TOPIC 11 JURISDICTION OF THE LABOR ARBITER

(NO CASES)

TOPIC 12 2011 NLRC RULES OF PROCEDURE

1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
FACTS: Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a
contract for security services with respondent University of the Philippines (UP).

In 1998, several security guards assigned to UP filed separate complaints against Lockheed and
UP for payment of underpaid wages, 25% overtime pay, premium pay for rest days and special
holidays, holiday pay, service incentive leave pay, night shift differentials, 13th month pay,
refund of cash bond, refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid
wages from December 16-31, 1998, and attorneys fees.

The LA held Lockheed and UP as solidarily liable to complainants. As the parties did not appeal
the NLRC decision, the same became final and executory. A writ of execution was then issued
but later quashed by the Labor Arbiter upon motion of UP due to disputes regarding the amount
of the award. Later, however, said order quashing the writ was reversed by the NLRC.

The NLRC order and resolution having become final, Lockheed filed a motion for the issuance
of an alias writ of execution which was subsequently granted. A Notice of Garnishment was
issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award.

UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being subjected
to garnishment at PNB are government/public funds. The Labor Arbiter, however, dismissed the
urgent motion for lack of merit. UP filed a petition for certiorari before the CA. The CA held that
although the subject funds do not constitute public funds, in light of the ruling in the case of
National Electrification Administration v. Morales mandates that all money claims against the
government must first be filed with the Commission on Audit (COA). Hence, petitioner filed this
petition before the SC.

ISSUE: Whether or not the garnishment is against the funds of UP is valid.

HELD: No.

Political Law Doctrine: It is the COA which has primary jurisdiction to examine, audit and settle
"all debts and claims of any sort" due from or owing the Government or any of its subdivisions,
agencies and instrumentalities, including government-owned or controlled corporations and their
subsidiaries.

This Court finds that the CA correctly applied theNEAcase. Like NEA, UP is a juridical
personality separate and distinct from the government and has the capacity to sue and be sued.
Thus, also like NEA, it cannot evade execution, and its funds may be subject to garnishment or
levy. However, before execution may be had, a claim for payment of the judgment award must
first be filed with the COA.

Under Commonwealth Act No. 327, as amended by Section 26 of P.D. No. 1445, it is the COA
which has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due
from or owing the Government or any of its subdivisions, agencies and instrumentalities,
including government-owned or controlled corporations and their subsidiaries. With respect to
money claims arising from the implementation of Republic Act No. 6758,their allowance or
disallowance is for COA to decide, subject only to the remedy of appeal by petition for certiorari
to this Court.

A reading of the pertinent Commonwealth Act provision clearly shows that it does not make any
distinction as to which of the government subdivisions, agencies and instrumentalities, including
government-owned or controlled corporations and their subsidiaries whose debts should be filed
before the COA.

As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can
be done since the funds of UP had already been garnished, since the garnishment was
erroneously carried out and did not go through the proper procedure (the filing of a claim with
the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per annum,
to be computed from the time of judicial demand to be reckoned from the time UP filed a
petition for certiorari before the CA which occurred right after the withdrawal of the garnished
funds from PNB.

DENIED.

2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
Facts: In a letter agreement, signed by individual respondent Rudolf Lietz and conformed to by
Portillo, the latter (Portillo) was hired by the former under the conditions that Portillo will not
engage in any other gainful employment by [her]self or with anyother company either directly or
indirectly without written consent of [Lietz Inc.] and a breach of which will render
[Portillo]liable to [Lietz Inc.] for liquidated damages. On her tenth (10th) year of service with
Lietz Inc., Portillo was promoted to Sales Representative. In this regard,Portillo signed another
letter agreement containing a "Goodwill Clause:"

It remains understood and you agreed that, on the termination of your employment by act of
either you or [LietzInc.], and for a period of three (3) years thereafter, you shall not engage
directly or indirectly as employee, manager, proprietor, or solicitor for yourself or others in a
similar or competitive business or the same character of work which you were employed by
[Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you
shall pay [Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation
over the last 12 months, it being agreed that this sum is reasonable and just.
 Three (3) years thereafter Portillo resigned from Lietz Inc. During her exit interview, Portillo
declared that she intended to engage in business a rice dealership, selling rice in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill
Clause" in the last letter

agreement she had signed. Subsequently, Lietz Inc. learned that Portillo had been hired by Ed
Keller Philippines, Limited to head its Pharma RawMaterial Department. Ed Keller Limited is
purportedly a direct competitor of Lietz Inc.

Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and
commissions went unheeded. On 14 September 2005, Portillo filed a complaint with the NLRC
for non-payment of 1 months salary, two (2) months commission, 13th month pay, plus
moral, exemplary and actual damages and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount
of P110,662.16.

However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should be
offset against her liability To Lietz Inc. for liquidated damages in the amount of 869,633.097
for Portillos alleged breach of the "Goodwill Clause" in the employment contract when she
became employed with Ed Keller Philippines, Limited.On 25 May 2007, the Labor Arbiter
granted Portillos complaint ordering Lietz, Inc. to pay Portillo the amount of Php110,662.16,
representing her salary and commissions, including 13th month pay. On appeal by respondents
Lietz Inc., the NLRC affirmed the ruling of the Labor Arbiter. The motion for reconsideration
was denied by NLRC. Lietz Inc. filed a petition for certiorari before the Court of Appeals,
alleging grave abuse of discretion in the labor tribunals rulings. The CA initially affirmed the
labor tribunals, but on motion for reconsideration, modified its previous decision. While
upholding the monetary award in favor of Portillo in the aggregate sum of 110,662.16, the CA
allowed legal compensation or set-off of such award of monetary claims by her liability to Lietz
Inc. for liquidated damages arising from her violation of the "Goodwill Clause" in her
employment contract with them. Portillos motion for reconsideration was denied.

Hence, this petition for certiorari before the SC.

ISSUE: Whether Portillos money claims for unpaid salaries may be offset against Lietz Inc.
claim for liquidated damages.

RULING:

Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the CA on
the "causal connection between

Portillos monetary claims against respondents and the latters claim from liquidated damages
against

the former."
Art. 217. Jurisdiction of Labor Arbiters and the Commission.

(a) Except as otherwise provided under this code, the Arbiters shall 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 case involving all workers, whether agricultural or non-agricultural:x x x x4. Claims
for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations; (Underscoring supplied)

Evidently, the CA is convinced that the claim for liquidated damages emanates from the
"Goodwill Clause of the employment contract and, therefore, is a claim for damages arising from
the employer-employee relations." As early as Singapore Airlines Limited v. Pao we
established that not all disputes between an employer and his employee(s) fall within the
jurisdiction of the labor tribunals. We differentiated between abandonment per se and the manner
and consequent effects of such abandonment and ruled that the first, is a labor case, while the
second, is a civil law case.

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under
the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual
obligation. The other items demanded are not labor benefits demanded by workers generally
taken cognizance of in labor disputes, such as payment of wages, overtime compensation or
separation pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute. (Emphasis supplied)Subsequent rulings amplified the
teaching in Singapore Airlines. The reasonable causal connection rule was discussed. Thus, in
San Miguel Corporation v. National Labor Relations Commission we held: xxx

The Court, therefore, believes and so holds that the "money claims of workers" referred to in
paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the
employer-employee relationship, or some aspect or incident of such relationship. Put a little
differently, that money claims of workers which now fall within the original and exclusive
jurisdiction of Labor Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship (Emphasis supplied) We thereafter ruled
that the "reasonable causal connection with the employer-employee relationship" is a
requirement not only in employees money claims against the employer but is, likewise, a
condition when the claimant is the employer. In Dai-Chi Electronics Manufacturing Corporation
v. Villarama, Jr. which reiterated the San Miguel ruling and allied jurisprudence, we pronounced
that a non-compete clause, as in the "Goodwill Clause" referred to in the present case, with a
stipulation that a violation thereof makes the employee liable to his former employer for
liquidated damages, refers to post-employment relations of the parties. We iterated that Article
217, paragraph 4 does not automatically cover all disputes between an employer and its
employee(s). We noted that the cause of action was within the realm of Civil Law, thus,
jurisdiction over the controversy belongs to the regular courts. At bottom, we considered that the
stipulation referred to post-employment relations of the parties. That the "Goodwill Clause" in
this case is likewise a postemployment issue should brook no argument. There is no dispute as to
the cessation of Portillos employment with Lietz Inc. She simply claims her unpaid salaries and
commissions, which Lietz Inc. does not contest. At that juncture, Portillo was no longer an
employee of Lietz Inc. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual
undertaking effective after the cessation of the employment relationship between the parties. In
accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law
case. It is clear, therefore, that while Portillos claim for unpaid salaries is a money claim that
arises out of or in connection with an employer-employee relationship, Lietz Inc.s claim against
Portillo for violation of the goodwill clause is a money claim based on an act done after the
cessation of the employment relationship. And, while the jurisdiction over Portillos claim is
vested in the labor arbiter, the jurisdiction over Lietz Inc.s claim rests on the regular courts.

In the case at bar, the difference in the nature of the credits that one has against the other,
conversely, the nature of the debt one owes another, which difference in turn results in the
difference of the forum where the different credits can be enforced, prevents the application of
compensation. Simply, the labor tribunal in an employees claim for unpaid wages is without
authority to allow the compensation of such claims against the post employment claim of the
former employer for breach of a post employment condition. The labor tribunal does not have
jurisdiction over the civil case of breach of contract. Indeed, the application of compensation in
this case is effectively barred by Article 113 of the Labor Code which prohibits wage deductions
except in three circumstances:

ART. 113. Wage Deduction No employer, in his own behalf or in behalf of any person, shall
make any deduction from 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.

3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
FACTS: Petitioners are in the business of providing security services to their clients. They hired
respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in
Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-
assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly
no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint
against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay
and refund of cash bond. Conciliation and mediation proceedings failed, so the parties were
ordered to submit their respective position papers.

Respondent claimed that petitioners failed to give her an assignment for more than nine months,
amounting to constructive dismissal, and this compelled her to file the complaint for illegal
dismissal. On the other hand, petitioners that respondent was relieved from her post as requested
by the client because of her habitual tardiness, persistent borrowing of money from employees
and tenants of the client, and sleeping on the job. Respondent filed a complaint for illegal
dismissal with the Labor Arbiter.
The Labor Arbiter (LA) in favor of petitioners, holding that the dismissal of Macaraeg was valid,
but ordered the former to pay a certain sum as financial assistance. The Appeal which respondent
filed with the NLRC was for having been filed out of time. Hence, NLRC declared that the LA's
Decision had become final and executory on June 16, 2009.

Respondent elevated the case to the CA via a petition for certiorari. The CA reversed and set
aside the decision of NLRC and declared Macaraeg to have been illegally dismissed. Petitioners
were ordered to reinstate petitioner without loss of seniority rights, benefits and privileges; and
to pay her backwages and other monetary benefits during the period of her illegal dismissal up to
actual reinstatement. Petitioners' motion for reconsideration was denied. Hence, the present
petition.

ISSUE: Whether the CA erred in liberally applying the rules of procedure and ruling that
respondent's appeal should be allowed and resolved on the merits despite having been filed out
of time.

RULING:

The Court cannot sustain the CA's Decision. It should be emphasized that the resort to a liberal
application, or suspension of the application of procedural rules, must remain as the exception to
the well-settled principle that rules must be complied with for the orderly administration of
justice. In Marohomsalic v. Cole the Court stated:

While procedural rules may be relaxed in the interest of justice, it is well-settled that these are
tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the
interest of justice was never intended to be a license for erring litigants to violate the rules with
impunity. Liberality in the interpretation and application of the rules can be invoked only in
proper cases and under justifiable causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed procedure to
ensure an orderly and speedy administration of justice.

The later case of Daikoku Electronics Phils., Inc. v. Raza, further explained that:

To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered
for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its
non-compliance with the rules and must convince the Court that the outright dismissal of the
petition would defeat the administration of substantial justice. x x x The desired leniency cannot
be accorded absent valid and compelling reasons for such a procedural lapse. x x x

In this case, the justifications given by the CA for its liberality by choosing to overlook the
belated filing of the appeal are, the importance of the issue raised, i.e., whether respondent was
illegally dismissed; and the belief that respondent should be "afforded the amplest opportunity
for the proper and just determination of his cause, free from the constraints of technicalities,"
considering that the belated filing of respondent's appeal before the NLRC was the fault of
respondent's former counsel. Note, however, that neither respondent nor her former counsel gave
any explanation or reason citing extraordinary circumstances for her lawyer's failure to abide by
the rules for filing an appeal. Respondent merely insisted that she had not been remiss in
following up her case with said lawyer. It is, however, an oft-repeated ruling that the negligence
and mistakes of counsel bind the client. A departure from this rule would bring about never-
ending suits, so long as lawyers could allege their own fault or negligence to support the clients
case and obtain remedies and reliefs already lost by the operation of law.

It should also be borne in mind that the right of the winning party to enjoy the finality of the
resolution of the case is also an essential part of public policy and the orderly administration of
justice. Hence, such right is just as weighty or equally important as the right of the losing party to
appeal or seek reconsideration within the prescribed period.

When the Labor Arbiter's Decision became final, petitioners attained a vested right to said
judgment.

4. McBurnie vs. Ganzon, GR No. 178034/1718117, October 17, 2013, En banc

FACTS: On October 4, 2002, Andrew James McBurnie (McBurnie), an Australian national,
instituted a complaint for illegal dismissal and other monetary claims against Eulalio Ganzon,
EGI-Managers, Inc., and E. Ganzon, Inc., (respondents). McBurnie claimed that on May 11,
1999, he signed a 5-year employment agreement with the company EGI as an Executive Vice-
President who shall oversee the management of the company hotels and resorts within the
Philippines. He performed work for the company until sometime in November 1999, when he
figured in an accident that compelled him to go back to Australia while recuperating from his
injuries. While in Australia, he was informed by respondent Ganzon that his services were no
longer needed because their intended project would no longer push through.

The respondents contend that their agreement with McBurnie was to jointly invest in and
establish a company for the management of the hotels. They did not intend to create an
employer-employee relationship, and the execution of the employment contract that was being
invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work
permit in the Philippines, and that McBurnie had not obtained a work permit.

