the decision of the
labor arbiter.

On 14 December 1993, respondents then filed a complaint against

SMC before the Regional Trial Court of Cebu City seeking for the
declaration of nullity of their so-called collective "contract of
termination" with SMC. The RTC dismissed respondents' complaint on
grounds of lack of jurisdiction and prescription. On appeal, the Court of
Appeals reversed and set aside the lower court's order of dismissal
and remanded the cases to the RTC for further proceedings. Hence,
this petition.

ISSUE:
Whether there is reasonable causal connection between the claim
asserted and the employer-employee relations, hence the case is
within the jurisdiction of our labor courts.

RULING:
NO. The demarcation line between the jurisdiction of regular
courts and labor courts over cases involving workers and their
employers has always been the subject of dispute. We have
recognized that not all claims involving such groups of litigants can be
resolved solely by our labor courts. However, we have also
admonished that the present trend is to refer worker-employer
controversies to labor courts, unless unmistakably provided by the law
to be otherwise. Because of this trend, jurisprudence has developed
the "reasonable causal connection rule." Under this rule, if there is a
reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of
our labor courts. In the absence of such nexus, it is the regular courts
that have jurisdiction.

The jurisdiction of labor courts is provided under Article 217 of the

Labor Code, to wit:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a)

Except as otherwise provided under this Code the Labor Arbiter shall
 Page 187

have original and exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes,
the following cases involving all workers, whether agricultural or non-
agricultural:

XXX

4. Claims for actual, moral, exemplary and other forms of damages

arising from employer-employee relations;

XXX

With regard to claims for damages under paragraph 4 of the above

article, this Court has observed that:

Jurisprudence has evolved the rule that claims for damages

under paragraph 4 of Article 217, to be cognizable by the Labor
Arbiter, must have a reasonable causal connection with any of the
claims provided for in that article. Only if there is such a connection
with the other claims can the claim for damages be considered as
arising from employer-employee relations.

In the present case, while respondents insist that their action is

for the declaration of nullity of their "contract of termination," what is
inescapable is the fact that it is, in reality, an action for damages
emanating from employer-employee relations. First, their claim for
damages is grounded on their having been deceived into severing
their employment due to SMC's concocted financial distress and
fraudulent retrenchment program — a clear case of illegal dismissal.
Second, a comparison of respondents' complaint for the declaration
of nullity of the retrenchment program before the labor arbiter and the
complaint for the declaration of nullity of their "contract of termination"
before the RTC reveals that the allegations and prayer of the former
are almost identical with those of the latter except that the prayer for
reinstatement was no longer included and the claim for backwages
and other benefits was replaced with a claim for actual damages.
These are telltale signs that respondents' claim for damages is
intertwined with their having been separated from their employment
without just cause and, consequently, has a reasonable causal
connection with their employer-employee relations with SMC.
Accordingly, it cannot be denied that respondents' claim falls under
the jurisdiction of the labor arbiter as provided in paragraph 4 of
Article 217.
 Page 188

Case Digests by: PABLO, JEDIA JANE M.

KAWACHI v. DEL QUERO

G.R. No. 163768. March 27, 2007.
Tinga, J.

DOCTRINE:
REASONABLE CAUSAL CONNECTION RULE

Where the damages claimed for were based on tort, malicious

prosecution, or breach of contract, as when the claimant seeks to
recover a debt from a former employee or seeks liquidated damages
in the enforcement of a prior employment contract, the jurisdiction of
regular courts was upheld. The scenario that obtains in this case is
obviously different. The allegations in private respondent’s complaint
unmistakably relate to the manner of her alleged illegal dismissal.

FACTS:
Private respondent worked as a clerk of a pawnshop owned by
petitioners. PR alleged that petitioner Julius Kawachi scolded her in
front of many people about the way she treated the customers of the
pawnshop and afterwards terminated private respondent’s
employment without affording her due process. She then filed an
action for damages against petitioners Julius Kawachi and Gayle
Kawachi before the MeTC of Quezon City. Petitioners argue that it is
the NLRC which has jurisdiction over the dispute.

ISSUE:
Whether or not NLRC has jurisdiction over the action for
damages.

RULING:
Yes, complaint arose out of Employer-Employee Relationship,
therefore jurisdiction is before the labor tribunals.

The jurisdictional controversy of the sort presented in this case

has long been settled by this Court.

Article 217(a) of the Labor Code, as amended, clearly bestows

upon the Labor Arbiter original and exclusive jurisdiction over claims
for damages arising from employer-employee relations — in other
words, the Labor Arbiter has jurisdiction to award not only the reliefs
provided by labor laws, but also damages governed by the Civil
Code.
 Page 189

In the instant case, the allegations in private respondent's

complaint for damages show that her injury was the offshoot of
petitioners' immediate harsh reaction as her administrative superiors
to the supposedly sloppy manner by which she had discharged her
duties. Petitioners' reaction culminated in private respondent's
dismissal from work in the very same incident. The incident on 10
August 2002 alleged in the complaint for damages was similarly
narrated in private respondent's Affidavit-Complaint supporting her
action for illegal dismissal before the NLRC. Clearly, the alleged
injury is directly related to the employer-employee relations of the
parties.

Where the employer-employee relationship is merely incidental

and the cause of action proceeds from a different source of
obligation, the Court has not hesitated to uphold the jurisdiction of the
regular courts. Where the damages claimed for were based on tort,
malicious prosecution, or breach of contract, as when the claimant
seeks to recover a debt from a former employee or seeks liquidated
damages in the enforcement of a prior employment contract, the
jurisdiction of regular courts was upheld. The scenario that obtains in
this case is obviously different. The allegations in private
respondent's complaint unmistakably relate to the manner of her
alleged illegal dismissal.

In the instant case, the NLRC has jurisdiction over private

respondent's complaint for illegal dismissal and damages arising
therefrom. She cannot be allowed to file a separate or independent
civil action for damages where the alleged injury has a reasonable
connection to her termination from employment. Consequently, the
action for damages filed before the MeTC must be dismissed.
 Page 190

Case Digests by: PABLO, JEDIA JANE M.

EVIOTA v. COURT OF APPEALS

G.R. No. 152121. July 29, 2003
Callejo, Sr., J.

DOCTRINE:
REASONABLE CAUSAL CONNECTION RULE

Actions between employees and employer where the employer-

employee is merely incidental and the cause of action precedes from
a different source of obligation is within the exclusive jurisdiction of the
regular court.
FACTS:
Petitioner and respondent bank entered into a contract of
employment whereby the latter employed the former as Compensation
and Benefits Manager. However, the petitioner, without complying with
the requisite 30-day notice, resigned from the respondent bank barely
a month after assuming his office and joined his former employer.
Hence, respondent bank filed an action for damages against the
petitioner before the Regional Trial Court of Makati City. The petitioner
sought to dismiss the complaint by reason of lack of jurisdiction. He
alleged that the respondent's claim falls within the exclusive jurisdiction
of the Labor Arbiter. However, both the trial court and the Court of
Appeals upheld the jurisdiction of the trial court. His motion for
reconsideration having been denied, the petitioner filed the instant
petition

ISSUE:
Whether or not the claim for damages arose out of Employer-
Employee Relationship and should be under the jurisdiction of the
Labor Arbiter.

RULING:
No. Not every controversy or money claim by an employee against
the employer or vice-versa is within the exclusive jurisdiction of the
labor arbiter. A money claim by a worker against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter only if there
is a "reasonable causal connection" between the claim asserted and
employee-employer relation. Absent such a link, the complaint will be
cognizable by the regular courts of justice.

In this case, the private respondent’s first cause of action for

damages is anchored on the petitioner’s employment of deceit and of
making the private respondent believe that he would fulfill his obligation
 Page 191

under the employment contract with assiduousness and earnestness.

The petitioner volte face when, without the requisite thirty-day notice
under the contract and the Labor Code of the Philippines, as amended,
he abandoned his office and rejoined his former employer; thus, forcing
the private respondent to hire a replacement. The private respondent
was left in a lurch, and its corporate plans and program in jeopardy and
disarray. Moreover, the petitioner took off with the private respondent’s
computer diskette, papers and documents containing confidential
information on employee compensation and other bank matters. On its
second cause of action, the petitioner simply walked away from his
employment with the private respondent sans any written notice, to the
prejudice of the private respondent, its banking operations and the
conduct of its business. Anent its third cause of action, the petitioner
made false and derogatory statements that the private respondent
reneged on its obligations under their contract of employment; thus,
depicting the private respondent as unworthy of trust.

It is evident that the causes of action of the private respondent

against the petitioner do not involve the provisions of the Labor Code
of the Philippines and other labor laws but the New Civil Code. Thus,
the said causes of action are intrinsically civil. There is no causal
relationship between the causes of action of the private respondent’s
causes of action against the petitioner and their employer-employee
relationship. The fact that the private respondent was the erstwhile
employer of the petitioner under an existing employment contract
before the latter abandoned his employment is merely incidental. In
fact, the petitioner had already been replaced by the private
respondent before the action was filed against the petitioner.
 Page 192

Case Digests by: PABLO, JEDIA JANE M.

INDOPHIL TEXTILE MILLS v. ADVIENTO

G.R. No. 171212. August 4, 2014.
Peralta, C. J.

DOCTRINE:
REASONABLE CAUSAL CONNECTION RULE

It should be stressed that respondent's claim for damages is

specifically grounded on petitioner's gross negligence to provide a safe,
healthy and workable environment for its employees — a case of
quasi-delict. (jurisdiction rests on regular courts)

FACTS:
Petitioner is a domestic corporation engaged in the business of
manufacturing thread for weaving. Petitioner hired respondent as Civil
Engineer to maintain its facilities in Marilao, Bulacan.

In 2002, respondent consulted a physician due to recurring

weakness and dizziness. Few days later, he was diagnosed with
Chronic Poly Sinusitis, and thereafter, with moderate, severe and
persistent Allergic Rhinitis. Accordingly, respondent was advised by his
doctor to totally avoid house dust mite and textile dust as it will
transmute into health problems.

Distressed, respondent filed a against petitioner with the NLRC for

alleged illegal dismissal. Subsequently, respondent filed another
Complaint with the RTC alleging that he contracted such occupational
disease by reason of the gross negligence of petitioner to provide him
with a safe, healthy and workable environment.

In his Complaint, respondent alleged that as part of his job

description, he conducts regular maintenance check on petitioner's
facilities including its dye house area, which is very hot and emits foul
chemical odor with no adequate safety measures introduced by
petitioner. According to respondent, the air washer dampers and all
roof exhaust vests are blown into open air, carrying dust thereto.
Concerned, respondent recommended to management to place roof
insulation to minimize, if not, eradicate the health hazards attendant in
the work place. However, said recommendation was turned down by
management due to high cost.
 Page 193

Respondent further suggested to petitioner's management that the

engineering office be relocated because of its dent prone location,
such that even if the door of the office is sealed, accumulated dust
creeps in outside the office. This was further aggravated by the
installation of new filters fronting the office. However, no action was
taken by management. Petitioner on the other hand, filed a Motion to
Dismiss alleging that the dispute is under the jurisdiction of the Labor
Arbiter pursuant to Article 217 of the Labor Code.

ISSUE:
Whether or not there exists a reasonable causal connection
between respondent’s claim and his employment.

RULING:
No. Jurisprudence has evolved the rule that claims for damages
under Article 217 (a) (4) of the Labor Code, to be cognizable by the LA,
must have a reasonable causal connection with any of the claims
provided for in that article. Only if there is such a connection with the
other claims can a claim for damages be considered as arising from
employer-employee relations.

In the case at bench, we find that such connection is nil.

True, the maintenance of a safe and healthy workplace is

ordinarily a subject of labor cases. More, the acts complained of
appear to constitute matters involving employee-employer relations
since respondent used to be the Civil Engineer of petitioner. However,
it should be stressed that respondent's claim for damages is
specifically grounded on petitioner's gross negligence to provide a safe,
healthy and workable environment for its employees — a case of
quasi-delict . This is easily ascertained from a plain and cursory
reading of the Complaint, which enumerates the acts and/or omissions
of petitioner relative to the conditions in the workplace.

In the case at bar, respondent alleges that due to the continued

and prolonged exposure to textile dust seriously inimical to his health,
he suffered work-contracted disease which is now irreversible and
incurable, and deprived him of job opportunities. Clearly, injury and
damages were allegedly suffered by respondent, an element of quasi-
delict. Secondly, the previous contract of employment between
petitioner and respondent cannot be used to counter the element of
"no pre-existing contractual relation" since petitioner's alleged gross
negligence in maintaining a hazardous work environment cannot be
considered a mere breach of such contract of employment, but falls
squarely within the elements of quasi-delict under Article 2176 of the
Civil Code since the negligence is direct, substantive and independent.
 Page 194

It also bears stressing that respondent is not praying for any relief
under the Labor Code of the Philippines. He neither claims for
reinstatement nor backwages or separation pay resulting from an
illegal termination. The cause of action herein pertains to the
consequence of petitioner's omission which led to a work-related
disease suffered by respondent, causing harm or damage to his
person. Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts.

Where the resolution of the dispute requires expertise, not in labor

management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the general
civil law, such claim falls outside the area of competence of expertise
ordinarily ascribed to the LA and the NLRC.
 Page 195

Case Digests by: PABLO, JEDIA JANE M.

RAMIL v. STONELEAF INC.

G.R. No. 222416. June 17, 2020.
J.C. Reyes, Jr., J.

DOCTRINE:
MANAGERIAL EMPLOYEE

Managerial employees" refer to those whose primary duty

consists of the management of the establishment in which they are
employed or of a department or subdivision thereof, and to other
officers or members of the managerial staff.

Fiduciary rank-and-file employees are entitled to labor

standards benefits under the Labor Code of the Philippines.

FACTS:
Petitioner Fiamette A. Ramil was hired as spa supervisor and
massage therapist at respondent’s establishment, Stoneleaf Spa and
Wellness Center. She was paid a monthly salary of P10,000 and P100
per massage service rendered.

On a particular day, a regular client came in for massage service.

However, the service was not recorded by Ramil in the computer as
required by company procedure. This was reported by other
employees to respondent De Guzman Stoneleaf President. The latter
investigated the matter and discovered Ramil's dishonest act. When
Ramil was confronted, she denied the allegation against her. Stoneleaf
terminated Ramil's employment due to serious misconduct, betrayal of
trust, and loss of confidence.

Ramil filed a complaint for illegal dismissal. The LA ruled that

Ramil was dismissed for a valid cause, that is, loss of trust and
confidence for her dishonest act. Stoneleaf appealed to the NLRC,
which affirmed the LA's Decision. Also, it found that Ramil is a rank-
and-file employee, and not a managerial employee/staff, thus, she was
entitled to the labor standards benefits awarded by the LA. The CA
resolved that Ramil was a supervisory/managerial employee.
Consequently, she was not entitled to 13th month pay, holiday pay,
and service incentive leave pay.
 Page 196

ISSUE:
Whether or not Ramil is a managerial employee.

RULING:
No. Under the Labor Code, rank-and-file employees are entitled to
service incentive leave pay, holiday pay, and pro-rated 13th month, but
not managerial employees.

In determining whether Ramil is a managerial employee/staff, her

actual work performed, and not her job title, must be considered. The
records show that Ramil does not have the prerogative to lay down
management policies and to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees or effectively recommend
such managerial actions. The scope of her assignment pertains to the
daily operation of the spa by making sure that the business runs
smoothly. However, her tasks do not include the regular exercise of
discretion. Her authority is limited to the execution of company
procedures and policies. She has plenty of administrative work, but
none of it involves the use of independent judgment. Her duties are
also subject to De Guzman's approval.

The Court concurs with the NLRC’s conclusion that Ramil is not a
managerial employee, but a rank-and-file employee. Specifically, she
is a fiduciary rank-and-file employee. Wesleyan University Phils. v.
Reyes defines a fiduciary rank-and-file employee as one who in the
normal and routine exercise of his/her functions regularly handle
significant amounts of money or property. Cashiers, auditors, and
property custodians are some of the employees in the second class.
 Page 197

Case Digests by: PABLO, JEDIA JANE M.

AUTOBUS TRANSPORT SYSTEM v. BAUTISTA

G.R. No. 156367. May 16, 2005.
Chico-Nazario, J.

DOCTRINE:
SERVICE INCENTIVE LEAVE

Service Incentive Leave shall not apply to employees classified

as field personnel. The phrase other employees whose performance
is unsupervised by the employer must not be understood as a
separate classification of employees to which service incentive leave
shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor Code
as those whose actual hours of work in the field cannot be
determined with reasonable certainty.

FACTS:
Respondent Antonio Bautista has been employed by petitioner
Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with
travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via
Manila and Manila-Tabuk via Baguio. Respondent was paid on
commission basis, seven percent (7%) of the total gross income per
travel, on a twice a month basis.

While respondent was driving Autobus No. 114 along Sta. Fe,
Nueva Vizcaya, the bus he was driving accidentally bumped the rear
portion of Autobus No. 124, as the latter vehicle suddenly stopped at
a sharp curve without giving any warning.

Respondent averred that the accident happened because he

was compelled by the management to go back to Roxas, Isabela,
although he had not slept for almost twenty-four (24) hours, as he
had just arrived in Manila from Roxas, Isabela. Respondent further
alleged that he was not allowed to work until he fully paid the amount
of P75,551.50, representing thirty percent (30%) of the cost of repair
of the damaged buses and that despite respondents pleas for
reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination.

Respondent instituted a Complaint for Illegal Dismissal with

Money Claims for nonpayment of 13th month pay and service
 Page 198

incentive leave pay against Autobus. Petitioner, on the other hand,

maintained that respondents 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.

ISSUE:
Whether or not the respondent is entitled to service incentive
leave.

RULING:
Yes. The grant of service incentive leave has been delimited by
the Implementing Rules and Regulations of the Labor Code to apply
only to those employees not explicitly excluded by Section 1 of Rule
V. According to the Implementing Rules, Service Incentive Leave
shall not apply to employees classified as field personnel. The phrase
other employees whose performance is unsupervised by the
employer must not be understood as a separate classification of
employees to which service incentive leave shall not be granted.
Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those whose
actual hours of work in the field cannot be determined with
reasonable certainty.

The same is true with respect to the phrase "those who are
engaged on task or contract basis, purely commission basis." Said
phrase should be related with "field personnel," applying the rule on
ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow. Hence, employees
engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service
incentive leave, unless, they fall under the classification of field
personnel.

As observed by the Labor Arbiter and concurred in by the Court

of Appeals: It is of judicial notice that along the routes that are plied
by these bus companies, there are its inspectors assigned at
strategic places who board the bus and inspect the passengers, the
punched tickets, and the conductors reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is
regularly checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as reported by
the driver and/or conductor.
 Page 199

They too, must be at specific place as [sic] specified time, as

they generally observe prompt departure and arrival from their point
of origin to their point of destination. In each and every depot, there is
always the Dispatcher whose function is precisely to see to it that the
bus and its crew leave the premises at specific times and arrive at the
estimated proper time. These, are present in the case at bar. The
driver, the complainant herein, was therefore under constant
supervision while in the performance of this work. He cannot be
considered a field personnel. Therefore, as correctly concluded by
the appellate court, respondent is not a field personnel but a regular
employee who performs tasks usually necessary and desirable to the
usual trade of petitioners business. Accordingly, respondent is
entitled to the grant of service incentive leave.

Therefore, as correctly concluded by the appellate court,

respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of
petitioner's business. Accordingly, respondent is entitled to the grant
of service incentive leave.
 Page 200

Case Digest by: PABLO, JEDIA JANE M.

SONGCO et. al. v. NLRC

G.R. No. 50999-51000. March 23, 1990.
MEDIALDEA, J.

DOCTRINE:
WAGES

In computing the basis for separation pay of a dismissed

employee, allowances and earned commissions should be included in
the monthly salary.

FACTS:
Private respondent F.E. Zuellig (M), Inc., (Zuellig) filed with the
Department of Labor an application seeking clearance to terminate
the services of petitioners Jose Songco, Romeo Cipres, and Amancio
Manuel (hereinafter referred to as 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. However, at the last hearing of the case, petitioners agreed
that the sole issue to be resolved is the basis of the separation pay
due to them. Petitioners, who were in the sales force of Zuellig
received monthly salaries of at least P40,000. In addition, they
received commissions for every sale they made. 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.

ISSUE:
1) Whether the allowances should be included in the monthly
salary of petitioners for the purpose of computation of their
separation pay.
2) Whether the sales commissions should be included in the
monthly salary of petitioners for the purpose of computation of
their separation pay.

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,
 Page 201

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. In computation thereof, what should be taken into
account is the average commissions earned during their last
year of employment. 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 work done or to be done, or for services
rendered or to be rendered, and includes the fair and
reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished
by the employer to the employee. ‘Fair and reasonable value’
shall not include 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 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 type of remuneration for services rendered
demonstrate clearly that commissions are part of petitioners’
wage or salary.
 Page 202

Case Digest by: PABLO, JEDIA JANE M.

MILLARES v. NLRC
G.R. No. 122827. March 29, 1999.
Bellosillo, J.

DOCTRINE:
FACILITIES AND SUPPLEMENTS

In determining whether a privilege is a facility, the criterion is not

so much its kind but its purpose. 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.

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/Manager’s 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
company’s 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
 Page 203

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.

ISSUE:
Whether or not the subject allowances form part of petitioners’
“wages” for the computation of separation pay?

RULING:
No. The allowances are not to be included in the computation of
wage for purposes of paying separation pay. 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. 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/Manager’s allowance for
respondent PICOP’s 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.
 Page 204

Case Digests by: PABLO, JEDIA JANE M.

SLL INTERNATIONAL CABLES SPECIALIST ET. AL v.

NLRC
G.R. No. 172161. March 2, 2011.
Mendoza, J.

DOCTRINE:
FACILITIES AND SUPPLEMENTS

The benefit or privilege given to the employee which constitutes

an extra remuneration above and over his basic or ordinary earning or
wage is supplement; and when said benefit or privilege is part of the
laborers' basic wages, it is a facility.
FACTS:
Private respondents Lopez, Canete and Zuniga were hired by
petitioner Lagon as apprentice or trainee cable/lineman. The three
were paid the full minimum wage and other benefits but since they
were only trainees, they did not report for work regularly but came in
as substitutes to the regular workers or in undertakings that needed
extra workers to expedite completion of work. Their employment is
terminated upon completion of each project.

For 4 separate projects from May 1997-December 1999, they

received the wage of P145.00, the minimum prescribed daily wage for
Region VII when they first started work in March 1997.

In January to February 2000, the 3 received the wage of P165.00. The

existing rate at that time was P213.00.

In March 2000, private respondents filed a complaint for illegal

dismissal, non-payment of wages, holiday pay, 13th month pay for
1997 and 1998 and SIL pay as well as damages and Attorneys fees.

In their answers, petitioners alleged that the food allowance of

P63.00 per day as well as private respondents allowance for lodging
house, transportation, electricity, water and snacks allowance should
be added to their basic pay. With these, petitioners claimed that private
respondents received higher wage rate than that prescribed in Rizal
and Manila. They argued that the rulings in Agabon v. NLRC and Glaxo
Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng Wellcome-
DFA should be applied by analogy, in the sense that the lack of written
acceptance of the employees of the facilities enjoyed by them should
not mean that the value of the facilities could not be included in the
computation of the private respondents’ “wages.”
 Page 205

ISSUE:
Whether or not the said value of facilities that Private
Respondents received should be included in the computation of
“wages” received by them.

RULING:
No. Section 3, Rule VII of the Rules to Implement the Labor Code
specifically enumerates those who are not covered by the payment of
minimum wage. Project employees are not among them. Furthermore,
Section 1 of DOLE Memorandum Circular No. 2 provides that an
employer may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the employer may
deduct from the wages of the employees not more than 70% of the
value of the meals and snacks enjoyed by the latter, provided that such
deduction is with the written authorization of the employees concerned.

Before the value of facilities can be deducted from the employees’

wages, the following requisites must all be present: first, proof must
be shown that such facilities are customarily furnished by the trade;
second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee; and finally, Facilities must be
charged at reasonable value. Mere availment is not sufficient to allow
deductions from employees' wages.

These requirements, however, have not been met in this case.

SLL failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employee's salaries.
It also failed to provide proof of the employees' written authorization,
much less show how they arrived at their valuations. At any rate, it is
not even clear whether private respondents actually enjoyed said
facilities.

The food and lodging, or the electricity and water allegedly

consumed by private respondents in this case were not facilities but
supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge
Co. the two terms were distinguished from one another in this wise:

"Supplements," therefore, constitute extra remuneration or special

privileges or benefits given to or received by the laborers over and
above their ordinary earnings or wages. "Facilities," on the other hand,
are items of expense
 Page 206

necessary for the laborer's and his family's existence and

subsistence so that by express provision of law they form part of the
wage and when furnished by the employer are deductible therefrom,
since if they are not so furnished, the laborer would spend and pay for
them just the same.

In short, the benefit or privilege given to the employee which

constitutes an extra remuneration above and over his basic or ordinary
earning or wage is supplement; and when said benefit or privilege is
part of the laborers' basic wages, it is a facility.
 Page 207

Case Digests by: PABLO, JEDIA JANE M.

CENTRAL AZUCARERA DE TARLAC v. CENTRAL

AZUCARERA DE TARLAC LABOR UNION-NLU
G.R. No. 188949. July 26, 2010.
Nachura, J.

DOCTRINE:
13th month pay

The term "basic salary" of an employee for the purpose of

computing the 13th-month 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:
Petitioner is a domestic corporation engaged in the business of
sugar manufacturing, while respondent is a legitimate labor
organization which serves as the exclusive bargaining representative
of petitioner'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, petitioner granted its

employees the mandatory thirteenth (13th)-month pay since 1975.
The formula used by petitioner in computing the 13th-month pay was:
Total Basic Annual Salary divided by twelve (12). Included in
petitioner's computation of the Total Basic Annual Salary were the
following: basic monthly salary; first eight (8) hours overtime pay on
Sunday and legal/special holiday; night premium pay; and vacation
and sick leaves for each year. Throughout the years, petitioner used
this computation until 2006.

