2.

1
Existence of employer-employee relationship is necessary for the
application of labor laws
a. Employment not merely a contractual relationship: ( Capitol Medical
Center vs. Meris)
CAPITOL MED. VS. MERIS
The dismissed doctor
Employers are also accorded rights and privileges to assure their selfdetermination and independence and reasonable return of capital. This
mass
of
privileges
comprises
the
so-called
management
prerogatives. Although they may be broad and unlimited in scope,
the State has the right to determine whether an employers privilege
is exercised in a manner that complies with the legal requirements
and does not offend the protected rights of labor. One of the rights
accorded an employer is the right to close an establishment or undertaking.
FACTS:
In 1974, petitioner Capitol Med hired Dr. Meris, one of its stockholders,
as in charge of its Industrial Service Unit (ISU) . Until the closure of the ISU in
April 1992, Dr. Meris performed dual functions of providing medical services
to Capitols more than 500 employees and health workers as well as to
employees and workers of companies having retainer contracts with it. In
March 1992, Dr. Meris received from Capitols president and chairman of the
board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a notice advising him
of the managements decision to close or abolish the ISU and the consequent
termination of his services as Chief thereof.
Dr. Meris, doubting the reason behind the managements decision to
close the ISU and believing that the ISU was not in fact abolished as it
continued to operate and offer services to the client companies with Dr.
Clemente as its head and the notice of closure was a mere ploy for his ouster
in view of his refusal to retire despite Dr. Clementes previous prodding for him
to do so, sought his reinstatement but it was unheeded.
Dr. Meris thus filed a complaint against Capitol and Dr. Clemente for
illegal dismissal and reinstatement with claims for backwages, moral and
exemplary damages.
LA: Abolition of the ISU was a valid and lawful exercise of management
prerogatives and there was convincing evidence to show that ISU was being
operated at a loss. Hence, dismissed the case with payment of retirement
plan to the respondent.
NLRC: Affirmed but removed the payment of retirement plan.
CA: Abolition was tainted with irregular entries, the appellate court
held that Capitols evidence failed to meet the standard of a sufficient and
adequate proof of loss necessary to justify the abolition of the ISU; and that
there was a procedural lapse in terminating the services of Dr. Meris, no
written notice to the Department of Labor and Employment (DOLE) of the ISU
abolition having been made, thereby violating the requirement embodied in
Article 283.

ISSUE: WON there was an illegal dismissal?

HELD: YES. The right to close the operation of an establishment or undertaking is
explicitly recognized under the Labor Code as one of the authorized causes in
terminating employment of workers, the only limitation being that the closure
must not be for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code. It would indeed be
stretching the intent and spirit of the law if a court were to unjustly interfere in
managements prerogative to close or cease its business operations just because
said business operation or undertaking is not suffering from any loss. As long as the
companys exercise of the same is in good faith to advance its interest and not
for the purpose of defeating or circumventing the rights of employees
under the law or a valid agreement, such exercise will be upheld. Clearly then,
the right to close an establishment or undertaking may be justified on grounds
other than business losses but it cannot be an unbridled prerogative to suit the
whims of the employer. The ultimate test of the validity of closure or cessation of
establishment or undertaking is that it must be bona fide in character. And the
burden of proving such falls upon the employer.
From the letter of Dr. Clemente to Dr. Meris, it is gathered that the abolition of
the ISU was due to the almost extinct demand for direct medical service by the
private and semi-government corporations in providing health care for their
employees; and that such extinct demand was brought about by the existing trend
of industrial companies allocating their health care requirements to Health
Maintenance Organizations (HMOs) or thru a tripartite arrangement with medical
insurance carriers and designated hospitals. In the case at bar, Capitol failed to
sufficiently prove its good faith in closing the ISU. The records of the case, however,
fail to impress that there was indeed extinct demand for the medical services
rendered by the ISU. The existence of business losses is not required to justify the
closure or cessation of establishment or undertaking as a ground to terminate
employment of employees. Even if the ISU were not incurring losses, its abolition or
closure could be justified on other grounds like that proffered by Capitol extinct
demand. Capitol failed, however, to present sufficient and convincing evidence to
support such claim of extinct demand.
The closure of ISU then surfaces to be contrary to the provisions of
the Labor Code on termination of employment. The termination of the
services of Dr. Meris not having been premised on a just or authorized
cause, he is entitled to either reinstatement or separation pay if
reinstatement is no longer viable, and to backwages.
b. Who has the initial burden of proving the existence of employeremployee relationship?
JAVIER VS. FLY ACE CORP.
*Burden of proof. Substantial evidence Ong : The Lover boy employer
Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto
FACTS:

Javier filed a complaint before the NLRC for underpayment of salaries and
other labor standard benefits. He alleged that he was an employee of Fly Ace
since September 2007, performing various tasks at the respondents warehouse
such as cleaning and arranging the canned items before their delivery to certain
locations, except in instances when he would be ordered to accompany the
companys delivery vehicles, as pahinante; that he reported for work from
Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the
afternoon; that during his employment, he was not issued an identification card
and payslips by the company; that on May 6, 2008, 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 then went home and
discussed the matter with his family; 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.
For its part, Fly Ace averred that it was engaged in the business of
importation and sales of groceries. Javier was contracted by its employee, Mr.
Ong, as extra helper on a pakyaw basis at an agreed rate of 300.00 per trip,
which was later increased to 325.00 in January 2008. Mr. Ong contracted Javier
roughly 5 to 6 times only in a month whenever the vehicle of its contracted
hauler, Milmar Hauling Services, was not available. Fly Ace no longer needed the
services of Javier. Denying that he was their employee, Fly Ace insisted that
there was no illegal dismissal. Fly Ace submitted a copy of its agreement with
Milmar Hauling Services and copies of acknowledgment receipts evidencing
payment to Javier for his contracted services bearing the words, daily manpower
(pakyaw/piece rate pay) and the latters signatures/initials.
LA dismissed the complaint for lack of merit on the ground that Javier
failed to present proof that he was a regular employee of Fly Ace.
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted
the argument of Javier and immediately concluded that he was not a regular
employee simply because he failed to present proof. It was of the view that a
pakyaw-basis arrangement did not preclude the existence of employer-employee
relationship. Payment by result.
CA annulled the NLRC findings that Javier was indeed a former employee
of Fly Ace and reinstated the dismissal of Javiers complaint as ordered by the LA.
ISSUE: WON an employer-employee relationship present in the case? ( Who has
the burden of proof?)
HELD: NO. In an illegal dismissal case, the onus probandi rests on the
employer to prove that its dismissal of an employee was for a valid
cause. However, before a case for illegal dismissal can prosper, an employeremployee relationship must first be established. No particular form of evidence is
required to prove the existence of such employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted.

Hence, while no particular form of evidence is required, a finding that such

relationship exists must still rest on some substantial evidence.
Moreover, the substantiality of the evidence depends on its quantitative as well
as its qualitative aspects. Although substantial evidence is not a function of
quantity but rather of quality, the x x x circumstances of the instant case
demand that something more should have been proffered. Had there been other
proofs of employment, such as x x x inclusion in petitioners payroll, or a clear
exercise of control, the Court would have affirmed the finding of employeremployee relationship.
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 x x x. Sadly, Javier failed to adduce
substantial evidence as basis for the grant of relief.
TENAZAS ET AL VS VILLEGAS TAXI TRANSPORT
The spare driver
FACTS:
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. 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.
Tenazas alleged that 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 P500.00. 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 companys 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 companys units as he is already fired.
Francisco, on the other hand, averred that his dismissal was brought about
by the companys 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.
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 companys units at any point in
time. The respondents further alleged that Tenazas was never terminated by the
company. 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. however,
upon being informed that his unit is ready for release, Tenazas failed to report back
to work for no apparent reason.

LA: There was no illegal dismissal. For Francisco, respondents categorically

denied the existence of an employer-employee relationship. In this situation, the
burden of proof shifts to the complainant to prove the existence of a
regular employment. Complainant Francisco failed to present evidence of regular
employment available to all regular employees, such as an employment contract,
company ID, SSS, withholding tax certificates, SSS membership and the like.
NLRC: reversed. 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. At the outset, the
CA declare that respondent Francisco failed to prove that an employer-employee
relationship exists between him and R. Transport.
ISSUE: WON an employer-employee relationship exist as regards to Francisco? ( Who
has the burden of proof?)
HELD: NO. It is an oft-repeated rule that in labor cases, as in other administrative
and quasi-judicial proceedings, "the quantum of proof necessary is substantial
evidence, or such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion."[T]he burden of proof rests upon
the party who asserts the affirmative of an issue." Corollarily, as Francisco
was claiming to be an employee of the respondents, it is incumbent upon him to
proffer evidence to prove the existence of said relationship. 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 employer, as his co-petitioner Tenazas did.
He could have also presented testimonial evidence showing the respondents
exercise of control over the means and methods by which he undertakes his work.
This is imperative in light of the respondents denial of his employment and the
claim of another taxi operator, Emmanuel Villegas (Emmanuel),that he was his
employer.
2.2
Burden of proof upon employer to show validity of the exercise of its
prerogatives
2.3 Only Substantial Evidence is required in Administrative Proceedings
ALILEM COOP VS BANDIOLA
Bookeeper illicit affair
FACTS:
Respondent Salvador Badiola was employed by petitioner as bookepper.
Petitioners BOD received a letter from Napoleon Gao-ay reporting the alleged

immoral conduct and unbecoming behaviour of respondent by having an illicit

relationship with Napoleons sister , Thelma. This prompted the board to conduct a
preliminary investigation. During the PI, the sisters of Thelma, thru their sworn
statements, confirmed the illicit affair. Respondent, denied the accusation against
him. He claimed that the accusation was a result of the insecurity felt by some
members of the coop and the Board because of his growing popularity owing to his
exemplary record as an employee. Thelma, thru an affidavit, denied the illicit
relationship. Meanwhile, the Board received a petition from about 50 members of
the coop asking the relief of the respondent due to his illicit affair; hence, contrary
to the coops personnel policy. In summary, the Ad hoc Committees investigation
report, respondent was directed to appear at AMPC office for hearing. Respondent
was terminated by the board. Without any compensation or benefit except unpaid
balance of his regular salary for services actually rendered. Aggrieved, respondent
filed a case for illegal dismissal against the petitioner.
LA: Dismissed for lack of merit.
NLRC: set aside the LAs decision.
CA: Ruled in favour of the respondent.
ISSUE: Whether there is a valid ground for the dismissal?
HELD: YES. It is undisputed that respondent was dismissed from employment for
engaging in extra marital affairs, a ground for termination of employment stated in
petitioners Personnel Policy. This basis of termination was made
known to
respondent as early as the first communication made by petitioner. In its letter,
petitioner directed respondent to explain in writing or personal confrontation why
he should not be terminated for violation of Section 4.1.4 of the Personnel Policy.
Respondent merely denied the accusation against him and did not question the
basis of such termination. When the LA was called upon to decide the illegal
dismissal case, it ruled in favor of petitioner and upheld the basis of such dismissal
which is the cited Personnel Policy. The NLRC, however, refused to recognize the
existence and validity of petitioners Personnel Policy on which the ground for
termination was embodied.
A comparison of petitioners old and new Personnel Policies attached by respondent
himself to his Position Paper shows that under the old policy, one of the grounds for
termination of an employee iscommission of acts or commission (sic) of duties
that bring discredit to the organization, while under the new policy, one ofthe
grounds is the commission of acts that brings (sic) discredit to the cooperative
organization, especially, but not limited to, conviction of any crime, illicit marital
affairs, scandalous acts
inimical to established and accepted social mores.
Contrary to respondents claim, with the amendment of the Personnel Policy,
petitioner did not create a new ground for the termination of employment to make
sure that respondent is removed from his position. The quoted ground under the
old policy is similar to that provided for in the new policy. The enumeration
containing the specific act of illicit marital affairs is not an additional ground, but
an example of an act that brings discredit to the cooperative. It is merely an
interpretation of what petitioner considers as such. It is, thus, clear from the
foregoing that engaging in extra-marital affairs is a ground for termination of
employment not only under the new but even under the old.
The employers evidence consists of sworn statements of either relatives or
friends of Thelma and respondent. They either had direct personal knowledge of the