On September 30, 2004, the Labor Arbiter (LA) declared McBurnie as having been illegally
dismissed from employment. The respondents filed their Memorandum of Appeal and Motion to
Reduce Bond, and posted an appeal bond in the amount of P100,000.00. They claimed that an
award of more than P60 Million Pesos to a single foreigner who had no work permit and who left
the country for good one month after the purported commencement of his employment was a
patent nullity.

On March 31, 2005, the NLRC denied the motion to reduce bond explaining that in cases
involving monetary award, an employer seeking to appeal the LA decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond equivalent to the monetary
award.

The motion for reconsideration was denied, the respondents appealed to the CA via a Petition for
Certiorari and Prohibition (with extremely urgent prayer for the issuance of a Preliminary
Injunction and/or Temporary Restraining Order) docketed as CA-G.R. SP No. 90845.
The NLRC dismissed their appeal due to respondent's failure to post the required additional
bond. The respondents motion for reconsideration was denied on June 30, 2006. This prompted
respondents to filed with the CA the Petition for Certiorari docketed as CA-G.R SP No. 95916,
which was later consolidated with CA-G.R. SP No. 90845

The CA granted the respondent's application for a writ of preliminary injunction on February 16,
2007. It directed the NLRC, McBurnie, and all persons acting for and under their authority to
refrain from causing the execution and enforcement of the LA decision in favor of McBurnie,
conditioned upon the respondents posting of a bond in the amount of P10,000,000.00. The
reconsideration of issuance of the writ of preliminary injunction sought by McBurnie was denied
by the CA.

McBurnie filed with the Supreme Court a Petition for Review on Certiorari (G.R. Nos. 178034
and 178117) assailing the CA resolutions that granted the respondent's; application for the
injunctive writ. On July 4, 2007, the Court denied the petition. A motion for reconsideration was
denied with a finality on October 7, 2007.

McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration and (2)
to Admit the Attached Supplemental Motion for Reconsideration, a prohibited pleading under
Section 2, Rule 56 of the Rules of Court. Thus, the motion for leave was denied by the Court and
the July 4, 2007 became final and executor on November 13, 2007.

On October 27, 2008, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No.
95916 and rendered a decision allowing the respondent's motion to reduce appeal bond and
directing the NLRC to give due course to their appeal. The CA also ruled that the NLRC
committed grave abuse of discretion in immediately denying the motion without fixing an appeal
bond in an amount that was reasonable, as it denied the respondents of their right to appeal from
the decision of the LA.

McBurnie filed a motion for reconsideration. The respondents moved that the appeal be resolved
on the merits by the CA. The CA denied both motions. McBurnie then filed with the Supreme
Court the Petition for Review on Certiorari (G.R. Nos. 186984-85)

The NLRC, acting on the CA order of remand, accepted the appeal from the LA decision and
reversed and set aside the decision of the LA, and entered a new on dismissing McBurnie
complaint.

On September 18, 2009, the third division of this court rendered its decision granting
respondents motion to reduce appeal bond. This Court also reinstated and affirmed the NLRC
decision dismissing respondent's appeal for failure to perfect an appeal and denying their motion
for reconsideration. The aforementioned decision became final and executor on March 14, 2012.

The respondents filed a Motion for Leave to File Attached Third Motion for Reconsideration,
with an attached Motion for Reconsideration with Motion to Refer These Cases to the Honorable
Court En Banc. The Court En Banc accepted the case from the third division and issued a
temporary restraining order (TRO) enjoining the implementation of the LA Decision. McBurnie
filed a Motion for Reconsideration where he invoked that the Court September 18, 2009 decision
had become final and executor.

ISSUE: Whether or not McBurnie was illegally dismissed?

HELD: There was no employer-employee relationship.

LABOR LAW: rule on appeal bonds

The crucial issue in this case concerns the sufficiency of the appeal bond that was posted by the
respondents. The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of
Procedure, which was substantially the same provision in effect at the time of the respondents
appeal to the NLRC, and which reads: No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the
monetary award. The filing of the motion to reduce bond without compliance with the requisites
in the preceding paragraph shall not stop the running of the period to perfect an appeal.

While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00 and
then ordered the case remand to the NLRC, this Court Decision dated September 18, 2009
provides otherwise, as it reads in part: While the bond may be reduced upon motion by the
employer, this is subject to the conditions that (1) the motion to reduce the bond shall be based
on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted
by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of
the period to perfect an appeal. The qualification effectively requires that unless the NLRC
grants the reduction of the cash bond within the 10-day reglementary period, the employer is still
expected to post the cash or surety bond securing the full amount within the said 10-day period.
If the NLRC does eventually grant the motion for reduction after the reglementary period has
elapsed, the correct relief would be to reduce the cash or surety bond already posted by the
employer within the 10-day period.

To begin with, the Court rectifies its prior pronouncement the unqualified statement that even an
appellant who seeks a reduction of an appeal bond before the NLRC is expected to post a cash or
surety bond securing the full amount of the judgment award within the 10-day reglementary
period to perfect the appeal.

LABOR LAW: suspension of the period to perfect the appeal upon the filing of a motion to
reduce bond

To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to
reduce bond, coupled with compliance with the two conditions emphasized in Garcia v. KJ
Commercial for the grant of such motion, namely, (1) a meritorious ground, and (2) posting of a
bond in a reasonable amount, shall suffice to suspend the running of the period to perfect an
appeal from the labor arbiter decision to the NLRC. To require the full amount of the bond
within the 10-day reglementary period would only render nugatory the legal provisions which
allow an appellant to seek a reduction of the bond.
The rule that the filing of a motion to reduce bond shall not stop the running of the period to
perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines,
Inc. v. Bautista, the Court held: Jurisprudence tells us that in labor cases, an appeal from a
decision involving a monetary award may be perfected only upon the posting of cash or surety
bond. The Court, however, has relaxed this requirement under certain exceptional circumstances
in order to resolve controversies on their merits. These circumstances include: (1) fundamental
consideration of substantial justice; (2) prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and the
amount and the issue involved.

A serious error of the NLRC was its outright denial of the motion to reduce the bond, without
even considering the respondent's arguments and totally unmindful of the rules and jurisprudence
that allow the bond reduction. Instead of resolving the motion to reduce the bond on its merits,
the NLRC insisted on an amount that was equivalent to the monetary award.

When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion.
It refused to at least make a preliminary determination of the merits of the appeal.

LABOR LAW: allowance of the reduction of appeal bonds

Time and again, the Court has cautioned the NLRC to give Article 223 of the Labor Code,
particularly the provisions requiring bonds in appeals involving monetary awards, a liberal
interpretation in line with the desired objective of resolving controversies on the merits.

Although the general rule provides that an appeal in labor cases from a decision involving a
monetary award may be perfected only upon the posting of a cash or surety bond, the Court has
relaxed this requirement under certain exceptional circumstances in order to resolve
controversies on their merits. These circumstances include: (1) the fundamental consideration of
substantial justice; (2) the prevention of miscarriage of justice or of unjust enrichment; and (3)
special circumstances of the case combined with its legal merits, and the amount and the issue
involved. Guidelines that are applicable in the reduction of appeal bonds were also explained in
Nicol v. Footjoy Industrial Corporation. The bond requirement in appeals involving monetary
awards has been and may be relaxed in meritorious cases, including instances in which (1) there
was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute
meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an
appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the
appellants, at the very least, exhibited their willingness and/or good faith by posting a partial
bond during the reglementary period.

It is in this light that the Court finds it necessary to set a parameter for the litigants and the
NLRC guidance on the amount of bond that shall hereafter be filed with a motion for a bond
reduction. To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure
that give parties the chance to seek a reduction of the appeal bond are effectively carried out,
without however defeating the benefits of the bond requirement in favor of a winning litigant, all
motions to reduce bond that are to be filed with the NLRC shall be accompanied by the posting
of a cash or surety bond equivalent to 10% of the monetary award that is subject of the appeal,
which shall provisionally be deemed the reasonable amount of the bond in the meantime that an
appellant motion is pending resolution by the Commission. In conformity with the NLRC Rules,
the monetary award, for the purpose of computing the necessary appeal bond, shall exclude
damages and attorney fees. Only after the posting of a bond in the required percentage shall an
appellant period to perfect an appeal under the NLRC Rules be deemed suspended.

The foregoing shall not be misconstrued to unduly hinder the NLRC exercise of its discretion,
given that the percentage of bond that is set by this guideline shall be merely provisional. The
NLRC retains its authority and duty to resolve the motion and determine the final amount of
bond that shall be posted by the appellant, still in accordance with the standards of meritorious
grounds and reasonable amount Should the NLRC, after considering the motion merit, determine
that a greater amount or the full amount of the bond needs to be posted by the appellant, then the
party shall comply accordingly. The appellant shall be given a period of 10 days from notice of
the NLRC order within which to perfect the appeal by posting the required appeal bond.

LABOR LAW: employment permit for non-resident aliens; illegal dismissal

Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under
our labor laws, it was necessary for him to establish, first and foremost, that he was qualified and
duly authorized to obtain employment within our jurisdiction. A requirement for foreigners who
intend to work within the country is an employment permit, as provided under Article 40, Title II
of the Labor Code.

In WPP Marketing Communications, Inc. v. Galera, we held that a foreign national failure to
seek an employment permit prior to employment poses a serious problem in seeking relief from
the Court.

Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself,
necessitates the dismissal of his labor complaint.

McBurnie failed to present any employment permit which would have authorized him to obtain
employment in the Philippines.This circumstance negates McBurnie claim that he had been
performing work for the respondents by virtue of an employer-employee relationship. The
absence of the employment permit instead bolsters the claim that the supposed employment of
McBurnie was merely simulated, or did not ensue due to the non-fulfillment of the conditions
that were set forth in the letter of May 11, 1999.

McBurnie failed to present other competent evidence to prove his claim of an employer-
employee relationship. iven the parties conflicting claims on their true intention in executing the
agreement, it was necessary to resort to the established criteria for the determination of an
employer-employee relationship, 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 employee
conduct. The rule of thumb remains: the onus probandi falls on the claimant to establish or
substantiate the claim by the requisite quantum of evidence. Whoever claims entitlement to the
benefits provided by law should establish his or her right thereto. McBurnie failed in this regard.
As previously observed by the NLRC, McBurnie even failed to show through any document
such as payslips or vouchers that his salaries during the time that he allegedly worked for the
respondents were paid by the company. In the absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie could not successfully claim that he was
dismissed, much less illegally dismissed, by the latter. Even granting that there was such an
employer-employee relationship, the records are barren of any document showing that its
termination was by the respondents dismissal of McBurnie.

5. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014
Facts
The present dispute stemmed from a complaint filed by the respondent in the RTC for
damage and injury due to gross negligence. It was alleged in the complaint that respondent used
to work as a facility maintenance officer for the petitioners factory which was engaged in the
deleterious industry of dying and chemical manufacture. Daily confrontations with these hazards
prompted him to forwards suggestions to the management in his and all the other workers
behalf. Unfortunately, these matters fell on deaf ears fell on deaf ears. It was finally alleged that
the petitioners negligence in heeding to the call and acting to the complaints eventually resulted
in the deterioration of respondents health which caused his eventual dismissal.
For the petitioners part, they argued that the matter falls outside the jurisdiction of the
RTC considering that these are matters within the sole jurisdiction of the Labor Arbiter
considering that the controversy arose from an employer-employee relationship. Further, they
argued that that there is a pending case involving the same parties and cause in the NLRC.
The RTC then resolved the complaint by affirming its jurisdiction over the matter. The
court noted that matters involving negligence, notwithstanding the fact that it arose during
employment, is a case of quasi-delict within its jurisdiction. The petitioner then appealed to the
RTC which dismissed the complaint and affirmed the RTCs decision.

ISSUE: Whether or not the fact that the complaint was founded on gross negligence arising from
employment is within the jurisdiction of the Regional Trial Court?

RULING:

Yes. It is obvious from the complaint that the plaintiffs have not alleged any unfair labor
practice. Theirs is a simple action for damages for tortious acts allegedly committed by the
defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code.
Upon the facts and issues involved, jurisdiction over the present controversy must be held
to belong to the civil Courts. While seemingly petitioner's claim for damages arises from
employer-employee relations, and the latest amendment to Article 217 of the Labor Code under
PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-employee
relationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for
damages is grounded on the "wanton failure and refusal without just cause of private respondent
Cruz to report for duty despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further averment that Cruz
"maliciously and with bad faith" violated the terms and conditions of the conversion training
course agreement to the damage of petitioner removes the present controversy from the coverage
of the Labor Code and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by private
respondent Cruz of his jobas the latter was not required in the Complaint to report back to
workbut on the manner and consequent effects of such abandonment of work translated in
terms of the damages which petitioner had to suffer. x x x.42
However, it should be stressed that respondents claim for damages is specifically
grounded on petitioners gross negligenceto provide a safe, healthy and workable environment
for its employees a case of quasi-delict.
Thus, the matter rightfully belongs to the jurisdiction of the trial courts.

6. Manila Mining Corp., vs. Amor GR No. 182800, April 20, 2015, citing 2015 Mcburnie
Facts:
Petitioners were regular employees of Manila Mining Corp. In December 2000, the
petitioner temporarily shut down its mining operations pending approval of its application to
increase said facility's capacity. Although the DENR-EMB issued a temporary authority for it to
be able to continue operating for another six (6) months and to increase its capacity, petitioner
failed to secure an extension permit when said temporary authority eventually lapsed. Thus,
petitioner served notice to its employees and DOLE of its temporary suspension for six months
and the temporary lay-off off of two thirds of its employees. However, the shutdown was
extended for another six months. Adversely affected by the petitioners continued failure to
resume its operations, respondents filed a complaint of constructive dismissal and monetary
claims.

The labor arbiter ruled in favor of respondents holding petitioner liable for constructive
dismissal in view of the suspension of its operations beyond the six-month period allowed in the
Labor Code.

Petitioners filed a memorandum of appeal with the NLRC and moved for the reduction of
the appeal bond on the ground of the financial losses of the preceding years has rendered it
unable to put up the surety equivalent to the monetary award.