Respondent staged a strike. During the pendency of the strike,

petitioner declared a temporary cessation of operations. In December
2005, all the striking union members were allowed to return to work.
Subsequently, petitioner declared another temporary cessation of
operations for the months of April and May 2006. The suspension of
 Page 208

operation was lifted on June 2006, but the rank-and-file employees

were allowed to report for work on a fifteen (15) day-per-month
rotation basis that lasted until September 2006. In December 2006,
petitioner gave the employees their 13th-month pay based on the
employee's total earnings during the year divided by 12.

Respondent objected to this computation. It averred that

petitioner did not adhere to the usual computation of the 13th-month
pay. It claimed that the divisor should have been 8 instead of 12,
because the employees worked for only 8 months in 2006. It likewise
asserted that petitioner did not have the company practice of giving
its employees the guaranteed amount equivalent to their one month
pay, in instances where the computed 13th-month pay was less than
their basic monthly pay.

Petitioner and respondent tried to thresh out their differences in

accordance with the grievance procedure as provided in their
collective bargaining agreement. During the grievance meeting, the
representative of petitioner explained that the change in the
computation of the 13th-month pay was intended to rectify an error in
the computation, particularly the concept of basic pay which should
have included only the basic monthly pay of the employees.

For failure of the parties to arrive at a settlement, respondent

applied for preventive mediation before the National Conciliation and
Mediation Board. However, parties still failed to settle the dispute.
Respondent filed a complaint against petitioner for money claims
based on the alleged diminution of benefits/erroneous computation of
13th-month pay before the the NLRC.

ISSUE:
Whether or not the salary-related benefits should be included in
the computation of 13th month pay.

RULING:
Yes. Under this Revised Guidelines, it was specifically stated that
the minimum 13th-month pay required by law shall not be less than
one-twelfth (1/12) of the total basic salary earned by an employee
within a calendar year.

Furthermore, the term "basic salary" of an employee for the

purpose of computing the 13th-month 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
 Page 209

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.

Based on the foregoing, 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 13th-month pay of
employees.

The Non-Diminution Rule, mandates that benefits given to

employees cannot be taken back or reduced unilaterally by the
employer because the benefit has become part of the employment
contract, written or unwritten. The rule against diminution of benefits
applies if it is shown that the grant of the benefit is based on an
express policy or has ripened into a practice over a long period of
time and that the practice is consistent and deliberate. Nevertheless,
the rule will not apply if the practice is due to error in the construction
or application of a doubtful or difficult question of law. But even in
cases of error, it should be shown that the correction is done soon
after discovery of the error.

Petitioner 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
petitioner in changing the formula at this time cannot be sanctioned,
as it indicates a badge of bad faith.
 Page 210

Case Digest by: JAIME NIKOLAI K. PAGGAO

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES

UNION v. AMERICAN WIRE AND CABLE CO., INC.
GR No. 155059. April 29, 2005
CHICO-NAZARIO J.

DOCTRINE:
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.

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 employee’s basic pay

for work rendered during Holy Monday, HolyTuesday, Holy
Wednesday, Dec. 23, 26, 27, 28 and 29, c. Christmas Party, d.
Promotional Increase.

All the said benefits are not 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.
 Page 211

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.

RULING:
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
employer’s 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.
 Page 212

Case Digest by: JAIME NIKOLAI K. PAGGAO

TSPIC CORPORATION v. TSPIC EMPLOYEES UNION

GR No. 163419. February 13, 2008
VELASCO, JR., J.

DOCTRINE:
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.

FACTS:
TSPIC is engaged in the business of designing, manufacturing,
and marketing integrated circuits to serve the communication,
automotive, data processing, and aerospace industries. Respondent
TSPIC Employees Union (FFW) (Union), on the other hand, is the
registered bargaining agent of the rank-and-file employees of TSPIC.

In 1999, TSPIC and the Union entered into a Collective Bargaining

Agreement (CBA) for the years 2000 to 2004. The CBA included a
provision on yearly salary increases starting January 2000 until
January 2002. Among the provisions is provided a “Crediting
Provision” stating:

The wage salary increase of the first year of this Agreement

shall be over and above the wage/salary increase, including the
wage distortion adjustment, granted by the COMPANY on
November 1, 1999 as per Wage Order No. NCR-07.

The wage/salary increases for the years 2001 and 2002 shall
be deemed inclusive of the mandated minimum wage increases
under future Wage Orders, that may be issued after Wage
Order No. NCR-07, and shall be considered as correction of
any wage distortion that may have been brought about by the
said future Wage Orders

Over the course of the years starting 2000, all rank and file
employees received their 10% increase in accordance with the CBA,
and 17 employees received their regularization bonuses, as agreed in
the CBA. A wage order was released increasing the minimum wage
from 223.50 to 250php. However, in 2001, 24 employees, herein
 Page 213

respondents, received notice that their salaries would be deducted in

the course of 12 months because they had been overpaid by reason
of a computation error, and the deduction was on the basis of the
Crediting Provision which placed the CBA over the wage orders. The
Union refused the contention of TSPIC arguing that the same
constituted a diminution of beneti and the case was referred to their
agreed grievance machinery but to no avail. The case was referred to
voluntary arbitration.

ISSUE:
Whether there is a diminution of benefits.

RULING:
No. A CBA is law between the parties, and given the crediting
provision which specifically provided the crediting of the wage orders,
the parties, or more particularly the employees are deemed to have
waived any wage order in favor of the benefits under the CBA. Given
this, there could be no diminution of benefits in this case given that
respondents indeed have been receiving benefits to which they were
not entitled.

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 dificult question
of law; and (4) the diminution or discontinuance is done unilaterally by
the employer.

The benefits received only having been received by reason of error

timely discovered, it is only proper that the same be returned to
TSPIC.
 Page 214

Case Digest by: JAIME NIKOLAI K. PAGGAO

LEPANTO CERAMICS, INC., v. LEPANTO CERAMICS

EMPLOYEES ASSOCIATION
GR No. 180866. March 2, 2010
PEREZ, J.

DOCTRINE:
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.

All given, business losses are a feeble ground for petitioner to

repudiate its obligation under the CBA. The rule is settled that any
benefit and supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued or eliminated by the employer. 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:
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.
 Page 215

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 company’s 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 respondent is entitled to the Christmas bonus.

RULING:
Yes. We uphold the rulings of the voluntary arbitrator and of the
Court of Appeals. Findings of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdictions, are
generally accorded not only respect but even finality, and bind us
when supported by substantial evidence. This is the rule particularly
where the findings of both the arbitrator and the Court of Appeals
coincide. As a general proposition, an arbitrator is confined to the
interpretation and application of the CBA. He does not sit to dispense
his own brand of industrial justice: his award is legitimate only in so
far as it draws its essence from the CBA. That was done in this case.

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. It
is a familiar and fundamental doctrine in labor law that the CBA is the
law between the parties and they are obliged to comply with its
provisions. This principle stands strong and true in the case at bar.

All given, business losses are a feeble ground for petitioner to

repudiate its obligation under the CBA. The rule is settled that any
benefit and supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued or eliminated by the employer. 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.

Hence, absent any proof that petitioners consent was vitiated by

fraud, mistake or duress, it is presumed that it entered into the CBA
voluntarily and had full knowledge of the contents thereof and was
aware of its commitments under the contract.
 Page 216

Case Digest by: JAIME NIKOLAI K. PAGGAO

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., v.

EASTERN TELECOMS EMPLOYEES UNION
GR No. 185665. February 8, 2012
MENDOZA, J.

DOCTRINES:
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.

A bonus may be granted on equitable consideration when the

giving of such bonus has been the company’s long and regular
practice.

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:
Eastern Telecommunications Phils., Inc. (ETPI) is a corporation
engaged in the business of providing telecommunications facilities,
particularly leasing international date lines or circuits, regular
landlines, internet and data services, employing approximately 400
employees.

Eastern Telecoms Employees Union (ETEU) is the certified exclusive

bargaining agent of the company's rank and file employees with a
strong following of 147 regular members. It has an existing collective
bargaining agreement with the company to expire in the year 2004
with a Side Agreement signed on September 3, 2001.

In essence, the labor dispute was a spin-off of the company's plan to

defer payment of the 2003 14th,15th and 16th month bonuses
sometime in April 2004. The company's main ground in postponing
the payment of bonuses is due to allege continuing deterioration of
 Page 217

company's financial position which started in the year 2000. However,

ETPI while postponing payment of bonuses sometime in April 2004,
such payment would also be subject to availability of funds.

Invoking the Side Agreement of the existing Collective Bargaining

Agreement for the period 2001-2004 between ETPI and ETEU which
stated as follows:

"4. Employment Related Bonuses. The Company confirms that

the 14th, 15th and 16th month bonuses (other than 13th month
pay) are granted."

ETPI then argues that even if it is contractually bound to distribute the

subject bonuses to ETEU members under the Side Agreements, its
current financial difficulties should have released it from the obligatory
force of said contract invoking Article 1267 of the Civil Code. Said
provision declares:

Article 1267. When the service has become so difficult as to be

manifestly beyond the contemplation of the parties, the obligor
may also be released therefrom, in whole or in part.

ISSUE:
Whether the Petitioner company can refuse in granting the
bonuses.

RULING:
The parties to the contract must be presumed to have assumed
the risks of unfavorable developments. It is, therefore, only in
absolutely exceptional changes of circumstances that equity
demands assistance for the debtor. In the case at bench, the Court
determines that ETPI's claimed depressed financial state will not
release it from the binding effect of the 2001-2004 CBA Side
Agreement.

ETPI appears to be well aware of its deteriorating financial condition

when it entered into the 2001-2004 CBA Side Agreement with ETEU
and obliged itself to pay bonuses to the members of ETEU.
Considering that ETPI had been continuously suffering huge losses
from 2000 to 2002, its business losses in the year 2003 were not
exactly unforeseen or unexpected. Consequently, it cannot be said
that the difficulty in complying with its obligation under the Side
Agreement was "manifestly beyond the contemplation of the parties."
 Page 218

The provision for the grant of bonuses reveals that the same provides
for the giving of 4th, 15th and 16th month bonuses without
qualification. The wording of the provision does not allow any other
interpretation.

There were no conditions specified in the CBA Side Agreements for

the grant of the benefits contrary to the claim of ETPI that the same is
justified only when there are profits earned by the company. The
records are also bereft of any showing that the ETPI made it clear
before or during the execution of the Side Agreements that the
bonuses shall be subject to any condition. Indeed, if ETPI and ETEU
intended that the subject bonuses would be dependent on the
company earnings, such intention should have been expressly
declared in the Side Agreements or the bonus provision should have
been deleted altogether.

Interestingly, ETPI never presented countervailing evidence to refute

ETEU's claim that the company has been continuously paying
bonuses since 1975 up to 2002 regardless of its financial state. Its
failure to controvert the allegation, when it had the opportunity and
resources to do so, works in favor of ETEU.

Time and again, it has been held that should doubts exist between
the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter.
 Page 219

Case Digest by: JAIME NIKOLAI K. PAGGAO

YUSHI KONDO, v. TOYOTA BOSHOKU (PHILS.) CORPORATION,

MAMORU MATSUNAGA, KAZUKI MIURA, AND JOSELITO
LEDESMA
G.R. No. 201396. September 11, 2019
JARDELEZA, J.

DOCTRINE:
Diminution of benefits arises when the following are present: (1)
the grant or benefit is founded on a policy or has ripened into a
practice over a long period of time; (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.
There is none where the existence of benefits via company practice
was not substantially proven.

FACTS:
Yushi Kondo (petitioner), a Japanese citizen, was hired by
respondent Toyota Boshoku Philippines Corporation (Toyota) as
Assistant General Manager for Marketing, Procurement and
Accounting. He was provided a service car and a local driver by
Toyota's President at the time, Fuhimiko Ito.

After working for 5 months, his performance rating was only slightly
above average. Petitioner was thereafter allegedly assigned the
oldest company car. He was also prevented from further using his
Caltex card for gasoline expenses, and instructed to pay for gas
expenses with his own money, subject to reimbursement. He was
also prevented from attending the meeting for the evaluation of
employees.

When respondent Mamoru Matsunaga (Matsunaga) took over as

President of Toyota, petitioner was transferred to the Production
Control, Technical Development and Special Project department as
Assistant Manager. Petitioner allegedly objected to the transfer and
admitted having no knowledge, skills, and experience in production
control and technical development. Nonetheless, petitioner assumed
his new post.

Then, petitioner was notified that his service car and driver will be
withdrawn. Since petitioner could not report for work, he considered
himself constructively dismissed. On the same day, he filed a
complaint with the NLRC for constructive dismissal, illegal diminution
of benefits, among others.
 Page 220

Respondents denied petitioner's allegations. Labor Arbiter Michaela

A. Lontoc (LA) issued a Decision holding that petitioner was
constructively dismissed. Respondents appealed to the NLRC which
reversed and set aside the LA Decision. Petitioner filed a motion for
reconsideration, but NLRC denied it. Hence, he filed a petition for
certiorari with the Court of Appeals (CA). The CA denied the petition.
Thus, he filed the present petition.

ISSUE:
Whether the CA erred in not finding grave abuse of discretion on
the part of the NLRC when it reversed the LA 's Decision and
dismissed petitioner's labor complaint.

RULING:
Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution in pay. What is essential is that there is a lack of
"voluntariness in the employee's separation from employment."
Petitioner claimed that he was forced to resign. Hence, it is
incumbent upon him to prove that his resignation was involuntary,
with clear, positive and convincing evidence. This he failed to do.

We agree with the NLRC that, the primary and immediate cause for
petitioner's claim of constructive dismissal is the withdrawal of his
assigned car and driver," which petitioner claimed as "essential
requisites of his continued employment. To place matters in
perspective, what petitioner essentially alleges is diminution of
benefits.

There is diminution of benefits when the following are present: (1) the
grant or benefit is founded on a policy or has ripened into a practice
over a long period of time; (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.

Here, the grant of service car and local driver to petitioner was based
neither on express policy or a written contract. It may also not be
considered company practice. In this case, petitioner failed to prove
that the car and driver benefits were also being enjoyed by other
employees who held positions equivalent to his position, or that the
benefits were given by the company itself with voluntary and
deliberate intent.
 Page 221

There is likewise no showing that petitioner's entitlement to the Caltex

card is based on an express policy, a written contract, or company
practice. He also failed to prove that the card was being enjoyed by
other employees similarly situated as him, as would indicate Toyota's
intention to give the benefit consistently and deliberately.

As regards the transfer of Department, petitioner did not raise any

objections to his transfer prior to the filing of the complaint, nor did he
amply demonstrate why he was unsuited for the new job. There was
no proof of any verbal or written opposition to the transfer.

It was not established that the petitioner was constructively

dismissed, much less that respondents acted in bad faith or in an
oppressive or malevolent manner.
 Page 222

Case Digest by: JAIME NIKOLAI K. PAGGAO

GSIS v. NLRC
G.R. No. 180045. November 17, 2010
NACHURA, J.

DOCTRINE:
JOINT AND SOLIDARY LIABILITY OF THE PRINCIPAL. In the
event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with the LC, 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.

FACTS:
Private respondents were employed as security guards by DNL
Security. By virtue of the service contract entered into by DNL
Security and petitioner GSIS on May 1978, private respondents were
assigned to petitioner’s Tacloban City office. In February 1993, DNL
Security informed respondents that its service contract with petitioner
was terminated. This notwithstanding, DNL Security instructed
respondents to continue reporting for work to petitioner. Respondents
worked as instructed until April 20, 1993, but without receiving their
wages; after which, they were terminated from employment. On June
15, 1995, respondents filed with the Labor Arbiter, a complaint
against DNL Security and petitioner for illegal dismissal, separation
pay, salary differentials, 13th month pay, and payment of unpaid
salary. Ruling of LA: The LA found that respondents were not illegally
terminated from employment because the employment of security
guards is dependent on the service contract between the security
agency and its client. However, considering that respondents had
been out of work for a long period, and consonant with the principle of
social justice, the LA awarded respondents with separation pay
equivalent to one (1) month salary for every year of service, to be
paid by DNL Security. The LA further granted respondents' claim of
salary differential, as they were paid wages below the minimum
wage, as well as 13th month pay. For these monetary awards,
petitioner was made solidarily liable with DNL Security, as the indirect
employer of respondents.

ISSUE:
Whether the GSIS is liable for payment of the respondents’
unpaid salary and other monetary benefits.

RULING:
 Page 223

Yes. The fact that there is no actual and direct employer-

employee relationship between petitioner and respondents does not
absolve the former from liability for the latter's monetary claims.
When petitioner contracted DNL Security's services, petitioner
became an indirect employer of respondents, pursuant to Article 107
of the Labor Code. After DNL Security failed to pay respondents the
correct wages and other monetary benefits, petitioner, as principal,
became jointly and severally liable, as provided in Articles 106 and
109 of the Labor Code. This statutory scheme is designed to give the
workers ample protection, consonant with labor and social justice
provisions of the 1987 Constitution. Petitioner's liability covers the
payment of respondents' salary differential and 13th month pay
during the time they worked for petitioner. In addition, petitioner is
solidarily liable with DNL Security for respondents' unpaid wages
from February 1993 until April 20, 1993. The principal is made liable
to its indirect employees because, after all, it can protect itself from
irresponsible contractors by withholding payment of such sums that
are due the employees and by paying the employees directly, or by
requiring a bond from the contractor or subcontractor for this purpose.
Petitioner's 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. Furthermore, the declared policy of the State in
Section 39 of the GSIS Charter granting GSIS an exemption from tax,
lien, attachment, levy, execution, and other legal processes should be
read together with the grant of power to the GSIS to invest its "excess
funds" under Section 36 of the same Act. Under Section 36, the GSIS
is granted the ancillary power to invest in business and other
ventures for the benefit of the employees, by using its excess funds
for investment purposes. In the exercise of such function and power,
the GSIS is allowed to assume a character similar to a private
corporation. Thus, it may sue and be sued, as also, explicitly granted
by its charter. To be sure, petitioner's charter should not be used to
evade its liabilities to its employees, even to its indirect employees,
as mandated by the Labor Code.
 Page 224

Case Digest by: JAIME NIKOLAI K. PAGGAO

ALIVIADO, et.al. v. PROCTOR AND GAMBLE

G.R. No. 160506. June 6, 2011
DEL CASTILLO, J.

DOCTRINE:
Labor laws expressly prohibit labor-only contracting. To prevent
its circumvention, the Labor Code establishes an employer-employee
relationship between the employer and the employees of the
labor-only contractor.

FACTS:
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 attorney’s 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 P&G is liable for the illegal dismissal of petitioners.

RULING:
Yes. Article 106 defines labor-only contracting, viz:

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.
 Page 225

On the same vein, Rule VIII-A, Book III of the Omnibus Rules
Implementing the Labor Code, as amended by Department Order No.
18-02, pertinently provides:

Section 5. Prohibition against labor-only contracting. Labor only

contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and ANY
of the following elements are present:

i)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

ii) [T]he contractor does not exercise the right to control over the
performance of the work of the contractual employee.

In our March 9, 2010 Decision, it was 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 us
to hold that it is a labor-only contractor.

The records also show that Promm-Gem supplied its complainant-

workers with the relevant materials, such as markers, tapes, liners
and cutters, necessary for them to perform their work. Promm-Gem
also issued uniforms to them. It is also relevant to mention that
Promm-Gem already considered the complainants working under it
as its regular, not merely contractual or project, employees. This
circumstance negates the existence of element (ii) as stated in
Section 5 of DOLE Department Order No. 18-02, which speaks of
contractual employees. This, furthermore, negates on the part of
Promm-Gem bad faith and intent to circumvent labor laws which
factors have often been tipping points that lead the Court to strike
down the employment practice or agreement concerned as contrary
to public policy, morals, good customs or public order.

Under the circumstances, Promm-Gem cannot be considered as a

labor-only contractor. We find that it is a legitimate independent
contractor. On the other hand, SAPS failed to show that its paid-in
capital of P31,250.00 is sufficient for the period required for it to
generate [the] needed revenue to sustain its operations
independently. Substantial capital refers to capitalization used in the
 Page 226

performance or completion of the job, work or service contracted out.

In the present case, SAPS failed to show substantial capital.
 Page 227

Case Digest by: JAIME NIKOLAI K. PAGGAO

MANDAUE GALLEON TRADE INC. v. ANDALES et.al.

G.R. No. 159668. March 7, 2008
AUSTRIA-MARTINEZ, J.

DOCTRINE:
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.

FACTS:
Petitioners Mandaue Galleon Trade, Inc. (MGTI) and
Gamallosons Traders, Inc.(GTI) are business entities engaged in
rattan furniture manufacturing for export. Respondent Vicente
Andales (Andales) filed a complaint with the Labor Arbiter against
both petitioners for illegal dismissal and non-payment of 13th month
pay and service incentive leave pay. His other co-workers numbering
260 filed a similar complaint against petitioner MGTI only. The
complainants alleged that MGTI hired them on various dates as
weavers, grinders, sanders and finishers; sometime in August 1998,
workers in the Finishing Department were told that they would be
transferred to a contractor and they were given Visitor Identification
Cards (IDs), while workers in the Weaving Department were told to
look for work elsewhere as the company had no work for them;
sometime in September 1998, workers in the Grinding Department
were not allowed to enter the company premises, while workers in the
Sanding Department were told that they could no longer work since
there was no work available; workers who were issued IDs were
allowed to go inside the premises; and they were dismissed without
notice and just cause.

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 affirmed
 Page 228

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 held that MGTI is liable to the respondents because the
alleged contractors are not independent contractors but labor-only
contractors.

ISSUE:
Whether MGIT is a labor-only contractor.

RULING:
Yes. 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 labor-only 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 main business. MGTI, the principal employer, is
solidarily liable with the labor-only 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.
 Page 229
Case Digest by: JAIME NIKOLAI K. PAGGAO

SPIC N’ SPAN SERVICES CORPORATION v. PAJE et.al.

G.R. No. 174084. August 25, 2010
BRION, J.

DOCTRINE:
REQUIREMENTS OF LEGITIMATE
CONTRACTING/SUBCONTRACTING. 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.

FACTS:
Swift Foods, Inc. (Swift) is a subsidiary of RFM Corporation that
manufactures and processes meat products and other food products.
SNSs business is to supply manpower services to its clients for a fee.
Swift and SNS have a contract to promote Swift products. Inocencio
Fernandez, Edelisa F. David, Thelma Guardian, Juliet C. Dingal, Fe
S. Bernardo, Lolita Gomez, Myra Amante, Miriam S. Catacutan,
Gloria O. Sumang, Gloria O. Paje, and Estrella Zapata
(complainants) worked as Deli/Promo Girls of Swift products in
various supermarkets in Tarlac and Pampanga. They were all
dismissed from their employment on February 28, 1998.They filed
two complaints for illegal dismissal against SNS and Swift before the
National Labor Relations Commission (NLRC) Regional Arbitration
Branch III, San Fernando, Pampanga, docketed as Case Nos. 03-
9131-98 and 07-9295-98. These cases were subsequently
consolidated.

After two unsuccessful conciliation hearings, the Labor Arbiter

ordered the parties to submit their position papers. Swift filed its
position paper; SNS did not. The complainants position papers were
signed by Florencio P. Peralta who was not a lawyer and who
claimed to be the complainants representative, although he never
showed any proof of his authority to represent them.

In their position papers, the complainants alleged that they were

employees of Swift and SNS, and their services were terminated
without cause and without due process. The termination came on the
day they received their notices; thus, they were denied the procedural
 Page 230

due process requirements of notice and hearing prior to their

termination of employment. Swift, in its position paper, 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 complainants were the employees of SNS, not of
Swift.

ISSUE:
Whether SNS is merely an agent of Swift.

RULING:
Yes, 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.
 Page 231

Case Digest by: JAIME NIKOLAI K. PAGGAO

ALASKA MILK CORPORATION, v. RUBEN P. PAEZ,

FLORENTINO M. COMBITE, JR., SONNY O. BATE, RYAN R.
MEDRANO, AND JOHN BRYAN S. OLIVER
G.R. No. 237277. November 27, 2019
A. REYES, JR., J.

DOCTRINE:
DOLE requires contractors to register themselves with the DOLE
Regional Office in which they operate, so as to monitor their
compliance with the law’s guiding principles. Failure to comply with
the registration requirement gives rise to a presumption that the
contractor is engaged in labor-only contracting.

Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor
Code, as amended by Department Order No. 18-02, pertinently
provides:

Section 5. Prohibition against labor-only contracting. Labor only

contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and ANY
of the following elements are present:

i)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

ii) [T]he contractor does not exercise the right to control over
the performance of the work of the contractual employee.

Unlike the registration requirement, which only serves to raise a

disputable presumption of job contracting; the possession of
substantial capital or investments is indispensable in proving a
contractor’s legitimacy. Apropos, D.O. No. 18-A provides a concrete
numerical threshold for determining substantial capital. Under Section
3(l) thereof, the capitalization requirement is met by corporations,
partnerships, and cooperatives that have at least P3,000,000 in paid-
up capital stocks/shares.
 Page 232

FACTS:
Respondents Ruben P. Paez, et al. worked as production
helpers at the Alaska’s San Pedro Laguna Milk Manufacturing Plant.
All of them were originally members of Asiapro until respondents
Bate, Combite and Oliver transferred to 5S Manpower Services (5S)
on June 26, 2013.

Through several Joint Operating Agreements, Asiapro and 5S

undertook to provide Alaska with personnel who would perform
“auxiliary functions” at the San Pedro Plant.

On different dates in 2013, the respondents were informed through

separate memoranda that their respective assignments at Alaska
were to be terminated later that year.

The respondents filed with the Labor Arbiter separate complaints for
illegal dismissal, regularization, and payment of money claims.

LA Ruling: No illegal dismissal. Asiapro and 5S had the capacity to

carry on an independent business, and that the cooperatives
exercised control over the respondents through coordinators
assigned at the premises of Alaska.

NLRC Ruling: Affirmed LA’s ruling.

CA Ruling: Respondents were illegally dismissed. Asiapro and 5S

were merely engaged in labor-only contracting. Therefore,
respondents were regular employees of Alaska, and thus were
illegally dismissed.

ISSUE:
Whether the respondents were illegally dismissed.

RULING:
Respondents Ruben P. Paez and Ryan R. Medrano, who were
members of the cooperative Asiapro, were not illegally dismissed,
while respondents Sonny O. Bate, Florentino M. Combite and John
Bryan S. Oliver, who were members of the cooperative 5S, were
illegally dismissed.