illicit relationship or revealed circumstances indicating the existence of such

relationship.
x x x Moreover, the credibility of the persons who bore witness against him
can hardly be questioned because some of these persons are relatives or friends of
either [respondent] or his lover. In particular, it is hard to see how Napoleon Gao-ay,
the brother of his lover, Thelma, could have resorted to a lie just to destroy him
when the same scandal could also result in tarnishing the reputation of his own
family. The motive of Napoleon in bringing the matter to the attention of the Board
of Directors, after all, was based on ethical grounds he wanted a stop to the affair
because it was a disgrace to the community.
The next question is whether procedural due process was observed in the
termination of respondents services. Before the services of an employee can be
validly terminated, the employer must furnish him two written notices: (a) a written
notice served on the employee specifying the ground or grounds for termination,
and giving the employee reasonable opportunity to explain his side; and (b) a
written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.The employer must inform the employee of the charges against him
and to hear his defenses. A full adversarial proceeding is not necessary as the
parties may be heard through pleadings, written explanations, position papers,
memorandum or oral argument. In this case, respondent was adequately afforded
the opportunity to defend himself and explain the accusation against him. Upon
receipt of the complaint, petitioner conducted a preliminary investigation and even
created an Ad Hoc Committee to investigate the matter. Respondent was directed to
explain either in writing or by a personal confrontation with the Board why he
should not be terminated for engaging in illicit affair. Not only did petitioner give
him the opportunity but respondentin fact informed petitioner that he opted
topresent his side orally and did so as promised when he specifically denied such
allegations before the AdHoc Committee. Moreover, respondent was also allowed to
peruse the investigation report prepared by the Ad Hoc Committee and was advised
that he was entitled to assistance of counsel.
2.3
In case of doubt or ambiguity, liberal interpretation of law in favour
of workers
PRICE VS. INNODATA PHILS.
The regular encoders
a contract of employment, being a contract of adhesion, is ambiguous,
any ambiguity therein should be construed strictly against the party
who prepared it.
FACTS:
INNODATA was a domestic corporation engaged in the data encoding and
data conversion business. It employed encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its business and
accomplish the job orders of its clients. INNODATA ceased its operation in June 2002
due to business losses. Petitioners Price, Stephanie G. Domingo, and Lolita Arbilera
were employed as formatters by INNODATA. The parties executed an employment
contract denominated as a Contract of Employment for a Fixed Period, stipulating
that the contract shall be for a period of one year. During their employment as

formatters, petitioners were assigned to handle jobs for various clients of

INNODATA. Once they finished the job for one client, they were immediately
assigned to do a new job for another client. On 16 February 2000, the HRAD
Manager of INNODATA wrote petitioners informing them of their last day of work.
According to INNODATA, petitioners employment already ceased due to the end of
their contract. This prompted the petitioners to file a case for illegal dismissal and
damages against respondents. Petitioners claimed that they should be considered
regular employees since their positions as formatters were necessary and desirable
to the usual business of INNODATA as an encoding, conversion and data processing
company. Petitioners finally argued that they could not be considered project
employees considering that their employment was not coterminous with any project
or undertaking, the termination of which was predetermined.
On the other hand, respondents explained that due to the wide range of
services rendered to its clients, INNODATA was constrained to hire new employees
for a fixed period of not more than one year. Respondents asserted that petitioners
were not illegally dismissed, for their employment was terminated due to the
expiration of their terms of employment. Petitioners contracts of employment with
INNODATA were for a limited period only, commencing on 6 September 1999 and
ending on 16 February 2000. Respondents further argued that petitioners were
estopped from asserting a position contrary to the contracts which they had
knowingly, voluntarily, and willfully agreed to or entered into. There being no illegal
dismissal, respondents likewise maintained that petitioners were not entitled to
reinstatement and backwages.
LA: Ruled in favour of the respondents. There was an illegal dismissal. The Labor
Arbiter held that as formatters, petitioners occupied jobs that were necessary,
desirable, and indispensable to the data processing and encoding business of
INNODATA. By the very nature of their work as formatters, petitioners should be
considered regular employees of INNODATA, who were entitled to security of tenure.
Thus, their termination for no just or authorized cause was illegal.
NLRC: absolved INNODATA. REVERSED. The NLRC found that petitioners were not
regular employees, but were fixed-term employees as stipulated in their respective
contracts of employment.
CA: Affirmed NLRCs.
ISSUE: whether petitioners were hired by INNODATA as regular employees or for
fixed-term employment?
HELD:
Regular. There were no valid fixed-term contracts and petitioners were
regular employees of the INNODATA who could not be dismissed except for just or
authorized cause. After considering petitioners contracts in their entirety, as well as
the circumstances surrounding petitioners employment at INNODATA, the Court is
convinced that the terms fixed therein were meant only to circumvent petitioners
right to security of tenure and are, therefore, invalid. The contracts of employment
submitted by respondents are highly suspect for not only being ambiguous, but also
for appearing to be tampered with. The Court notes that the attempt to change the
beginning date of effectivity of petitioners contracts was very crudely done. The
alterations are very obvious, and they have not been initialed by the petitioners to