Respondents moved for the dismissal of the appeal on two grounds:

1. Despite receipt of the decision on Nov 24, 2004, the memorandum of appeal was only
mailed on Feb 7, 2005.
2. Appeal bond tendered by petitioner was so grossly disproportionate to the monetary
award for the same to be considered as substantial compliance.
NLRC granted the appeal. The case was raised to the CA, which nullified the NLRC decision on
the grounds that the NLRC did not have jurisdiction over the case since the appeal was not
perfected.

ISSUE:
Whether of not the appeal was perfected?

HELD:
No, the appeal was not perfected. The CA ruling is upheld.

That the right to appeal is not a natural right or a part of due process; it is merely a statutory
privilege, and may be exercised only in the manner and in accordance with the provisions of law.

On timeliness of appeal
Having received the Labor Arbiter's Decision on 24 November 2004, petitioner had ten (10)
calendar days or until 4 December 2004 within which to perfect an appeal. Considering that the
latter date fell on a Saturday, petitioner had until the next working day, 6 December 2004, within
which to comply with the requirements for the perfection of its appeal. Our perusal of the record
shows that, despite bearing the date 3 December 2004, petitioner's memorandum of appeal was
subscribed before Notary Public only on 6 December 2004. Without proof as to the actual date
of filing of said pleading being presented by both parties, the CA discounted the timeliness of its
filing in light of the established fact that the copy thereof intended for respondents was only
served by registered mail on 7 February 2005. Since proof of service of the memorandum on
appeal is required for the perfection of an appeal from the decision of the Labor Arbiter, the CA
ruled that "respondents filed its appeal not earlier than 07 February 200[5], which is way beyond
the ten-day reglementary period to appeal."

However, the rule is settled that the burden of evidence lies with the party who asserts the
affirmative of an issue. By and of itself, the fact that the copy of memorandum of appeal
intended for respondents was served upon them by registered mail only on 7 February 2005 does
not necessarily mean that petitioner's appeal from the Labor Arbiter's decision was filed out of
time. On the principle that justice should not be sacrificed for technicality, it has been ruled that
the failure of a party to serve a copy of the memorandum to the opposing party is not a
jurisdictional defect and does not bar the NLRC from entertaining the appeal.

On the validity of the cash bond

On Dec 6, petitioner filed a motion to reduce the appeal bond. The ruling in McBurnie v.
Ganzon, et al., ruled that a reduction to reduce appeal bond is granted only when (1) the motion
to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in
relation to the monetary award is posted by the appellant, otherwise the filing of the motion to
reduce bond shall not stop the running of the period to perfect an appeal.

We find that both conditions are not met in the case at bar. On the first requisite, the petitioners
did not provide any proof to substantiate its claim on the preferred basis of serious losses and
reverses it supposedly sustained.
On the second requisite, petitioner posted an amount of 100,000php as provisional bond
sufficient to suspend the running of the 10 day reglementary period. However, the check was
dishonored, thereby rendering the tender thereof as ineffectual. Since it is the posting of a cash or
surety bond which confers jurisdiction upon the NLRC, the rule is settled that non-compliance is
fatal and has the effect of rendering the award final and executory.

Thus, the perfection of an appeal in the manner and within the period prescribed by law is not
only mandatory but also jurisdictional and failure of a party to conform to the rules regarding
appeal will render the judgment final and executory.

7. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015
FACTS:

Respondent Games, worked as a foreman for petitioner, allegedly stole its vehicle
lubricants. Subsequently, it charged him with qualified theft before the trial court. Two years
thereafter, or on 24 August 2007, Games filed a Complainant for illegal dismissal, nonpayment
of benefits, and damages against petitioner. The latter, through counsel, failed to file its Position
Paper on the date set on 15 November 2007.

On 5 February 2008, the LA ruled against petitioner and ordered the latter to pay Games
P535,553.07 for his separation pay, back wages, service incentive leave pay and attorney's fees
resulting from his illegal dismissal. Petitioner no longer filed a motion for reconsideration. As a
result, the LA's ruling became final and executory.

The LA issued a Writ of Execution, which petitioner sought to quash. It prayed that the
proceedings be reopened, explaining that it had failed to present evidence because of its counsel's
negligence in filing the appropriate pleadings. The LA denied the claims of petitioner.
Aggrieved, the latter appealed before the NLRC.

The appeal of petitioner was denied due course because it had failed to show proof of its
security deposit for the appeal. According to the NLRC, the bonding company's mere declaration
in the Certification of Security Deposit that the bond was fully secured was not tantamount to a
faithful compliance with the rule, because there must first be an accompanying assignment of the
employer's bank deposit.

On the merits, the NLRC dismissed the case on the basis of the rule that no appeal may
be taken from an order of execution of a final judgment. For the NLRC, petitioner's failure to
appeal the LA Decision already made the ruling final and executory.

Petitioner elevated the case to the CA via a Petition for Certiorari, but the action was
dismissed. Firstly, the CA ruled that the NLRC did not gravely abuse its discretion in denying
the appeal, given that petitioner had failed to comply faithfully with the bond requirement.
Secondly, it echoed the ruling of the NLRC that a final judgment is no longer appealable.
Thirdly, the CA found that petitioner's own negligence had caused it to lose its right to appeal.
 Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for
Injunctive Relief before this Court. It disputed the finding that it did not show proof of its
security deposit for the appeal bond. It also insisted that its counsel's gross negligence justified
the reopening of the proceedings below.

ISSUE:
1. Whether or not CA erred in dismissing the petitioners complaint

2. Whether or not the NLRC gravely abused its discretion in requiring petitioner to post an
appeal bond

3. Whether or not an appeal bond must be accompanied by a "proof of security deposit or

collateral securing the bond."

RULING OF THE COURT:

1. This Court maintains that the CA correctly refused to reopen the proceedings below. The
reopening of a case is an extraordinary remedy, which, if abused, can make a complete
farce of a duly promulgated decision that has long become final and executory. Hence,
there must be good cause on the movant's part before it can be granted.

a) In this case, petitioner itself was negligent in advancing its case. As found
by the appellate court, petitioner was present during the mandatory
conference hearing in which the latter was informed by the LA of the need
to file a Position Paper on 15 November 2007. However, petitioner not
only reneged on the submission of its Position Paper, but even failed to
move for the filing of the pleading at any point before the LA resolved the
case on 5 February 2008.

b) Moreover, petitioner had failed to exhibit diligence when it did not attend
the hearing on 11 January 2008, or any of the proceedings thereafter,
despite its manifestation that it no longer had any legal representative.
Given the instances of negligence by petitioner itself, the Court finds that
the CA justly refused to reopen the case in the former's favor. Definitely,
petitioner cannot now be allowed to claim denial of due process when it
was petitioner who was less than vigilant of its rights.
2. The NLRC did not commit any mistake in requiring petitioner to post an appeal bond.
The paraphrased proposition that "an appeal bond is not required in appeals from
decisions of the LA denying a motion to quash a writ of execution" lacks any citation
sourced from a statute or case law. Article 223 of the Labor Code and Section 6, Rule VI
of the 2011 NLRC Rules of Procedure, uniformly state thus:

In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages and attorney's
fees. (Emphasis supplied)

Evidently, the above rules do not limit the appeal bond requirement only to certain kinds
of rulings of the LA. Rather, these rules generally state that in case the ruling of the
LA involves a monetary award, an employer's appeal may be perfected only upon the
posting of a bond. Therefore, absent any qualifying terms, so long as the decision of the
LA involves a monetary award, as in this case, that ruling can only be appealed after the
employer posts a bond.

Clearly, this construction is but proper considering the avowed purpose of appeal bonds
demanded by the law from employers in labor cases. If we are to construe otherwise, then
an aggrieved party may simply seek the quashal of a writ of execution, instead of going
through the normal modes of appeal, to altogether avoid paying for an appeal bond. This
ruse will then circumvent the requirement of both labor rules and jurisprudence16to post
an appeal bond before contesting the LA's grant of monetary award. Hence, the first point
is not only incorrect, but also dangerous.

3. According to the NLRC and the CA, the bonding company's mere declaration in the
Certification of Security Deposit that the bond is fully secured is not tantamount to a
faithful compliance with the rule, because there must first be an accompanying
assignment of the employer's bank deposit. On the other hand, the dissent sees this
declaration as an act that satisfies Section 6, Rule VI of the 2011 NLRC Rules of
Procedure. For this reason, he opines that the NLRC should have entertained the appeal
of petitioner.

Notwithstanding this issue, the NLRC has given a well-founded reason for refusing to
entertain petitioner's appeal, namely, no appeal may be taken from an order of execution
of a final and executory judgment.

An appeal is not a matter of right, but is a mere statutory privilege. It may be availed of
only in the manner provided by law and the rules. Thus, a party who seeks to elevate an
action must comply with the requirements of the 2011 NLRC Rules of Procedure as
regards the period, grounds, venue, fees, bonds, and other requisites for a proper appeal
 before the NLRC; and in Section 6, Rule VI, the aforesaid rules prohibit appeals from
final and executory decisions of the Labor Arbiter.

In this case, petitioner elevated to the NLRC an already final and executory decision of
the LA. To recall, after petitioner learned of its former counsel's negligence in filing a
Position Paper before the LA, it nonetheless failed to file a motion reconsideration to
question the ruling of the LA that it illegally dismissed Games. At that point, the
Decision was already final and executory, so the LA dutifully issued a Writ of Execution.
Petitioner sought the quashal of the writ of execution and the reopening of its case only at
that stage; and only after it was rebuffed by the LA did petitioner appeal before the
NLRC. Based on the timeline, therefore, the LA's adverse Decision had become final and
executory even prior to petitioner's appeal before the NLRC contesting the denial of the
Motion to Quash the Writ of Execution. Consequently, the NLRC dismissed the appeal
based on its clear prohibition under Section 5, Rule V of the 2011 NLRC Rules of
Procedure.

The NLRC's reasoning that no appeal may be taken from an order of execution of a final
and executory judgment is also rooted in case law. Jurisprudence dictates that a final and
executory decision of the LA can no longer be reversed or modified. After all, just as a
losing party has the right to file an appeal within the prescribed period, so does the
winning party have the correlative right to enjoy the finality of the resolution of the case.
On this basis, the CA did not grievously err when it concluded that the ruling of the
NLRC denying petitioner's appeal was not baseless, arbitrary, whimsical, or despotic.

8. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015
Facts:

In her complaint for damages against the Social Security System (SSS), the DBP Service
Corporation, and the SSS Retirees Association, respondent Ubana alleged that in July 1995 she
applied for employment with the SSS. Despite passing all the examinations and submitting the
requirements, she was referred to the DBP Service Corporation, passed the pre-employment
examination and was referred to SSS Naga for training and immediate deployment to SSS Daet.

She was made to sign a six-month Service Contract in May, 1996; and when she reported
to the SSS Daet Branch, she was assigned to various sections and divisions as Processor and
Data Encoder. Her salary was only P229.00 daily compared to a regular SSS Processor who
receives P846.45 daily. While her service contract with the DBP Service Corporation was never
renewed, she continued to be employed by the SSS; she was continually assured of being
absorbed into the SSS; in fact she was qualified for the position as she passed the required
training.
 Because of the oppressive and prejudicial treatment of the SSS, she was forced to resign
in August, 2002 as she could not stand anymore the exploitation, the agony of dissatisfaction,
anxiety, demoralization, and injustice. Respondent Ubana therefore alleges that the defendants
conspired to exploit her and violate civil service rules and regulations and Civil Code provisions
on Human relations, specifically Articles 19, 20 and 21. Thus, she prayed for actual damages by
way of unrealized income, moral and exemplary damages, and attorneys fees.

The defendants filed a motion to dismiss for lack of jurisdiction, averring that the
complaint was predicated on the claims that arose out of employer-employee relations, thus
cognizable by the NLRC. At first, the RTC granted the motion to dismiss, but on motion for
reconsideration by the respondent, the RTC reversed itself and denied the motion to dismiss. It
held that a perusal of the complaint filed by Debbie substantially alleges that the case is for
Damages. Having denied the existence of employer-employee relationship between it and
Debbie, and the case is for damages, the regular trial courts, not the CSC has jurisdiction over the
case.

SSS moved to reconsider, but the RTC denied, hence it filed a petition for certiorari with the CA
which likewise dismissed the case.

Thus, this present petition before the Court.

The Issue:
Whether or not the RTC has jurisdiction over the complaint filed by Debbie.

The Ruling:
The Court denies the Petition.

In Home Development Mutual Fund v. Commission on Audit, it was held that while they
performed the work of regular government employees, DBP Service Corporation personnel are
not government personnel, but employees of DBP Service Corporation acting as an independent
contractor. Applying the foregoing pronouncement to the present case, it can be said that during
respondents stint with petitioner, she never became an SSS employee, as she remained an
employee of DBP Service Corporation and SSS Retirees Association the two being
independent contractors with legitimate service contracts with SSS.

Indeed, [i]n legitimate job contracting, no employer-employee relation exists between the
principal and the job contractors employees. The principal is responsible to the job contractors
employees only for the proper payment of wages.

In her Complaint, respondent acknowledges that she is not petitioners employee, but that
precisely she was promised that she would be absorbed into the SSS plantilla after all her years
of service with SSS; and that as SSS Processor, she was paid only P229.00 daily or P5,038.00
monthly, while a regular SSS Processor receives a monthly salary of P18,622.00, or P846.45
daily wage. In its pleadings, petitioner denied the existence of an employer-employee
relationship between it and respondent; in fact, it insists on the validity of its service agreements
with DBP Service Corporation and SSS Retirees Association meaning that the latter, and not
SSS, are respondents true employers. Since both parties admit that there is no employment
relation between them, then there is no dispute cognizable by the NLRC. Thus, respondents case
is premised on the claim that in paying her only P229.00 daily or P5,038.00 monthly as
against a monthly salary of P18,622.00, or P846.45 daily wage, paid to a regular SSS Processor
at the time, petitioner exploited her, treated her unfairly, and unjustly enriched itself at her
expense.

For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire
jurisdiction over a dispute, there must be an employer-employee relation between the parties
thereto.

x x x 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, x x x 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.
Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original
jurisdiction only over the following:

1. Unfair labor practices;

2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, 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) regardless of whether accompanied with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite

x x x.

SSince there is no employer-employee relationship between the parties herein, then there is no
labor dispute cognizable by the Labor Arbiters or the NLRC.