Asiapro is a legitimate job contractor. It carried on its own

independent business, has a substantial capital, provided services to
a noteworthy clientele, and exercised control over respondents
Medrano and Paez as shown by the following acts: 1. Asiapro
 Page 233

conducted training or seminars to enhance respondents Paez’s and

Medrano’s productivity, 2. Respondents Paez and Medrano met with
Asiapro representatives to discuss new client principal, 3. Asiapro’s
Project Coordinator was stationed at the Alaska plant to supervise the
manner and methods utilized by its worker members in fulfilling their
duties, 4. Asiapro’s control over the respondents was stipulated in the
Joint Operating Agreements.

In job contracting, the contractor carries out a business distinct and

independent from the principal’s and undertakes the work or service
on its own account, using its own manner and methods in doing so.
The contractor’s employees are free from the control of the principal
employer, save only as to the result thereof. Therefore, Paez and
Medrano were not regular employees of Alaska, and thus were not
illegally dismissed.

On the other hand, 5S was only engaged in labor-only contracting.

Art. 106 of the Labor Code, defines labor-only contracting as an
arrangement where a person without substantial capital or investment
in the form of tools, equipment, machinery, or work premises, among
other things, supplies workers to an employer, and such workers
perform activities directly related to the principal business of the
latter. In agreements of this nature, the contractor merely acts as an
agent in recruiting workers on account of the principal with the intent
to circumvent the constitutional and statutory rights of employees.
There is no question that the practice is inimical to the national
interest and that it runs contrary to public policy. As such, it is
proscribed by law.

5S only has 5 regular employees, does not own any tools, machinery,
or equipment that its worker-members can use in the performance
their duties, has no independent business and has no substantial
capital. While the labor tribunals believed that 5S had adequate
amount of assets, it was never established that the contractor
furnished its worker members with tools or equipment necessary to
carry out the services of a production helper at Alaska’s Milk
Manufacturing Plant.

It is uncontroverted that respondents Bate, Combite, and Oliver were

terminated from Alaska due to the expiration of their contracts with
5S, through which they were assigned to render services at the San
Pedro plant. However, because of the finding that 5S was engaged in
labor only contracting, they are by fiction of law, considered as
Alaska’s regular employees. Hence, having been terminated without
lawful cause, they are entitled to reimbursement without loss of
seniority rights and other privileges, in addition to full backwages,
 Page 234

inclusive of allowances and benefits, pursuant to Article 279 of the

Labor Code.
 Page 235

Case Digest by: JAIME NIKOLAI K. PAGGAO

DEVELOPMENT BANK OF THE PHILIPPINES v. NLRC

G.R. No. 108031. March 1, 1995
BELLOSILLO, J.

DOCTRINE:
Art. 110 should not be treated apart from other laws but applied
in conjunction with the pertinent provisions of the Civil Code and the
Insolvency Law to the extent that piece-meal distribution of the assets
of the debtor is avoided. The rationale is that to hold Art. 110 to be
applicable also to extrajudicial proceedings would be putting the
worker in a better position than the State which could only assert its
own prior preference in case of a judicial proceeding. Art. 110, which
was amended by R.A. 6715 effective 21 March 1989, now reads:

Art. 110. Worker preference in case of bankruptcy. — In the

event of bankruptcy or liquidation of an employer's business, his
workers shall enjoy first preference as regards their unpaid
wages and other monetary claims, any provision of law to the
contrary notwithstanding. Such unpaid wages and monetary
claims shall be paid in full before the claims of the Government
and other creditors may be paid.

Obviously, the amendment expanded the concept of "worker

preference" to cover not only unpaid wages but also other monetary
claims to which even claims of the Government must be deemed
subordinate.

FACTS:
Private respondent Leonor A. Ang started employment as
Executive Secretary with Tropical Philippines Wood Industries, Inc.
She was later promoted to the position of Personnel Officer.

Development Bank of the Philippines foreclosed TPWII plant facilities

and equipment but the latter continued its business operations. In
January 1986 petitioner 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 filed with the 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.
 Page 236

After hearing the Labor Arbiter found TPWII primarily liable to private
respondent but only for her separation pay and vacation and sick
leave pay because her claims for unpaid wages and 13th month pay
were later paid after the complaint was filed. DBP was held
subsidiarily liable in the event the company failed to satisfy the
judgment. The National Labor Relations Commission affirmed the
ruling of the Labor Arbiter.

ISSUE:
Whether the declaration of bankruptcy or judicial liquidation
required before the worker's preference may be invoked under Art.
110 of the Labor Code.

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.
 Page 237

Case Digest by: JAIME NIKOLAI K. PAGGAO

HOEGH FLEET SERVICES PHILS., INC., and/or HOEGH FLEET

SERVICES AS v. BERNARDO M. TURALLO
G.R. No. 230481. July 26, 2017
VELASCO, JR., J.

DOCTRINE:
Article 111 of the Labor Code indeed provides that the culpable
party may be assessed attorney's fees equivalent to 10 percent of the
amount of wages recovered. It also provides that it shall be unlawful
for any person to demand or accept, in any judicial or administrative
proceedings for the recovery of wages, attorney's fees which exceed
10 percent of the amount of wages recovered. Section 8, Rule VIII,
Book III of the Implementing Rules of the Labor Code sustains the
same and states that attorney's fees shall not exceed 10 percent of
the amount awarded. A closer reading of these provisions, however,
would lead us to the conclusion that the 10 percent only serves as the
maximum of the award that may be granted. Relevantly, We have
ruled in the case of Taganas v. National Labor Relations Commission
that Article 111 does not even prevent the NLRC from fixing an
amount lower than the ten percent ceiling prescribed by the article
when the circumstances warrant it. With that, the Court is not tied to
award 10 percent attorney's fees to the winning party.

The extraordinary concept of attorney's fees is the one contemplated

in Article 111 of the Labor Code. This is awarded by the court to the
successful party to be paid by the losing party as indemnity for
damages sustained by the former in prosecuting, through counsel, his
cause in court.

FACTS:
On 9 November 2012, petitioners hired Turallo as a Messman on
board vessel "Hoegh Tokyo" for nine (9) months. The employment
contract was signed on 27 December 2012. Turallo was found "fit for
sea duty" in the Pre-Employment Medical Examination (PEME). On 2
January 2013, Turallo boarded the vessel.

Sometime in September 2013 while on board the vessel, Turallo felt

pain on the upper back of his body and chest pain, which was
reported to his superiors on 23 September 2013. Upon arrival in
Manila, Turallo was referred to the company-designated physician,
who in turn referred him to an orthopedic surgeon and cardiologist.
He underwent medical and laboratory tests.
 Page 238

Despite Turallo' s continuous rehabilitation treatment, pain in his left

shoulder persisted, hence, he followed up his pending surgery
therefor several times to no avail. This prompted Turallo to seek a
second opinion. On 13 May 2014, Turallo consulted with Dr. Manuel
Fidel Magtira, a government physician of the Vizcarra Diagnostic
Center who, after x-ray of his left wrist and shoulder joints, found him
to be "partially and permanently disabled with separate impediments
for the different affected parts of (his) body of Grade 8, Grade 10 and
Grade 11, based on the POEA contract" but declared him as
"permanently unfit in any capacity for further sea duties".

On 23 May and 2 June 2014, grievance proceedings were held

between the parties at the AMOSUP, where the petitioners offered
the amount of Thirty Thousand Two Hundred Thirty One US Dollars
(US$30,231. 00) corresponding to .a Grade 8 disability compensation
based on the maximum amount of Ninety Thousand US Dollars
(US$90,000.00). Turallo, however proposed the settlement .amount
of Sixty Thousand US Dollars (US$60,000.00). The parties failed to
reach an agreement. Despite efforts to arrive at an agreement, the
parties failed to settle their differences, hence, they were directed to
submit their pleadings and evidence for the resolution of the issues
before the panel of arbitrators.

PANEL DECISION: Ordered petitioners, jointly and severally, to pay

complainant the following amounts: 1. Disability compensation in the
amount of US$90,000.00, to be paid in the equivalent peso amount at
the rate prevailing at the time of payment. 2. Sickness Allowance in
the amount of US$3,084.54 to be paid in its peso equivalent as in
number l; and 3. Attorney's fees equivalent to ten percent (10%) of
the total monetary award. Finally, legal interests shall be imposed on
the monetary awards herein granted at the rate of 6% per annum
from finality of this judgment until fully paid. Hoegh Fleet argued that
the Panel erred in ruling that Turallo is entitled to the award of
attorney's fees for being unwarranted as there was no showing of an
unjustified act or evident bad faith on its part for denying Turallo's
claim. CA did not dispute Turallo' s entitlement to attorney’s fees, it
ruled that reducing the amount from ten percent (10%) of the total
monetary award to just One Thousand US Dollars (US$1,000.00)
would be reasonable.

ISSUE:
Whether Turallo is entitled to attorney’s fees.

RULING:
Yes. The Court agrees with the CA that attorney's fees should be
reduced, not to US$1,000.00, however, but to five percent (5%) of the
total monetary award.1âwphi1 Article 111 of the Labor Code indeed
 Page 239

provides that the culpable party may be assessed attorney's fees

equivalent to 10 percent of the amount of wages recovered. It also
provides that it shall be unlawful for any person to demand or accept,
in any judicial or administrative proceedings for the recovery of
wages, attorney's fees which exceed 10 percent of the amount of
wages recovered. Section 8, Rule VIII, Book III of the Implementing
Rules of the Labor Code sustains the same and states that attorney's
fees shall not exceed 10 percent of the amount awarded. A closer
reading of these provisions, however, would lead us to the conclusion
that the 10 percent only serves as the maximum of the award that
may be granted. Relevantly, We have ruled in the case of Taganas v.
National Labor Relations Commission that Article 111 does not even
prevent the NLRC from fixing an amount lower than the ten percent
ceiling prescribed by the article when the circumstances warrant it.
With that, the Court is not tied to award 10 percent attorney's fees to
the winning party, as what Turallo wishes to imply.

In PCL Shipping Philippines, Inc. v. National Labor Relations

Commission the Court discussed that there are two commonly
accepted concepts of attorney's fees, the so-called ordinary and
extraordinary. In its ordinary concept, an attorney's fee is the
reasonable compensation paid to a lawyer by his client for the legal
services he has rendered to the latter. The basis of this compensation
is the fact of his employment by and his agreement with the client. In
its extraordinary concept, attorney's fees are deemed indemnity for
damages ordered by the court to be paid by the losing party in a
litigation. The instances where these may be awarded are those
enumerated in Article 2208 of the Civil Code, specifically par. 7
thereof which pertains to actions for recovery of wages, and is
payable not to the lawyer but to the client, unless they have agreed
that the award shall pertain to the lawyer as additional compensation
or as part thereof. The extraordinary concept of attorney's fees is the
one contemplated in Article 111 of the Labor Code. This is awarded
by the court to the successful party to be paid by the losing party as
indemnity for damages sustained by the former in prosecuting,
through counsel, his cause in court.

Clearly, Turallo incurred legal expenses after he was forced to file an

action to recover his disability benefits. Considering that he was
constrained to litigate with counsel in all the stages of this
proceeding, and keeping in mind the liberal and compassionate spirit
of the Labor Code, where the employees' welfare is the paramount
consideration, this Court considers five percent (5%) of the total
monetary award as more appropriate and commensurate under the
circumstances of this petition.
 Page 240

Case Digest by: JAIME NIKOLAI K. PAGGAO

ERNESTO P. GUTIERREZ, v. NAWRAS MANPOWER SERVICES,

INC., AL-ADHAMAIN CO. LTD., AND ELIZABETH BAWA,
G.R. No. 234296. November 27, 2019
CARANDANG, J.

DOCTRINE:
In Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa
MWC-East Zone Union v. Manila Water Co., Inc., this Court
differentiated the ordinary and extraordinary concepts of attorney's
fees. Attorney's fees under the extraordinary concept refer to those
awarded by the Court to the losing party. These may be awarded in
specific instances enumerated under Article 2208 of the Civil Code.
Under paragraph 7 of Article 2208, attorney's fees may be recovered
"[i]n actions for recovery of wages x x x."

In actions for recovery of wages, such as the instant case, a specific

provision under the Labor Code governs. Article 111 (a) of the Labor
Code provides:

Art. 111. Attorney's Fees. - (a) In cases of unlawful withholding of

wages, the culpable party may be assessed attorney's fees
equivalent to ten percent of the amount of wages recovered.

xxxx

We construed Article 111 of the Labor Code as an exception to the

general rule of strict construction in the award of attorney's fees. In
Kaisahan, We held that "[a]lthough an express finding of facts and
law is still necessary to prove the merit of the award, there need not
be any showing that the employer acted maliciously or in bad faith
when it withheld wages." The findings of fact required to prove
entitlement to attorney's fees in labor cases refer to the unjustified
withholding of lawful wages.

FACTS:
Ernesto Gutierrez was hired by NAWRAS Manpower Services,
Inc. (NAWRAS) to work as respondent Al Adhamain Co. Ltd.'s "driver
vehicle road". He was deployed July 31, 2013.

Upon arrival, Gutierrez claimed that he was initially placed on floating

status. He received his first salary only in November 2013 and
received two months' worth of salary on December 2, 2013. He
received a service vehicle on December 3, 2013 but he had to
 Page 241

personally shoulder the gasoline expenses going to Al-Adhamain's

asphalt plant. On February 15, 2014, the workshop supervisor
informed Gutierrez that he would be transferred to another site and
was made to report to Al-Adhamain's administrator. At the
administrator's office, he was only given a clearance form. In a
meeting with Al-Adhamain's owner, Gutierrez was told that his
contract would be terminated and he would be repatriated as soon as
he completes his clearance. He then called NAWRAS about the pre-
termination of his contract but was refrained from filing a complaint
with the Philippine Overseas Labor Office in order to allow NAWRAS
to talk to Al-Adhamain. He thus proceeded to submit the
requirements for his clearance in the last week of February 2014. On
March 15, 2014, petitioner was given his remaining salary (sans 1-
month salary) and a refund of his two months' salary bond. He was
then told to book his own flight back to the Philippines and that he
would be reimbursed later on. However, of the SR3,100.00 that he
spent for the airfare, Al-Adhamain's owner only reimbursed him for
SR2,000.00.

Upon repatriation, he filed a complaint for illegal dismissal. Although

they claimed that he was legally dismissed After his three-month
probationary period, Al-Adhamain informed him of his unsatisfactory
performance. Gutierrez was thus transferred to a different site to
afford him a chance to change his working attitude. They claimed that
he was given several chances to change his work attitude to no avail.
Despite extending several opportunities for petitioner to improve,
petitioner opted to request for his last salary, benefits, termination
pay, and return ticket.

ISSUE:
Whether Gutierrez was illegally dismissed entitling him to salary
for the unexpired portion, airfare ticket, and repayment of last salary.

RULING:
The Supreme Court affirmed the decision of the NLRC and CA
finding Gutierrez to be illegally dismissed allowing him to receive the
following:

1. Salary equivalent to the unexpired portion of the contract.

This Court struck down the phrase "or for three (3) months for every
year of the unexpired term, whichever is less" under Section 7 of R.A.
10022 because the same phrase was already declared
unconstitutional in R.A. 8042 or the Migrant Workers and Overseas
Filipinos Act of 1995. He is, thus, entitled to "his salaries for the
 Page 242

unexpired portion of his employment contract" - the operative clause

of Section 7.

2. SR1,100.00 as reimbursement for his airfare ticket.

This Court is more inclined to believe that petitioner was able to

substantiate his claim of paying SR3,100.00 for his airplane ticket.
Aside from the fact that respondents kept silent on the matter in their

appeal before the NLRC, the NLRC pointed out that petitioner
presented a ticket receipt as proof that petitioner paid for the airplane
ticket. This is bolstered by the LA's findings that respondents failed to
present any proof of payment for the ticket. A reading of the CA's
decision, likewise, reveals that respondents failed to present any
proof to substantiate their claim that they paid for petitioner's ticket.
As such, it is proper to reinstate the LA and NLRC's order for
respondents to reimburse petitioner the excess SR1,100.00 payment.

3. Repayment of his last salary.

Gutierrez was not given his November 2013 salary because Al

Adhamain withheld it "as his placement fee." The said salary
deduction was improper because an illegally dismissed migrant
worker is entitled to a full reimbursement of his/her placement fee.
The LA's directive to refund petitioner's placement fee is really one for
the repayment of petitioner's November 2013 salary because
petitioner never paid respondents a placement fee.
 Page 243

Case Digest by: PANTINO, JUNNA LYNNE R.

JOSELITO A. ALVA vs. HIGH CAPACITY SECURITY

FORCE, INC., ET AL.
G.R. No. 203328. November 08, 2017.
Reyes, Jr., J.

DOCTRINE:
ARTICLE 111
The availment of the free legal services offered by PAO does not
prevent the award of attorney’s fees upon the successful conclusion of
the litigation. The established rule in labor law is that the withholding of
wages need not be coupled with malice or bad faith to warrant the grant
of attorney’s fees. All that is required is that the lawful wages were not
paid without justification, thereby compelling the employee to litigate.

FACTS:
While petitioner Alva was Assistant Security Officer to Assistant
Officer-in-Charge of HRD-PTE, Ltd., one of the security guards under
his supervision allowed the entry of a garbage collection truck without
securing prior permission and approval of the company’s
Administrative and Personnel Manager causing Alva’s suspension for
1 month. During his suspension, HRD-PTE requested for his relief from
the post and complained that he was found sleeping while on duty and
exercised favoritism in the assignment of shifts of security guards.
Thereafter, Alva was placed on floating status and was given an option
to temporarily render duty as an ordinary guard while waiting for an
available officer’s post. However, Alva was no longer given any post.

Alva, then filed a complaint for illegal dismissal, and claimed

benefits, which included attorney’s fees.

The Labor Arbiter found High Capacity guilty of illegal dismissal

due to its failure to reinstate Alva after the lapse of his off-detail status.
Attorney’s fees equivalent to 10% of the total monetary award was
awarded to Alva, since he was constrained to hire the services of
counsel to protect his rights and interests. NLRC reversed the ruling
stating that there was just cause for dismissal. NLRC maintained the
award of attorney’s fees. The Court of Appeals reversed the ruling of
the NLRC stating that was constructive dismissal since Alva was
placed on floating status for more than 6 months. However, CA deleted
the award of attorney’s fees because Alva was represented by the
Public Attorney’s Office (PAO).

ISSUE:
 Page 244

Whether or not Alva is entitled the award of attorney’s fees.

RULING:
YES. Alva is entitled the award of attorney’s fees.

The availment of the free legal services offered by PAO does not
prevent the award of attorney’s fees upon the successful conclusion of
the litigation. Art. 111 of the Labor Code sanctions the award of
attorney’s fees in cases of unlawful withholding of wages, wherein the
culpable party may be assessed attorney’s fees equivalent to 10% of
the amount of wages recovered. Art. 2208 of the Labor Code also
states that in the absence of stipulation, attorney’s fees and expenses
of litigation, other than judicial costs, cannot be recovered except,
among others: when the defendant’s act of omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect
his interest; in actions for recovery of wages of household helpers,
laborers, and skilled workers; in actions for indemnity under workmen’s
compensation and employer’s liability laws; in any other case where
the court deems it equitable that attorney’s fees and expenses of
litigation should be recovered.

The established rule in labor law is that the withholding of wages

need not be coupled with malice or bad faith to warrant the grant of
attorney’s fees. All that is required is that the lawful wages were not
paid without justification, thereby compelling the employee to litigate.

In this case, Alva, whose wages and monetary benefits were

unlawfully withheld, is indeed entitled to an award of attorney’s fees,
notwithstanding his availment of the free legal services offered by PAO.
Further, the amount of attorney’s fees shall be awarded to PAO as a
token of compensation for their provision of the free legal services to
litigants who have no means of hiring a private lawyer. Therefore, Alva
should be awarded attorney’s fees notwithstanding the fact that he was
represented by PAO.
 Page 245

Case Digest by: PANTINO, JUNNA LYNNE R.

SHS PERFORATED MATERIALS, INC., ET AL. vs.

MANUEL DIAZ
G.R. No. 185814. October 13, 2010.
Mendoza, J.

DOCTRINE:
ARTICLE 113
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. Absent a
showing that the withholding of complainant’s wages falls under the
exceptions provided in Article 113, the withholding thereof is thus
unlawful.

FACTS:
During meetings with the respondent Diaz, petitioner Winfried
Hartmannshenn expressed his dissatisfaction over respondent’s poor
performance and absences during his employment specially when
Hartmannshenn was abroad. Hartmannshenn also observed that
respondent is not responsive the electronic mails, calls and
communication made to him, which is important for the business.

As a result, respondent’s salary was withheld. Respondent then

served a demand letter and a resignation letter to petitioner which was
accepted. Petitioner Hartmannshenn informed respondent that his
salary would be released upon explanation of his failure to report to
work, and proof that he did, in fact, work for the period in question.

Respondent filed 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
attorney’s fees, costs of suit, and legal interest.

Petitioners contend that withholding respondent’s salary was

justified because respondent was absent and did not show up for work.
He also failed to account for his whereabouts and work
accomplishments. When there is an issue as to whether an employee
has, in fact, worked and is entitled to his salary, it is within management
prerogative to temporarily withhold an employees’ salary/wages
pending determination of whether or not such employee did indeed
work.
 Page 246

The Labor Arbiter ruled that respondent has been constructively

dismissed. This was reversed by the NLRC. The Court of Appeals then
reversed the NLRC decision and reinstated the ruling of the Labor
Arbiter.

ISSUES:
Whether or not the temporary withholding of respondent’s
salary/wages was a wage deduction under Art. 113.

RULING:
NO. The temporary withholding of respondent’s salary/wages was
not a wage deduction under Art. 113.

Although management prerogative refers to the right to regulate

all aspects of employment, it cannot be understood to include the right
to temporarily withhold salary/wages without the consent of the
employee. Any withholding of an employees’ wages by an employer
may only be allowed in the form of wage deductions under the
circumstances provided in Article 113 of the Labor Code, as set forth
below:

ART. 113. Wage Deduction. No employer, in his own behalf or in

behalf of any person, shall make any deduction from the wages of his
employees, except:

(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or authorized
in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations

issued by the Secretary of Labor.

Absent a showing that the withholding of complainant’s wages falls

under the exceptions provided in Article 113, the withholding thereof is
thus unlawful. The Court finds petitioners evidence insufficient to prove
that respondent did not work from November 16 to November 30, 2005.
Therefore, if doubt exists between the evidence presented by the
employer and that by the employee, the scales of justice must be tilted
in favor of the latter.
 Page 247

Case Digest by: PANTINO, JUNNA LYNNE R.

NORMAN PANALIGAN, ET AL. vs. PHYVITA

ENTERPRISES CORPORATION
G.R. No. 202086. June 21, 2017.
Leonardo- De Castro, J.

DOCTRINE:
ARTICLE 118
The fact that petitioners were implicated in the theft incident after
filing a labor complaint before DOLE-NCR which resulted to an
inspection of the respondent’s premises, is a reasonable inference that
petitioners’ dismissal may have been indeed a retaliatory measure
designed to coerce them into withdrawing their complaint.

FACTS:
The Finance Assistant of respondent Phyvita Enterprises
Corporation, discovered that the amount of One Hundred Eighty
Thousand Pesos (Php180,000.00) representing their sales was
missing, including receipts, payrolls, credit card receipts and sales
invoices. As advised by Phyvita's Legal Officer, the matter was
reported to the Parañaque City Police Station to conduct an
investigation. However, it was unsuccessful.

Meanwhile, petitioners filed a complaint against respondent before

DOLE-NCR alleging underpayment of wages, non-payment of
legal/special holiday five (5)-day service incentive leave pay, night shift
differential pay, no pay slip, signing of blank payroll, withheld salary
due to non-signing of blank payroll. DOLE-NCR conducted an
inspection of respondent.

Individual Office Memoranda were issued by respondent against

petitioners directing them to explain in writing why no disciplinary
action shall be imposed against them for any act of dishonesty, more
specifically their alleged involvement in a theft wherein important
documents and papers including cash were lost. Having failed to
participate in the investigation proceedings conducted by Phyvita,
petitioners were dismissed from their employment on the ground that
they violated the company's rules and regulations by stealing company
documents and cash. This was without prejudice to the filing of criminal
charges against them.

Petitioners argue that their dismissal was a mere retaliatory

measure by respondent because of the complaint before DOLE and
refusal to amicably settle the same. The unjust accusation of stealing
 Page 248

would be a violation of Article 118 of the Labor Code. They also claim
that the charge of theft was baseless and it was even dismissed by the
City Prosecutor because there was no direct, solid or concrete proof
directing them to the commission of theft.

Respondents assert that petitioners’ dismissal were legal under

Article 282 of the Labor Code since the commission of theft is a serious
misconduct and an act which gives rise to fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized
representative. Thus, it is a sufficient ground to justify their dismissal.
The dismissal of the criminal complaint against petitioners is immaterial
since they were still validly dismissed based on breach of trust.

The Labor Arbiter declared that petitioners were legally terminated

from employment on the ground of loss of trust and confidence. This
was reversed by the NLRC which ruled that petitioners were illegally
dismissed from employment. The Court of Appeals reversed the NLRC
ruling and reinstated the ruling of the Labor Arbiter.

ISSUE:
Whether or not the charge of theft against petitioners is a
retaliatory measure which violates Art. 118 of the Labor Code.

RULING:
YES. The charge of theft against petitioners is a retaliatory
measure which violates Art. 118 of the Labor Code.

The fact that the DOLE-NCR conducted an inspection of the

respondent's premises on April 13, 2005 as a result of the labor
complaint filed by petitioners, on April 4, 2005 and petitioners, were
implicated in the alleged January 25, 2005 theft incident only thereafter,
a reasonable inference can be made that petitioners’ termination of
employment may have been indeed a retaliatory measure designed to
coerce them into withdrawing their complaint for underpayment of
wages and nonpayment of other labor standard benefits. Such an act
is proscribed by Article 118 of the Labor Code which states:

Art. 118. Retaliatory Measures - It shall be unlawful for an

employer to refuse to pay or reduce the wages and benefits, discharge
or in any manner discriminate against any employee who has filed any
complaint or instituted any proceeding under this title or has testified
or is about to testify in such proceedings.