indicate their assent to the same. If the contracts were truly fixed-term contracts,
then a change in the term or period agreed upon is material and would already
constitute a novation of the original contract.
The employment status of a person is defined and prescribed by law and not
by what the parties say it should be. Equally important to consider is that a contract
of employment is impressed with public interest such that labor contracts must
yield to the common good. Thus, provisions of applicable statutes are deemed
written into the contract, and the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply
contracting with each other.
Regular employment has been defined by Article 280 of the Labor Code, as
amended, which reads:
Xxx 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, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where the work or
services to be performed is seasonal in nature and employment is for the duration
of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph. Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists. Xxx
Based on the afore-quoted provision, the following employees are accorded
regular status: (1) those who are engaged to perform activities which are necessary
or desirable in the usual business or trade of the employer, regardless of the length
of their employment; and (2) those who were initially hired as casual employees,
but have rendered at least one year of service, whether continuous or broken, with
respect to the activity in which they are employed.
Undoubtedly, petitioners belong to the first type of regular employees. Under
Article 280 of the Labor Code, the applicable test to determine whether an
employment should be considered regular or non-regular is the reasonable
connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer.
In the case at bar, petitioners were employed by INNODATA on 17 February
1999 as formatters. The primary business of INNODATA is data encoding, and the
formatting of the data entered into the computers is an essential part of the process
of data encoding. Formatting organizes the data encoded, making it easier to
understand for the clients and/or the intended end users thereof. Undeniably, the

work performed by petitioners was necessary or desirable in the business or trade

of INNODATA.
A contract of employment, being a contract of adhesion, is ambiguous, any
ambiguity therein should be construed strictly against the party who prepared it.
The Court is, thus, compelled to conclude that petitioners contracts of employment
became effective on 16 February 1999, and that they were already working
continuously for INNODATA for a year.
Hence, the petitioners, regular employees, were illegally dismissed.
PHILIPPINE
JOURNALISTS,
INC.,
vs.
JOURNAL EMPLOYEES UNION (JEU), FOR ITS UNION MEMBER, MICHAEL
ALFANTE,
The coverage of the term legal dependent as used in a stipulation in a collective
bargaining agreement (CBA) granting funeral or bereavement benefit to a regular
employee for the death of a legal dependent, if the CBA is silent about it, is to be
construed as similar to the meaning that contemporaneous social legislations have
set. This is because the terms of such social legislations are deemed incorporated in
or adopted by the CBA.
Facts:
Complainant Judith Pulido alleged that she was hired by respondent as proofreader
on 10 January 1991; The 2nd complainant, Michael L. Alfante alleged that he started
to work with respondents as computer technician at Management Information
System under manager Neri Torrecampo on 16 May 2000; he was regularized
receiving a monthly salary of P9,070.00 plus other monetary benefits; that
sometime in 2001, Rico Pagkalinawan replaced Torrecampo, which was opposed by
complainant and three other co-employees; that Pagkalinawan took offense of their
objection; complainant Alfante received a memorandum from Pagkalinawan
regarding his excessive tardiness; complainant Alfante received a memorandum
from Executive Vice-President Arnold Banares, requiring him to explain his side on
the evaluation of his performance submitted by manager Pagkalinawan; that one
week after complainant submitted his explanation, he was handed his notice of
dismissal on the ground of "poor performance"; and that complainant was dismissed
effective 28 July 2003.
Complainant Alfante submitted that he was dismissed without just cause.
Respondents, in their position paper, averred that complainants Pulido and Alfante
were dismissed for cause and with due process.
In both instances, respondents maintained that they did not commit any act of
unfair labor practices; that they did not commit acts tantamount to interfering,
restraining, or coercing employees in the exercise of their right to self-organization.
Respondents deny liabilities as far as complainants monetary claims are concerned.
Concerning violations of the provision on wage distortion under Wage Order No. 9,
respondents stressed that complainants were not affected since their salary is way
over the minimum wage.
With respect to the alleged non-adjustment of longevity pay and burial aid,
respondent PJI pointed out that it complies with the provisions of the CBA and that
both complainants have not claimed for the burial aid. Respondents put forward the
information that the alleged nonpayment of rest days every Monday for the past