There being no employer-employee relation or any other definite or direct contract between
respondent and petitioner, the latter being responsible to the former only for the proper payment
of wages, respondent is thus justified in filing a case against petitioner, based on Articles 19 and
20 of the Civil Code, to recover the proper salary due her as SSS Processor. At first glance, it is
indeed unfair and unjust that as, Processor who has worked with petitioner for six long years, she
was paid only P5,038.00 monthly, or P229.00 daily, while a regular SSS employee with the same
designation and who performs identical functions is paid a monthly salary of P18,622.00, or
P846.45 daily wage. Petitioner may not hide under its service contracts to deprive respondent of
what is justly due her. As a vital government entity charged with ensuring social security, it
should lead in setting the example by treating everyone with justice and fairness. If it cannot
guarantee the security of those who work for it, it is doubtful that it can even discharge its
directive to promote the social security of its members in line with the fundamental mandate to
promote social justice and to insure the well-being and economic security of the Filipino people.

In this jurisdiction, the long honored legal truism of equal pay for equal work' has been
impregnably institutionalized; [p]ersons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. That
public policy abhors inequality and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution in the Article on Social Justice and
Human Rights exhorts Congress to give highest priority to the enactment of measures that
protect and enhance the right of all people to human dignity, reduce social, economic, and
political inequalities. The very broad Article 19 of the Civil Code requires every person, in the
exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his
due, and observe honesty and good faith

9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675, Sept
23, 2015
FACTS: Petitioner union staged a strike against herein respondent companys Ice Cream and
Chilled Products Division, citing, as grounds, respondents alleged violation of the collective
bargaining agreement (CBA), dismissal of union officers and members, discrimination and other
unfair labor practice (ULP) acts. Respondent, NESTLE filed a Petition to Declare Strike Illegal.
DOLE Acting Secretary certified strike as illegal. After a series of conciliation meetings and
discussions between parties, they agreed to resolve their differences and came up with a
compromise agreement embodied in a MOA dated August 4, 1998 and subsequently approved
by NLRC on October 12, 1998.January 25, 2010, after a lapse of more than 11 years from the
time of execution of the subject MOA, petitioners filed a Motion of Writ of Execution
contending that they have not been paid the amounts they are entitled to in accordance with the
MOA. Respondents filed its opposition contending that the petitioners remedy is already barred
by prescription because, under the 2005 Revised Rules of the NLRC, a decision or order may be
executed on motion within 5 years from the date it becomes final and executor and that the same
decision or order may only be enforced by independent action within a period of 10 years from
the date of its finality.

ISSUE: Whether or not the petitioners demand to be paid has prescribed.

RULING: A compromise agreement is entered as a determination of a controversy has the force

and effect of a judgment. It is immediately executor and not appealable, except for vices of
consent or forgery. The non-fulfillment of its terms and conditions justifies the issuance of a writ
of execution; in such an instance, execution becomes a ministerial duty of the court.

Section 8, Rule XI, 2005 Revised Rules of Procedure of the NLRC which states that:
 A decision or order may be executed on motion within 5 years from the date it becomes
final and executory. After the lapse of such period, the judgment shall become dormant,
and may only be enforced by an independent action within a period of 10 years from date
of its finality.

Section 4, (a) and 6, Rule III, of the NLRC Manual on Execution of Judgment:

Section 4. Issuance of Writ.-Execution shall issue upon an order, resolution or decision

that finally disposes of the actions or proceedings and after the counsel of record and the
parties have been duly furnished with the copies of the same in accordance with the
NLRC Rules of Procedure, provided:

a) The Commission or Labor Arbiter shall, motu proprio or upon motion of any interested
party, issued a writ of execution on a judgment only within 5 years from the date it
becomes final and executory...

Section 6. Execution by Independent Action.

A judgment after the lapse of 5 years from the date it becomes final and executor and
before it is barred by prescription, may only be enforced by an independent action. It is
clear from the above law and rules that a judgment may be executed on motion within 5
years from the date of its entry or from the date it becomes final and executor. After the
lapse of time, and before it is barred by the statute of limitations, a judgment may be
enforced by action or by the institution of a complaint in a regular form.

In this case, it is clear that the judgment of the NLRC, having been based on a compromise
embodied in a written contract, was immediately executor upon its issuance on October 12,
1998. Thus, it could have been executed by motion within 5 years. It was not. Nonetheless, it
could have been enforced by an independent action within the next 5 years, or within 10 years
from the time the NLRC Decision was promulgated. It was not. While the Court fully recognizes
the special protection which the Constitution, labor laws, and social legislation accord the
workingman, the Court cannot, however alter or amend the law on prescription to relieve
petitioners of the consequences of their inaction. Laws come to the assistance of the vigilant, not
of the sleeping.

10. Quantum Foods, Inc. vs. Esloyo, GR. No. 213696, December 9, 2015, citing 2015
Mcburnie
Facts: From a decision dated Dec. 27, 2007 of the Labor Arbiter (LA) finding respondents
Marcelino Esloyo and Glen Magsila to have been illegally dismissed and granting a total
monetary judgment of P1,817,856.71, petitioner Quantum Foods, Inc. (QFI) filed a notice of
appeal and memorandum of appeal before the National Labor Relations Commission (NLRC) on
Feb. 8, 2008. The memorandum was accompanied by: (a) a motion to reduce bond averring that
it was encountering difficulty raising the amount of the bond and finding an insurance company
that can cover said amount during the short period of time allotted for an appeal; and (b) a cash
bond in the amount of P400,000.00 (partial bond). Subsequently, but before the NLRC could act
on the motion to reduce bond, QFI posted a surety bond from an accredited insurance company
fully covering the monetary judgment, which respondents vehemently opposed. In a decision
dated Feb. 20, 2009, the NLRC denied respondents motion to dismiss and gave due course to
QFIs appeal, holding, among others, that there was substantial compliance with the bond
requirement, and merit in QFIs appeal that would justify a liberal application of the requirement
on the timely filing of the appeal bond. On a petition for certiorari, the Court of Appeals (CA), in
a decision dated Jan. 18, 2011, reversed and set aside the NLRCs ruling and ruled that QFIs
failure to post the required bond in an amount equivalent to the monetary judgment impeded the
perfection of its appeal and rendered the LAs decision final and executory.
Issue: Whether or not the CA CA erred in ascribing grave abuse of discretion on the part of the
NLRC in giving due course to QFI's appeal.
Ruling: Yes. In Nicol v. Footjoy Industrial Corp., 555 Phil. 275 (2007), the Court summarized
the guidelines under which the NLRC must exercise its discretion in considering an appellants
motion for reduction of bond in this wise:
The bond requirement on appeals involving monetary awards has been and may be relaxed in
meritorious cases. These cases include instances in which (1) there was substantial compliance
with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce
the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the
desired objective of resolving controversies on the merits, or (4) the appellants, at the very least,
exhibited their willingness and/or good faith by posting a partial bond during the reglementary
period.
xxx
As to what constitutes a reasonable amount of bond that must accompany the motion to reduce
bond in order to suspend the period to perfect an appeal, the Court, in McBurnie v. Ganzon, G.R.
Nos. 178034, 178117, and 186984-85, October 17, 2013, 707 SCRA 646, 679, pronounced:
To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give
parties the chance to seek a reduction of the appeal bond are effectively carried out, without
however defeating the benefits of the bond requirement in favor of a winning litigant, all motions
to reduce bond that are to be filed with the NLRC shall be accompanied by the posting of a cash
or surety bond equivalent to 10 percent of the monetary award that is subject of the appeal,
which shall provisionally be deemed the reasonable amount of the bond in the meantime that an
appellants motion is pending resolution by the Commission. In conformity with the NLRC
Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall
exclude damages and attorneys fees. Only after the posting of a bond in the required percentage
shall an appellants period to perfect an appeal under the NLRC Rules be deemed suspended.
(Emphasis and underscoring supplied)
Hence, the posting of a P400,000.00 cash bond equivalent to more than 20 percent of the
monetary judgment, together with the Motion to Reduce Bond within the reglementary period
was sufficient to suspend the period to perfect the appeal. The posting of the said partial bond
coupled with the subsequent posting of a surety bond in an amount equivalent to the monetary
judgment also signified QFIs good faith and willingness to recognize the final outcome of its
appeal.
In determining the reasonable amount of appeal bonds, however, the Court primarily considers
the merits of the motions and the appeals. Thus, in Rosewood Processing, Inc. v. NLRC, 352
Phil. 1013(1998), the Court considered the posting of a P50,000.00 bond together with the
motion to reduce bond as substantial compliance with the legal requirements of an appeal from a
P789,154.39 monetary award considering the clear merits which appear, res ipsa loquitor, in the
appeal from the labor arbiters decision and the petitioners substantial compliance with rules
governing appeals.
It should be emphasized that the NLRC has full discretion to grant or deny the motion to reduce
bond, and its ruling will not be disturbed unless tainted with grave abuse of discretion. Verily, an
act of a court or tribunal can only be considered to be tainted with grave abuse of discretion
when such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack
of jurisdiction, which clearly is not extant with respect to the NLRCs cognizance of QFIs
appeal. Far from having gravely abused its discretion, the NLRC correctly preferred substantial
justice over the rigid and stringent application of procedural rules. This, by all means, is not a
case of grave abuse of discretion calling for the issuance of a writ of certiorari, warranting the
reversal of the CAs ruling granting the certiorari petition and the remand of the case to the C A
for appropriate action.

11. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016
Facts: Calixto (Borela) and Estelo (Amarille), respondents, filed a case against the petitioners,
Dela Rosa Liner Inc. And Rosauro and Nora Dela Rosa, for underpayment/non-payment of
salaries, holiday pay, overtime pay, service incentive leave pay, 13th month pay, sick leave and
vacation leave, night shift differential, illegal deductions, and violation of Wage Order Nos. 13,
14, 15 and 16. The petitioners moved to dismiss the complaint on the ground of forum shopping,
pointing out that the CA 13th Division had disposed of a similar case (CA-G.R. SP No.
118038) after they entered into a compromise agreement which covered all claims and causes of
action in relation to the respondents employment. The Labor Arbiter sided in favour of the
petitioners and dismissed the complaint on the ground of forum shopping, but the NLRC, on
appeal set aside the LA ruling, holding that respondents could not have committed forum
shopping as there was no identity of causes of action between the two cases. The first complaint,
the NLRC pointed out, charged the petitioners with illegal dismissal and unfair labor practice;
while the second complaint was based on the petitioners alleged nonpayment/underpayment of
their salaries and monetary benefits, and violation of several wage orders. On petition for
certiorari to the CA, the latter dismissed their petition, hence the petitioners elevated their case to
the Supreme Court. The respondents argue that the petition was belatedly filed, since the
deadline for filing the petition was June 12, 2013, but the petitioners notarized the petition only
on June 13, 2013, which means that it was filed on the same day, hence, filed one-day late.

Issue: Whether there was forum shopping in the two cases, the previous one for illegal dismissal,
and the later one for non-payment of statutory benefits.
Whether the petition was belatedly filed.

Ruling: The petition for review on certiorari timely filed pursuant to Rule 45, Section 2 of the
Rules of Court. The last day for filing of the petition, as respondents claim, fell on June 12, 2013,
Independence Day, a legal holiday. In Reiner Pacific International Shipping, et al., v. Captain
Francisco B. Guevarra, et al., the Court explained that under Section 1, Rule 22 of the Rules of
Court, as clarified by A.M. 00-2-14 SC (in relation to the filing of pleadings in courts), when the
last day on which a pleading is due falls on a Saturday, Sunday, or a legal holiday, the filing of
the pleading on the next working day is deemed on time. The filing of the petition therefore on
June 13, 2013, a working day, fully complied with the rules.

The CA 15th Division committed no reversible error when it affirmed the NLRC ruling that the
second complaint is not barred by the rule on forum shopping nor by the principle of res judicata.
In other words, no grave abuse of discretion could be attributed to the NLRC when it reinstated
the second complaint.

Contrary to the petitioners submission, respondents second complaint, a money claim, is not a
similar case to the first complaint. Thus, the filing of the second complaint did not constitute
forum shopping and the judgment in the first case is not a res judicata ruling that bars the second
complaint.

As the CA aptly cited, the elements of forum shopping are: (1) identity of parties; (2) identity of
rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity
of the two preceding particulars such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res judicata in the action under consideration.

The Court concurs with the C A that forum shopping and res judicata are not applicable in the
present case. There is no identity of rights asserted and reliefs prayed for, and the judgment
rendered in the previous action will not amount to res judicata in the action now under
consideration.

There is also no identity of causes of action in the first complaint and in the second complaint.
In Yap v. Chua, which that the test to determine whether causes of action are identical is to
ascertain whether the same evidence would support both actions, or whether there is an identity
in the facts essential to the maintenance of the two actions. If the same facts or evidence would
support both actions, then they are considered the same; a judgment in the first case would be a
bar to the subsequent action.

Under the circumstances of the case, sufficient basis exists for the NLRCs and CAs
conclusions that there is no identity of causes of action between the respondents two complaints
against the petitioners. The first complaint involved illegal dismissal/suspension, unfair labor
practice with prayer for damages and attorneys fees; while the second complaint (the subject of
the present appeal) involves claims for labor standards benefits the petitioners alleged
violation of Wage Orders Nos. 13, 14, 15 and 16; nonpayment of respondents sick and vacation
leave pays, 13th-month pay, service incentive leave benefit, overtime pay, and night shift
differential.

As the CA correctly held, the same facts or evidence would not support both actions. To put it
simply, the facts or the evidence that would determine whether respondents were illegally
dismissed, illegally suspended, or had been the subject of an unfair labor practice act by the
petitioners are not the same facts or evidence that would support the charge of non-compliance
with labor standards benefits and several wage orders. We thus cannot find a basis for
petitioners claim that the same action had been settled x x x.

Neither was the Court persuaded by petitioners argument that The Compromise Agreement
covered all claims and causes of action that the parties may have against each other in relation to
the private respondents employment. The compromise agreement had been concluded to
terminate the illegal dismissal and unfair labor case then pending before the CA. While the
parties agreed that no further action shall be brought by the parties against each other, they
pointedly stated that they referred to actions on the same grounds. The phrase same grounds can
only refer to the grounds raised in the first complaint and not to any other grounds.