Also, respondent failed to adduce substantial evidence that would

clearly demonstrate that petitioners have committed serious
misconduct or have performed actions that would warrant the loss of
 Page 249

trust and confidence reposed upon them by their employer. The

questioned payroll sheets that petitioners attached to the labor
complaint filed before DOLE-NCR are the only concrete proof that
respondent used to support its allegation. However, the said
documents were not specifically enumerated as among the stolen
items in the police report of the alleged incident of theft, while a
previous incident report merely stated that "several copies of payroll"
were taken. Respondent had charged and dismissed petitioners,
before it had even obtained its supposed "proof” of their misdeed.
 Page 250

Case Digest by: PANTINO, JUNNA LYNNE R.

P.I. MANUFACTURING, INCORPORATED vs. P.I.

MANUFACTURING SUPERVISORS AND FOREMAN
ASSOCIATION, ET AL.
G.R. No. 167217. February 4, 2008.
Sandoval- Gutierrez, J.

DOCTRINE:
ARTICLE 124
Wage distortion means the disappearance or virtual
disappearance of pay differentials between lower and higher positions
in an enterprise because of compliance with a wage order.

FACTS:
The President signed into law Republic Act (R.A.) No. 66402
providing, among others, an increase in the statutory minimum wage
and salary rates of employees and workers in the private sector.
Section 2 provides:

SEC. 2. The statutory minimum wage rates of workers and employees

in the private sector, whether agricultural or non-agricultural, shall be
increased by ten pesos (P10.00) 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.
Petitioner and respondent entered into a new Collective Bargaining
Agreement whereby the supervisors were granted an increase of
P625.00 per month and the foremen, P475.00 per month.

The increases were made retroactive to May 12, 1987, or prior to

the passage of R.A. No. 6640, and every year thereafter until July 26,
1989.

On January 26, 1989, respondents filed a complaint with the

Arbitration Branch of the National Labor Relations Commission
(NLRC), charging petitioner with violation of R.A. No. 6640. Petitioner
argues that the wage distortion issue is already barred by Sec. 2 Article
IV of the Employment Contract which states that it "absolves, quit
claims and releases the COMPANY for any monetary claim they have,
if any there might be or there might have been previous to the signing
of this agreement." Petitioner interprets this as absolving it from any
 Page 251

wage distortion brought about by the implementation of the new

minimum wage law.

The Labor Arbiter ruled that petitioner should give the members of
respondent wage increases equivalent to 13.5% of their basic pay they
were receiving prior to December 14, 1987. This was affirmed by the
NLRC. The Court of Appeals also affirmed the ruling but increased the
wage rate from 13.5% to 18.5%. It further ruled that the increase
resulting from any wage distortion caused by the implementation of
Republic Act 6640 is not waivable.

ISSUE:
Whether the implementation of R.A. No. 6640 resulted in a wage
distortion and whether such distortion was cured or remedied by the
CBA.

RULING:
YES. The implementation of R.A. No. 6640 resulted in a wage
distortion and it was cured or remedied by the CBA.

Wage distortion means the disappearance or virtual

disappearance of pay differentials between lower and higher positions
in an enterprise because of compliance with a wage order.

In this case, there was indeed a wage distortion due to the

implementation of R.A. No. 6640. However, it was cured or remedied
when respondent entered into the CBA with petitioner after the
effectivity of R.A. No. 6640. The CBA wage increases almost doubled
that of the P10.00 increase under R.A. No. 6640. The P625.00/month
means P24.03 increase per day for the supervisors, while the
P475.00/month means P18.26 increase per day for the foremen.
These increases were to be observed every year, starting May 12,
1987 until July 26, 1989.

A CBA constitutes the law between the parties when freely and
voluntarily entered into. Here, it has not been shown that respondent
PIMASUFA was coerced or forced by petitioner to sign the CBA. All of
its thirteen (13) officers signed the CBA fully aware of the passage of
R.A. No. 6640.
 Page 252

Case Digest by: PANTINO, JUNNA LYNNE R.

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE

TRADE UNIONS vs. NATIONAL LABOR RELATIONS
COMMISSION
G.R. No. 140689. February 17, 2004.
Carpio-Morales, J.

DOCTRINE:
ARTICLE 124
Article 124 should be construed and correlated in relation to
minimum wage fixing, the intention of the law being that in the event of
an increase in minimum wage, the distinctions embodied in the wage
structure based on skills, length of service, or other logical bases of
differentiation will be preserved.

FACTS:
The New Salary Scale of respondent increased the hiring rates of
new employees, to wit: Levels I and V by P1,000.00, and Levels II, III
and IV by P900.00. As a result, petitioner, the duly certified exclusive
bargaining agent of the regular rank and file employees of respondent
pressed for the increase in the salary of its old, regular employees. The
respondent rejected the notion stating that there was no obligation on
the part of the management to grant to all its employees the same
increase in an across-the-board manner.

Petitioner filed a Notice of Strike on August 26, 1993 on the ground

of discrimination and other acts of Unfair Labor Practice (ULP). The
National Conciliation and Mediation Board treated the Notice of Strike
as a Preventive Mediation Case based on a finding that the issues
therein were not strikeable. Later on, the dispute was certified by the
Secretary of Labor and Employment for compulsory arbitration.

The Second Division of the NLRC, finding no wage distortion,

dismissed the case for lack of merit. This was affirmed by the Court of
Appeals.

ISSUE:
Whether or not 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.

RULING:
 Page 253

NO. 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 did not result in wage
distortion.

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. In a
problem dealing with wage distortion, the basic assumption is that
there exists a grouping or classification of employees that establishes
distinctions among them on some relevant or legitimate bases.

To determine the existence of wage distortion, the historical

classification of the employees prior to the wage increase must be
established. Likewise, it must be shown that as between the different
classification of employees, there exists a historical gap or difference.

Petitioner argues 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. However, the classification preferred by petitioner is belied
by the wage structure of respondent as shown in the new salary scale
it adopted on May 28, 1993, retroactive to April 1, 1993, which provides
that employees of respondent have been historically classified into
levels, i.e. I to V, and not on the basis of their length of service. Put
differently, the entry of new employees to the company ipso facto
place[s] them under any of the levels mentioned in the new salary scale
which private respondent adopted retroactive [to] April 1, 1993.

The formulation of a wage structure through the classification of

employees is a matter of management judgment and discretion. Article
124 should be construed and correlated in relation to minimum wage
fixing, the intention of the law being that in the event of an increase in
minimum wage, the distinctions embodied in the wage structure based
on skills, length of service, or other logical bases of differentiation will
be preserved.
 Page 254

Case Digest by: PANTINO, JUNNA LYNNE R.

PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO

PHILS., INC.) vs. THE SECRETARY OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT, ET AL.
G.R. No. 179652. March 06, 2012.
Velasco, Jr., J.

DOCTRINE:
ARTICLE 128
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. 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.

FACTS:
Private respondent Jandeleon Juezan filed a complaint against
petitioner with the Department of Labor and Employment (DOLE)
Regional Office No. VII, Cebu City, 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 noncoverage of SSS, PAG-IBIG and Philhealth. The DOLE
Regional Director found that private respondent was an employee of
petitioner, and was entitled to his money claims. Petitioner sought
reconsideration of the Director’s Order, but failed. The ruling of the
Regional Director was affirmed by the Acting DOLE Secretary.

The CA ruled 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.

In the initial decision of the Supreme Court, it ruled that 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. This was the
interpretation of the Court of the clause in cases where the relationship
of employer-employee still exists in Art. 128(b).
 Page 255

From this Decision, the Public Attorney’s 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 employer-employee relationship. In its Comment,
the DOLE sought clarification as well, as to the extent of its visitorial
and enforcement power under the Labor Code, as amended.

ISSUE:
Whether or not the DOLE can make a determination of the
existence of employer-employee relationship.

RULING:
YES. DOLE can make a determination of the existence of
employer-employee relationship.

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 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 DOLE, in determining the existence of an employer-employee

relationship, has a ready set of guidelines to follow, the same guide the
courts themselves use. The elements to determine the existence of an
employment relationship are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; (4)
the employer’s power to control the employees conduct. The use of
this test is not solely limited to the NLRC. The DOLE Secretary, or his
or her representatives, can utilize the same test, even in the course of
inspection, making use of the same evidence that would have been
presented before the NLRC.

This is not to say that the determination by the DOLE is beyond

question or review. Suffice it to say, there are judicial remedies such
as a petition for certiorari under Rule 65 that may be availed of, should
a party wish to dispute the findings of the DOLE.
 Page 256

It must also be remembered that the power of the DOLE to

determine the existence of an employer-employee relationship need
not necessarily result in an affirmative finding. The DOLE may well
make the determination that no employer-employee relationship exists,
thus divesting itself of jurisdiction over the case. It must not be
precluded from being able to reach its own conclusions, not by the
parties, and certainly not by this Court.

In summary, if a complaint is brought before the DOLE to give

effect to the labor standards provisions of the Labor Code or other labor
legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to
the exclusion of the NLRC. If the DOLE finds that there is no employer-
employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under
Art. 217(3) of the Labor Code, which provides that the Labor Arbiter
has original and exclusive jurisdiction over those cases involving
wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement. If a
complaint is filed with the NLRC, and there is still an existing employer-
employee relationship, the jurisdiction is properly with the DOLE. The
findings of the DOLE, however, may still be questioned through a
petition for certiorari under Rule 65 of the Rules of Court.

In the present case, the finding of the DOLE Regional Director that
there was an employer-employee relationship has been subjected to
review by this Court, with the finding being that there was no employer-
employee relationship between petitioner and private respondent,
based on the evidence presented. Private respondent presented self-
serving allegations as well as self-defeating evidence. The findings of
the Regional Director were not based on substantial evidence, and
private respondent failed to prove the existence of an employer-
employee relationship. The DOLE had no jurisdiction over the case, as
there was no employer-employee relationship present. Thus, the
dismissal of the complaint against petitioner is proper.
 Page 257

Case Digest by: PANTINO, JUNNA LYNNE R.

MRS. ALBERTA YANSON/ HACIENDA VALENTIN-

BALABAG vs. THE HON. SECRETARY, DEPARTMENT
OF LABOR AND EMPLOYMENT (LEGAL SERVICE-
MANILA), ET AL.
G.R. No. 159026. February 11, 2008.
Austria-Martinez, J.

DOCTRINES:
ARTICLE 128
Article 128 (b) of the Labor Code clearly provides that the appeal
bond must be "in the amount equivalent to the monetary award in the
order appealed from."
The reduction of bond in the NLRC is expressly authorized under
the Rules implementing Article 223 and no similar authority is given the
DOLE Secretary

FACTS:
Mardy Cabigo and 40 other workers (private respondents) filed
with the Department of Labor and Employment-Bacolod District Office
(DOLE-Bacolod) a request for payroll inspection of Hacienda Valentin
Balabag owned by Alberta Yanson (petitioner). DOLE-Bacolod
conducted an inspection of petitioner's establishment on May 27, 1998,
and issued a Notice of Inspection Report, finding petitioner liable for
violations of labor standard laws.

Petitioner did not appear in any of the scheduled hearings or

present any pleading or document. A compliance order directing
petitioner to pay, within five (5) days, P9,084.00 to each of the 41
respondents or a total of P372,444.00 remained not satisfied so a writ
of execution was issued. Petitioner claimed that she did not receive
any form of communication, or participate in any proceeding relative to
the subject matter of the writ of execution, which DOLE-Bacolod
denied.

Petitioner filed a Verified Appeal and Supplement to the Verified

Appeal, posting therewith an appeal bond of P1,000.00 and attaching
thereto a Motion to be Allowed to Post Minimal Bond with Motion for
Reduction of Bond. The Court of Appeals dismissed the appeal.

Before the Supreme Court, petitioner contends that her appeal

bond cannot be based on the monetary award of P372,444.00 granted
by DOLE-Bacolod in its August 14, 1998 Order which, having been
rendered without prior notice to her, was a patent nullity and completely
 Page 258

without effect. She argues that her appeal bond should instead be
based on her capacity to pay; otherwise, her right to free access to the
courts as guaranteed under Article III, Section 2 of the Constitution
would be set to naught merely because of her diminished financial
capacity.

ISSUE:
Whether or not there is a perfected appeal.

Whether or not the appeal bond can be reduced.

RULING:
As to the first issue, NO. There is no perfected appeal.

Article 128 (b) of the Labor Code clearly provides that the appeal
bond must be "in the amount equivalent to the monetary award in the
order appealed from." In this case, the petitioner only posted P1,000
appeal bond in contrast with the monetary award of P372,444.00. 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.

As to the second issue, NO. The appeal bond cannot be reduced.

Article 128 (b) deliberately employed the word "only" in reference

to the requirements for perfection of an appeal in labor standards
cases. "Only" commands a restrictive application, giving no room for
modification of said requirements. The reduction of bond in the NLRC
is expressly authorized under the Rules implementing Article 223 and
no similar authority is given the DOLE Secretary in Department Order
No. 18-02 (Implementing Rules), Series of 2002, amending
Department Order No. 7-A, Series of 1995, implementing Article 128
(b). Thus, under the foregoing Implementing Rules, it is plain that
public respondent has no authority to accept an appeal under a
reduced bond.
 Page 259

Case Digest by: PANTINO, JUNNA LYNNE R.

NESTOR J. BALLADARES, ET AL. vs. PEAK VENTURES

CORPORATION/EL TIGRE SECURITY AND
INVESTIGATION AGENCY, ET AL.
G.R. No. 161794. June 16, 2009.
Nachura, J.

DOCTRINE:
ARTICLE 128
The Secretary of Labor or his duly authorized representatives
(DOLE Regional director) is now empowered to hear and decide, in a
summary proceeding, any matter involving the recovery of any amount
of wages and other monetary claims arising out of employer-employee
relations at the time of the inspection, even if the amount of the money
claim exceeds P5,000.

FACTS:
Petitioners were security guards employed by respondent Peak
Ventures and assigned to the premises of respondent YMOAA. They
filed a complaint for underpayment of wages and other benefits with
the DOLE. In order to verify the allegations in the complaint, DOLE
conducted an inspection using the visitorial and enforcement powers
of the Secretary of Labor and Employment, which yielded proof of
violations of labor standards.

The DOLE Regional Director ruled in favor of petitioners stating

that the contractor was jointly and severally liable with the principal,
pursuant to the law and jurisprudence on the matter. Respondents are
jointly ordered to pay the total amount of P1,106,298.07 to all the
petitioners. The DOLE Secretary affirmed the ruling of the Regional
Director but stated that the amount awarded was excessive.

This was reversed by the Court of Appeals stating that the DOLE
Secretary acted without, or in excess of, jurisdiction or with grave
abuse of discretion because DOLE Regional Director had no
jurisdiction to hear and decide the case - because the claims of each
of the petitioners exceeded P5,000, and under Article 129 of the Labor
Code, the power to hear and decide claims of employees arising from
employer-employee relations exceeding P5,000 for each employee
belonged to the Labor Arbiter.

Before the Supreme Court, the petitioner argued that the CA erred
in applying Article 129 instead of Article 128 of the Labor Code. The
respondent averred that CA did not err in applying Article 129 and
 Page 260

Article 217 of the Labor Code providing for the jurisdiction of the Labor
Arbiter because the instant case arose from a complaint for recovery
of wages, simple money claims and other benefits, and the claims
exceeded P5,000, and the inspection conducted by the DOLE thru the
visitorial and enforcement powers of the Secretary of Labor and
Employment did not convert the case to the one falling under Article
128.

ISSUE:
Whether or not DOLE under Article 128 (b) of the Labor Code has
jurisdiction over the petitioners’ complaint regardless of the monetary
value of the claims involved therein.

RULING:
YES. DOLE under Article 128 (b) of the Labor Code has
jurisdiction over the petitioners’ complaint regardless of the monetary
value of the claims involved therein.

By the nature of the complaint and from the result of the inspection,
the authority of the DOLE, under Article 128, came into play regardless
of the monetary value of the claims involved. The extent of this
authority and the powers flowing therefrom are defined and set forth in
Article 128 of the Labor Code, as amended by R.A. No. 7730.

The Secretary of Labor or his duly authorized representatives

(DOLE Regional director) is now empowered to hear and decide, in a
summary proceeding, any matter involving the recovery of any amount
of wages and other monetary claims arising out of employer-employee
relations at the time of the inspection, even if the amount of the money
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.

ART. 128 (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 finding of the labor
employment and enforcement officer and raises issues supported by
 Page 261

documentary proofs which were not considered in the course of

inspection.

Elements to divest the Regional Director or his representatives of

jurisdiction:

(1) that the employer contests the findings of the labor regulations
officer and raises issues thereon;

(2) that in order to resolve such issues, there is a need to examine

evidentiary matters; and

(3) 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 this case, the Regional Director validly assumed jurisdiction

over the money claims even if the claims exceeded P5,000 because
such jurisdiction was exercised in accordance with Article 128(b) of the
Labor Code and the case does not fall under the exception clause. Also,
respondent did not contest the findings of the labor regulations officer.
During the hearing, it never denied that petitioners were not paid
correct wages and benefits, and such fact was even admitted in its
petition filed before the CA.
 Page 262

Case Digest by: PANTINO, JUNNA LYNNE R.

ALLIED INVESTIGATION BUREAU, INC. vs. HON.

SECRETARY OF LABOR & EMPLOYMENT
G.R. No. 122006. November 24, 1999.
Kapunan, J.

DOCTRINE:
ARTICLE 128
While it is true that under Articles 129 and 217 of the Labor Code,
the Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claims of each employee exceeds P5,000.00, said
provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article
128 of the Labor Code (as amended by R.A. No. 7730).

FACTS:
On January 17, 1995, private respondents Melvin T. Pelayo and
Samuel Sucanel, two of the security guards assigned by petitioner to
Novelty Philippines, Inc. filed a complaint with the Office of respondent
Regional Director Romeo A. Young charging petitioner with non-
compliance with a wage order which increased the minimum daily pay
of workers by P17.00, or from P118.00 to P135.00 effective December
16, 1993; and further, by P10.00, or from P135.00 to P145.00 daily
beginning April 1, 1994. Private respondents sought the recovery of
wage differentials.

The Regional Director conducted inspection visits at petitioner’s

establishment and found violations namely; non-implementation of the
wage order, non-remittance of SSS premiums, and excessive
deduction for the Bayanihan System. It ordered petitioner to effect
restitution and/or correction of the foregoing at the company or plant
level within five calendar days, otherwise an order of compliance shall
be issued.

In order to facilitate amicable settlement between the parties, a

series of conferences and hearings were scheduled by the Office of
the Regional Director. However, despite due notice, petitioner failed to
appear in any of said hearings. So, the Regional Director issued a
Compliance Order. Petitioner appealed to the Secretary of Labor and
Employment, without however, posting a cash or surety bond
equivalent to the monetary award in the said Order appealed from.

On September 19, 1995, the Secretary of Labor dismissed

petitioners appeal for failure to perfect said appeal.
 Page 263

Before the Supreme Court, petitioner cites Articles 129 and 217 of
the Labor Code of the Philippines which provide, respectively, that the
power of the Regional Director to adjudicate employees money claims
is subject to the condition that the aggregate money claims of each
employee does not exceed P5,000.00; and, that the Labor Arbiter has
jurisdiction over all other claims arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00),
whether or not accompanied with a claim for reinstatement.

ISSUE:
Whether or not the Secretary of Labor & Employment acted with
grave abuse of discretion in dismissing herein petitioners appeal
attacking the jurisdiction of respondent Regional Director in
adjudicating subject money claims of private respondents.

RULING:
NO. The Secretary of Labor & Employment did not act with grave
abuse of discretion in dismissing herein petitioners appeal attacking
the jurisdiction of respondent Regional Director in adjudicating subject
money claims of private respondents.

While it is true that under Articles 129 and 217 of the Labor Code,
the Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claims of each employee exceeds P5,000.00, said
provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article
128 of the Labor Code (as amended by R.A. No. 7730) thus:

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
 Page 264

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 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.

The provision explicitly excludes from its coverage Articles 129

and 217 of the Labor Code, thereby retaining and further strengthening
the power of the Secretary of Labor or his duly authorized
representatives to issue compliance orders to give effect to the labor
standards provisions of said 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.

Clearly, as the duly authorized representative of Secretary of

Labor, and in the lawful exercise of the Secretary’s visitorial and
enforcement powers under Article 128 of the Labor Code, respondent
Regional Director had jurisdiction to issue his impugned Order.
 Page 265

Case Digest by: PANTINO, JUNNA LYNNE R.

PLACIDO O. URBANES, JR. vs. THE HONORABLE

SECRETARY OF LABOR AND EMPLOYMENT, ET AL.
G.R. No. 122791. February 19, 2003.
Carpio-Morales, J.

DOCTRINE:
ARTICLE 128
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.

FACTS:
During the effectivity of the security service agreement between
petitioner Urbanes and respondent SS, a wage order was issued which
provided for the increase of the salary of security service providers,
among others. Petitioner sent a letter to SSS requesting the
adjustment of their contract rate by virtue of said wage order. This
remained unheeded thus, petitioner pulled out his agency's services to
SSS.

Petitioner then filed a complaint with the DOLE-NCR seeking

implementation of the wage order. SSS claimed that Urbanes is not
the real-party-in-interest and its obligation will be to the security guards.
Petitioner argued that the security guards have no legal basis to file a
complaint because of lack of contractual privity.

The Regional Director (RD) of the DOLE-NCR found for petitioner

and ordered SSS to pay the wage differentials. SSS filed a motion for
reconsideration for the computation of the wage which the RD granted.
SSS then filed an appeal with the DOLE Secretary claiming that the
RD had no jurisdiction over the case at bar. The DOLE Secretary set
aside the DOLE RD order and also held petitioner CSA jointly and
severally liable for wage differentials, the amount of which should be
paid directly to the security guards.

Before the Supreme Court, petitioner claimed that the DOLE

Secretary does not have jurisdiction to review appeals from the
decisions of RDs in complaints filed under Art. 129 of the LC. He
claimed that the appeal should have been to the NLRC. SSS, on the
other hand, claims that it is Art. 128 and not Art. 129 that is applicable
and claimed that the order issued by the RD may be appealed to the
DOLE Secretary.
 Page 266

ISSUE:
Whether or not the appeal from the order of the DOLE Regional
Director directing respondent to comply with the wage order be filed
before the DOLE Secretary.

RULING:
NO. The appeal from the order of the DOLE Regional Director
directing respondent to comply with the wage order should not be filed
before the DOLE Secretary.

It is the RTC which has jurisdiction over the subject matter of the
present case. 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. 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 the wage order. 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.
 Page 267

Case Digest by: PANTINO, JUNNA LYNNE R.

CLAUDINE DE CASTRO ZIALCITA vs. PHILIPPINE

AIRLINES
RO4-3-3398-76. February 20, 1977.
Office of the President

DOCTRINE:
ARTICLE 134 (FORMERLY ARTICLE 136)
Article 136's protection of women is broader and more powerful
than the regulation provided under Article 132.

FACTS:
Petitioner Zialcita is a stewardess of respondent PAL. She was
fired from work because she got married. PAL argued and cited its
policy that stewardesses must be single. The policy also states that
subsequent marriage of a stewardess shall automatically terminate
employment.

Zialcita anchored on Article 136 of the Labor Code. PAL sought

refuge from Article 132.

Article 132 provides, "Facilities for women. The Secretary of Labor

and Employment shall establish standards that will ensure the safety
and health of women employees. In appropriate cases, he shall, by
regulations, require any employer to: To determine appropriate
minimum age and other standards for retirement or termination in
special occupations such as those of flight attendants and the like."

Article 136 provides, "Stipulation against marriage. It shall be

unlawful for an employer to require as a condition of employment or
continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage."

ISSUE:
Whether or not Zialcita was validly dismissed.

RULING:
NO. Zialcita was not validly dismissed.
 Page 268

The termination was improper. During the time Zialcita was

terminated, no regulation had yet been issued by the Secretary of
Labor to implement Article 132.

Even assuming that the Secretary of Labor had already issued

such a regulation and to the effect that stewardesses should remain
single, such would be in violation of Article 136 of the Labor Code.
Article 136's protection of women is broader and more powerful than
the regulation provided under Article 132.
 Page 269

Case Digest by: PANTINO, JUNNA LYNNE R.

STAR PAPER CORPORATION, ET AL. vs. RONALDO D.

SIMBOL, ET AL.
G.R. No. 164774. April 12, 2006.
Puno, J.

DOCTRINE:
ARTICLE 136 (FORMERLY ARTICLE 134)
In the Philippine jurisdiction, we employ the standard of
reasonableness of the company policy which is parallel to the bona fide
occupational qualification requirement. This requirement of
reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the
existence of a reasonable business necessity.

FACTS:
Respondents Simbol and Comia both married a co-employee in
the petitioner company, and alleged that they were compelled to resign
from the company pursuant to a company policy that states “in case of
two of our employees (both singles, one male and another female)
developed a friendly relationship during the course of their employment
and then decided to get married, one of them should resign to preserve
the policy stated above.”

As to respondent Estrella, she alleged that she had a relationship

with co-worker Zulga who misrepresented himself as a married but
separated man. After he got her pregnant, she discovered that he was
not separated. Thus, she severed her relationship with him to avoid
dismissal due to the company policy. However, she was still dismissed
on the ground of immoral conduct.

Respondents filed a complaint for unfair labor practice,

constructive dismissal, separation pay and attorney’s fees. They
averred that the aforementioned company policy is illegal and
contravenes Article 134 (formerly 136) of the Labor Code. Petitioners
allege that its policy may appear to be contrary to Article 134 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-third-degree-
policy which is within the ambit of the prerogatives of management.
 Page 270

LA dismissed the complaint. LA opines that the company policy is

a proper exercise management prerogative. NLRC affirmed LA
decision. Court of Appeals reversed the NLRC decision and declared
that the dismissal of respondents illegal and ordering private
respondents to reinstate petitioners to their former positions without
loss of seniority rights with full backwages from the time of their
dismissal until actual reinstatement; and attorneys fees.

ISSUE:
Whether or not the company policy is a proper exercise of
management prerogative.

RULING:
NO. The company policy is a proper exercise of management
prerogative.

The questioned policy is in violation to Article 134 of the Labor

Code. In the Philippine jurisdiction, we employ the standard of
reasonableness of the company policy which is parallel to the bona fide
occupational qualification requirement. This requirement of
reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the
existence of a reasonable business necessity.

The Court did not find a reasonable business necessity in the case
at bar. 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.

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.