three (3) years is a matter that is still at issue in NLRC Case No. 02-0402973-93,
which case is still pending before this Commission. Respondents asserted that the
respondents Arturo Dela Cruz, Bobby Capco, Arnold Banares, Ruby Ruiz-Bruno and
Fundador Soriano should not be held liable on account of complainants dismissal as
they merely acted as agents of respondent PJI. Upon the foregoing backdrop, Labor
Arbiter Corazon C. Borbolla rendered her decision on March 29, 2006, disposing
thusly:
LA: Pulido was illegally dismissed. The charge of illegal dismissal by Michael Alfante
is hereby dismissed for lack of merit. The charge of unfair labor practice is
dismissed for lack of basis.
Complainant Michael Alfante (Alfante), joined by his labor organization, Journal
Employees Union (JEU), filed a partial appeal in the National Labor Relations
Commission (NLRC. the NLRC rendered its decision dismissing the partial appeal for
lack of merit.
JEU and Alfante moved for the reconsideration of the decision, but the NLRC denied
their motion
CA: Affirmed.
JEU and Alfante appealed to the Court (G.R. No. 192478) to challenge the CAs
dispositions regarding the legality of: (a) Alfantes dismissal; (b) the non-compliance
with Minimum Wage Order No. 9; and (c) the non-payment of the rest day.
On August 18, 2010, the Court denied due course to the petition in G.R. No. 192478
for failure of petitioners to sufficiently show that the CA had committed any
reversible error to warrant the Courts exercise of its discretionary appellate
jurisdiction.
The Court denied with finality JEU and Alfantes ensuing motion for reconsideration
On its part, petitioner likewise appealed (G.R. No. 192601), seeking the review of
the CAs disposition in the decision of February 5, 2010 on the granting of the
funeral and bereavement aid stipulated in the CBA.
In its petition for review, petitioner maintained that under Section 4, Article XIII of
the CBA, funeral and bereavement aid should be granted upon the death of a legal
dependent of a regular employee; that consistent with the definition provided by
the Social Security System (SSS), the term legal dependent referred to the spouse
and children of a married regular employee, and to the parents and siblings, 18
years old and below, of a single regular employee; 13 that the CBA considered the
term dependents to have the same meaning as beneficiaries, as provided in Section
5, Article XIII of the CBA on the payment of death benefits; 14 that its earlier granting
of claims for funeral and bereavement aid without regard to the foregoing definition
of the legal dependents of married or single regular employees did not ripen into a
company policy whose unilateral withdrawal would constitute a violation of Article
100 of the Labor Code,the law disallowing the non-diminution of benefits;that it had
approved only four claims from 1999 to 2003 based on its mistaken interpretation of
the term legal dependents, but later corrected the same in 2000; that the grant of
funeral and bereavement aid for the death of an employees legal dependent,
regardless of the employees civil status, did not occur over a long period of time,
was not consistent and deliberate, and was partly due to its mistake in appreciating
a doubtful question of law; and that its denial of subsequent claims did not amount
to a violation of the law against the non-diminution of benefits.

In their comment,JEU and Alfante countered that the CBA was a bilateral contractual
agreement that could not be unilaterally changed by any party during its lifetime;
and that the grant of burial benefits had already become a company practice
favorable to the employees, and could not anymore be reduced, diminished,
discontinued or eliminated by petitioner.
ISSUE: whether or not petitioners denial of respondents claims for funeral and
bereavement aid granted under Section 4, Article XIII of their CBA constituted a
diminution of benefits in violation of Article 100 of the Labor Code. *** Interpretation
of law
HELD: YES.
The nature and force of a CBA are delineated in Honda Phils., Inc. v. Samahan ng
Malayang Manggagawa sa Honda,20 thuswise:
A collective bargaining agreement (or CBA) refers to the negotiated contract
between a legitimate labor organization and the employer concerning wages, hours
of work and all other terms and conditions of employment in a bargaining unit. As in
all contracts, the parties in a CBA may establish such stipulations, clauses, terms
and conditions as they may deem convenient provided these are not contrary to
law, morals, good customs, public order or public policy. Thus, where the CBA is
clear and unambiguous, it becomes the law between the parties and compliance
therewith is mandated by the express policy of the law.
Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the
law between the parties, must be complied with by them. The literal meaning of the
stipulations of the CBA, as with every other contract, control if they are clear and
leave no doubt upon the intention of the contracting parties. 22
Here, a conflict has arisen regarding the interpretation of the term legal dependent
in connection with the grant of funeral and bereavement aid to a regular employee
under Section 4, Article XIII of the CBA,23 which stipulates as follows:
SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a
funeral/bereavement aid in the following instances:
a. Death of a regular employee in line of duty P50,000
b. Death of a regular employee not in line of duty P40,000
c. Death of legal dependent of a regular employee P15,000. (Emphasis supplied)
Petitioner insists that notwithstanding the silence of the CBA, the term legal
dependent should follow the definition of it under Republic Act (R.A.) No. 8282
(Social Security Law),24 so that in the case of a married regular employee, his or her
legal dependents include only his or her spouse and children, and in the case of a
single regular employee, his or her legal dependents include only his or her parents
and siblings, 18 years old and below; and that the term dependents has the same
meaning as beneficiaries as used in Section 5, Article XIII of the CBA.
We cannot agree with petitioners insistence.
Social legislations contemporaneous with the execution of the CBA have given a
meaning to the term legal dependent. First of all, Section 8(e) of the Social Security
Law provides that a dependent shall be the following, namely: (a) the legal spouse
entitled by law to receive support from the member; (b) the legitimate, legitimated,
or legally adopted, and illegitimate child who is unmarried, not gainfully employed
and has not reached 21 of age, or, if over 21 years of age, is congenitally or while
still a minor has been permanently incapacitated and incapable of self-support,