The Court likewise cannot accept the compromise agreements application to all claims and
damages or losses either party may have against each other whether those damages or losses are
known or unknown, foreseen or unforeseen.
This coverage is too sweeping and effectively excludes any claims by the respondents against the
petitioners, including those that by law and jurisprudence cannot be waived without appropriate
consideration such as nonpayment or underpayment of overtime pay and wages.

In Pampanga Sugar Development, Co., Inc., v. Court of Industrial Relations, et al., the Court
reminded the parties that while rights may be waived, the waiver must not be contrary to law,
public policy, morals, or good customs; or prejudicial to a third person with a right recognized by
law. In labor law, respondents claim for 13th-month pay, overtime pay, and statutory wages
(under Wages Orders 13, 14, 15 and 16), among others, cannot simply be generally waived as
they are granted for workers protection and welfare; it takes more than a general waiver to give
up workers rights to these legal entitlements.
Lastly, the petitioners insinuation, that the respondents are not and should not be entitled to
anything more, because they had already received a considerable amount for the settlement
(P350,000.00 for Borela and P150,000.00 for Amarille), should be placed and understood in its
proper context.

The Court noted in the illegal dismissal case where the compromise agreement took place, the
NLRC 6th Division (acting on the appeal from the LAs ruling) awarded Borela P442,550.00 in
backwages; P20,000.00 in moral and exemplary damages, plus 10% attorneys fees; and to
Amarille P215,775.00 in back wages and P50,000.00 in moral and exemplary damages, plus
10% attorneys fees.

Although the NLRC reconsidered these awards and eventually granted financial assistance of
P10,000.00 each to Borela and Amarille, it is reasonable to regard the amounts they received as a
fair compromise in the settlement of the first complaint in relation with the initial NLRC award,
indicated above, before its reconsideration. To be sure, the parties, especially the respondents,
could not have considered the P10,000.00 financial assistance or their labor standards claims,
particularly the alleged violation of the wage orders, as a factor in their effort to settle the case
amicably. The compromise agreement, it should be emphasized, was executed on September 8,
2011, while the labor standards complaint was filed only on September 23, 2011.

For the reasons discussed above, the Court finds the petition without merit.

12. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, September 21, 2016
Facts:
In July 2009, respondent Vukasinovic was hired by petitioner FDC as its Director for Business
Development for one year. His employment was renewed for another year. Sometime in May
2010, he allegedly received a text message from Mallari informing him that Villareal was
receiving commissions from company transactions.
Respondent met with Mallari and offered her money in exchange for evidence that will support
her allegations. Petitioner FDC's General Manager conducted further investigations on the
alleged corruptions of Engr. Villareal. During the inquiry, Mallari revealed that she merely
fabricated the story so that she can ask money from respondent.

Petitioner FDC approved the recommendation of the Investigating Panel and terminated
respondent's employment. The Decision and the Notice of Termination were served on
November 2, 2010. Respondent, however, refused to acknowledge its receipt and, instead, filed a
complaint for illegal dismissal, illegal suspension, regularization, non-payment of salaries,
service incentive leave, 13th month pay, actual, moral and exemplary damages, attorney's fees
and demands for his reinstatement with full backwages against petitioner FDC and its officers.
On June 27, 2011, Labor Arbiter Bactin dismissed the complaint for lack of factual or legal
basis, and ruled that respondent cannot be regularized as he is an employee with a legal and valid
fixed-term employment and that his dismissal was for a just cause. This was affirmed by the
NLRC.
The NLRC noted that respondent had previously filed another complaint before the same branch
of the NLRC in San Fernando, Pampanga, involving the same facts, issues, and prayer. This
previous case has been dismissed by Labor Arbiter Abdon on the ground of forum shopping. The
dismissal was eventually sustained by both the NLRC and the CA in which the decision in CA-
G.R. SP No. 126225 became final and executory.

Respondent then filed a petition for certiorari with the CA which was docketed as CA-G.R. SP
No. 125945 and raffled to its 9th Division in which CA ordered the award of unpaid salaries to
respondent. The CA held that petitioner FDC failed to present evidence to show payment of the
salaries of respondent for the period claimed.
Petitioners filed a petition for review before this Court, contending that the CA erred in not
dismissing outright respondent's petition in CA G.R. SP No. 125945. They claim that given the
final decision in CA-G.R. SP No. 126225, wherein all the elements of litis pendentia were found,
the CA should have refused to take cognizance of the case.
Issue:
Whether the CA gravely erred in not dismissing the petition in CA-G.R. SP No. 125945 for
deliberate forum shopping.
Ruling:
There is forum shopping when a party repetitively avails of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and the
same essential facts and circumstances, and all raising substantially the same issues either
pending in or already resolved adversely by some other court.
The test for determining the existence of forum shopping is whether a final judgment in one case
amounts to res judicata in another or whether the following elements of litis pendentia are
present: (a) identity of parties, or at least such parties as representing the same interests in
both actions; (b) identity of rights asserted and reliefs prayed for, the relief being founded on the
same facts; and (c) the identity of the two preceding particulars, such that any judgment rendered
in the other action will, regardless of which party is successful, amount to res judicata in the
action under consideration.
In the instant case, there is no doubt that all the elements of litis pendentia have already been
established, as this was already settled with finality in CA-G.R. SP No. 126225.
It is well-settled that once there is a finding of forum shopping, the penalty is summary dismissal
not only of the petition pending before this Court, but also of the other case that is pending in a
lower court. This is so because twin dismissal is the punitive measure to those who trifle with the
orderly administration of justice.
Section 5. Certification against forum shopping- ...If the acts of the party or his counsel clearly
constitute willful and deliberate forum shopping, the same shall be ground for summary
dismissal with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions.
Consequently, the CA should have dismissed the case outright without rendering a decision on
the merits of the case.
The petition for certiorari filed by respondent Sascha Vukasinovic with the CA is
ordered DISMISSED on the ground of deliberate forum shopping.

13. Manila Doctors College vs. Olomores, GR No. 225044, Oct. 3, 2016
FACTS

Respondent was a faculty member of petitioner Manila Doctors College (MDC) assigned at the
Humanities Department of the College of Arts and Sciences. He was dismissed for Grave
 Misconduct, Gross Inefficiency, and Incompetence, after due investigation finding him guilty
of employing a grading system that was not in accordance with the guidelines set by MDC.
Respondent then filed a case for illegal dismissal, money claims, regularization, damages, and
attorney's fees against petitioners MDC and Teresita O. Turla, President of MDC, before the
NLRC,
- He claimed that there was no just cause for his dismissal, and that he should be accorded
a permanent appointment after having served as an instructor on a full-time basis for five
(5) consecutive years.

Labor Arbiter Decision

Labor Arbiter Amansec Declared the Respondent having been illegally dismissed
- His act of liberally implementing the guidelines in arriving at his students' final grades
did not constitute serious misconduct
- His five (5)-year continuous service as faculty member without any derogatory record
belies the charge of inefficiency and competence again him.

However, with respect to the claim for regularization:

- Respondent failed to meet the requisites for the acquisition of permanent status, as he
became a full-time faculty member, with at least 18 units of teaching load, only on the
second semester of School Year 2008-2009, even if he was employed since June of 2005,
thereby falling short of the necessary three (3) consecutive years of service as full-time
teacher.
- The Manual of Regulations for Private Higher Education (MORPHE) provides that a full
academic teaching personnel who has satisfactorily completed his probationary
employment for a period of six (6) consecutive semesters, or nine (9) consecutive
trimesters, shall acquire a regular or permanent status if he is re-hired immediately after
the end of probation.

Ordered petitioners to reinstate respondent as faculty member under the same terms and
conditions of his employment, without loss of seniority rights, but denied payment of back
wages

However, upon motion by the respondent, Labor Arbiter Rioflorido granted respondent's
motion and ordered the issuance of a writ of execution for the total amount of P213,076.92
inclusive of back wages.
emphasized that an order of reinstatement entitles an employee to receive his accrued back
wages from the moment the reinstatement order was issued up to the date when the same
was reversed by a higher court without fear of refunding what he had received.

Aggrieved, petitioners appealed to the NLRC.

The NLRC Ruling

Granted the petition and modified the Order of LA Rioflorido by deleting the award of the
supposed reinstatement back wages in the amount of P201,538.46.
It retained, however, the grant of service incentive leave pay of P11,538.46.
 Since respondent's dismissal was eventually determined to be legal, there is no more basis for
either payroll reinstatement back wages or separation pay.

MDC than elevated the matter via a petition for certiorari before the CA

The CA Ruling

The employer has to either:

- (1) re-admit the employee to work under the same terms and conditions prevailing prior to
his dismissal
- (2) or to reinstate him in the payroll; HOWEVER. even if such order of reinstatement is
reversed on appeal, the employer is still obliged to reinstate and pay the wages of the
employee during the period of appeal until reversal by a higher court or tribunal.

MDC filed a motion for reconsideration, but was however denied; hence, the instant petition.

ISSUE

WON, the CA correctly reversed the NLRC ruling deleting the award of reinstatement back
wages in favor of respondent in the amount of P201,538.46.

RULING

Under Article 223 (now Article 229) of the Labor Code:

- "the decision of the [LA] reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal.
The employee shall either be (1) admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation (2) or, at the option of the
employer, merely reinstated in the payroll."Verily, the employer is duty-bound to
reinstate the employee, failing which, the employer is liable instead to pay the dismissed
employee's salary.

Notwithstanding the reversal of the finding of illegal dismissal, an employer, who, despite the
LA's order of reinstatement, did not reinstate the employee during the pendency of the appeal
up to the reversal by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time of the reversal.
Petitioners contend that had given respondent the option to receive separation pay in lieu of
reinstatement for the reason that it was respondent who failed to choose either relief. However,
as above-discussed, the reinstatement aspect of the LA's Decision is immediately executory
and, hence, the active duty to reinstate the employee - either actually or in payroll - devolves
upon no other than the employer, even pending appeal.
Meanwhile, the Court, in Bergonio, Jr., v. South East Asian Airlines, remarked that "an order
of reinstatement issued by the LA is self-executory, i.e., the dismissed employee need not even
 apply for and the LA need not even issue a writ of execution to trigger the employer's duty to
reinstate the dismissed employee.
Thus, while herein respondent may have been given an alternative option to instead receive
separation pay in lieu of reinstatement, there is no denying that, based on the provisions of the
Labor Code and as attributed in jurisprudence, it is his employer who should have first
discharged its duty to reinstate him.

14. Dee Jays Inn & Caf vs. Raneses, GR No. 191823, Oct. 5, 2016
FACTS: Petitioner DJIC started its operation on December 8, 2002. Petitioner Ferraris, the
owner and manager of petitioner DJIC, engaged the services of respondent and a certain
Moonyeen J. Bura-ay (Moonyeen) as cashier and cashier/receptionist, respectively, for a monthly
salary of P3,000.00 each. Respondent led before the Social Security System (SSS) Office a
complaint against petitioner Ferraris for non-remittance of SSS contributions and led before the
NLRC City Arbitration Unit (CAU) XII, Cotabato City, a complaint against petitioners for
underpayment/nonpayment of wages, overtime pay, holiday pay, service incentive leave pay,
13th month pay, and moral and exemplary damages were ordered to submit their respective
position papers. On September 8, 2005, respondent led her position paper, which already
included a claim for illegal dismissal. Respondent averred that sometime in January 2005, she
asked from petitioner Ferraris the latter's share as employer in the SSS contributions and
overtime pay for the 11 hours of work respondent rendered per day at petitioner DJIC. Petitioner
Ferraris got infuriated and told respondent to seek another employment. This prompted
respondent to file her complaints before the SSS Ofice and NLRC CAU XII. After learning of
respondent's complaints, petitioner Ferraris terminated respondent's employment on February 5,
2005. Respondent submitted the Joint Affdavit of Mercy Joy Christine Bura-ay (Mercy) and Mea
Tormo to corroborate her allegations. Petitioners countered that respondent and Moonyeen were
not terminated from employment. According to petitioners, petitioner DJIC incurred a shortage
of P400.00 in its earnings for February 4, 2005. That same day, petitioner Ferraris called
respondent and Moonyeen for a meeting but the two employees denied incurring any shortage.
Petitioner Ferraris lost her temper and scolded respondent and Moonyeen, and required them to
produce the missing P400.00. However, respondent and Moonyeen merely walked out and did
not report back to work anymore. To support their version of events, petitioners submitted the
affdavit of Ma. Eva Gorospe (Eva), another employee of petitioners. Respondent recorded her
weekly wages and payment of SSS premiums in a notebook, which had since been missing.
Petitioners additionally averred that since January 2002, respondent had been living in petitioner
Ferraris's ancestral home for free. Petitioner Ferraris even shouldered the cost of P2,500.00 to
have electrical connections installed at the house for the use of respondent and her family. From
2002 to 2004, petitioner Ferraris admonished respondent several times for bringing her child to
work, which prevented respondent from concentrating on her job at petitioner DJIC.
On February 21, 2006, the Labor Arbiter rendered a Decision in favor of petitioners, but granted
respondent's claim for 13th month pay. In her position paper, the petitioner Ferraris categorically
denied having terminated respondent. The respondent after being reprimanded for shortages, she
ceased to report for work on February 5, 2005. This fact is attested to by petitioners' witness, a
co-employee of the respondent Ma. Eva Gorospe to the effect that respondent and co-employee
Moonyeen Bura-ay scolded them for shortages during a meeting on February 5, 2005. The
witness attested that they were not terminated but they did not report for work anymore the
following day up to the present. This gives weight to the fact that in her complaint no illegal
dismissal was contemplated by respondent. The records, on the other hand, is bereft of any
evidence linking to the allegation of dismissal. In fact, there is no positive or unequivocal act on
the part of petitioners that would buttressed a fact that respondent was dismissed. The Labor
Arbiter did not give much credence to respondent's charge of illegal dismissal because there was
no positive or unequivocal act on the part of petitioners to support the assertion that respondent
was dismissed. The respondent did not controvert the petitioners' categorical denial and more,
she failed to demonstrate the burden. As such, the allegations of the respondent to the effect that
she was dismissed remains gratuitous. The Labor Arbiter decreed in the end: WHEREFORE,
premises laid, judgment is hereby rendered dismissing the complaint in the instant case for lack
of cause of action and for not being impressed with merit. However, [petitioners] are hereby
ordered, jointly and severally, to pay respondent the amount of Five Hundred Pesos (Php500.00)
representing 13th month pay differential. Respondent sought recourse from the Court of Appeals
by filing a Petition for Certiorari, imputing grave abuse of discretion on the part of the NLRC in
its issuance of the Resolutions dated August 30, 2006 and November 30, 2006 in NLRC CA No.
M- 009173-06. In its Decision dated April 29, 2009, the Court of Appeals granted respondent's
Petition. On the basis that any doubt should be resolved in favor of labor, the Court of Appeals
held that respondent was illegally dismissed. For being illegally dismissed, the Court of Appeals
found respondent entitled to the following:
Petitioners should be ordered to reinstate respondent without loss of seniority rights and other
privileges, or, in case reinstatement would no longer be feasible, to pay respondent separation
pay equivalent to one (1) month salary for every year of service, with payment in either cases of
[respondent's] full backwages, inclusive of allowances, and her other benets or their monetary
equivalent, computed from February 5, 2005, the date respondent was illegally dismissed, up to
the time of her actual reinstatement. With respect to the other monetary claims, We find no
cogent reason to disturb the ruling of the Labor Arbiter in awarding [respondent] only the
amount of Php500.00 representing respondent's 13th month pay differential.
ISSUES: THE COURT OF APPEALS ERRED IN CONCLUDING THAT A CAUSE OF
ACTION BELATEDLY INCLUDED IN THE POSITION PAPER AND NOT ORIGINALLY
PLEADED IN THE COMPLAINT CAN STILL BE GIVEN COGNIZANCE.
THE COURT OF APPEALS ERRED IN FINDING THAT THE NLRC ACTED WITH
GRAVE ABUSE OF DISCRETION ON THE BASIS THAT THE DECISION LACKED
FACTUAL PROOF AND ALSO IGNORED ESTABLISHED JURISPRUDENCE.
RULING: The filing of the position paper is the operative act which forecloses the raising of
other matters constitutive of the cause of action. This necessarily implies that the cause of action
is finally ascertained only after both the complaint and position paper are properly evaluated.
The Court observes herein that respondent could not have included the charge of illegal dismissal
in her complaint because she filed said complaint (which were for various money claims against
petitioners) in January 2005, and petitioners purportedly dismissed her from employment only on
February 5, 2005. However, since respondent subsequently alleged and argued the matter of her
illegal dismissal in her position paper filed on September 8, 2005, then the Labor Arbiter could
still take cognizance of the same. Nevertheless, on the substantive issue of whether or not
respondent was illegally dismissed, the Court answers in the negative. We find that the CA erred
in disregarding the NLRC's conclusion that there had been no dismissal, and in immediately
proceeding to tackle Nightowl's defense that Lumahan abandoned his work. The CA should have
first considered whether there had been a dismissal in the first place. To our mind, the CA
missed this crucial point as it presumed that Lumahan had actually been dismissed. The CA's
failure to properly appreciate this point which led to its erroneous conclusion constitutes
reversible error that justifies the Court's exercise of its factual review power.
In a case where the employee was neither found to have been dismissed nor to have abandoned
his/her work, the general course of action is for the Court to dismiss the complaint, direct the
employee to return to work, and order the employer to accept the employee. The Petition is
GRANTED.