For failure of petitioners to present undisputed proof of a

reasonable business necessity, we rule that the questioned policy is
an invalid exercise of management prerogative.
 Page 271

Case Digest by: PANTINO, JUNNA LYNNE R.

MA. LOURDES T. DOMINGO vs. ROGELIO I. RAYALA

G.R. No. 155831. February 18, 2008.
Nachura, J.

DOCTRINE:
SEXUAL HARASSMENT
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.
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 respondent’s acts result in creating an
intimidating, hostile or offensive environment for the employee.

FACTS:
Ma. Lourdes Domingo, then Stenographic Reporter III at the
NLRC, filed a Complaint for sexual harassment against NLRC
Chairman Rogelio Rayala before the DOLE. To support the Complaint,
Domingo executed an Affidavit narrating the incidences of sexual
harassment complained of, thus:

Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at

hahawakan ang aking balikat sabay pisil sa mga ito habang ako ay
nagta-type at habang nagbibigay siya ng diktasyon.

Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman

Rayala. Ito ay sa kadahilanang ang fax machine ay nasa loob ng
kaniyang kwarto. Nang mabigyan ko na ng fax tone yung kausap ko,
pagharap ko sa kanan ay nakaharang sa dadaanan ko si Chairman
Rayala. Tinitingnan ako sa mata at ang titig niya ay umuusad mula ulo
hanggang dibdib tapos ay ngumiti na may mahalay na pakahulugan.

Domingo filed for leave of absence and asked to be immediately

transferred. Thereafter, she filed the Complaint for sexual harassment.
Upon receipt of the Complaint, the DOLE Secretary referred the
Complaint to the Office of the President (OP). The OP found Rayala
guilty of the offense charged.

Rayala argues that for sexual harassment to exist under RA 7877,

there must be: (a) demand, request, or requirement of a sexual favor;
(b) the same is made a pre-condition to hiring, re-employment, or
continued employment; or (c) the denial thereof results in
discrimination against the employee.
 Page 272

Rayala asserts that Domingo has failed to allege and establish any
sexual favor, demand, or request from petitioner in exchange for her
continued employment or for her promotion. According to Rayala, it
was merely Domingo’s perception of malice in his alleged acts a
product of her own imagination.

ISSUE:
Whether or not Rayala may be held guilty for sexual harassment.

RULING:
YES. Rayala may be held guilty for sexual harassment.

The law penalizing sexual harassment in our jurisdiction is RA

7877. Section 3 thereof defines work-related sexual harassment in this
wise:

Sec. 3. Work, Education or Training-related Sexual Harassment

Defined. Work, education or training-related sexual harassment is
committed by an employer, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over
another in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual

harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the

employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation, terms,
conditions, promotions, or privileges; or the refusal to grant the sexual
favor results in limiting, segregating or classifying the employee which
in a way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;

(2) The above acts would impair the employees rights or privileges
under existing labor laws; or

(3) The above acts would result in an intimidating, hostile, or

offensive environment for the employee.

It is not necessary that the demand, request or requirement of a

sexual favor be articulated in a categorical oral or written statement. It
 Page 273

may be discerned, with equal certitude, from the acts of the offender.
Holding and squeezing Domingo’s 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 Rayala’s 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
respondent’s acts result in creating an intimidating, hostile or offensive
environment for the employee. 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.
 Page 274
Case Digest by: QUINTON, ATHENAI FRANCES R.

PHILIPPINE AEOLUS AUTO-MOTIVE UNITED

CORPORATION v. NLRC
G.R. No. 124617. April 28, 2000.
Bellosillo, J.

DOCTRINE:
SEXUAL HARRASSMENT
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.

FACTS:
Private respondent Rosalinda C. Cortez was a company nurse for
Philippine Aeolus Automotive United Corporation (PAAUC). A
memorandum was issued to Cortez requiring her to explain why no
disciplinary action should be taken against her (a) for throwing a stapler
at Plant Manager William Chua, her superior, and uttering invectives
against him; (b) for losing the amount of P1,488.00 entrusted to her by
Plant Manager Chua to be given to Mr. Fang of the CLMC Department;
and, (c) for asking a co-employee to punch-in her time card thus
making it appear that she was in the office when in fact she was not.
While Cortez was still under preventive suspension, another
memorandum was issued by petitioner corporation to explain why no
disciplinary action should be taken against her for allegedly failing to
process the ATM applications of her nine (9) co-employees with the
Allied Banking Corporation. Subsequently, third memorandum was
issued to Cortez, this time informing her of her termination from the
service on grounds of gross and habitual neglect of duties, serious
misconduct and fraud or willful breach of trust.

Cortez claims that her Plant Manager, William Chua would make
sexual advances to her and she never reciprocated his flirtations, until
finally, she noticed that his attitude towards 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. She just found out one day that
her table which was equipped with telephone and intercom units and
containing her personal belongings was transferred without her
knowledge to a place with neither telephone nor intercom, for which
 Page 275

reason, an argument ensued when she confronted William Chua

resulting in her being charged with gross disrespect.

PAAUC asserts that Chua’s sexual advances to her which started

from her early days of employment and lasted for almost four years, is
hardly believable because it took Cortez more than four (4) years to
expose Chua’s alleged sexual harassment.

Cortez then filed with the Labor Arbiter a complaint for illegal
dismissal, non-payment of annual service incentive leave pay, 13th
month pay and damages against PAAUC and its president. 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. On appeal, the NLRC reversed the decision of the Labor
Arbiter and found PAAUC guilty of illegal dismissal of private
respondent Cortez. The NLRC ordered petitioner PAAUC to reinstate
respondent Cortez to her former position with back wages computed
from the time of dismissal up to her actual reinstatement. PAAUC
moved for reconsideration but it was denied; hence, this petition
for certiorari challenging the NLRC Decision and Resolution.

ISSUE:
Whether or not Cortez is entitled to moral and exemplary damages
by reason of sexual harassment she had endured in her workplace

RULING:
The Court ruled in the affirmative. 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.

Here, Cortez 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. 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. Since
William Chua had no place in Cortez’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.
 Page 276

In moral damages, it suffices to prove that the claimant has

suffered anxiety, sleepless nights, besmirched reputation and social
humiliation by reason of the act complained of. Exemplary damages,
on the other hand, are granted in addition to, inter alia, moral damages
by way of example or correction for the public good if the employer
acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.

In this case, anxiety was gradual in Cortez’s five (5)-year

employment. It began when her plant manager showed an obvious
partiality for her which went out of hand when he started to make it
clear that he would terminate her services if she would not give in to
his sexual advances. Sexual harassment is an imposition of misplaced
"superiority" which is enough to dampen an employee’s spirit in her
capacity for advancement. It affects her sense of judgment; it changes
her life. If for this alone private respondent should be adequately
compensated.

Thus, for the anxiety, the seen and unseen hurt that she suffered,
petitioners should also be made to pay her moral damages, plus
exemplary damages, for the oppressive manner with which petitioners
effected her dismissal from the service, and to serve as a forewarning
to lecherous officers and employers who take undue advantage of their
ascendancy over their employees.
 Page 277

Case Digest by: QUINTON, ATHENAI FRANCES R.

LBC v. PALCO
G.R. No. 217101. February 12, 2020.
Leonen, J.

DOCTRINE:
SEXUAL HARRASSMENT
An employee is considered constructively dismissed if he or she
was sexually harassed by her superior and her employer failed to act
on his or her complaint with prompt and sensitivity.

FACTS:
Monica C. Palco (Palco) worked for LBC Express-Vis Inc. (LBC)
as a customer associate in its Gaisano Danao Branch (LBC Danao).
While employed at LBC, Palco had initially noticed that the Branch’s
Team Leader and Officer-in-Charge, Arturo A. Batucan would often flirt
with her, which made her uncomfortable. Later, Batucan started
sexually harassing her.

The final straw happened at around 8:00 a.m. on May 1, 2010.

That morning, Batucan sneaked in on Palco while she was in a corner
counting money. Palco was caught by surprise and then Batucan held
her on her hips and attempted to kiss her lips. However, Palco was
able to shield herself. Batucan then tried a second time and was able
to kiss Palco's lips before she could react. She told him not to repeat
what he had done and threatened to tell his wife about it. Palco felt
angry and afraid.

On May 5, 2010, she reported the incident to the LBC Head Office
in Lapu Lapu City. She had a resignation letter prepared in case
management would not act on her complaint. The management
advised her to request for a transfer to another team while they
investigated the matter. Palco returned to the LBC Head Office with
her mother and submitted her formal complaint against Batucan. Later,
they proceeded to the police station to report the incident. On May 14,
2010, sensing that management did not immediately act on her
complaint, Palco resigned. She asserted that she was forced to quit
since she no longer felt safe at work. It was only on September 27,
2010 when LBC sent a letter addressed to Batucan containing a
suspension with last warning

Palco filed a complaint for constructive dismissal against LBC. The

Labor Arbiter ruled in favor of Palco. On appeal, the NLRC affirmed
with modification the Labor Arbiter's decision but reduced the amount
 Page 278

of moral damages. The Court of Appeals affirmed the decision of the

NLRC, and subsequently denied LBC's motion for reconsideration.
Hence, this petition.

ISSUE:
Whether or not LBC should be held liable for the alleged
constructive dismissal of Palco

RULING:
The Court ruled in the affirmative. Constructive dismissal occurs
when an employer makes an employee's continued employment
impossible, unreasonable or unlikely, or has made an employee's
working conditions or environment harsh, hostile and unfavorable,
such that the employee feels obliged to resign from his or her
employment. It does not always involve forthright dismissal or
diminution in rank, compensation, benefit and privileges. There may be
constructive dismissal if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his
continued employment.

One of the ways by which a hostile or offensive work environment

is created is through the sexual harassment of an employee.
Workplace sexual harassment occurs when a supervisor, or agent of
an employer, or any other person who has authority over another in a
work environment, imposes sexual favors on another, which creates in
an intimidating, hostile, or offensive environment for the latter. 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.

In this case, it is clear that Batucan's acts were sexually suggestive.

He held respondent's hand, put his hand on her lap and shoulder,
pulled her bra strap, joked about making a baby with her, attempted to
kiss her, and eventually scored one. These acts are not only
inappropriate, but are offensive and invasive enough to result in an
unsafe work environment for respondent.

Furthermore, under Section 5 of the Anti-Sexual Harassment Act,

the employer is only solidarity liable for damages with the perpetrator
in case an act of sexual harassment was reported and it did not take
immediate action on the matter. If the employer has been informed of
the acts of its managerial staff, and does not contest or question it, it is
deemed to have authorized or be complicit to the acts of its erring
employee.
 Page 279

In this case, even if petitioner LBC had no participation in the

sexual harassment, it had been informed of the incident. Despite this,
it failed to take immediate action on respondent's complaint. Its lack of
prompt action reinforced the hostile work environment created by
Batucan. There was unreasonable delay on petitioner's part in acting
on respondent's complaint when the formal investigation is deemed to
have commenced only 41 days after the incident was reported, and
petitioner likewise offered no explanation as to why it took another
month before it held an administrative hearing for the case.

Hence, LBC is liable for constructive dismissal on its delay in

acting on respondent's case which showed its insensibility, indifference,
and disregard for its employees' security and welfare.
 Page 280
Case Digest by: QUINTON, ATHENAI FRANCES R.

GSIS v. CA
G.R. No. 124208. January 28, 2008.
Azcuna, J.

DOCTRINE:
COMPENSABILITY
It is the time-honored principle that the Employees Compensation
Act is basically a social legislation designed to afford relief to our
working men and that labor, social welfare legislations should be
liberally construed in favor of the applicant. Considering, 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.

FACTS:
Abraham Cate (Abraham) joined the military service as a Rifleman
of the Philippine Navy. He was transferred to the now defunct
Philippine Constabulary with the rank of Technical Sergeant and was
later promoted to Master Sergeant. On 1991, he was absorbed in the
Philippine National Police (PNP) with the rank of Senior Police Officer
IV (SPO4).

In 1993, Abraham complained of a mass on his left cheek which

gradually increased in size. A biopsy was done at PGH and the
histopath report revealed that he was suffering from Osteoblastic
Osteosarcoma. He underwent operation which results to the removal
of the mass on his left cheek. In April 1994, another biopsy revealed
the recurrence of the ailment. Abraham underwent debulking of the
recurrent tumor at the PGH. Post-operative course was uneventful and
he underwent radiotherapy. On December 1994, Abraham was
compulsorily retired from the PNP.

Abraham filed a claim for income benefits with the GSIS. GSIS
denied the claim on the ground that Osteosarcoma is not considered
an occupational disease, and there is no showing that his duties as
SPO4 had increased the risk of contracting said ailment. GSIS also
denied Abraham’s request for reconsideration of the decision. On May
1995, Abraham died at the age of 45. The heirs of Abraham appealed
the decision of GSIS to the ECC. The ECC affirmed the decision of
GSIS and dismissed the case for lack of merit. On appeal, the CA ruled
that Osteosarcoma is compensable on the ground that the Employees
Compensation Act is basically a social legislation designed to afford
relief to our working men, and should, therefore, be liberally construed
 Page 281

in favor of the applicant. It stated that Abraham’s failure to present

evidence on the causal relation of the illness to his working conditions
is due to the lack of available proof because the origin and cause of
Osteosarcoma are unknown, and accordingly, the benefit of the doubt
should be resolved in favor of the claim since employees’
compensation is based on social security principles.

ISSUE:
Whether or not the ailment of the late Abraham is compensable
under the present law on employees’ compensation

RULING:
The Court ruled in the affirmative. Under Sec. 1 (b), Rule III of the
Amended Rules on Employees’ Compensation, for the sickness and
the resulting disability or death to be compensable, the sickness must
be the result of an occupational disease listed under Annex ‘A’ of these
Rules with the conditions set therein satisfied; otherwise, proof must
be shown that the risk of contracting the disease is increased by the
working conditions.

Osteosarcoma is not listed as an occupational disease in the

Amended Rules on Employees’ Compensation. Accordingly, it is
supposed to be upon the claimant or private respondents to prove by
substantial evidence that the risk of contracting Osteosarcoma was
increased by the working conditions of the late Abraham. Substantial
evidence means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. The records show that
Abraham failed to present evidence to establish that the development
of his ailment was traceable to his working conditions in the Philippine
Navy, the now defunct Philippine Constabulary and the PNP

On the other hand, it is the time-honored principle that the

Employees Compensation Act is basically a social legislation designed
to afford relief to our working men and that labor, social welfare
legislations should be liberally construed in favor of the applicant. The
plight of any cancer patient deserves some serious considerations.
Inflicted with this dreadful malady, the patient suffers from the trauma
of an impending death not to mention the high cost of medical
attendance required, only to prolong one’s agony and the
hopelessness of any definite cure simply because the origin and cause
of cancer are farfetched unresolved. 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.
 Page 282

Here, 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.

Since the requirement is impossible to comply with, given the

present state of scientific knowledge. The obligation to present such
as an impossible evidence must, therefore, be deemed void. Hence,
Abraham is entitled to compensation, consistent with the social
legislation’s intended beneficial purpose.
 Page 283
Case Digest by: QUINTON, ATHENAI FRANCES R.

SALMONE v. ECC
G.R. No. 142392. September 26, 2000.
Pardo, J.

DOCTRINE:
COMPENSABILITY
Cardiovascular diseases listed as compensable occupational
diseases in the Rules of the Employees’ Compensation Commission,
requires no further proof of casual relation between the disease and
claimant’s work.

FACTS:
Sometime in 1982, Dominga Salmone (petitioner) was employed
as sewer by the Paul Geneve Entertainment Corporation, a corporation
engaged in the business of sewing costumes, gowns and casual and
formal dresses. She was later promoted as the officer-in-charge and
the over-all custodian in the Sewing Department, more particularly the
procurement of all the materials needed by the Sewing Department as
well as insuring the quality of the products from the sewing department.

In 1996, Salmone started to feel chest pains. As per results of her

medical examination, petitioner was found suffering from
Atherosclerotic heart disease, Atrial Fibrillation, Cardiac Arrhythmia
Upon recommendation of her doctor, petitioner resigned from her work
hoping that with a much-needed complete rest, she will be cured.

Petitioner later filed a disability claim with the SSS but it was
denied. She then filed a motion for reconsideration with the SSS but
the same was denied. Dissatisfied, Salmone appealed from the said
decision to the ECC but it was denied again. On appeal to the CA, it
dismissed the petition, ruling that petitioner’s illness was not
compensable because she failed to adduce substantial evidence
proving any of the conditions of compensability. Hence, this petition.

ISSUE:
Whether or not Salmone is entitled to disability benefits

RULING:
The Court ruled in the affirmative. Under the Labor Code, as
amended, provide as that 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)
 Page 284

any illness caused by employment, subject to proof that the risk of

contracting the same is increased by working conditions. In other
words, for a sickness and the resulting disability or death to be
compensable, the said sickness must be an occupational disease
listed under Annex "A" of said Rules, otherwise, the claimant or
employee concerned must prove that the risk of contracting the
disease is increased by the working condition.

Atherosclerotic heart disease, atrial fibrillation, and cardiac

arrhythmia, from which petitioner suffered falls under the classification
“cardiovascular diseases” which is listed as compensable occupational
disease provided that substantial evidence is adduced to prove any of
the following conditions: (a) If the heart disease was known to have
been present during employment there must be proof that an acute
exacerbation clearly precipitated by the unusual strain by reason of the
nature of his work; (b) The strain of work that brings about an acute
attack must be of sufficient severity and must be followed within twenty
four (24) hours by the clinical signs of a cardiac insult to constitute
causal relationship; and (c) If a person who was apparently
asymptomatic before subjecting himself to strain of work showed signs
and symptoms of cardiac injury during the performance of his work and
such symptoms and signs persisted, it is reasonable to claim a causal
relationship."

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.

Hence, Salmone’s illness is compensable.

 Page 285
Case Digest by: QUINTON, ATHENAI FRANCES R.

HEIRS OF DEAUNA v. FIL STAR MARITIME

CORPORATION
G.R. No. 191563. June 20, 2012.
Reyes, J.

DOCTRINE:
COMPENSABILITY
The special clauses on collective bargaining agreements must
prevail over the standard terms and benefits formulated by the POEA
in its Standard Employment Contract. A contract of labor is so
impressed with public interest that the more beneficial conditions must
be endeavored in favor of the laborer. This is in consonance with the
avowed policy of the State to give maximum aid and full protection to
labor as enshrined in Article XIII of the 1987 Constitution.

FACTS:
Respondent Grandslam Enterprise Corporation (Grandslam) is
among Fil-Star Maritime Corporation (Fil-Star)'s foreign principals.
Grandslam owns and manages the vessel M/V Sanko Stream (Sanko)
which Edwin Deauna boarded on August 1, 2004 for a nine-month
engagement as Chief Engineer. As such, he was responsible for the
operations and maintenance of the entire vessel's engineering
equipment. He also determined the requirements for fuel, lube oil and
other consumables necessary for a voyage, conducted inventory of
spare parts, prepared the engine room for inspection by marine and
safety authorities, and took charge of the engine room during
maneuvering and emergency situations.

Prior to Edwin's deployment, he underwent the customary Pre-

employment Medical Examination (PEME) and was found as "fit to
work" as was repeatedly the case in the past 30 years since his first
deployment by Fil-Star in 1975. Sometime in October 2004, Edwin
experienced abdominal pains while on-board Sanko. He was promptly
referred to a doctor in Paranagua, Brazil. An ultrasound examination
revealed that he had kidney stones for which he was administered oral
medications. Thereafter, he resumed his work on-board Sanko.

On April 3, 2005 or more or less 8 months from deployment, Edwin

was repatriated. There were, however, conflicting claims regarding the
cause of his repatriation. The respondents claimed that Edwin
requested for an early termination of his contract in order to attend his
daughter's graduation ceremony. On the other hand, the petitioners
averred that Edwin was repatriated due to the latter's body weakness
 Page 286

and head heaviness. Edwin can neither physically report in Fil-Star's

office nor board his next vessel of assignment.

After a series of medical examination, findings showed that Edwin

is suffering from Glioblastoma WHO Grade 4" (GBM), a malignant and
aggressive form of brain cancer. The company-designated physician,
Dr. Cruz, opined that the etiology of GBM is unknown. About four
months after Edwin's repatriation, Dr. Cruz sent Capt. Millalos a
medical report stating that he was diagnosed with Glioblastoma
Multiforme.

Two demand letters seeking disability benefits were thereafter

sent by the petitioners to the respondents, however, the latter denied
the petitioners' demand. A complaint for disability benefits, medical and
transportation reimbursements, moral and exemplary damages and
attorney's fees were filed before the 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.

After finding that there was an arbitration clause in the in the

IBF/AMOSUP/IMMAJ CBA, the Labor Arbiter (LA) rendered a decision
referring the complaint to voluntary arbitration. The Voluntary Arbitrator
(VA) awarded death benefits to the petitioners. The respondents filed
with the CA a petition to challenge VA's award. The CA rendered
reversed and set aside VA’s award on the ground that the deceased
seaman's cause of death was not connected with his employment on
board the vessel as a Chief Engineer, and Glioblastoma Multiforme is
not an accepted occupational disease of a Chief Engineer under the
POEA-SEC, Art. 32-A.

ISSUE:
Whether or not the heirs of Deauna may claim the payment of
death compensation benefits according to the CBA

RULING:
The Court ruled in the affirmative.

The parties in this case never raised the issue of the VA's
jurisdiction, and in effect, it was an admission on the part of both the
petitioners and the respondents that the controversy involves the
interpretation of CBA provisions relative to the claims for death
compensation benefits. Stated differently, the contending parties both
impliedly acquiesced to the applicability of the CBA provisions and not
of the POEA SEC over the claims of the petitioners.
 Page 287

More importantly, the special clauses on collective bargaining

agreements must prevail over the standard terms and benefits
formulated by the POEA in its Standard Employment Contract. A
contract of labor is so impressed with public interest that the more
beneficial conditions must be endeavored in favor of the laborer. This
is in consonance with the avowed policy of the State to give maximum
aid and full protection to labor as enshrined in Article XIII of the 1987
Constitution.

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.

Here, 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.
Accordingly, the company-designated physician, Dr. Cruz, in effect
admitted that Edwin was repatriated due to symptoms which a person
suffering from GBM normally exhibits, and he recommended to Capt.
Millalos Edwin's entitlement to medical assistance and sick pay for a
period beyond 130 days from repatriation. Edwin subsequently died of
GBM, the symptoms of which were the cause of his earlier repatriation.

Hence, since Edwin's death is reasonably connected to the cause

of his repatriation, within the purview of the IBF/AMOSUP/IMMAJ CBA,
he indubitably died while under the respondents' employ, thus, entitling
the petitioners to death benefits as provided for in Appendix 3 of the
said CBA.
 Page 288
Case Digests by: QUINTON, ATHENAI FRANCES R.

DEBAUDIN v. SSS
G.R. No. 148308. September 21, 2007.
Azcuna, J.

DOCTRINE:
COMPENSABILITY
To establish compensability of a non-occupational disease,
reasonable proof of work-connection and not direct causal relation is
required. 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.

FACTS:
Roberto Debaudin is a seaman by profession. During his eighteen
(18) years of service with United Philippines Lines (UPL), he boarded
various foreign ocean-going vessels while performing his duties and
responsibilities that included cleaning chemical-spill-oil on deck, slat
dislodging, and spraying naphtha chemical and washing dirt and rusts
inside the tank.

Petitioner’s medical record shows that his illness started in May

1993 when he experienced episodes of bilateral blurring of vision.
While in Singapore then, he consulted Dr. Richard F.T. Fan, an
ophthalmic surgeon, and he was diagnosed to be suffering from
advanced glaucoma. His condition recurred even after his separation
from service, prompting him to seek further eye consultations and
treatments in the Philippines. His eye disease was finally diagnosed as
chronic open angle glaucoma.

On account of his ailment, petitioner filed before the SSS a claim

for compensation benefits. The application, however, was denied on
the ground that there is no causal relationship between the illness and
his job as a seaman. When his motion for reconsideration was also
denied, petitioner elevated the case to the ECC which later on affirmed
the assailed decision. On appeal, the petition was denied due course
and the CA accordingly 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. Hence, this petition.

ISSUE:
 Page 289

Whether or not the work of petitioner as a seaman contributed

even in a small degree in or had increased the risk of contracting his
chronic open angle glaucoma.

RULING:
The Court ruled in the negative. Under the Labor Code, as
amended, an employee is entitled to compensation benefits if the
sickness is a result of an occupational disease listed under Annex "A"
of 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. 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.

In the present case, petitioner’s 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 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.

Perusal of the records reveals petitioner’s failure to adduce any

proof of a reasonable connection between his work as a seaman and
the chronic open angle glaucoma he had contracted. Petitioner
presented no competent medical history, records or physician’s report
to objectively substantiate the claim that there is a reasonable nexus
between his work and his ailment.

Hence, petitioner’s 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.
 Page 290
Case Digest by: QUINTON, ATHENAI FRANCES R.

AUSTRIA v. CA
G.R. No. 146636. August 12, 2002.
Puno, J.

DOCTRINE:
COMPENSABILITY
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.

FACTS:
Pablo A. Austria (petitioner) 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. He underwent different
medical examinations and treatment, and it revealed that he has
osteoarthritis of the lumbar spine.

On account of his osteoarthritis, petitioner filed with the SSS a

claim for compensation benefits. The claim was granted and petitioner
was awarded permanent partial disability benefits. Thereafter, he
requested the SSS for conversion of his permanent partial disability
benefit to permanent total disability benefit. The SSS denied the
request on the ground that there is no progression of petitioner’s illness
which was already granted under previous EC disability. 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.
Petitioner elevated the case to the CA via petition for certiorari. The
appellate court dismissed the petition, ruling that the law does not allow
the conversion of permanent partial disability to permanent total
disability. Hence, this petition.

ISSUE:
Whether or not Austria is entitled to permanent total disability
benefits

RULING:
The Court ruled in the affirmative. 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. Consequently, 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
 Page 291

come within the coverage of Rule X of the Amended Rules on

Employees Compensability, 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. Disability is intimately related to
ones earning capacity. It should be understood less on its medical
significance but more on the loss of earning capacity.

Here, 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, Austria’s disability to perform his regular duties is

considered total and permanent and, accordingly, conversion of
permanent partial disability benefit to permanent total disability benefit
is proper because it is shown that the employee’s ailment qualifies as
such.
 Page 292
Case Digests by: QUINTON, ATHENAI FRANCES R.