physically or mentally; and (c) the parent who is receiving regular support from the
member. Secondly, Section 4(f) of R.A. No. 7875, as amended by R.A. No. 9241, 25
enumerates who are the legal dependents, to wit: (a) the legitimate spouse who is
not a member; (b) the unmarried and unemployed legitimate, legitimated,
illegitimate, acknowledged children as appearing in the birth certificate; legally
adopted or step-children below 21 years of age; (c) children who are 21 years old
and order but suffering from congenital disability, either physical or mental, or any
disability acquired that renders them totally dependent on the member of our
support; and (d) the parents who are 60 years old or older whose monthly income is
below an amount to be determined by the Philippine Health Insurance Corporation
in accordance with the guiding principles set forth in Article I of R.A. No. 7875. And,
thirdly, Section 2(f) of Presidential Decree No. 1146, as amended by R.A. No.
8291,dependent for support upon the member or pensioner; (b) the legitimate,
legitimated, legally adopted child, including the illegitimate child, who is unmarried,
not gainfully employed, not over the age of majority, or is over the age of majority
but incapacitated and incapable of self-support due to a mental or physical defect
acquired prior to age of majority; and (c) the parents dependent upon the member
for support.1wphi1
It is clear from these statutory definitions of dependent that the civil status of the
employee as either married or single is not the controlling consideration in order
that a person may qualify as the employees legal dependent. What is rather
decidedly controlling is the fact that the spouse, child, or parent is actually
dependent for support upon the employee. Indeed, the Court has adopted this
understanding of the term dependent in Social Security System v. De Los Santos, 27
viz:
Social Security System v. Aguas is instructive in determining the extent of the
required "dependency" under the SS Law. In Aguas, the Court ruled that although a
husband and wife are obliged to support each other, whether one is actually
dependent for support upon the other cannot be presumed from the fact of
marriage alone.
Further, Aguas pointed out that a wife who left her family until her husband died
and lived with other men, was not dependent upon her husband for support,
financial or otherwise, during the entire period.
Said the Court:
In a parallel case involving a claim for benefits under the GSIS law, the Court
defined a dependent as "one who derives his or her main support from another.
Meaning, relying on, or subject to, someone else for support; not able to exist or
sustain oneself, or to perform anything without the will, power, or aid of someone
else." It should be noted that the GSIS law likewise defines a dependent spouse as
"the legitimate spouse dependent for support upon the member or pensioner." In
that case, the Court found it obvious that a wife who abandoned the family for more
than 17 years until her husband died, and lived with other men, was not dependent
on her husband for support, financial or otherwise, during that entire period. Hence,
the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto from
her husband cannot be said to be "dependent for support" upon the husband,
absent any showing to the contrary. Conversely, if it is proved that the husband and
wife were still living together at the time of his death, it would be safe to presume
that she was dependent on the husband for support, unless it is shown that she is
capable of providing for herself.

Considering that existing laws always form part of any contract, and are deemed
incorporated in each and every contract, 28 the definition of legal dependents under
the aforecited social legislations applies herein in the absence of a contrary or
different definition mutually intended and adopted by the parties in the CBA.
Accordingly, the concurrence of a legitimate spouse does not disqualify a child or a
parent of the employee from being a legal dependent provided substantial evidence
is adduced to prove the actual dependency of the child or parent on the support of
the employee.
In this regard, the differentiation among the legal dependents is significant only in
the event the CBA has prescribed a hierarchy among them for the granting of a
benefit; hence, the use of the terms primary beneficiaries and secondary
beneficiaries for that purpose. But considering that Section 4, Article XIII of the CBA
has not included that differentiation, petitioner had no basis to deny the claim for
funeral and bereavement aid of Alfante for the death of his parent whose death and
fact of legal dependency on him could be substantially proved.
The argument of petitioner that the grant of the funeral and bereavement benefit
was not voluntary but resulted from its mistaken interpretation as to who was
considered a legal dependent of a regular employee deserves scant consideration.
To be sure, no doubtful or difficult question of law was involved inasmuch as the
several cogent statutes existing at the time the CBA was entered into already
defined who were qualified as the legal dependents of another. Moreover, the
voluntariness of the grant of the benefit became even manifest from petitioners
admission that, despite the memorandum it issued in 2000 33 in order to "correct"
the interpretation of the term legal dependent, it still approved in 2003 the claims
for funeral and bereavement aid of two employees, namely: (a) Cecille Bulacan, for
the death of her father; and (b) Charito Cartel, for the death of her mother, based
on its supposedly mistaken interpretation.34
It is further worthy to note that petitioner granted claims for funeral and
bereavement aid as early as 1999, then issued a memorandum in 2000 to correct
its erroneous interpretation of legal dependent under Section 4, Article XIII of the
CBA. This notwithstanding, the 2001-2004 CBA 35 still contained the same provision
granting funeral or bereavement aid in case of the death of a legal dependent of a
regular employee without differentiating the legal dependents according to the
employee's civil status as married or single. The continuity in the grant of the
funeral and bereavement aid to regular employees for the death of their legal
dependents has undoubtedly ripened into a company policy. With that, the denial of
Alfante's qualified claim for such benefit pursuant to Section 4, Article XIII of the
CBA violated the law prohibiting the diminution of benefits.
En contra:
MITSUBISHI MOTORS PHIL. SALARIED EMPLOYEES VS. MITSUBISHI CORP.
FACTS:
The parties CBA covering the period August 1, 1996 to July 31, 1999provides
for the hospitalization insurance benefits for the covered dependents, thus: xxx The
COMPANY shall obtain group hospitalization insurance coverage or assume under a
self-insurance basis hospitalization for the
dependents of regular employees up toa maximum amount of forty thousand
pesos (P40,000.00) per confinement.xxx When the CBA expired on July 31, 1999,