15. Buenaflor Car Services vs. Cezar Durumpili David GR No. 222730, Nov. 7, 2016

FACTS:

Respondent was employed as Service Manager by petitioner, doing business under the
trade name Pronto! Auto Services. In such capacity, he was in charge of the overall day-to-day
operations of petitioner, including the authority to sign checks, check voucher, and purchase
orders.

In the course of petitioners business, with respect to the purchase and delivery of automotive
parts and products, it was company policy that all checks should be issued in the name of the
specific supplier and not in cash, and that said checks are to be picked up from the petitioners
accounting assistant, Marilyn A. Del Rosario, at the companys office in Muntinlupa City.

On August 8, 2013, Chief Finance Officer Cristina S. David of petitoners affiliate company,
Diamond IGB, Inc., received a call from the branch manager of ChinaBank, SM City Bicutan
Branch, informing her that the latter had cleared several checks issued by petitioner bearing the
words OR CASH indicated after the payees name.
An investigation was conducted thereafter.

On August 22, 2013, petitioner, through its president, Exequiel Lampa, along with Helen Lee,
Human Resource Manager, confronted Del Rosario on the questioned checks. Del Rosario
readily confessed that upon respondents instruction, she inserted the words OR CASH after
the name of the payees when the same had been signed by all the authorized signatories. Along
with respondent, Del Rosario also implicated De Guzman, Purchasing Officer, and Caranto,
petitioners messenger/driver, who she alleged, were also under the respondents direct
supervision and co-conspirators. Del Rosarios confession was put into writing in two (2)
separate letters both of even date. (Extrajudicial Confession)

The ensuing investigation revealed that there were 27 checks with the words OR CASH, all
signed by respondent in the total amount of P1,021,561.72. As a result, respondent, together with
Del Rosario, De Guzman, and Caranto, were placed under preventive suspension for a period of
30 days and directed to submit their respective written explanations.

Respondent, for his part, vehemently denied the charges against him. He claimed that he has no
control over the companys finance and billing operations, nor the authority to instruct Del
Rosario to make any check alterations, without the permission and authority of either Buenaflor,
vice-president of operations, or Vasay, Chief Finance Officer.

On September 20, 2013, respondent and his co-workers were served with their respective notices
of termination after having been found guilty of violating the companys code of conduct and
behavior, particularly serious misconduct and willful breach of trust. Respondent, De Guzman,
and Caranto filed a complaint for illegal dismissal with prayer for reinstatement and payment of
damages and attorneys fees against petitioners and Buenaflor.

In the meantime, Lee, on behalf of petitioner, filed a criminal complaint for 27 counts of
Qualified Theft through Falsification of Commercial Documents against respondent, De
Guzman, Caranto and Del Rosario, supported by Buenaflor and Vasays affidavits attesting that
the checks they signed did not bear the words OR CASH, and that they did not authorize its
insertion after the payees name. Respondent, De Guzman, Caranto, and Del Rosario were
indicted.

LABOR ARBITER RULING:

In a decision dated September 29, 2014, The Labor Arbiter ruled that respondent, De
Guzman, and Caranto were illegally dismissed, and consequently, awarded backwages,
separation pay and attorneys fees. The LA observed that petitioner failed to establish existence
of conspiracy among respondent, De Guzman, Caranto and Del Rosario in altering the checks
and that the latters extrajudicial confession was informally made and not supported by evidence.
Petitioner appealed this decision to the NLRC.

NLRC RULING:

In a decision dated November 28, 2014, the NLRC affirmed with modification the LAs
decision, finding that De Guzman and Caranto have been dismissed for cause, but sustained the
illegality of respondents termination from work.

NLRC held that since De Guzman prepared the purchase orders, and Caranto encashed the
checks despite knowledge of the company policy, they could not be discounted from the scheme.
Having his motion for partial reconsideration denied, petitioner appealed to the Court of
Appeals.

COURT OF APPEALS RULING:

CA found no grave abuse of discretion on the part of the NLRC in holding that
respondent was illegally dismissed. CA ruled that Del Rosarios extrajudicial confession only
bound her as confessant but constitutes hearsay with respect to respondent and the other co-
accused. CA noted that at the time the checks were signed by respondent, the words OR CASH
were not yet written on thereon.

ISSUE:
Whether or not the Court of Appeals committed reversible error in upholding the NLRCs ruling
that respondent was illegally dismissed.

SUPREME COURT RULING:

The petition is meritorious.

Article 297 of the Labor Code, as renumbered, enumerates the just causes for termination of an
employee, to wit:

ART. 297. Termination by Employer. An Employer may terminate an employment for

any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in conncetion with his work

(b) Gross and habitual neglect by the employee of his duties

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative

(d) Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

In the case at bar, respondents termination was grounded on his violation of petitoioners code
of conduct and behavior, which was supposedly tantamount to (a) Serious Misconduct and/or (b)
willful breach of trust reposed in him by his employer.

Petitioners claims was hinged on respondents alleged directive to petitioners accounting

assistant, Del Rosario, to insert the word OR CASH in the checks payable to the suppliers.

While the respondent denies these allegations, but, given his position of trust, although his
statements may be true, the court observes that it is highly unlikely that respondent did not have
any participation in the above-mentioned scheme to defraud petitioner. No checks would have
been issued if no purchase orders were made, which the respondent must approve before the
payment process can even commence.

Case law states that Labor suits require only substantial evidence to prove the validity of the
dismissal. Based on such, the court is convinced that substantial evidence exists to support
petitioners allegations against respondent. The Doctrine of Independently Relevant Statements
was the basis of SC in considering the extrajudicial confessions of Del Rosario as more than
mere hearsay and is highly relevant to the issue of the case.
Petition Granted. Respondent is held to be validly dismissed, and thus, not entitled to backwages,
separation pay, as well as attorneys fees.

16. C.I.C.M Mission Seminaries School of Theology Inc. vs. Perez, GR No. 220506, January
18, 2017

Facts

This controversy is an offshoot of an illegal dismissal case led by the respondent against the
petitioners. In its June 16, 2008 Decision, the LA recognized respondent's right to receive from
the petitioners backwages and separation pay in lieu of reinstatement. Thus, it ordered the
petitioners to pay respondent the aggregate amount of P286,670.58. The LA decision was
affirmed by the NLRC, by the CA and by this Court in G.R. No. 200490.

The decision became final and executory on October 4, 2012, as evidenced by the Entry of
Judgment. Consequently, respondent moved for the issuance of a writ of execution. However,
petitioners opposed and moved for the issuance of a certificate of satisfaction of judgment,
alleging that their obligation had been satisfied by the release of the cash bond in the amount of
P272,337.05 to respondent.

However, in its July 10, 2014 Order, the LA ruled that the cash bond posted by the petitioners
was insufficient to satisfy their obligation. Thus, it ordered the issuance of a writ of execution.
The Sheriff, who, in turn, implemented it by garnishing upon CICM's bank deposit with BPI
Family Savings Bank. At this point, CICM moved for the urgent quashal of the said writ and for
the garnishment to be lifted.

Hence this petition.

Issue WON the computation of respondents award of backwages and separation pay should be
reckoned on October 4, 2012 when the finality of this courts decision in G.R. No. 200490 or on
June 16, 2008 which is the date when the LA rendered in the main case and which was also the
date when reinstatement was refused.

Ruling Petition is DENIED

The decision of the CA is based on long standing jurisprudence that in the event the aspect of
reinstatement is disputed, backwages, including separation pay, shall be computed from the time
of dismissal until the finality of the decision ordering the separation pay.

The reason for this was explained in Bani Rural Bank, Inc. v. De Guzman. When there is an
order of separation pay
the employment relationship is terminated only upon the finality of the decision ordering the
separation pay. The finality of the decision cuts-off the employment relationship and represents
the final settlement of the rights and obligations of the parties against each other. Hence,
backwages no longer accumulate upon the finality of the decision ordering the payment of
separation pay because the employee is no longer entitled to any compensation from the
employer by reason of the severance of his employment. One cannot, therefore, attribute patent
error on the part of the CA when it merely affirmed the NLRC's conclusion, which was clearly
based on jurisprudence.

Plainly, it does not matter if the delay caused by an appeal was brought about by the employer or
by the employee. The rule is, if the LA's decision, which granted separation pay in lieu of
reinstatement, is appealed by any party, the employer- employee relationship subsists and until
such time when decision becomes final and executory, the employee is entitled to all the
monetary awards awarded by the LA.

In this case, respondent remained an employee of the petitioners pending her partial appeal. Her
employment was only severed when this Court, in G.R. No. 200490, affirmed with finality the
rulings of the CA and the labor tribunals declaring her right to separation pay instead of actual
reinstatement.

The court further ruled that to favor the petitioners' position is nothing short of a derogation of
the State's policy to protect the rights of workers and their welfare under Article II, Section 8 of
the 1987 Constitution. Thus, respondent is entitled to have her backwages and separation pay
computed until October 4, 2012, the date when the judgment of this Court became final and
executory, as certified by the Clerk of Court, per the Entry of Judgment in G.R. No. 200490

17. Turks Shawarma Company vs. Pajaron, et al., GR No. 207156, January 16, 2017

Facts

Respondents file a complaint for constructive and actual illegal dismissal, non-payment of
overtime pay, holiday pay, holiday premium, rest day premium, service incentive leave pay and
13th month pay against petitioners. The following are their allegations:
1. Respondent Pajaron was hired by petitioner company as service crew on may 2007. On
his complaint he alleged that on April 9, 2010, Zearosa asked him to sign a piece of
paper stating that he was receiving the correct amount of wages and that he had no claims
whatsoever from petitioners. When he refused to sign Zearosa fired him from work.
2. Respondent Carbonilla alleged that sometime in June 2008, he had an altercation with his
supervisor Conchita Marcillana (Marcillana) while at work. When the incident was
brought to the attention of Zearosa, he was immediately dismissed from service. He was
also asked by Zearosa to sign a piece of paper acknowledging his debt amounting to
P7,000.00.

In their reply, petitioners denied having dismissed Pajaron and Carbonilla. They alleged that
Pajaron would habitually absent himself from work for an unreasonable length of time without
notice; and while they rehired him several times whenever he returned, they refused to rehire him
this time after he abandoned work in April 2009. As for Carbonilla, he was reprimanded and
admonished several times for misbehavior and disobedience of lawful orders and was advised
that he could freely leave his work if he could not follow instructions. Unfortunately, he left his
work without any reason and without settling his unpaid obligation in the amount of P78,900.00,
which compelled them to file a criminal case for estafa against him.

The Labor Arbiter found credible Pajaron and Carbonilla's version and held them constructively
and illegally dismissed by petitioners.

In the appeal to NLRC denied the motion to reduce bond. It ruled that financial difficulties may
not be invoked as a valid ground to reduce bond; at any rate, it was not even substantiated by
proof. Moreover, the partial bond in the amount of P15,000.00 is not reasonable in relation to the
award which totalled to P197,936.27. Petitioners' appeal was thus dismissed by the NLRC for
non-perfection. This was affirmed by the Court of Appeals.