GATUS v. SSS
G.R. No. 174725. January 26, 2011.
Leonardo-De Castro, J.

DOCTRINE:
COMPENSABILITY
Cardiovascular diseases are considered as occupational when
contracted under any of the following conditions: (a) If the heart
disease was known to have been present during employment there
must be proof that an acute exacerbation clearly precipitated by the
unusual strain by reason of the nature of his work; (b) The strain of
work that brings about an acute attack must be of sufficient severity
and must be followed within twenty-four (24) hours by the clinical signs
of a cardiac insult to constitute causal relationship; (c) If a person who
was apparently asymptomatic before subjecting himself to strain at
work showed signs and symptoms of cardiac injury during the
performance of his work and such symptoms and signs persisted, it is
reasonable to claim a causal relationship. The burden of proof is on
claimant to show that any of the above conditions have been met in his
case.

FACTS:
Alexander B. Gatus (petitioner) worked at the Central Azucarera
de Tarlac and he was a covered member of the SSS. He optionally
retired from his work upon reaching 30 years of service.

In the course of his employment, he was certified fit to work on

1975 and was accordingly promoted to a year-round regular
employment. He suffered chest pains and was confined at the Central
Luzon Doctor’s Hospital on 1995. Upon discharge, he was diagnosed
to be suffering from Coronary Artery Disease (CAD): Triple Vessel and
Unstable Angina. His medical records showed him to be hypertensive
for 10 years and a smoker. On account of his CAD, he was given by
the SSS the following EC/SSS Permanent Partial Disability (PPD)
benefits.

Sometime 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. Convinced that
he was entitled to the benefits, he assailed the decision but the SSS
maintained its position. The SSS also denied his motion for
reconsideration.
 Page 293

He elevated the matter to the ECC, which denied his appeal

essentially ruling that although his CAD was a cardiovascular disease
listed as an occupational disease 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.
On appeal, the Court of Appeals held that petitioner is not entitled to
compensation benefits which was likewise a confirmation of the audit
conducted by the Social Security System (SSS). Hence, this petition.

ISSUE:
Whether or not Gatus’ ailment is compensable under P.D No. 626

RULING:
The Court ruled in the negative. For an occupational disease and
the resulting disability or death to be compensable, all of the following
conditions must be satisfied: (a) the employee's work must involve the
risks described herein; (b) the disease was contracted as a result of
the employee's exposure to the described risks; (c) The disease was
contracted within a period of exposure and under such other factors
necessary to contract it; and (d) there was no notorious negligence on
the part of the employee.

Cardiovascular diseases are considered as occupational when

contracted under any of the following conditions: (a) If the heart
disease was known to have been present during employment there
must be proof that an acute exacerbation clearly precipitated by the
unusual strain by reason of the nature of his work; (b) The strain of
work that brings about an acute attack must be of sufficient severity
and must be followed within twenty-four (24) hours by the clinical signs
of a cardiac insult to constitute causal relationship; (c) If a person who
was apparently asymptomatic before subjecting himself to strain at
work showed signs and symptoms of cardiac injury during the
performance of his work and such symptoms and signs persisted, it is
reasonable to claim a causal relationship.

The burden of proof is on petitioner to show that any of the above

conditions have been met in his case. The requisite quantum of proof
in cases filed before administrative or quasi-judicial bodies is
substantial evidence, or that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.

Here, 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
 Page 294

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.

Gatus did not discharge the burden of proof imposed under the
Labor Code to show that his ailment was work-related. 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 physician’s report in order to substantiate his
allegation that the working conditions had increased the risk of
acquiring the cardiovascular disease.

Hence, Gatus was not qualified for the disability benefits under the
employees’ compensation law.
 Page 295
Case Digest by: QUINTON, ATHENAI FRANCES R.

REPUBLIC OF THE PHILIPPINES v. MARIANO

G.R. No. 139455. March 28, 2003.
Quisumbing, J.

DOCTRINE:
COMPENSABILITY
For 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. What kind
and quantum of evidence would constitute an adequate basis for a
reasonable man (not necessarily a medical scientist) to reach one or
the other conclusion, can obviously be determined only on a case-to-
case basis.

FACTS:
Respondent Pedro Mariano was an employee of LGP Printing
Press for eleven years. 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, Mariano’s 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." Mariano filed a claim for
employee’s compensation benefit with the SSS. In its medical
evaluation SSS denied his claim on the ground that there was no
causal connection between his ailment and his job as film developer.

Meanwhile, the ECC remanded respondent’s case to the SSS for

reception of additional documentary evidence. Respondent had
consulted Dr. Rogelio Mariano, whose diagnosis showed he was
suffering from Parkinson’s disease and hypertension. The ECC,
dismissed respondent’s claim and ruled that the respondent had failed
to establish a causal connection between Parkinson’s Disease and the
working conditions at the printing press. On respondent’s claim for
compensation for Hypertension, the ECC found that respondent had
failed to adduce sufficient evidence to establish that his ailment had
caused impairment of any of his body organs, which in turn could
permanently prevent him from engaging in a gainful occupation.

Aggrieved, respondent elevated the matter to the Court of Appeals

which rendered a judgment reversing the decision of the ECC held that
respondent had substantially established the connection between the
cause of his ailments and the nature of his work. Hence, this petition.
 Page 296

ISSUE:
Whether or not Mariano is entitled to claim for compensation
benefits

RULING:
The Court ruled in the affirmative. Under Section 1 (b), 13 Rule III,
of the Rules Implementing P.D. No. 626, 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. What kind and quantum of evidence would
constitute an adequate basis for a reasonable man (not necessarily a
medical scientist) to reach one or the other conclusion, can obviously
be determined only on a case-to-case basis.

First, as to Parkinson’s 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 that the conditions prevailing at LGP largely led
to the progression of the ailment. The respondent’s functions entailed
constant exposure to hazardous or toxic chemicals such as carbon
disulfate, carbon monoxide, or manganese. Where it was established
that the claimant’s ailment occurred during and in the course of his
employment, it must be presumed that the nature of the claimant’s
employment is the cause of the disease.

Second, even if we were to assume that Parkinson’s Disease is

not compensable, there can be no question that hypertension is a
compensable illness. In Government Service Insurance System v.
Gabriel, the Court ruled that hypertension and heart ailments are
compensable illnesses. Here, the respondent was diagnosed as
having hypertension and a medical certification was issued to that
effect. Further, in Ijares v. Court of Appeals, which involved a claim for
disability benefits due to hypertension, the Court gave probative value
to the medical findings of the examining physician. A doctor’s
certification as to the nature of the claimant’s disability normally
deserves full credence.

Here, Mariano’s various jobs 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 work, indeed the emotional and
physical stress of respondent’s work at the printing press caused, and
then exacerbated, his hypertension.
 Page 297

Thus, Mariano whose capabilities have been diminished, if not

completely impaired, as a consequence of his service, ought to be
given benefits he deserves under the law.
 Page 298
Case Digests by: QUINTON, ATHENAI FRANCES R.

MAGSAYSAY MARITIME CORPORATION V. LOBUSTA

G.R. No. 177578. January 25, 2012.
Villarama, JR., J.

DOCTRINE:
COMPENSABILITY
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.

FACTS:
Respondent Oberto S. Lobusta is a seaman who has worked for
Magsaysay Maritime Corporation since 1994. In March 1998, he was
hired again as Able Seaman by Magsaysay Maritime Corporation in
behalf of its principal Wastfel-Larsen Management A/S. Lobusta
boarded MV “Fossanger” but after two months, he complained of
breathing difficulty and back pain. 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 for repatriation for further
treatment.

Upon repatriation, Lobusta undergone a series of medical

examinations for treatment and further evaluation if he can return to
work. The parties then agree on a common doctor, Dr. Camilo Roa. Dr.
Roa’s clinical summary states Lobusta is not physically fit to resume
his normal work as a seaman due to the persistence of his symptoms;
that his asthma will remain chronically active and will be marked by
intermittent exacerbations; and that he needs multiple controller
medications for his asthma.

As the parties failed to reach a settlement as to the amount to

which Lobusta is entitled, he filed a complaint for disability/medical
benefits against petitioners before NLRC. Sometime in October 2000,
the parties agreed on an independent medical examination by Dr.
Annette M. David, whose findings it was agreed upon, would be
considered final. Dr. David’s findings stated that Lobusta is not
considered fit to work as an Able Seaman. As no settlement was
reached despite Dr. David’s findings, the Labor Arbiter ordered the
parties to file their respective position papers.
 Page 299

The Labor Arbiter rendered a decision which ordered petitioners

to pay Lobusta medical allowance for 120 days, disability benefits, and
attorney’s fees. The Labor Arbiter ruled that Lobusta suffered illness
during the term of his contract. The Labor Arbiter held that provisions
of the Labor Code, as amended, on permanent total disability do not
apply to overseas seafarers. Hence, Lobusta was awarded of
US$20,154 instead of US$60,000, the maximum rate for permanent
and total disability under 1996 POEA Standard Employment Contract.

On appeal, the NLRC dismissed his appeal and affirmed the Labor
Arbiter’s decision. The NLRC ruled that Lobusta’s condition may only
be considered permanent partial disability. While Dr. David suggested
that Lobusta’s prospects as seafarer may have been restricted by his
bronchial asthma, Dr. David also stated that the degree of impairment
is mild. Later, the NLRC also denied Lobusta’s motion for
reconsideration. Unsatisfied, Lobusta brought the case to the CA, the
CA declared that Lobusta is suffering from permanent total disability
and increased the award of disability benefits in his favor to US$60,000

ISSUE:
Whether or not Lobusta is entitled to receive US$60,000
permanent total disability benefits

RULING:
The Court ruled in the affirmative. In Vergara v. Hammonia
Maritime Services, Inc., the standard terms of the POEA Standard
Employment Contract agreed upon are intended to be read and
understood in accordance with Philippine laws, particularly, Articles
191 to 193 of the Labor Code, as amended, and the applicable
implementing rules and regulations in case of any dispute, claim or
grievance.

The Labor Code concept of permanent total disability applies to

the case of seafarers. 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. Further, in a disability
compensation, it is not the injury which is compensated, but rather it is
the incapacity to work resulting in the impairment of one’s earning
capacity. According to the jurisprudence, permanent disability is the
inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body.
 Page 300

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.

Here, 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 Lobusta’s 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.

On Lobusta’s other ailment, Dr. Roa’s 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 Lobusta’s 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 v. National Labor Relations Commission,
unfitness to work for 11-13 months was considered permanent total
disability. Further, Dr. David’s 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, Lobusta was not able to work again as a seaman and that
his disability is permanent as he has been unable to work for more than
eight years, counted until the CA decided the case in August 2006.
Hence, the award to Lobusta of US$60,000 as permanent total
disability benefits is proper.
 Page 301
Case Digests by: QUINTON, ATHENAI FRANCES R.

SOCIAL SECURITY COMMISSION v. AZOTE

G.R. No. 209741. April 15, 2015.
Mendoza, J.

DOCTRINE:
COMPENSABILITY
SSS, as the primary institution in charge of extending social
security protection to workers and their beneficiaries is mandated by
law to require reports, compilations and analyses of statistical and
economic data and to make an investigation as may be needed for its
proper administration and development. Precisely, the investigations
conducted by SSS are appropriate in order to ensure that the benefits
provided under the SS Law are received by the rightful beneficiaries.

FACTS:
In 1992, Edna and Edgardo were married in civil rites at RTC
Branch 9 in Albay. Their union produced six children born. Edgardo
submitted Form E-4 to the SSS designating his six children as
beneficiaries. When Edgardo passed away, 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 with a different set of beneficiaries.

Edna filed a petition with the SSC to claim the death benefits, lump
sum and monthly pension of Edgardo. 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 Azote to file her answer. Despite the
publication, no answer was filed and Rosemarie was subsequently
declared in default.

Subsequently, the SSC dismissed Edna’s petition for lack of

merit. NSO records revealed that the marriage of Edgardo to
one Rosemarie Teodora Sino was registered on July 28, 1982. It
opined that Edgardo’s marriage to Edna was not valid as there was no
showing that his first marriage had been annulled or dissolved.
Accordingly, the SSC denied Edna’s motion for reconsideration. On
appeal, the CA reversed and set aside the resolution and the order of
the SSC. It held that the SSC could not make a determination of the
validity or invalidity of the marriage of Edna to Edgardo considering
that no contest came from either Rosemarie or Elmer. The CA denied
the SSC’s motion for reconsideration. Hence, the present petition.
 Page 302

ISSUE:
Whether or not Edna Azote is entitled to receive death benefits of
Edgardo from SSS

RULING:
The Court ruled in the negative. Under the Social Security Law, it
is clear that only the legal spouse of the deceased-member is qualified
to be the beneficiary of the latter’s SS benefits. Furthermore, using the
parameters outlined in Article 41 of the Family Code, Edna, without
doubt, failed to establish that there was no impediment or that the
impediment was already removed at the time of the celebration of her
marriage to Edgardo. Settled is the rule that whoever claims
entitlement to the benefits provided by law should establish his or her
right thereto by substantial evidence. Edna could not adduce evidence
to prove that the earlier marriage of Edgardo was either annulled or
dissolved or whether there was a declaration of Rosemarie’s
presumptive death before her marriage to Edgardo. What is apparent
is that Edna was the second wife of Edgardo.

SSS, as the primary institution in charge of extending social

security protection to workers and their beneficiaries is mandated by
law to require reports, compilations and analyses of statistical and
economic data and to make an investigation as may be needed for its
proper administration and development. Precisely, the investigations
conducted by SSS are appropriate in order to ensure that the benefits
provided under the SS Law are received by the rightful beneficiaries.

Here, 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. As can be gleaned from the
certification issued by the NSO, there is no doubt that Edgardo married
Rosemarie in 1982. Edna cannot be considered as the legal spouse
of Edgardo as their marriage took place during the existence of a
previously contracted marriage. For said reason, the denial of Edna’s
claim by the SSC was correct. It should be emphasized that the SSC
determined Edna’s eligibility on the basis of available statistical data
and documents on their database as expressly permitted by the law.

Hence, considering that Edna was not able to show that she was
the legal spouse of a deceased-member, she would not qualify under
the law to be the beneficiary of the death benefits of Edgardo.
 Page 303
Case Digest by: QUINTON, ATHENAI FRANCES R.

MARLOW NAVIGATION, et al v. GANAL

G.R. No. 220168. June 07, 2017.
Peralta, J.

DOCTRINE:
COMPENSABILITY
The law does not intend for an employer to be the insurer of all
accidental injuries befalling an employee in the course of the latter's
employment, but only for those which arise from or grow out of the risks
necessarily associated with the workman's nature of work or incidental
to his employment.

FACTS:
Marlow Navigation, et al (petitioners) employed Ricardo Ganal
(Ganal) as an oiler aboard the vessel MV Stadt Hamburg. A party was
organized for the crewmen while the ship was anchored at Chittagong,
Bangladesh and after finishing his shift, Ganal joined the party. Around
3 o'clock in the morning of April 16, 2012, the ship captain noticed that
Ganal was already drunk so he directed him to return to his cabin and
take a rest. Ganal ignored the ship captain's order. Thus, a ship officer,
a security watchman and a member of the crew were summoned to
escort Ganal to his cabin. The crew members attempted to accompany
him back to his cabin but he refused. They then tried to restrain him
but he resisted and, when he found the chance to escape, he ran
towards the ship's railings and, without hesitation, jumped overboard
and straight into the sea. The crew members immediately threw life
rings into the water towards the direction where he jumped and the
ship officer sounded a general alarm and several alarms thereafter.
Contact was also made with the coast guard and the crew members
searched for Ganal, to no avail. Ganal was later found dead and
floating in the water.

Ganal's wife, Gemma Boragay, and her children (respondents)

filed a claim for death benefits with petitioners, but the latter denied the
claim. Boragay then filed with the NLRC a complaint for recovery of
death and other benefits, unpaid salaries for the remaining period of
Ganal's contract, as well as moral and exemplary damages.

The LA rendered a decision dismissing the complaint for lack of

merit. The LA held that respondents' allegations are self-serving and
hearsay; they failed to present evidence to substantiate their
allegations. On appeal, the NLRC denied respondents' appeal and
affirmed the decision of the LA. The NLRC ruled that petitioners have
duly proven that Ganal's death is not compensable as it was the result
 Page 304

of the deliberate and willful act of Ganal and, thus, is directly

attributable to him. Respondents filed a motion for reconsideration, but
the NLRC denied it. Respondents then filed a petition for certiorari with
the CA. The CA rendered its assailed decision which reversed the
ruling of the NLRC. The CA held that Ganal jumped into the sea while
he was overcome by alcohol and completely intoxicated and deprived
of his consciousness and mental faculties to comprehend the
consequence of his own actions and keep in mind his own personal
safety. Petitioners filed a motion for reconsideration, but the CA denied
it. Hence, this petition

ISSUE:
Whether or not Ganal’s death, which resulted from his act of
jumping overboard due to intoxication, is compensable

RULING:
The Court ruled in the negative. The law does not intend for an
employer to be the insurer of all accidental injuries befalling an
employee in the course of the latter's employment, but only for those
which arise from or grow out of the risks necessarily associated with
the workman's nature of work or incidental to his employment.

Here, it may be conceded that the death of Ganal took place in the
course of his employment, in that it happened at the time and at the
place where he was working. However, the accident which produced
this tragic result did not arise out of such employment. The occasion
where Ganal took alcoholic beverages was a grill party organized by
the ship officers of MV Stadt Hamburg. It was a social event and Ganal
attended not because he was performing his duty as a seaman, but
was doing an act for his own personal benefit. Even if the Court were
to adopt a liberal view and consider the grill party as incidental to
Ganal's work as a seaman, his death during such occasion may not be
considered as having arisen out of his employment as it was the direct
consequence of his decision to jump into the water without coercion
nor compulsion from any of the ship officers or crew members.

Moreover, petitioners took the necessary precautions when: (1)

the ship captain advised Ganal to proceed to his cabin and take a rest;
(2) Ganal was assisted by no less than three crew members who tried
to persuade him to return to his cabin; (3) when he refused, the crew
members tried to restrain him but he escaped and immediately ran
away from them and, without warning, jumped into the sea. Ganal's act
of jumping overboard was not, in any way, connected with the
performance of his duties as ship oiler. Neither could petitioners have
reasonably anticipated such act on the part of Ganal.
 Page 305

In addition, even if it could be shown that a person drank

intoxicating liquor, it is incumbent upon the person invoking
drunkenness as a defense to show that said person was extremely
drunk, as a person may take as much as several bottles of beer or
several glasses of hard liquor and still remain sober and unaffected by
the alcoholic drink. It must be shown that the intoxication was the
proximate cause of death or injury and the burden lies on him who
raises drunkenness as a defense.

Here, there was no competent proof to show that Ganal's state of

intoxication during the said incident actually deprived him of his
consciousness and mental faculties which would have enabled him to
comprehend the consequences of his actions and keep in mind his
personal safety. Respondents failed to present evidence to overcome
the defense of the petitioners and show that, prior to and at the time
that he jumped overboard, Ganal was deprived of the use of his reason
or that his will has been so impaired, by reason of his intoxication, as
to characterize his actions as unintentional or involuntary. The fact
alone that he refused to be escorted to his cabin, that he resisted
efforts by other crew members to restrain him and that he jumped
overboard without hesitation or warning does not prove that he was not
in full possession of his faculties as to characterize his acts as
involuntary or unintentional.

Hence, petitioners should not be held responsible for the

consequence of Ganal's act of jumping overboard.
 Page 306
Case Digest by: QUINTON, ATHENAI FRANCES R.

SEAPOWER SHIPPING v. SABANAL

G.R. No. 198544. June 19, 2017.
Jardeleza, J.

DOCTRINE:
COMPENSABILITY
The employer is generally liable for death benefits when a seafarer
dies during his term of employment. The only exception is when it can
be proved that such death was done deliberately or willfully. Evidence
of insanity or mental sickness may be presented as a matter of counter-
defense. However, it must be proved that the person is deprived of full
control of his senses. Strange behavior alone is insufficient to prove
insanity.

FACTS:
Sea Power Shipping Enterprises, Inc. (Seapower) hired Warren M.
Sabanal (Sabanal) as Third Mate onboard MT Montana. After
undergoing the routine pre-employment medical examination and
being declared fit to work, Sabanal boarded the ship and commenced
his duties.

Sometime in September 1995, during voyage, Sabanal started

exhibiting unusual behavior which led the captain to set double guards
on him. It appeared that he had problems with his brother in the
Philippines. The sailors watching over Sabanal reported that he
wanted to board a life boat, citing danger in the ship's prow. Because
of Sabanal's condition, the captain relieved him of his shift and allowed
him to sleep in the cabin guarded. The following day, the captain
wanted to supervise Sabanal better, so he took him on deck and
assigned to him simple tasks, such as correcting maps and collecting
and typing the crew's declarations. The captain observed that
Sabanal's condition was "rather better" and he "did not appear to have
any problems." Later that day, Sabanal requested the sailor-on-guard
that he be allowed to return to the deck for some fresh air. Once on
deck, Sabanal suddenly ran to the stern and jumped to the sea. The
ship's rescue attempts proved futile, and Sabanal's body was never
recovered. Seapower informed Sabanal's wife, Elvira, regarding the
incident. Elvira went to claim whatever benefits she was entitled to but
Seapower informed her that she was only entitled to the death benefits
under the Social Security System; Seapower categorically disclaimed
any liability for Sabanal's death.

The Labor Arbiter dismissed Elvira's case on the grounds of

prescription and lack of merit. It ruled that the pieces of evidence
 Page 307

submitted by Seapower, particularly, copies of the ship's log and the

master's report, clearly show that Sabanal took his own life. Hence, his
death is not compensable. On appeal, the NLRC affirmed the Labor
Arbiter's dismissal of the complaint. The NLRC found that Sabanal's
suicide was established by substantial evidence. It held that when the
death of the seaman resulted from his own willful act, the death is not
compensable. After the NLRC denied Elvira's motion for
reconsideration, Elvira elevated the case to the Court of Appeals on
certiorari. The CA reversed the NLRC and concluded that Sabanal’s
actions were borne not by his willful disregard of his safety and of his
life, but, on the contrary, he became paranoid that the ship was in grave
danger, that he wanted to save himself from the imagined doom that
was to befall the ship." Accordingly, the Court of Appeals ordered
Seapower to pay death benefits to Elvira. It subsequently denied
Seapower's motion for reconsideration. Hence, this petition.

ISSUE:
Whether or not Sabanal’s death is compensable

RULING:
The Court ruled in the negative. Under the POEA-SEC, no
compensation shall be payable in respect of any injury, incapacity,
disability or death resulting from a willful act on his own life by the
seaman, provided, however, that the employer can prove that such
injury, incapacity, disability or death is directly attributable to him.

In Agile Maritime Resources, Inc. v. Siador (Agile), which also

involved a seafarer jumping overboard, the Court held that since the
willfulness may be inferred from the physical act itself of the seafarer
(his jump into the open sea), the insanity or mental illness required to
be proven must be one that deprived him of the full control of his
senses; in other words, there must be sufficient proof to negate
voluntariness. Homesickness and/or family problems may result to
depression, but the same does not necessarily equate to mental
disorder. The issue of insanity is a question of fact; for insanity is a
condition of the mind not susceptible of the usual means of proof. As
no man would know what goes on in the mind of another, the state or
condition of a person's mind can only be measured and judged by his
behavior.

Here, Elvira did not present any evidence to support her claim that
Sabanal was already insane when he jumped overboard. While
Sabanal’s behavior may be indicative of a possible mental disorder, it
is insufficient to prove that he had lost full control of his faculties. In
order for insanity to prosper as a counter-defense, the claimant must
substantially prove that the seafarer suffered from complete
deprivation of intelligence in committing the act or complete absence
 Page 308

of the power to discern the consequences of his action. Mere

abnormality of the mental faculties does not foreclose willfulness. In
fact, the ship log shows Sabanal was still able to correct maps and type
the declarations of the crew hours before he jumped overboard. The
captain observed that Sabanal did not appear to have any problems
while performing these simple tasks, while the sailor-on-guard reported
that Sabanal did not show any signs of unrest immediately before the
incident. These circumstances, coupled with the legal presumption of
sanity, tend to belie Elvira's claim that Sabanal no longer exercised any
control over his own senses and mental faculties.

Hence, Sabanal’s death is not compensable.

 Page 309

Case Digest by: Angeline V. Wilson

GSIS VS. PAUIG

G.R. No. 210328. January 30, 2017.
Peralta, J.

DOCTRINE:
COMPENSABILITY

Compulsory coverage under the GSIS had previously and consistently

included regular and permanent employees, and expressly excluded
casual, substitute or temporary employees from its retirement
insurance plan.

FACTS:
Respondent Apolinario C. Pauig (Pauig) was the Municipal
Agriculturist of the Municipality of San Pablo, lsabela. He started in the
government service on February 12, 1964 as Emergency Laborer on
casual status. Later, he became a temporary employee from July 5,
1972 to July 18, 1977. On July 19, 1977, he became a permanent
employee, and on August 1, 1977, he became a GSIS member. On
November 3, 2004, he retired from the service upon reaching the
mandatory retirement age of 65 years old. But when he filed his
retirement papers with the GSIS-Cauayan, the latter processed his
claim based on a Record of Creditable Service and a Total Length of
Service of only twenty-seven (27) years. Disagreeing with the
computation, Pauig wrote a letter-complaint to the GSIS, arguing that
his first fourteen (14) years in the government service had been.
erroneously omitted. The GSIS ratiocinated that Pauig's first fourteen
(14) years in the government were excluded in the computation of his
retirement benefits because during those years, no premium payments
were remitted to it. Aggrieved, Pauig filed a case before the RTC. the
RTC rendered a Decision in favour of Pauig. GSIS then filed a motion
for reconsideration, which was later denied. Thus, the instant petition.

ISSUE:
Whether or not respondent GSIS should include Pauig's first fourteen
(14) years in government service for the calculation of the latter's
retirement benefits claim.

RULING:
No. Retirement benefits are given to government employees to
reward them for giving the best years of their lives to the service of their
country. This is especially true with those in government service
occupying positions of leadership or positions requiring management
 Page 310

skills because the years they devote to government service could be

spent more profitably elsewhere, such as in lucrative appointments in
the private sector.