the parties executed another CBA effective August 1, 1999 to July 31, 2002
incorporating the same provisions
on dependents hospitalization insurance
benefits but in the increased amount of P50,000.00.
On separate occasions, three members of MMPSEU, namely, Ernesto
Calida
(Calida), Hermie Juan Oabel (Oabel) and Jocelyn Martin (Martin), filed claims for
reimbursement ofhospitalization expenses of their dependents. MMPC paid only a
portion of their hospitalization insurance claims, not the full amount.
Claiming that under the CBA, they are entitled to hospital benefits which
should not be reduced by the amounts paid by MEDICard and by Prosper, Calida,
Oabel and Martin asked for reimbursement from MMPC. However, MMPC denied the
claims contending thatdouble insurance would result if the said employees would
receive from the company the full amount of hospitalization expenses despite
having already received payment of portions thereof from other health insurance
providers. This prompted the MMPSEU President to write the MMPC President
demanding full payment of the hospitalization benefits. Alleging discrimination
against MMPSEU union members, she pointed out that full reimbursement was
given in a similar claim filed by Luisito Cruz (Cruz), a member of the Hourly Union.
In the voluntary arbitration , MMPSEU alleged that there is nothing in the CBA
which prohibits an
employee from obtaining other insurance or declares that medical expenses can be
reimbursed only upon presentation oforiginal official receipts. It stressed that the
hospitalization benefits should be computedbased on the formula indicated in the
CBA without deducting the benefits derived from other insurance providers.
Besides, if reduction is permitted, MMPC would be unjustly benefitted from the
monthly premium contributed by the employees through salary deduction. MMPSEU
added that its members had legitimate claims under the CBA and that any doubt as
to any of its provisions should be resolved in favor of its members. Moreover, any
ambiguity should be resolved in favor of labor.
On the other hand, MMPC argued that the reimbursement of the entire
amounts being claimed by the covered employees, including those already paid by
other insurance companies, would constitute double indemnity or double insurance,
which is circumscribed under the Insurance Code. Moreover, a contract of insurance
is a contract of indemnity and the employees cannot be allowed to profit from their
dependents loss.
The Voluntary Arbitrator: that the employees may demand simultaneous payment
from both the CBA and their dependents separate health insurance without
resulting to double insurance, since separate premiums were paid for each
contract. He also noted that the CBA does not prohibit reimbursement in casethere
are other health insurers.
CA: It ruled that despite the lack of a provision which bars recovery in case of
payment by other insurers, the wordings of the subject provision of the CBAshowed
that the parties intended to make MMPC liable only for expenses actually incurred
by an employees qualified dependent. In particular, the provision stipulates that
payment should be made directly to the hospital and that the claim should be
supported by actual hospital and doctors bills. These mean that the employees

shall only be paid amounts notcovered by other health insurance and is more in
keeping with the principle of indemnity in insurance contracts. Besides, a contrary
interpretation would allow unscrupulous employees to unduly profit from the x x x
benefits and shall open the floodgates to questionable claims x x x.

REPUBLIC VS ASIAPRO
owners-members: the SSS coverage seekers
FACTS: Respondent Asiapro, as a cooperative, is composed of owners-members.
Under its by-laws, owners-members are of two categories, to wit: (1) regular
member, who is entitled to all the rights and privileges of membership; and (2)
associate member, who has no right to vote and be voted upon and shall be entitled
only to such rights and privileges provided in its by-laws. Its primary objectives
are to provide savings and credit facilities and to develop other livelihood
services for its owners-members. In the discharge of the aforesaid primary
objectives, respondent cooperative entered into several Service Contracts with
Stanfilco - a division of DOLE Philippines, Inc. and a company based in Bukidnon.
The owners-members do not receive compensation or wages from the
respondent cooperative. Instead, they receive a share in the service
surplus which the respondent cooperative earns from different areas of
trade it engages in, such as the income derived from the said Service
Contracts with Stanfilco. The owners-members get their income from the
service surplus generated by the quality and amount of services they
rendered, which is determined by the Board of Directors of the respondent
cooperative.
In order to enjoy the benefits under the Social Security Law of 1997, the ownersmembers of the respondent cooperative, who were assigned to Stanfilco requested
the services of the latter to register them with petitioner SSS as self-employed and
to remit their contributions as such. Also, to comply with Section 19-A of Republic