Issue WON there was substantial compliance on with the rules on perfection of appeal

Ruling Petition is DENIED

The Court has time and again held that "[t]he right to appeal is neither a natural right nor is it a
component of due process. It is a mere statutory privilege, and may be exercised only in the
manner and in accordance with the provisions of the law. The party who seeks to avail of the
same must comply with the requirements of the rules. Failing to do so, the right to appeal is lost.

Second paragraph of Article 223 of the Labor Code, which sets forth the rules on appeal from the
Labor Arbiter's monetary award, provides: In case of a judgment involving 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 Commission in the amount
equivalent to the monetary award in the judgment appealed from.

Meanwhile, Section 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC, provide:

Section 6. Bond. In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon the posting
of a bond, which shall either be in the form of cash deposit or surety bond equivalent in
amount to the monetary award, exclusive of damages and attorney's fees.

It is clear from both the Labor Code and the NLRC Rules of Procedure that there is legislative
and administrative intent to strictly apply the appeal bond requirement, and the Court should give
utmost regard to this intention." The posting of cash or surety bond is therefore mandatory and
jurisdictional; failure to comply with this requirement renders the decision of the Labor Arbiter
final and executory. This indispensable requisite for the perfection of an appeal "is to assure the
workers that if they finally prevail in the case, the monetary award will be given to them upon
the dismissal of the employer's appeal [and] is further meant to discourage employers from using
the appeal to delay or evade payment of their obligations to the employees."

However, this admits certain exceptions under Section 6 of Rule VI of the 2005 NLRC Revised
Rules of Procedure, provides:

xxx xxx xxx

No motion to reduce bond shall be entertained except on meritorious grounds, and upon
the posting of a bond in a reasonable amount. The mere ling of a motion to reduce bond
without complying with the requisites in the preceding paragraphs shall not stop the
running of the period to perfect an appeal.

Thus, the reduction of the appeal bond is allowed, subject to the following conditions: (1) the
motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in
relation to the monetary award is posted by the appellant. Compliance with these two conditions
will stop the running of the period to perfect an appeal.

In the case at bar, petitioners motion to reduce bond was not predicated on meritorious and
reasonable grounds and the amount tendered is not reasonable in relation to the award. The
NLRC correctly held that the supposed ground cited in the motion is not well-taken for there was
no evidence to prove Zearosa's claim that the payment of the full amount of the award would
greatly affect his business due to financial setbacks. Besides, "the law does not require outright
payment of the total monetary award; [the appellant has the option to post either a cash or surety
bond. In the latter case, appellant must pay only a moderate and reasonable sum for the premium
to ensure that the award will be eventually paid should the appeal fail."

Moreover, the partial bond was not reasonable. In the case of McBurnie v. Ganzon, the Court has
set a provisional percentage of 10% of the monetary award (exclusive of damages and attorney's
fees) as reasonable amount of bond that an appellant should post pending resolution by the
NLRC of a motion for a bond's reduction. Only after the posting of this required percentage shall
an appellant's period to perfect an appeal be suspended. Applying this parameter, the P15,000.00
partial bond posted by petitioners is not considered reasonable in relation to the total monetary
award of P197,936.27.

Additionally, petitioners insisted that their immediate posting of the deficiency when they led a
motion for reconsideration constituted substantial compliance with the Rules. To which the court
ruled that the NLRC exercises full discretion in resolving a motion for the reduction of bond in
accordance with the standards of meritorious grounds and reasonable amount. The "reduction of
the bond is not a matter of right on the part of the movant [but] lies within the sound discretion of
the NLRC x x x."

Thus, petitioners' case will still fail on its merits even if we are to allow their appeal to be given
due course. After scrupulously examining the contrasting positions and arguments of the parties,
the court find that the Labor Arbiter's Decision declaring Pajaron and Carbonilla illegally
dismissed was supported by substantial evidence. While petitioners vehemently argue that
Pajaron and Carbonilla abandoned their work, the records are devoid of evidence to show that
there was intent on their part to forego their employment. In fact, petitioners adamantly admitted
that they refused to rehire Pajaron and Carbonilla despite persistent requests to admit them to
work. Hence, petitioners essentially admitted the fact of dismissal. However, except for their
empty and general allegations that the dismissal was for just causes, petitioners did not proffer
any evidence to support their claim of misconduct or misbehavior on the part of Pajaron and
Carbonilla. "In termination cases, the burden of proof rests on the employer to show that the
dismissal is for a just cause." For lack of any clear, valid, and just cause in terminating Pajaron
and Carbonilla's employment, petitioners are indubitably guilty of illegal dismissal.

18. Dutch Movers Inc. vs. Lequin, et al., GR No. 210032, April 25, 2017
Facts: DMI employed Lequin as truck driver and the rest of the respondents as helpers. On Dec
28, 2004, petitioner Cesar Lee informed the respondents that DMI would cease its hauling
operation for no reason; as such, they requested DMI to issue a formal notice regarding the
matter but to no avail. Later, upon respondents request, the DOLE NCR issued a certification
revealing that DMI did not file any notice of business closure. Thus, respondents argued that
they were illegally dismissed as their termination was without cause and only on the pretext of
closure.

In Oct 28, 2005, LA Mangandong dismissed the case for lack of cause of action.

On Nov 23, 2007, NLRC reversed and set aside the LA Decision and ruled that respondents were
illegally dismissed because DMI simply placed them on standby, and no longer provide them
with work. Dispositive portion provided that DMI is ordered to reinstate complainants to their
former positions without loss of seniority rights and other privileges and that DMI is ordered to
pay complainants.

NLRC decision became final and executory on Dec 30, 2007.

Respondents: Filed a Motion for Writ of Execution and later on, submitted a Reiterating Motion
for Writ of Execution with Updated Computation of Full Backwages. Pending resolution of these
motions, respondents filed a Manifestation and Motion to Implead stating that upon
investigation, they discovered that DMI no longer operates. They nonetheless insisted that
petitioners managed and operated DMI and consistently represented to respondents that they
were the owners of DMI. They likewise claimed that per inquiry with the SEC and the DOLE,
they learned that DMI did not file any notice of business closure; and the creation and operation
of DMI was attended with fraud making it convenient for petitioners to evade their legal
obligations to them. With these developments, respondents prayed that petitioners, and the
officers named in the Articles of Incorporation (AOI), be impleaded, and be held solidarily liable
with DMI in paying the judgement award.

LA: On April 1, 2009, LA Savari issued an Order holding petitioners liable for the judgement
awards and decreed that petitioners represented themselves to respondents as the owners of DMI
and were the ones who managed the same. She further noted that petitioners were afforded due
process as they were impleaded from the beginning of the case.

On July 31, 2009, LA Savari issued a Writ of Execution. It commanded the Deputy Sheriff to
proceed to respondents DMI AND/OR Cesar Lee and Yolanda Lee to collect the judgment
award.
Petitioners: Moved to quash the Writ of Execution contending that the April 1, 2009 LA order
was void because the LA has no jurisdiction to modify the final and executory NLRC Decision
and the same cannot anymore be altered or modified since there was no finding of bad faith
against them.

LA denied petitioners Motion to Quash because it did not contain any ground that must be set
forth in such motion.

NLRC: NLRC quashed the Writ of Execution in so far as it held petitioners liable to pay the
judgement awards. NLRC ruled in its Resolution that the Writ of Execution should only pertain
to DMI since petitioners were not held liable to pay the awards under the final and executory
NLRC decision. It added that petitioners could not be sued personally for the acts for DMI
because the latter had a separate and distinct personality from the persons comprising it. NLRC
denied the MR.

CA: CA reversed the NLRC Resolutions and affirmed the Writ of Execution impleading
petitioners as party-respondents liable to answer for the judgment awards.CA denied MR.

Issue:
1. WON the NLRC decision can still be altered and modified and that petitioners Cesar and
Yolanda Lee are personally liable to pay the respondents the judgement award
2. WON there is legal basis to pierce the veil of corporate fiction of DMI

Ruling:
1. YES. The principle of immutability of judgement, or the rule that once a judgement has
become final and executory, the same can no longer be altered or modified and the
courts duty is only to order its execution, is not absolute. One of its exceptions is when
there is a supervening event occurring after the judgement becomes final and executory,
which renders the decision unenforceable.

Supervening event refers to facts that transpired after a judgment has become final and
executory, or to new situation that developed after the same attained finality. It includes
matters that the parties were unaware of before or during trial as they were not yet
existing during that time.

Supervening events transpired in this case after the NLRC Decision became final and
executory, which rendered its execution impossible and unjust. In the case at bar, during
the execution stage, DMI ceased operation and the same did not file any formal notice
regarding it.

2. YES. The veil of corporate fiction must be pierced and petitioners should be held
personally liable for judgement awards.

Piercing the veil of corporate fiction is allowed, and responsible persons may be
impleaded, and be held solidarily liable even after final judgment and on execution,
 provided that such persons deliberately used the corporate vehicle to unjustly evade the
judgment obligation, or resorted to fraud, bad faith, or malice in evading their obligation.
While it is true that one's control does not by itself result in the disregard of corporate
fiction; however, considering the irregularity in the incorporation of DMI, then there is
sufficient basis to hold that such corporation was used for an illegal purpose, including
evasion of legal duties to its employees, and as such, the piercing of the corporate veil is
warranted. The act of hiding behind the cloak of corporate fiction will not be allowed in
such situation where it is used to evade one's obligations, which "equitable piercing
doctrine was formulated to address and prevent."

TOPIC 13 OTHER IMPORTANT LABOR PROVISIONS

A. CONTRACTING ARRANGEMENT
CASES:

1. Aliviado et al vs. Procter & Gamble Phils GR No. 160506, March 9, 2010
Facts: Petitioners worked as merchandisers of P&G. They all individually signed employment
contracts with either Promm-Gem or SAPS. They were assigned at different outlets,
supermarkets and stores where they handled all the products of P&G. They received their wages
from Promm-Gem or SAPS.

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such
as habitual absenteeism, dishonesty or changing day-off without prior notice.
To enhance consumer awareness and acceptance of the products, P&G entered into contracts
with Promm-Gem and SAPS for the promotion and merchandising of its products.
In December 1991, petitioners filed a complaint against P&G for regularization, service
incentive leave pay and other benefits with damages.

Issue: WON P&G is the employer of petitioners.

Held: In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary
to first determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job
contractors. Clearly, the law and its implementing rules allow contracting arrangements for the
performance of specific jobs, works or services. However, in order for such outsourcing to be
valid, it must be made to an independent contractor because the current labor rules expressly
prohibit labor-only contracting.

To emphasize, there is labor-only contracting when the contractor or sub-contractor merely

recruits, supplies or places workers to perform a job, work or service for a principal and any of
the following elements are present:
1. 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
1. ii) The contractor does not exercise the right to control over the performance of the work of
the contractual
Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find
that it is a legitimate independent contractor.
Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, we find that the
former is engaged in labor-only contracting.
Where labor-only contracting exists, the Labor Code itself establishes an employer-employee
relationship between the employer and the employees of the labor-only contractor. The statute
establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor
laws. The contractor is considered merely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if such employees had been directly
employed by the principal employer.

2. San Miguel Corp. vs. Semillano et al., GR No. 164257, July 5, 2010
Facts:

It appears that AMPCO hired the services of Vicente et al. [Vicente Semillano, Nelson
Mondejar, Jovito Remada and Alex Hawod, respondents herein] on different dates in December
[of 1991 and] 1994. All of them were assigned to work in SMC's Bottling Plant situated at Brgy.
Granada Sta. Fe, Bacolod City, in order to perform the following tasks: segregating bottles,
removing dirt therefrom, filing them in designated places, loading and unloading the bottles to
and from the delivery trucks, and performing other tasks as may be ordered by SMC's officers.
[They] were required to work inside the premises of SMC using [SMC's] equipment. [They]
rendered service with SMC for more than 6 months.

Subsequently, SMC entered into a Contract of Services with AMPCO designating the latter as
the employer of Vicente, et al. As a result, Vicente et al. failed to claim the rights and benefits
ordinarily accorded a regular employee of SMC. In fact, they were not paid their 13thmonth pay.
On June 6, 1995, they were not allowed to enter the premises of SMC. The project manager of
AMPCO, Merlyn Polidario, told them to wait for further instructions from the SMC's supervisor.
Vicente et al. waited for one month, unfortunately, they never heard a word from SMC.

Consequently, Vicente et al., as complainants, filed on July 17, 1995 a COMPLAINT FOR
ILLEGAL DISMISSAL with the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and
Rufino I. Yatar [SMC Plant Manager], as respondents.

Issue: Whether or not AMPCO is a legitimate job contractor.

Held:
A claim that an action for regularization has no legal basis and is violative of petitioner's
constitutional and statutory rights is, therefore, dependent upon the resolution of the issue posed
above.

The petition fails.

Generally, the findings of fact made by the Labor Arbiter and the NLRC, as the specialized
agencies presumed to have the expertise on matters within their respective fields, are accorded
much respect and even finality, when supported by ample evidence and affirmed by the CA. The
fact that the NLRC, in its subsequent resolution, reversed its original decision does not render the
foregoing inapplicable where the resolution itself is not supported by substantial evidence.

Department of Labor and Employment (DOLE) Department Order No. 10, Series of 1997,
defines "job contracting" and "labor-only contracting" as follows:

Sec. 8. Job contracting. - There is job contracting permissible under the Code if
the following conditions are met:

(1) The 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; and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business.

Sec. 9. Labor-only contracting. - (a) Any person who undertakes to supply

workers to an employer shall be deemed to be engaged in labor-only contracting
where such person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing
activities which are directly related to the principal business or operations
of the employer in which workers are habitually employed.
(3) Labor-only contracting as defined herein is hereby prohibited and the
person acting as contractor shall be considered merely as an agent or
intermediary 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.
(4) For cases not falling under this Article, the Secretary of Labor shall
determine through appropriate orders whether or not the contracting out
of labor is permissible in the light of the circumstances of each case and
after considering the operating needs of the employer and the rights of the
workers involved. In such case, he may prescribe conditions and
restrictions to insure the protection and welfare of the workers.
Section 5 of Department Order No. 18-02 (Series of 2002) of the Rules Implementing Articles
106 to 109 of the Labor Code further provides that:

"Substantial capital or investment" refers to capital stocks and subscribed

capitalization in the case of corporations, tools, equipment, implements,
machineries and work premises,actually and directly used by the contractor or
subcontractor in the performance or completion of the job work or service
contracted out.