The doctrine of liberal construction cannot be applied in this case,

where the law invoked is clear, unequivocal and leaves no room for
interpretation or construction. To uphold Pauig's position will
contravene the very words of the law and will defeat the ends which it
seeks to attain. Pauig claims that his service in the government from
February 12, 1964 to July 18, 1977 should be credited for the purpose
of computing his retirement benefits is unmeritorious. Compulsory
coverage under the GSIS had previously and consistently included
regular and permanent employees, and expressly excluded casual,
substitute or temporary employees from its retirement insurance plan.
Based on the records, Pauig began his career in the government on
February 12, 1964 as Emergency Laborer on a casual status. Then,
he became a temporary employee from July 5, 1972 to July 18, 1977.
However, the Court notes that it was not until 1997 that the compulsory
membership in the GSIS was extended to employees other than those
on permanent status.
 Page 311

Case Digest by: Angeline V. Wilson

CF SHARP VS. CASTILLO

G.R. No. 208215. April 19, 2017.
Peralta, J.

DOCTRINE:
COMPENSABILITY

For disability to be compensable under Section 20 (B) of the 2000

POEA-SEC, two elements must concur: (1) the injury or illness must
be work-related; and (2) the work-related injury or illness must have
existed during the term of the seafarer's employment contract. In other
words, to be entitled to compensation and benefits under this provision,
it is not sufficient to establish that the seafarer's illness or injury has
rendered him permanently or partially disabled; it must also be shown
that there is a causal connection between the seafarer's illness or injury
and the work for which he had been contracted. In determining the
work-causation of a seafarer's illness, the diagnosis of the company-
designated physician bears vital significance.

FACTS:
Respondent Rhudel Castillo was hired by petitioner C.F. Sharp
Crew Management to serve as Security Guard on board the vessel MV
Norwegian Sun. Respondent boarded the ship MV Norwegian Sun.
Prior to his deployment, respondent underwent a Pre-employment
Medical Examination ( PEME ) and was pronounced fit to work. While
on board the vessel, respondent suffered from difficulty of breathing
and had a brief seizure attack causing him to fall from his bed. He was
immediately treated by the ship doctor. When the ship docked at the
port of Mazatlan, Sinaloa, Mexico, respondent was brought to a
hospital where he was immediately admitted. Respondent was
repatriated on October 7, 2008. He was referred to the company-
designated physicians, Dr. Susannah Ong-Salvador and Dr. Antonio A.
Pobre for further treatment, evaluation and management. He
underwent a magnetic resonance imaging ( MRI ) with the following
findings: "T1 and T2 weighted hyperdensity over cortico-white matter
junction of the right parietal lobe." On April 16, 2009, a Medical
Progress Report was issued by Dr. Ong-Salvador stating that
respondent is suffering from "right parietal cavernoma" and the
condition is deemed to be idiopathic, thus, it is not work-related. On
April 30, 2009, Dr. Pobre issued a Certification indicating that
respondent is suffering from Cavernoma and the illness is a congenital
disorder and not work-related. Petitioners shouldered all the expenses
in connection with respondent's medical treatment. Respondent was,
 Page 312

likewise, paid his sickness wage. Respondent filed a complaint for

permanent and total disability benefits, damages and attorney’s fees.

ISSUE:
Whether or not respondent is entitled to total and permanent disability
benefits

RULING:
No. For disability to be compensable under Section 20 (B) of the
2000 POEA-SEC, two elements must concur: (1) the injury or illness
must be work-related; and (2) the work-related injury or illness must
have existed during the term of the seafarer's employment contract. In
other words, to be entitled to compensation and benefits under this
provision, it is not sufficient to establish that the seafarer's illness or
injury has rendered him permanently or partially disabled; it must also
be shown that there is a causal connection between the seafarer's
illness or injury and the work for which he had been contracted. In
determining the work-causation of a seafarer's illness, the diagnosis of
the company-designated physician bears vital significance. After all, it
is before him that the seafarer must initially report to upon medical
repatriation.

In the case at bar, petitioners' physician, Dr. Pobre, declared that

the illness of respondent which is cavernoma is not work-related as the
same is congenital in nature, while petitioners' other physician Dr.
Salvador-Ong declared the same as idiopathic in its causation and,
thus, not work-related. However, the statement of respondent’s
physician, Dr. Vicaldo, claims that the disease is work-related. In the
report of Dr. Vicaldo he stated that he only saw respondent once, or
on May 1, 2010. Dr. Vicaldo did not perform any sort of diagnostic test
or examination on respondent. Respondent did not allege how he was
examined and treated by Dr. Vicaldo, and how the latter arrived at the
conclusion that respondent's illness is work-related. Meanwhile, Dr.
Ong-Salvador and Dr. Pobre are familiar with respondent's medical
history and condition, thus, their medical opinion on whether
respondent's illness is work-aggravated/-related deserve more
credence as opposed to Dr. Vicaldo's unsupported conclusions. In sum,
respondent is not entitled to total and permanent disability benefits for
his failure to refute the company designated physicians' findings that
his illness was not work-related.
 Page 313

Case Digest by: Angeline V. Wilson

LEMONCITO VS. BSM CREW SERVICE CENTRE

G.R. No. 247409. February 3, 2020.
Lazaro-Javier, J.

DOCTRINE:
COMPENSABILITY

Without a valid final and definitive assessment from the

company-designated doctors within the 120/240-day period, as in this
case, the law already steps in to consider a seafarer's disability as total
and permanent. By operation of law, therefore, petitioner is already
totally and permanently disabled. Besides, jurisprudence grants
permanent total disability compensation to seafarers, who suffered
from either cardiovascular diseases or hypertension, and were under
the treatment of or even issued fit¬-to-work certifications by company-
designated doctors beyond 120 or 240 days from their repatriation

FACTS:
On July 16, 2015, respondent BSM Crew Service Centre
Philippines, Inc. (BSM), on behalf of its principal respondent Bernard
Schulte Shipmanagement (BSS), hired petitioner Michael Angelo
Lemoncito as a motor man for a duration of nine (9) months. Petitioner
was covered by the collective bargaining agreement (CBA) between
International Maritime Employees' Council and Associated Marine
Officers' and Seamen's Union of the Philippines. After being declared
fit to work, petitioner boarded MV British Ruby on July 22, 2015.

While on board, petitioner complained of fever and cough

productive of whitish phlegm and throat discomfort. His blood pressure
reached 173/111, for which he was given medication. On February 22,
2016, he was medically repatriated. On February 26, 2016, he was
referred to the Marine Medical Services under the care of company-
designated doctors Percival Pangilinan and Dennis Jose Sulit. After a
series of tests, he was diagnosed with lower respiratory tract infection
and hypertension. The company-designated doctors opined that
petitioner's hypertension was not work-related.

On July 1, 2016, the company-designated doctors issued their

16th and final report where they noted that petitioner had been
previously cleared of his lower respiratory tract infection and that his
hypertension was responding to medication.6
 Page 314

Disagreeing with conclusions of the company-designated

doctors, petitioner consulted Dr. Antonio Pascual, who issued a
Medical Report dated September 12, 2016. Dr. Pascual certified that
petitioner had 1) Hypertensive Heart Disease, Stage 2; and 2)
Degenerative Osteoarthritis, Thoracic Spine. Consequently, Dr.
Pascual declared petitioner "unfit to work as a seaman."7

On the basis of Dr. Pascual's certification, petitioner invoked the

grievance procedure embodied in the CBA and lodged a complaint for
total permanent disability benefits, sickness allowance, damages and
attorney's fees before the Panel of Voluntary Arbitrators.

ISSUE:
Whether or not petitioner can be declared as totally and permanently
disabled by reason of his hypertension

RULING:
Yes. After undergoing a pre-employment medical examination
(PEME), petitioner was declared fit to work and was permitted to board
MV British Ruby on July 22, 2015. Although a PEME is not expected
to be an in-depth examination of a seafarer's health, still, it must fulfill
its purpose of ascertaining a prospective seafarer's capacity for safely
performing tasks at sea. Thus, if it concludes that a seafarer, even one
with an existing medical condition, is "fit for sea duty," it must, on its
face, be taken to mean that the seafarer is well in a position to engage
in employment aboard a sea vessel without danger to his health.

Undoubtedly, the Medical Report dated July 1, 2016 is not

complete and adequate, therefore, it must be ignored. Ampo-on v.
Reinier Pacific International Shipping, Inc. explains:

Upon finding that the seafarer suffers a work-related injury or

illness, the employer is obligated to refer the former to a company-
designated physician, who has the responsibility to arrive at a definite
assessment of the former's fitness or degree of disability within a
period of 120 days from repatriation. This period may be extended up
to a maximum of 240 days, if the seafarer requires further medical
treatment, subject to the right of the employer to declare within this
extended period that a permanent partial or total disability already
exists.

The responsibility of the company-designated physician to arrive

at a definite assessment within the prescribed periods necessitates
that the perceived disability rating has been properly established and
inscribed in a valid and timely medical report. To be conclusive and to
give proper disability benefits to the seafarer, this assessment must be
 Page 315

complete and definite; otherwise, the medical report shall be set aside
and the disability grading contained therein shall be ignored. As case
law holds, a final and definite disability assessment is necessary in
order to truly reflect the true extent of the sickness or injuries of the
seafarer and his or her capacity to resume work as such.

Failure of the company-designated physician to arrive at a

definite assessment of the seafarer's fitness to work or permanent
disability within the prescribed periods and if the seafarer's medical
condition remains unresolved, the law steps in to consider the latter's
disability as total and permanent.

To repeat, without a valid final and definitive assessment from

the company-designated doctors within the 120/240-day period, as in
this case, the law already steps in to consider a seafarer's disability as
total and permanent. By operation of law, therefore, petitioner is
already totally and permanently disabled. Besides, jurisprudence
grants permanent total disability compensation to seafarers, who
suffered from either cardiovascular diseases or hypertension, and
were under the treatment of or even issued fit-to-work certifications by
company-designated doctors beyond 120 or 240 days from their
repatriation
 Page 316

Case Digest by: Angeline V. Wilson

ABUNDO VS. MAGSAYSAY MARITIME CORPORATION

G.R. No. 222348. November 20, 2019.
Inting, J.

DOCTRINE:
COMPENSABILITY

Before a seafarer should be compelled to initiate referral to a

third doctor, there must first be a final and categorical assessment
made by the company-designated physician as to the seafarer's
disability within 120/240-day period. Otherwise, the seafarer shall be
considered permanently disabled by operation flaw.

FACTS:
Jherome G. Abundo (petitioner) was formerly employed as Able
Seaman on board the vessel "Grand Celebration-D/E" (Grand
Celebration). On the other hand, Magsaysay Maritime Corporation is a
licensed manning agent of its principal, Grand Celebration LDA
(collectively, respondents).

On December 15, 2012, while the petitioner was securing a

lifeboat, a metal block snapped and hit his right forearm. After
consultation with the doctor assigned in the vessel, the petitioner was
recommended for repatriation. When he was fit to travel, the petitioner
was medically repatriated on January 7, 2013. Upon arrival, the
petitioner was referred to a company-designated physician. Petitioner
underwent a treatment procedure and after his discharge from the
hospital, the petitioner was then made to undergo physiotherapy to
improve the function of his right arm.

Dr. Esther G. Go (Dr. Go), the company-designated doctor,

issued an interim assessment of Grade 10 disability which was noted
by the company medical coordinator, Dr. Robert D. Lim (Dr. Lim).
Further, on April 26, 2013, Dr. Ramon Lao (Dr. Lao), a company
surgeon, suggested a Grade 10 disability due to ankylosed wrist.

Meanwhile, the petitioner sought an independent doctor, Dr.

Rogelio P. Catapang (Dr. Catapang), an orthopaedic surgery and
traumatic flight surgeon who made the following findings:
 Page 317

Mr. Abundo continues to have weakness and pain of the right

extremity despite continuous physiotherapy. Range of motion is
restricted particularly in supination. Because his grip is weak, he
is unable to lift heavy objects, the kind of work seaman are
expected to perform. He has lost his pre-injury capacity and is
UNFIT to work back at his previous occupation.

With these findings, the petitioner demanded from the

respondents the maximum benefit under the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-
SEC) and claimed to be suffering from permanent disability. Instead of
granting permanent disability benefits, the respondents offered
US$10,075.00, an amount equivalent to a Grade 10 disability. As a
result, the petitioner filed a labor complaint against the respondents
seeking the payment of sickness allowance, permanent and total
disability benefits, moral and exemplary damages, and attorney's fees.

On July 1, 2016, the company-designated doctors issued their

16th and final report where they noted that petitioner had been
previously cleared of his lower respiratory tract infection and that his
hypertension was responding to medication.

Disagreeing with conclusions of the company-designated

doctors, petitioner consulted Dr. Antonio Pascual, who issued a
Medical Report dated September 12, 2016. Dr. Pascual certified that
petitioner had 1) Hypertensive Heart Disease, Stage 2; and 2)
Degenerative Osteoarthritis, Thoracic Spine. Consequently, Dr.
Pascual declared petitioner "unfit to work as a seaman."

LA: The Labor Arbiter found that the petitioner's disability is permanent
and total based on the pieces of evidence presented. She explained
that even after the company-designated physician gave an interim
assessment of the petitioner's medical condition under Grade 10
disability, the petitioner was still undergoing rehabilitation. The Labor
Arbiter opined that total disability does not mean absolute helplessness.
Thus, she concluded that in disability compensation, it is not the injury
which is compensated but rather the incapacity to work resulting in the
impairment of one's earning capacity. NLRC affirmed LA ruling.

CA: The CA held that referral to a third doctor is mandatory. It ruled

that it is the obligation of the seafarer to notify the concerned employer
of his intention to settle the issue through the appointment of a third
doctor. The CA upheld the assessment of Dr. Go, the company-
designated physician, stating that the petitioner suffers from Grade 10
disability.
 Page 318

Likewise, the CA clarified that the 120/240-day period could no longer

be made as basis for the assessment of the disability grade but the
actual disability grade given by the company-designated physician or
the third independent physician pursuant to Section 20(A)(6) of the
POEA¬ SEC. Applying Section 20(A)(6) o the POEA-SEC, the CA
stated that the disability shall be based on the disability grading
provided under Section 32 of the POEA-SEC which grants a disability
award of US$10,075.00

ISSUE:
Whether or not petitioner is entitled to permanent and total disability
benefits

RULING:
Yes. Although the CA was correct in highlighting that referral to
a third doctor is mandatory, it however, overlooked the fact that there
was no final and categorical assessment and conclusion made by the
company-designated physicians. It likewise misapprehended the fact
that the company doctors' assessment is not yet a final conclusion as
to the petitioner's disability, and that, there is no need to consult a third
doctor in order to settle the issue.

There is no question that the referral to a third doctor as provided

in Section 20(A)(3) of the POEA-SEC is mandatory in case there are
disagreements made by the company-designated physician and the
seafarer's chosen physician as to the seafarer's medical condition.
This Court in the recent cases of Murillo v. Philippine Transmarine
Carriers, Inc. and Dionio v. Trans-Global Maritime Agency, Inc.,
reiterated the settled rule that the referral to a third doctor is mandatory,
and that the seafarer's failure to abide thereby is a breach of the POEA-
SEC which makes the assessment of the com any-designated
physician final and binding.

However, our jurisprudence is replete with cases which

pronounce that before a seafarer should be compelled to initiate
referral to a third doctor, there must first be a final and categorical
assessment made by the company-designated physician as to the
seafarer's disability within 120/240-day period. Otherwise, the seafarer
shall be considered permanently disabled by operation flaw.

In the case at bench, the disability grading that Dr. Go, the
company-designated doctor, issued was merely an interim
assessment and not a final and categorical finding. If it were otherwise,
Dr. Go would not have advised the petitioner to continue his
rehabilitation. Also, Dr. Lao's subsequent medical report cannot be
considered as final assessment as he merely suggested disability
 Page 319

grading. Dr. Lao was not the designated doctor who medically
evaluated the petitioner's condition. His report is merely a suggestion
subject for evaluation by Dr. Lim, the medical coordinator.

Records reveal that petitioner remained incapacitated to resume

sea duties even after the company-designated doctor evaluated his
medical condition. This means that the petitioner had to still undergo
medical treatment even after being seen by the company-designated
physician. Obviously, even after the lapse of the maximum 240-day
period there was still no final assessment made by the company-
designated doctor as to the petitioner's disability. With Dr. Go's failure
to issue a final and definite assessment of petitioner's condition within
the 240-day period, petitioner was thus deemed totally and
permanently disabled. It is apparent that petitioner's disability and
incapacity to resume working continued for more than 240 days.

Consequently, the absence of a final assessment by the

company-designated physician makes the rule on third-doctor-referral
inapplicable in the instant case. The failure of the company-designated
physician to issue a final assessment and disability grading within the
240-day period made the petitioner's disability total and permanent
even without evaluation by a third doctor. Evidently, there is no need
for the petitioner to initiate the referral to a third doctor for him to be
entitled to permanent disability benefits. Considering the absence of
definitive disability assessment made by the company-designated
physician, it was by operation of law that the petitioner became
permanently disabled.
 Page 320

Case Digest by: Angeline V. Wilson

PHILIPPINE TRANSMARINE CARRIERS, INC. VS.

MANZANO
G.R. No. 210329. March 18, 2021.
Gaerlan, J.

DOCTRINE:
COMPENSABILITY

A seafarer who was repatriated for end of contract and had no

medical condition during his employment but later suffers from an
illness which manifested only after the end of his employment can still
be entitled to disability benefits provided, he/she can prove that the
illness suffered is reasonably linked to the work performed on board.

FACTS:
Respondent entered into a contract of employment5 with herein
petitioners on February 3, 2010. He was hired as an Oiler for a period
of eight months on board petitioner Marin Shipmanagement Limited's
vessel, the Maersk Danang. Respondent's employment was likewise
covered by the Overriding Total Crew Cost Fleet Agreement6 (TCC
CBA) entered into by the International Transport Workers' Federation
and petitioner Transmarine Carriers, Inc.

As a requirement, the respondent completed the pre-employment

medical examination (PEME) and was declared fit for sea duty without
restriction.

Respondent alleged that sometime in the third week of July 2010, while
he was working aboard the Maersk Danang, he slipped and fell from
an elevated height and initially landed on his right knee. Consequently,
he suffered from severe pain on his right knee, the right side of his
body, and his lumbar region. Due to persistent pain, respondent
requested to see a doctor. As recommended, he underwent an x-ray
examination and was found to have no fracture and no dislocation but
is suffering from "soft tissue injury, arthralgia, effusion.”

The medical findings stated that "[y]our exam shows you have an injury
to the knee joint. A knee sprain is a tearing of the ligaments that hold
the joint together. There are no broken bones. Sprains take 3 to 6
weeks to heal. For persistent pain beyond one week, motion [ and]
strengthening exercises may be required through your doctor
orthopedist." He was likewise advised to stay off the injured leg as
much as possible. Despite the advice, respondent had to return to work.
 Page 321

On November 27, 2010, due to the persistent pain on his right shoulder
and back, he went to the Badr Al Samaa Group of Hospital and
Polyclinics in Ruwi, Sultanate of Oman where he was examined and
was found to be suffering from costochondritis and myalgia in his right
shoulder.

Respondent's eight-month contract ended; thus, he was repatriated.

He arrived in Manila on December 3, 2010. On the third day from his
arrival, he went to the petitioners' office but was not examined by the
company-designated physician but was advised to obtain a Cocolife
card. Thereafter, the respondent attended physical therapy sess10ns
for several months at the said hospital. Despite the therapy, he
continued to suffer from pain.

Notwithstanding all treatment undergone, respondent still felt pain in

his right knee, right shoulder, and lower back. Dr. Molo did not
conclude with an assessment as regards respondent's fitness to work.
Thus, on August 10, 2010, he consulted with Dr. Renato P. Runas (Dr.
Runas). Dr. Runas concluded that respondent is now permanently unfit
to resume sea duties with permanent partial disability.

Based on the findings and evaluation of Dr. Runas, respondent sought

to recover disability benefits from petitioners. However, petitioners did
not heed his claims.

NCMB: The NCMB resolved the case and ruled in favor of respondent.
It ordered the petitioners to pay respondent disability benefits and
attorney's fees in the total amount ofUS$137,500.00 based on the TCC
CBA.

CA: The CA in affirming the ruling of the NCMB ruled that the
respondent's disability was the result of none other than an accident.
Therefore, it concluded that Section 19 of the TCC CBA applies in the
case and that NCMB Panel committed no error in its ruling.43
Moreover, the CA also took into consideration the fact that no
certification as to respondent's fitness to work was ever issued by the
company-designated physician, thus, it likewise used the 240-day
presumptive disability rule against the petitioners.

ISSUE:
Whether or not a seafarer who finished and completed his employment
contract without any medical complaint on board or upon arrival in the
Philippines is entitled to disability compensation

RULING:
 Page 322

Yes. Respondent's non-entitlement to the benefits under the TCC CBA

does not mean he can no longer claim benefits. He still can under the
POEA-SEC which is deemed incorporated to his employment contract,
provided, however, that he is able to prove that his injuries or illnesses
are work-related.

While it is true that respondent was repatriated because his

contract had already ended, the injuries he complained of initially
manifested while on board the Maersk Danang. Certainly then, a
seafarer who was repatriated for end of contract and had no medical
condition during his employment but later suffers from an illness which
manifested only after the end of his employment can still be entitled to
disability benefits provided, he/she can prove that the illness suffered
is reasonably linked to the work performed on board.

It is, thus, absurd to say that respondent, who was repatriated for
end of contract but already had medical conditions while onboard
during his employment, is not entitled to disability benefits while a
seafarer, who was likewise repatriated for end of contract but suffered
from an illness which manifested only after repatriation, is entitled to
the same benefits.

As mentioned earlier, a seafarer's disability claim is governed by

the medical findings, laws, and contracts entered into by the employer
and the seafarer. Deemed incorporated in the seafarer's employment
contract is the POEA-SEC.

In this case, since the parties executed the employment contract

on February 3, 2010, the 2000 POEA-SEC shall govern. Undeniably,
Dr. Molo, the company-designated physician, failed to issue a
certification as to respondent's medical condition or fitness to work
despite lapse of the 240-day extended period for treatment from initial
examination.

It is true that a seafarer's mere inability to perform his or her usual

work after 120 days does not automatically lead to entitlement to
permanent and total disability benefits because the 120-day period for
treatment and medical evaluation by a company-designated physician
may be extended to a maximum of 240 days. Clearly, the period within
which the company-designated physician shall issue an assessment
shall not exceed 240 days. The failure of the company-designated
physician to render a final and definitive assessment of a seafarer's
condition within the 240-day extended period consequently transforms
the seafarer's temporary and total disability to permanent and total
disability
 Page 323

Case Digest by: Angeline V. Wilson

SSC VS. AZCOTE

G.R. No. 209741. APRIL 15, 2015.
Mendoza, J.

DOCTRINE:
SSS
In claiming benefits, the settled rule from Signey v. SSS is that
"whoever claims entitlement benefits provided by law should establish
his or her right by substantial evidence".

Lastly, although the SSC is not intrinsically empowered to determine

the validity of marriages, it is required by Sec 4(b)(7) of RA 8282 to
examine available statistical and economic data to ensure that the
benefits fall into the rightful beneficiaries.

FACTS:
In 1994, Edgardo submitted Form E-4 to the SSS with Edna and
their 3 older children as designated beneficiaries. In 2001, Edgardo
submitted another Form E-4 designating their 3 younger children as
additional beneficiaries.

Edgardo passed away in 2005. Thereafter, Edna filed her claim

for death benefits with the SSS as the wife of a deceased-member.
However, SSS records showed the Edgardo had submitted another
Form E-4 in 1982 with a different set of beneficiaries, namely:
Rosemarie Azote, as spouse, and Elmer Azote, as dependent.
Consequently, Edna's claim was denied, but her 6 children were
adjudged as beneficiaries.

In 2007, Edna filed a petition with the SSC to claim benefits,

insisting she was the legitimate wife. Due to the conflicting
information in the forms, summons was published in a
newspaper of general circulation directing the alleged 1st wife
Rosemarie to file her answer, but no one replied.

SSC: Dismissed Edna's petition for lack of merit because Edgardo did
not revoke the previous designation of Rosemarie as wife-beneficiary,
and Rosemarie was still presumed to be the legal wife. SSC also noted
that the NSO records revealed the marriage of Edgardo and
Rosemarie was registered in 1982. Hence, Edgardo's marriage with
Edna was not valid as there was no showing that his 1st marriage had
been annulled or dissolved.
 Page 324

CA: Reversed and set aside the resolution & order of the SSC and
held that the SSC could not make a determination of the validity of the
marriage of Edna to Edgardo. The CA also denied SSC's motion for
reconsideration.

ISSUE:
Whether or not Edna Azcote is entitled to the SSS death benefits
as the wife of a deceased member

RULING:
NO, and SSC’s petition is granted. Edna cannot be the beneficiary
because she is not considered the legal spouse of Edgardo as their
marriage took place during the existence of a previously contracted
marriage. The law in force at the time of Edgardo's death was RA 8282.
Sec 8 (e) and (k) expressly provide that it is the legal spouse who would
be entitled to receive benefits from an SSS deceased-member.

In this case, there is concrete proof (NSO certification) of

Edgardo's earlier contracted marriage with Rosemarie, making her the
first and legal wife. At the time of the celebration of the 2nd marriage
of Edgardo with Edna, the Family Code was already in force. Article
41 states "a marriage contracted by any person during the subsistence
of a previous marriage shall be null and void..."

In claiming benefits, the settled rule from Signey v. SSS is that

"whoever claims entitlement benefits provided by law should establish
his or her right by substantial evidence". In the case, Edna failed to
establish that there was no impediment at the time of the celebration
of their marriage

Lastly, although the SSC is not intrinsically empowered to

determine the validity of marriages, it is required by Sec 4(b)(7) of RA
8282 to examine available statistical and economic data to ensure that
the benefits fall into the rightful beneficiaries. In the case, SSC's denial
of Edna's claim is correct as it determined Edna's eligibility on the basis
of available statistical data and database documents.
 Page 325

Case Digest by: Angeline V. Wilson

SSC VS. FAVILLA

G.R. No. 170195. March 28, 2015.
Del Castillo, J.

DOCTRINE:
SSS
The claimant -spouse must therefore establish two qualifying factors:
(1) that she is the legitimate spouse, and (2) that she is dependent
upon the member for support.