Act No. 1161, as amended by Republic Act No. 8282, the SSS contributions of the
said owners-members were equal to the share of both the employer and the
employee.
However, petitioner SSS through its Vice-President for Mindanao Division
sent a letter to the respondent cooperative, addressed to its Chief
Executive Officer (CEO) and General Manager Leo G. Parma, informing the
latter that based on the Service Contracts it executed with Stanfilco,
respondent cooperative is actually a manpower contractor supplying
employees to Stanfilco and for that reason, it is an employer of its ownersmembers working with Stanfilco. Thus, respondent cooperative should
register itself with petitioner SSS as an employer and make the
corresponding report and remittance of premium contributions in
accordance with the Social Security Law of 1997. Respondent answered that it
is not an employer because its owners-members are the cooperative itself; hence, it
cannot be its own employer.
Petitioner SSS filed a petition before petitioner SSC against the respondent
cooperative and Stanfilco praying that the respondent cooperative or, in the
alternative, Stanfilco be directed to register as an employer and to report
respondent cooperatives owners-members as covered employees under the
compulsory coverage of SSS and to remit the necessary contributions in accordance
with the Social Security Law of 1997.
Respondent cooperative filed its Answer with Motion to Dismiss alleging that
no employer-employee relationship exists between it and its owners-members, thus,
petitioner SSC has no jurisdiction over the respondent cooperative.
Motion to dismiss was denied by the SSC. MR was likewise denied. CA:
Granted the petitioner filed by Asiapro and declared that SSC has no jurisdiction
over the case.
ISSUE: Whether there is an employer-employee relationship between Asiapro and its
owners-members?
HELD: 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 wages by whatever means; (3) the power of dismissal;
and (4) the power to control the workers conduct, with the latter assuming primacy
in the overall consideration. The most important element is the employers
control of the employees conduct, not only as to the result of the work to
be done, but also as to the means and methods to accomplish. The power of
control refers to the existence of the power and not necessarily to the actual
exercise thereof. It is not 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. 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. 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. In this case,
the weekly stipends or the so-called shares in the service surplus given by the
respondent cooperative to its owners-members were in reality wages, as
the same were equivalent to an amount not lower than that prescribed by existing
labor laws, rules and regulations, including the wage order applicable to the area
and industry; or the same shall not be lower than the prevailing rates of wages. 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 cooperatives 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. As earlier opined, of the four elements of the employer-employee
relationship, the control test is the most important. 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.
It is true that the Service Contracts executed between the respondent
cooperative and Stanfilco expressly provide that there shall be no employeremployee relationship between the respondent cooperative and its ownersmembers. This Court, however, cannot give the said provision force and effect.
As previously pointed out by this Court, an employee-employer relationship
actually exists between the respondent cooperative and its owners-members. The
four elements in the four-fold test for the existence of an employment relationship
have been complied with. The respondent cooperative must not be allowed to deny
its employment relationship with its owners-members by invoking the questionable
Service Contracts provision, when in actuality, it does exist. The existence of an
employer-employee relationship cannot be negated by expressly
repudiating it in a contract, when the terms and surrounding
circumstances show otherwise. The employment status of a person is
defined and prescribed by law and not by what the parties say it should
be. It is settled that the contracting parties may establish such stipulations, clauses,
terms and conditions as they want, and their agreement would have the force of law
between them. However, the agreed terms and conditions must not be
contrary to law, morals, customs, public policy or public order.1[36] The
Service Contract provision in question must be struck down for being contrary to
law and public policy since it is apparently being used by the respondent
cooperative merely to circumvent the compulsory coverage of its employees, who
are also its owners-members, by the Social Security Law.
1

LEGEND HOTEL (mnl) VS. REALUYO

Joey: The Illegally dismissed pianist
FACTS:
This is a case for illegal dismissal involves a pianist to perform at petitioners
Tanglaw restaurant from Sep. 1992 with an initial rate of 400/night; that his rate
increased to 750/night and that during his employment , he could not choose the
time or performance, which had been fixed from 7pm to 10pm for 3x a week. He
added that the petitioners restaurant manager had required him to conform with
the venues motif; that he had been subjected to the rules on employees
representation checks, a privilege granted to other employees; that on July 9, 1999,
the management had notified him as a cost-cutting measure his services as a
pianist would no longer be required effective July 30.; that he disputed the excuse,
insisting that petitioner had been lucratively operating as of the filing of the
complaint; that the loss of his employment. In its defense, petitioner denied the
existence of an employer-employee relationship with the respondent, insisting that
he had been only a talent engaged to provide live music at the petitioners Madison
coffee shop for 3 hours on 2 days per week; and stated that the economic crisis that
hit the country constrained the management to dispense with his services.
LA: Dismissed. No employer-employee relationship. Respondent appealed.
NLRC: Affirmed. CA: Set aside the ruling of the NLRC. There is an employeremployee relationship.
ISSUE: WON there existed an employer- employee relationship between the parties
HELD: YES. First, petitioner actually wielded the power of selection at the time it
entered into the service contract with the respondent. This is true, notwithstanding
petitioners insistence that respondent had only offered his services to provide live
music at petitioners restaurant and despite petitioners position that what had
really transpired was a negotiation of his rate and time availability. The power of
selection was firmly evidence by the express written recommendation by Velazco,
petitioners restaurant manager for the increase of his remuneration. Petitioner
could not seek refuge behind the service contract entered into with the respondent.
It is the law that defines and governs an employment relationship, whose terms are
not restricted to those fixed in the written contract, for other factors, like the nature
of the work the employee has been called upon to perform, are also considered. Any
stipulation in writing can be ignored when the employer utilizes the stipulation to
deprive the employee of his security of tenure. The inequality that characterizes
employer-employee relations generally tips the scales in favour of the employer,
such that the employee is often scarcely provided real and better options. Secondly,
the argument as regards to whatever remuneration was given to respondent was
only his talent fees; that the latter was not included in the definition of wage
is baseless. Respondents remuneration, albeit denominated as talent
fees, was still considered in the term wage in the sense and context of the
Labor Code. Hence, respondent received compensation for the services he
rendered as a pianist in petitioners hotel. Petitioner cannot use the service contract
to rid itself of the consequences of its employment of respondent. Thridly, the
respondent performed his work as a pianist under petitioners supervision and
control. Specifically, petitioners control both the END ACHIEVED and the MANNER
and MEANS USED to ACHIEVE that END was denominated by the ff : ( He cannot
choose the time of his performance, place of performance; manager required

respondent to wear barong; subject to the rules of employees representation

check). Power of dismissal was likewise present.
THE DISMISSAL WAS INVALID for failure of the petitioner to present clear
and convincing evidence that loss was incurred to justify retrenchment.