FACTS:
Teresa Favila was married to Florante Favila and being his wife
she was designated as the sole beneficiary in the E-1 Form he
submitted at the SSS on June 1970. Florente likewise designated their
children Jofel, Floresa and Florante II, as beneficiaries. But when
Florante died on 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 Florante’s pension benefits, Teresa
subsequently filed her claim for said benefits before the SSS. The SSS,
however, denied the claim, because as per the said agency the claim
for Florante’s pension benefits was initially settled in favor of Teresa
as guardian of the minor Florante II.

Per its records, Teresa was paid the monthly pension from
February 1997 to October 2001 when Florante II reached the age of
21. 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 with whom, as Teresa herself allegedly
admitted, she slept with four times a week. SSS also asserted that an
interview conducted in Teresa’s neighborhood in Tondo, Manila
revealed that although she did not cohabit with another man after her
separation with Florante, there were rumors that she had an affair with
a police officer. To support Teresa’s non-entitlement to the benefits
claimed, SSS cited the provisions of Sections 8 and 13 of SSS Law.

SSC: Surviving spouse’s entitlement to an SSS member’s death

benefits is dependent on two factors which must concur at the time of
the latter’s death, those are:

1. legality of the marital relationship

 Page 326

2. dependency for support - is affected by factors such as

separation de facto of the spouses, marital infidelity, and such
other grounds sufficient to disinherit a spouse under the law.

SSC ruled that she is disqualified from claiming benefits because she
is not dependent for support from Florante due to her marital infidelity.
She has been separated from Florante for 17 years before his death.
She only contested her non-entitlement of benefits when the pension
was stopped.

Teresa insisted that SSS should have granted her claim for death
benefits because she is undisputedly the legal surviving spouse of
Florante and is therefore entitled to such benefits as primary
beneficiary.

CA: 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. There was no legal
separation nor annulment of marriage that could have disqualified her
from claiming the death benefits and that her designation as
beneficiary had not been invalidated by any court of law. In addition,
the CA saw SSS’s conduct of investigations to be violative of the
constitutional right to privacy. It lamented that SSS has no power to
investigate and pry into the member’s and his/her family’s personal
lives and should cease and desist from conducting such investigations.
Ultimately, the CA reversed and set aside the assailed Resolution and
Order of the SSC and directed SSS to pay Teresa’s monetary claims
which included the monthly pension due her as the surviving spouse
and the lump sum benefit equivalent to thirty-six times the monthly
pension.

ISSUE:
Whether or not Teresa is entitled to benefits?

RULING:
NO. The law in force at the time of Florante’s death was RA 1161.
Section 8 (e) and (k) of said law provides: Section 8. Terms Defined.
For the purposes of this Act, the following terms shall, unless the
context indicates otherwise, have the following meanings:

e) Dependent - The legitimate, legitimated or legally adopted child

who is unmarried, not gainfully employed and not over twenty-one
years of age, or over twenty-one years of age, provided that he is
congenitally incapacitated and incapable of self-support, physically or
mentally; the legitimate spouse dependent for support upon the
 Page 327

employee; and the legitimate parents wholly dependent upon the

covered employee for regular support.

(k) Beneficiaries – The dependent spouse until he remarries and

dependent children, who shall be the primary beneficiaries. In their
absence, the dependent parents and, subject to the restrictions
imposed on dependent children, the legitimate descendants and
illegitimate children who shall be the secondary beneficiaries. In the
absence of any of the foregoing, any other person designated by the
covered employee as secondary beneficiary. From the above-quoted
provisions, it is plain that for a spouse to qualify as a primary
beneficiary under paragraph (k) thereof, he/she must not only be a
legitimate spouse but also a dependent.

Under the premise, "the obvious conclusion is that a wife who is

already separated de facto from her husband cannot be said to be
‘dependent for support’ upon the husband. She is not qualified as a
primary beneficiary since she failed to present any proof to show that
at the time of her husband’s death, she was still dependent on him for
support even if they were already living separately.

Respondent Teresa G. Favila is declared to be not a dependent

spouse within the contemplation of Republic Act No. 1161 and is
therefore not entitled to death benefits accruing from the death of
Florante Favila.

Paragraphs (e) and (k) of Section 8 of RA 1161 are very clear. "Hence,
we need only apply the law. Under the principles of statutory
construction, if a statute is clear, plain, and free from ambiguity, it must
be given its literal meaning and applied without attempted
interpretation. Thus, bears stressing that for her (the claimant) to
qualify as a primary beneficiary, she must prove that she was ‘the
legitimate spouse dependent for support from the employee.’

The claimant -spouse must therefore establish two qualifying factors:

(1) that she is the legitimate spouse, and (2) that she is dependent
upon the member for support. x x x Here, there is no question that
Teresa was Florante’s legal wife. What is at point, however, is whether
Teresa is dependent upon Florante for support in order for her to fall
under the term "dependent spouse" under Section 8(k) of RA 1161.
What the SSC relies on in concluding that Teresa was not dependent
upon Florante for support during their separation for 17 years was its
findings that Teresa maintained an illicit relationship with another man.
Teresa however counters that such illicit relationship has not been
sufficiently established and, hence, as the legal wife, she is presumed
to be continually dependent upon Florante for support.
 Page 328

Case Digest by: Angeline V. Wilson

MENDOZA VS. PEOPLE

G.R. No. 183891. August 3, 2010.
Brion, J.

DOCTRINE:
SSS
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 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
petitioner’s 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 above-quoted 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:
Whether or not Mendoza is guilty of violating R.A. 8282 (SSS Law)?

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,
 Page 329

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,
petitioner’s 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 petitioner’s
reasoning would allow unscrupulous businessmen to conveniently
escape liability by the creative adoption of managerial titles.
 Page 330

Case Digest by: Angeline V. Wilson

SSS VS. SIGNEY

G.R. No. 173582. January 28, 2008.
Tinga, J.

DOCTRINE:
SSS
The SSS Law is clear that for a minor child to qualify as a "dependent,"
the only requirements are that he/she must be below 21 years of age,
not married nor gainfully employed.

FACTS:
Rodolfo Signey, Sr., an SSS member, died on 21 May 2001. In
his records, he had designated Yolanda Signey (petitioner) as primary
beneficiary and their 4 children as secondary beneficiaries. On July
2001, petitioner filed a claim for death benefits with the 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 April 1996, and Rodelyn Signey
(Rodelyn), born on April 2000. Petitioner’s declaration was confirmed
when Gina herself filed a claim for the same death benefits 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, Editha also filed an application for death benefits with the
SSS stating that she was the legal wife of the deceased.

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: 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 October
1967, than to the aforestated declarations of Editha in her waiver of
rights.

CA: 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?
 Page 331

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 member’s 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 member’s 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:

(e) Dependents — 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.

(k) Beneficiaries — The dependent spouse until he or she

remarries, the dependent legitimate, legitimated or legally
adopted, and illegitimate children, who shall be the primary
beneficiaries of the member: Provided, That the dependent
illegitimate children shall be entitled to fifty percent (50%) of the
share of the legitimate, legitimated or legally adopted children:
Provided, further, That in the absence of the dependent
legitimate, legitimated or legally adopted children of the member,
his/her dependent illegitimate children shall be entitled to one
hundred percent (100%) of the benefits. In their absence, the
dependent parents who shall be the secondary beneficiaries of
the member. In the absence of all of the foregoing, any other
 Page 332

person designated by the member as his/her secondary

beneficiary.

Whoever claims entitlement to the benefits provided by law

should establish his or her right thereto by substantial evidence. Since
petitioner is disqualified to be a beneficiary and because the deceased
has no legitimate child, it follows that the dependent illegitimate minor
children of the deceased shall be entitled to the death benefits as
primary beneficiaries. The SSS Law is clear that for a minor child to
qualify as a "dependent," the only requirements are that he/she must
be below 21 years of age, not married nor gainfully employed. In this
case, the minor illegitimate children Ginalyn and Rodelyn were born on
13 April 1996 and 20 April 2000, respectively. Had the legitimate child
of the deceased and Editha survived and qualified as a dependent
under the SSS Law, Ginalyn and Rodelyn would have been entitled to
a share equivalent to only 50% of the share of the said legitimate child.
Since the legitimate child of the deceased predeceased him, Ginalyn
and Rodelyn, as the only qualified primary beneficiaries of the
deceased, are entitled to 100% of the benefits.
 Page 333

Case Digest by: Angeline V. Wilson

SSS VS. JARQUE

G.R. No. 165545. March 24, 2006.
Carpio-Morales, J.

DOCTRINE:
SSS
Although SSC is empowered to settle any dispute with respect to SSS
coverage, benefits, and contributions, in so exercising such power,
however, it cannot review, much less reverse, decisions rendered by
courts of law.

FACTS:
In 1955, Clemente Bailon (Bailon) and Alice Diaz (Alice)
contracted marriage in Barcelona, Sorsogon. After 15 year Alice Diaz
was declared presumptively dead. 13 years after his wife Alice was
declared presumptively dead, Bailon contracted marriage with Teresita
Jarque (respondent). After the death of Bailon, Jarque filed a claim for
funeral benefits, and was granted P12,000 by the SSS. However, after
coming to knowledge of the claim, Alice reappeared contesting the
release of funeral benefits and pension to Jarque asking that the
benefits be granter to her as the lawful wife.

SSS advised respondent of the cancellation of her monthly

pension for death benefits and requested respondent to return the
monthly pension she had received from the SSS because her marriage
with Bailon was void as it was contracted while the latter’s marriage
with Alice was still subsisting. Jarque then elevated the decision to the
SSC (Commission).

SSC: found that the marriage of respondent to Bailon was void and,
therefore, she was "just a common-law-wife” affirmed the decision of
SSS.

CA: Reversed SSC. SSS/SSC has no jurisdiction to declare the

second marriage null and void on the basis alone of its own
investigation and declare that the decision of the RTC declaring one to
be presumptively dead is without basis. Respondent SSS cannot
arrogate upon itself the authority to review the decision of the regular
courts under the pretext of determining the actual and lawful
beneficiaries of its members.

ISSUE:
 Page 334

Can the SSS and Commission validly declare the first marriage
subsisting and the second marriage null and void?

RULING:
No. Although SSC is empowered to settle any dispute with
respect to SSS coverage, benefits and contributions, in so exercising
such power, however, it cannot review, much less reverse, decisions
rendered by courts of law as it did in the case at bar when it declared
that the CFI Order was obtained through fraud and subsequently
disregarded the same, making its own findings with respect to the
validity of Bailon and Alice’s marriage on the one hand and the
invalidity of Bailon and respondent’s marriage on the other. In
interfering with and passing upon the CFI Order, the SSC virtually
acted as an appellate court. The law does not give the SSC unfettered
discretion to trifle with orders of regular courts in the exercise of its
authority to determine the beneficiaries of the SSS.
 Page 335

Case Digest by: Angeline V. Wilson

GERSIP ASSOCIATION VS. GSIS

G.R. No. 189827. October 16, 2013.
Villarama, J.

DOCTRINE:
GSIS
Under the PFRR, however, the GRF is allocated for specific purposes
and not intended for distribution to members. The GRF shall be used
for the following purposes:

(a) To cover the deficiency, if any, between the amount standing

to the credit of a member who dies or is separated from the
service due to permanent and total disability, and the amount due
him under Article V Section 4;

(b) To make up for any investment losses and write-offs of bad

debts, in accordance with policies to be promulgated by the
Board;

(c) To pay the benefits of separated employees in accordance

with Article IV, Section 3; and

(d) For other purposes as may be approved by the Board,

provided that such purposes is consistent with Article IV, Section
4.

FACTS:
On March 19, 1981, the GSIS Board of Trustees (GSIS Board)
approved the proposed GSIS Provident Fund Plan (Plan) to provide
supplementary benefits to GSIS employees upon their retirement,
disability or separation from the service, and payment of definite
amounts to their beneficiaries in the event of death. It likewise adopted
the "Provident Fund Rules and Regulations" (PFRR) which became
effective on April 1, 1981.

Under the Plan, employees who are members of the Provident

Fund contribute through salary deduction a sum equivalent to 5% of
their monthly salary while respondent’s monthly contribution is fixed at
45% of each- member’s monthly salary. A Committee of Trustee
appointed by respondent administers the Fund by investing it "in a
prudent manner to ensure the preservation of the Fund capital and the
adequacy of its earnings.
 Page 336

20% of the proportionate earnings of respondent’s contributions

is deducted and credited to a General Reserve Fund (GRF) and the
remainder is credited to the accounts of the members in proportion to
their credit at the beginning of each quarter. Upon retirement, members
are entitled to withdraw the entire amount of their contributions and
proportionate share of the accumulated earnings thereon, and 100%
of respondent’s contributions with its proportionate earnings.

On March 30, 2001, petitioner GERSIP Association, Inc.,

composed of retired GSIS employees and officers, wrote the President
and General Manager of respondent requesting the liquidation and
partition of the GRF. In his letter-reply dated August 14, 2001, then
President and General Manager Winston F. Garcia explained that
there exists a trust relation rather than co-ownership with respect to
the Fund, stressing that the PFRR authorizes a reduction of 20%
earnings for the GRF, not a total liquidation of the fund itself.

In addition, the GRF, being an integral part of the Fund, must be

maintained as a general policy to serve its purpose of providing
supplementary benefits to retired, separated, and disabled GSIS
employees and, in the event of death, payment of definite amounts to
their beneficiaries. Petitioners filed a civil suit before the RTC-QC, but
on motion of respondent, it was dismissed on the ground that it is the
GSIS Board that has jurisdiction over the controversy.

In its Answer, respondent asserted that petitioners as retiring

members of the Fund were entitled only to the benefits provided in
Section 1(b), Article V of the PFRR and that their claim is not covered
by Section 8(a) to (d), Article IV which enumerates the purposes for
which the GRF is allocated. Respondent further contended that there
is no legal basis for petitioners’ theory that they are co-owners and not
just beneficiaries of the Fund.

GSIS Board of Trustees: The Board denied the Petition for Lack of
Merit. It held that the execution of the Trust Agreement between
respondent and the Committee is a clear indication that the parties
intended to establish an express trust, not a co-ownership, with
respondent as Trustor, the Committee as Trustee of the Fund and the
members as Beneficiaries. As to the GRF, the Board said that it
answers only for the contingent claims mentioned in Section 8, Article
IV and there is no requirement in the PFRR for the accounting and
partition of GRF.

CA: When their motion for reconsideration was denied by the GSIS
Board, petitioners filed a petition for review in the CA under Rule 43 of
the 1997 Rules of Civil Procedure, as amended. By Decision dated
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June 30, 2009, the CA affirmed the ruling of the GSIS Board.
Petitioners’ motion for reconsideration was likewise denied. Hence,
this petition.

ISSUES:
1) Whether or not the GSIS Provident fund is not a "trust" but a co-
ownership

2) Whether or not the Reserve Fund of the GSIS Provident Fund is

not required by law

3) Whether or not partial partition of the Reserve Fund is consistent

with maintaining the GSIS Provident Fund

4) Whether or not the petitioners, as members of the Provident

Fund, are legally entitled to accounting and audit of the Fund.

RULING:
1. The GSIS Provident fund is not a "trust" but a co-ownership.

The GSIS Provident Fund was established through Resolution No.

201 of the GSIS Board. The GSIS Board likewise adopted a set of rules
and regulations (PFRR) to govern the membership, fund contributions
and investment, payment of benefits and the trustees. A Trust
Agreement was executed between respondent and the Committee.
Respondent’s contention that it had thereby created an express trust
was upheld by the GSIS Board and the CA. The appellate court further
ruled that the rules on co-ownership do not apply and there is nothing
in the PFRR that allows the distribution of the GRF in proportion to the
members’ share therein. The Court sustains the rulings of the GSIS
Board and CA.

Under the PFRR, however, the GRF is allocated for specific

purposes and not intended for distribution to members. The GRF shall
be used for the following purposes:

(a) To cover the deficiency, if any, between the amount standing

to the credit of a member who dies or is separated from the
service due to permanent and total disability, and the amount due
him under Article V Section 4;

(b) To make up for any investment losses and write-offs of bad

debts, in accordance with policies to be promulgated by the
Board;
 Page 338

(c) To pay the benefits of separated employees in accordance

with Article IV, Section 3; and

(d) For other purposes as may be approved by the Board,

provided that such purposes is consistent with Article IV, Section
4.

It is clear that while respondent’s monthly contributions are

credited to the account of each member, and the same were received
by petitioners upon their retirement, they were entitled to only a
proportionate share of the earnings thereon. The benefits of retiring
members of the Fund are covered by Section 1(b), Article V which
states: (b) Retirement. In the event the separation from the System is
due to retirement under existing laws, such as P.D. 1146, R.A. 660 or
R.A. 1616, irrespective of the length of membership to the Fund, the
retiree shall be entitled to withdraw the entire amount of his
contributions to the Fund, as well as the corresponding proportionate
share of the accumulated earnings thereon, and in addition, 100% of
the System’s contributions, plus the proportionate earnings thereon.

2-3. The Court finds nothing illegal or anomalous in the creation of the
GRF to address certain contingencies and ensure the Fund’s
continuing viability. Petitioners’ right to receive retirement benefits
under the Plan was subject to well-defined rules and regulations that
were made known to and accepted by them when they applied for
membership in the Fund.

4. Petitioners have the right to demand for an accounting of the Fund

including the GRF. Under Section 5, Article VIII of the PFRR, the
Committee is required to prepare an annual report showing the income
and expenses and the financial condition of the Fund as of the end of
each calendar year. Said report shall be submitted to the GSIS Board
and shall be available to members. There is, however, no allegation or
evidence that the Committee failed to comply with the submission of
such annual report, or that such report was not made available to
members.
 Page 339

Case Digest by: Angeline V. Wilson

GSIS VS. DE LEON

G.R. No. 186560. November 17, 2010.
Nachura, J.

DOCTRINE:
GSIS
Prior to RA 8291, retiring government employees who were not entitled
to the benefits under R.A. No. 910 had the option to retire under either
of two laws: Commonwealth Act 186, as amended by RA 660, or PD
1146.

Section 11 PD 1146. Conditions for Old-Age Pension. — (a)Old-age

pension shall be paid to a member who:

1. Has at least fifteen years of service;

2. Is at least sixty years of age; and

3. Is separated from the service.

The conversion under the law is one that is voluntary, a choice to be

made by the retiree.

FACTS:
De Leon applied for retirement with GSIS under RA 910, invoking
RA 3783, as amended by RA 4140, which provides that chief state
prosecutors hold the same rank as judges. Thereafter, he was granted
retirement benefits. However, after more than nine years, in 2001,
DBM informed GSIS that De Leon was not qualified to retire under RA
910, which only covers judges and justices, and not prosecutors. Thus,
GSIS cancelled the payment of De Leon’s pension. As such, De Leon
seeks that a different law be applied to allow him to continue to receive
retirement benefits. However, GSIS would not allow it. It cited Section
55 of RA 8291 which provides for exclusivity of benefits which means
that a retiree may choose only one retirement scheme available to him
to the exclusion of all others. Also, said law expressly prohibits
conversion beyond one year from retirement. De Leon filed a petition
for mandamus.

The CA held that De Leon is entitled to pension for life under RA

660, RA 8291 and PD 1146, even though he is not entitled under RA
910. He cannot be faulted for the mistake of GSIS.
 Page 340

ISSUE:
Whether or not De Leon is entitled to retirement benefits

RULING:
Yes.

AS TO THE CONTENTION THAT THERE WILL BE DOUBLE

RETIREMENT: De Leon’s disqualification from receiving retirement
benefits under RA 910 does not mean that he is disqualified from
receiving any retirement benefit under any other existing retirement law.
However, contrary to the CA, he is not covered by RA 8291 because
the same took effect after he retired from service. Prior to RA 8291,
retiring government employees who were not entitled to the benefits
under R.A. No. 910 had the option to retire under either of two laws:
Commonwealth Act 186, as amended by RA 660, or PD 1146.

Section 11 PD 1146. Conditions for Old-Age Pension. — (a)Old-age

pension shall be paid to a member who:

1. Has at least fifteen years of service;

2. Is at least sixty years of age; and

3. Is separated from the service.

De Leon had complied with these requirements at the time of his

retirement. GSIS does not dispute this. Accordingly, respondent is
entitled to receive benefits for life as provided under Section 12 of the
same law. To grant respondent these benefits does not equate to
double retirement, as GSIS mistakenly claims. Since respondent has
been declared ineligible to retire under RA 910, GSIS should simply
apply the proper retirement law to respondent's claim, in substitution
of RA 910. Respondent will not receive — and GSIS is under no
obligation to give him — more than what is due him under the proper
retirement law.

AS TO THE CONTENTION THAT DE LEON SEEKS A

CONVERSION OF HIS MODE OF RETIREMENT: The conversion
under the law is one that is voluntary, a choice to be made by the
retiree. Here, respondent had no choice but to look for another law
under which to claim his pension benefits because the DBM had
decided not to release the funds needed to continue payment of his
monthly pension.
 Page 341

Case Digest by: Angeline V. Wilson

GSIS VS. ALCARAZ

G.R. No. 187474. February 6, 2013.
Brion, J.

DOCTRINE:
GSIS
A heart disease, such as myocardial infarction, can be considered
work-related, with or without the complicating factors of other non-
occupational illnesses. Thus, the Court so ruled in Rases v. ECC (that
a heart disease is compensable if it was known to have been present
during employment, there must be proof that an acute exacerbation
was clearly precipitated by the unusual strain by reason of the nature
of his work.

FACTS:
Bernardo was employed by the MMDA-Makati as Metro Aide and
Metro Aide I for almost twenty-nine years. Sometime in February 2004,
Bernardo was diagnosed with Pulmonary Tuberculosis and
Community Acquired Pneumonia . On May 13, 2004, he was confined
at the Ospital ng Makati. He was discharged on May 19, 2004 with the
following diagnosis: Acute Diffuse Anterolateral Wall Myocardial
Infarction, Killips IV-1, CAP High Risk, PTB III and Diabetes Mellitus
Type 2. On January 15, 2005, Bernardo was found dead at the
basement of the MMDA building. It was found in the autopsy that
Bernardo died of Myocardial Infarction, old and recent.

Bernardo’s widow, Marilou, subsequently filed a claim for death

benefits with the GSIS. GSIS denied the claim for death benefits on
the ground that myocardial infarction, the cause of Bernardo’s death,
was directly related to diabetes which is not considered a work-
connected illness; hence, its complications, such as myocardial
infarction, are not work-related. Marilou appealed to the ECC which
affirmed the GSIS ruling. Aggrieved, she sought relief from the CA
through a petition for review under Rule 43 of the Rules of Court,
contending that

(1) the ECC misappreciated the facts. She argued that even if
the underlying cause of Bernardo’s death was diabetes, the illness was
acquired in the course of his employment and was further aggravated
by the nature of his work; and
 Page 342

(2) the ECC gravely abused its discretion for giving scant
consideration to the medical findings on Bernardo’s true condition prior
to his death.

The GSIS, on the other hand, prayed that the petition be denied,
contending that in the absence of satisfactory evidence that Bernardo’s
nature of employment predisposed him to contract the ailment, the
widows claim must fail. The CA granted the petition and set aside the
ECC ruling. It opined that while myocardial infarction is not among the
occupational diseases listed under Annex A of the Amended Rules on
Employees Compensation, the ECC, pursuant to Resolution No. 432,
laid down conditions under which cardio-vascular diseases can be
considered as work-related and therefore compensable.

CA: Found sufficient proof of work-connection between Bernardos

ailment and his working conditions. It believed that his work as laborer
and metro aide must have substantially contributed to his illness. GSIS
moved for reconsideration but was denied by the CA. Hence, this
petition.

ISSUE:
Whether or not Bernardo’s illness was work-related and/or the risk of
contracting the illness was increased by the nature of his work?

RULING:
YES, GSIS’ petition is denied. GSIS and the ECC denied the
claim of his widow for death benefits on the ground that his death was
due to myocardial infarction which they declared to be non-
compensable; that it is not work-related as it is simply a complication
of diabetes mellitus; and that diabetes mellitus is not in the list of
occupational diseases and, for this reason, its complications such as
myocardial infarction, are not work-related. The conclusions of the two
agencies totally disregarded the stressful and strenuous conditions
under which Bernardo toiled for almost 29 long years as a laborer and
as a metro aide. By so doing, they closed the door to other influences
that caused or contributed to Bernardo’s fatal heart problem an ailment
aggravated with the passage of time by the risks present in the difficult
working conditions that Bernardo had to bear from day to day in his
employment. While diabetes mellitus was indeed a complicating factor
in Bernardo’s health condition and indisputably aggravated his heart
problem, we cannot discount other employment factors, mental and
physical, that had been indisputably present; they contributed, if not as
a direct cause of the heart condition itself, as aggravation that
worsened and hastened his fatal myocardial infarction. For instance, it
is undisputed that Bernardo was earlier diagnosed with CAP, which
could also be a predisposing factor to myocardial infarction. There is
also stress due to the nature of Bernardo’s work. Myocardial infarction,
 Page 343

also known as coronary occlusion or just a coronary, is a life-

threatening condition. Predisposing factors for myocardial infarction
are the same for all forms of coronary artery disease, and these factors
include stress. Stress appears to be associated with elevated blood
pressure.

CA, therefore, is correct in holding that there is substantial

evidence supporting the conclusion that myocardial infarction in
Bernardo’s case is work related.

CA’s conclusion is bolstered by the fact that the ECC itself, the
government agency tasked by law to implement the employee’s
compensation program Included cardio-vascular diseases in the list of
occupational diseases, making them compensable, subject to any of
the conditions stated in its enabling Resolution No. 432.

With the resolution, it should be obvious that by itself, a heart

disease, such as myocardial infarction, can be considered work-related,
with or without the complicating factors of other non-occupational
illnesses. Thus, the Court so ruled in Rases v. ECC (that a heart
disease is compensable if it was known to have been present during
employment, there must be proof that an acute exacerbation was
clearly precipitated by the unusual strain by reason of the nature of his
work. Based on the evidence on record, we find as the CA did, that the
nature of Bernardo’s duties and the conditions under which he worked
were such as to eventually cause the onset of his myocardial infarction.
The stresses, the strain, and the exposure to street pollution and to the
elements that Bernardo had to bear for almost 29 years all too real to
be ignored. They cannot but lead to a deterioration of health
particularly with the contributing factors of diabetes and pulmonary
disease.