The "right to control" shall refer to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end
to be achieved, but also the manner and means to be used in reaching that end.

The test to determine the existence of independent contractorship is whether or not the 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 results of
the work.

The existence of an independent and permissible contractor relationship is generally established

by the following criteria: whether or not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and duration of the relationship; the
right to assign the performance of a specified piece of work; the control and supervision of the
work to another; the employer's power with respect to the hiring, firing and payment of the
contractor's workers; the control of the premises; the duty to supply the premises, tools,
appliances, materials, and labor; and the mode, manner and terms of payment.

Although there may be indications of an independent contractor arrangement between petitioner

and AMPCO, the most determinant of factors exists which indicate otherwise.

Petitioner's averment that AMPCO had total assets amounting to P932,599.22 and income
of P2,777,603.46 in 1994 was squarely debunked by the LA. Thus:

Furthermore, there are no pieces of evidence that AMPCO has substantial capital
or investment. An examination its "Statement of Income and Changes in
Undivided Savings" show that its income for the year 1994 was P2,777,603.46
while its operating expenses for said year is P2,718,315.33 or a net income
of P59,288.13 for the year 1994; that its cash on hand for 1994 is P22,154.80.

In fact, the NLRC in its original decision likewise stated as follows:

In contrast, the (sic) AMPCO's main business activity is trading, maintaining a

store catering to members and the public. Its job contracting with SMC is only a
minor activity or sideline. The component of AMPCO's substantial capital are
[ sic ]in fact invested and used in the trading business. This is palpably shown in
 the sizable amount of its accounts receivables amounting to more than P.6M out
of its members' capital of only P.47M in 1994.

Neither did petitioner prove that AMPCO had substantial equipment, tools, machineries, and
supplies actually and directly used by it in the performance or completion of the segregation and
piling job. In fact, as correctly pointed out by the NLRC in its original decision, there is nothing
in AMPCO's list of fixed assets, machineries, tools, and equipment which it could have used,
actually and directly, in the performance or completion of its contracted job, work or service
with petitioner. For said reason, there can be no other logical conclusion but that the tools and
equipment utilized by respondents are owned by petitioner SMC. It is likewise noteworthy that
neither petitioner nor AMPCO has shown that the latter had clients other than petitioner.
Therefore, AMPCO has no independent business.

In the case at bench, petitioner faults the CA for holding that the respondents were under the
control of petitioner whenever they performed the task of loading in the delivery trucks and
unloading from them. It, however, fails to show how AMPCO took "entire charge, control and
supervision of the work and service agreed upon." AMPCO's Comment on the Petition is
likewise utterly silent on this point. Notably, both petitioner and AMPCO chose to ignore the
uniform finding of the LA, NLRC (in its original decision) and the CA that one of the assigned
jobs of respondents was to "perform other acts as may be ordered by SMC's officers."
Significantly, AMPCO, opted not to challenge the original decision of the NLRC that found it a
mere labor-only contractor.

Moreover, the Court is not convinced that AMPCO wielded "exclusive discretion in the
discharge" of respondents. As the CA correctly pointed out, Merlyn Polidario, AMPCO's project
manager, even told respondents to "wait for further instructions from the SMC's supervisor" after
they were prevented from entering petitioner SMC's premises. Based on the foregoing, no other
logical conclusion can be reached than that it was petitioner, not AMPCO, who wielded power of
control.

Despite the fact that the service contracts contain stipulations which are earmarks of independent
contractorship, they do not make it legally so. The language of a contract is neither determinative
nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot
dictate, by a declaration in a contract, the character of AMPCO's business, that is, whether as
labor-only contractor, or job contractor. AMPCO's character should be measured in terms of, and
determined by, the criteria set by statute. At a closer look, AMPCO's actual status and
participation regarding respondents' employment clearly belie the contents of the written service
contract.

Petitioner cannot rely either on AMPCO's Certificate of Registration as an Independent

Contractor issued by the proper Regional Office of the DOLE to prove its claim. It is not
conclusive evidence of such status. The fact of registration simply prevents the legal presumption
of being a mere labor-only contractor from arising. In distinguishing between permissible job
contracting and prohibited labor-only contracting, the totality of the facts and the surrounding
circumstances of the case are to be considered.
Petitioner also argues that among the permissible contracting arrangements include "work or
services not directly related or not integral to the main business or operation of the principal
including. work related to manufacturing processes of manufacturing establishments." The Court
is not persuaded. The evidence is clear that respondents performed activities which were directly
related to petitioner's main line of business. Petitioner is primarily engaged in manufacturing and
marketing of beer products, and respondents' work of segregating and cleaning bottles is
unarguably an important part of its manufacturing and marketing process.

Lastly, petitioner claims that the present case is outside the jurisdiction of the labor tribunals
because respondent Vicente Semillano is a member of AMPCO, not SMC. Precisely, he has
joined the others in filing this complaint because it is his position that petitioner SMC is his true
employer and liable for all his claims under the Labor Code.

Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only
contractor, for all the rightful claims of respondents. Under this set-up, AMPCO, as the "labor-
only" contractor, is deemed an agent of the principal (SMC). The law makes the principal
responsible over the employees of the "labor-only" contractor as if the principal itself directly
hired the employees.

3. Manila Water Co. vs. Dalumpines, GR No. 175501, Oct. 4, 2010

Facts:
By virtue of Republic Act No. 8041, otherwise known as the "National Water Crisis Act of
1995," the Metropolitan Waterworks and Sewerage System (MWSS) was given the authority to
enter into concession agreements allowing the private sector in its operations. Petitioner Manila
Water Company, Inc. (Manila Water) was one of two private concessionaires contracted by the
MWSS to manage the water distribution system in the east zone of Metro Manila. The east
service area included the following towns and cities: Mandaluyong, Marikina, Pasig, Pateros,
San Juan, Taguig, Makati, parts of Quezon City and Manila, Angono, Antipolo, Baras,
Binangonan, Cainta, Cardona, Jala-Jala, Morong, Pililla, Rodriguez, Tanay, Taytay, Teresa, and
San Mateo.

Under the concession agreement, Manila Water undertook to absorb the regular employees of
MWSS listed by the latter effective August 1, 1997. Individual respondents, with the exception
of Moises Zapatero (Zapatero) and Edgar Pamoraga (Pamoraga), were among the one hundred
twenty-one (121) employees not included in the list of employees to be absorbed by Manila
Water. Nevertheless, Manila Water engaged their services without written contract from August
1, 1997 to August 31, 1997.

On September 1, 1997, individual respondents signed a three (3)-month contract to perform

collection services on commission basis for Manila Waters branches in the east zone.
On November 21, 1997, before the expiration of the contract of services, the 121 bill collectors
formed a corporation duly registered with the Securities and Exchange Commission (SEC) as the
"Association Collectors Group, Inc." (ACGI). ACGI was one of the entities engaged by Manila
Water for its courier service. However, Manila Water contracted ACGI for collection services
only in its Balara Branch.

In December 1997, Manila Water entered into a service agreement with respondent First Classic
Courier Services, Inc. (FCCSI) also for its courier needs. The service agreements between
Manila Water and FCCSI covered the periods 1997 to 1999 and 2000 to 2002. Earlier, in a
memorandum dated November 28, 1997, FCCSI gave a deadline for the bill collectors who were
members of ACGI to submit applications and letters of intent to transfer to FCCSI. The
individual respondents in this case were among the bill collectors who joined FCCSI and were
hired effective December 1, 1997.

On various dates between May and October 2002, individual respondents were terminated from
employment. Manila Water no longer renewed its contract with FCCSI because it decided to
implement a "collectorless" scheme whereby Manila Water customers would instead remit
payments through "Bayad Centers." The aggrieved bill collectors individually filed complaints
for illegal dismissal, unfair labor practice, damages, and attorneys fees, with prayer for
reinstatement and backwages against petitioner Manila Water and respondent FCCSI. The
complaints were consolidated and jointly heard.

Issues: WON an employment relationship exists between respondent bill collectors and
petitioner Manila Water

Held:

FCCSI has no sufficient investment in the form of tools, equipment and machinery to undertake
contract services for Manila Water involving a fleet of around 100 collectors assigned to several
branches and covering the service area of Manila Water customers spread out in several
cities/towns of the East Zone. The only rational conclusion is that it is Manila Water that
provides most if not all the logistics and equipment including service vehicles in the performance
of the contracted service, notwithstanding that the contract between FCCSI and Manila Water
states that it is the Contractor which shall furnish at its own expense all materials, tools and
equipment needed to perform the tasks of collectors. Moreover, it must be emphasized that
petitioners who are "trained collectors" performed tasks that cannot be simply categorized as
"messengerial."

In fact, these are the very functions they were already discharging even before they joined
FCCSI which "invited" or "solicited" their placement just about the expiration of their three (3)-
month contract with Manila Water on November 28, 1997. The Agreement between FCCSI and
Manila Water provides that FCCSI shall "field the required number of trained collectors to the
following Customer Relations Branch Office": Cubao, Espaa, San Juan-Mandaluyong,
Marikina, Pasig, Taguig-Pateros and Makati.

As correctly ruled by the CA, FCCSIs capitalization may not be considered substantial
considering that it had close to a hundred collectors covering the east zone service area of Manila
Water customers. The allegation in the position paper of FCCSI that it serves other companies
courier needs does not "cure" the fact that it has insufficient capitalization to qualify as
independent contractor. Neither did FCCSI prove its allegation by substantial evidence other
than by their self-serving declarations. What is evident is that it was Manila Water that provided
the equipment and service vehicles needed in the performance of the contracted service, even if
the contract between FCCSI and Manila Water stated that it was the Contractor which shall
furnish at its own expense all materials, tools, and equipment needed to perform the tasks of
collectors.

Based on the four-fold test of employer-employee relationship, Manila Water emerges as the
employer of respondent collectors. 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 power to control the employee's conduct. The
most important of these elements 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.

Respondent bill collectors are, therefore, employees of petitioner Manila Water. It cannot be
denied that the tasks performed by respondent bill collectors are directly related to the principal
business or trade of Manila Water. Payments made by the subscribers are the lifeblood of the
company, and the respondent bill collectors are the ones who collect these payments.

The primary standard of determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of the
employer. In this case, the connection is obvious when we consider the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Finally,
the repeated and continuing need for the performance of the job is sufficient evidence of the
necessity, if not indispensability of the activity to the business.

4. Teng vs. Pahagac, GR No. 169704, November 17, 2010

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.

On February 20, 2003, the 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.

Issues:
1. WON the VAs decision is not subject to a motion for reconsideration.
 2. WON an employer-employee relationship existed between Teng and the respondent
workers.

Held:

The petition is denied.

Article 262-A of the Labor Code does not prohibit the filing of a motion for reconsideration.

On March 21, 1989, Republic Act No. 6715 took effect, amending, among others, Article 263 of
the Labor Code which was originally worded as:
Art. 263 x x x Voluntary arbitration awards or decisions shall be final,
unappealable, and executory.

As amended, Article 263 is now Article 262-A, which states:

Art. 262-A. x x x [T]he award or decision x x x shall contain the facts and the law
on which it is based. It shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties.

Notably, Article 262-A deleted the word "unappealable" from Article 263. The deliberate
selection of the language in the amendatory act differing from that of the original act indicates
that the legislature intended a change in the law, and the court should endeavor to give effect to
such intent. We recognized the intent of the change of phraseology in Imperial Textile Mills, Inc.
v. Sampang, where we ruled that:

It is true that the present rule [Art. 262-A] makes the voluntary arbitration award
final and executory after ten calendar days from receipt of the copy of the award
or decision by the parties. Presumably, the decision may still be reconsidered by
the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed
during that period.

Tengs allegation that the VAs decision had become final and executory by the time the
respondent workers filed an appeal with the CA thus fails. We consequently rule that the
respondent workers seasonably filed a motion for reconsideration of the VAs judgment, and the
VA erred in denying the motion because no motion for reconsideration is allowed.

Second issue

There exists an employer-employee relationship between Teng and the respondent workers.

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.

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

ART. 106. Contractor or Subcontractor x x x The Secretary of Labor and

Employment may, by appropriate regulations, restrict or prohibit the contracting-
out of labor.

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 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.

Section 5 of the DO No. 18-02, which implements Article 106 of the Labor Code, 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) The contractor does not exercise the right to control over the performance
of the work of the contractual employee.
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.

5. GSIS vs. NLRC et al., GR No. 180045, Nov. 17, 2010

FACTS:Respondents were hired DNL Security Agency. By virtue of the service contract entered
into by DNL Security and petitioner Government Service Insurance System on May 1, 1978,
respondents were assigned to petitioners Tacloban City office, each receiving a monthly income
of P1,400.00. Sometime in July 1989, petitioner voluntarily increased respondents monthly
salary to P3,000.00.

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.

Respondents filed with the NLRC a complaint against DNL Security and petitioner for illegal
dismissal, separation pay, salary differential, 13th month pay, and payment of unpaid salary.

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.
Because DNL Security instructed respondents to continue working for petitioner from February
1993 to April 20, 1993, DNL Security was also made to pay respondents wages for the period.

DNL Security filed a motion for reconsideration, while petitioner appealed to the NLRC. NLRC
treated DNL Securitys motion for reconsideration as an appeal, but dismissed the same, as it was
not legally perfected. It likewise dismissed petitioners appeal, having been filed beyond the
reglementary period.

Undaunted, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before
the CA. The CA affirmed the NLRC decision. Petitioner filed a motion for reconsideration but
the same was denied. Hence, this petition.

ISSUE: Whether or not the CA erred in ruling that the appeal was not filed on time and in
ruling that petitioner GSIS is jointly and severally liable with DNL Security Agency for
payment of the unsubstantiated amounts of Salary Differentials

HELD: 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 latters monetary
claims. When petitioner contracted DNL Securitys services, petitioner became an indirect
employer of respondents, pursuant to Article 107 of the Labor Code

ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise
apply to any person, partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any work, task, job or project.

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, which state:
ART. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the formers work, the
employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by him.

ART. 109. Solidary liability. The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of any provision of this
Code. For purposes of determining the extent of their civil liability under this
Chapter, they shall be considered as direct employers.

Petitioners liability covers the payment of respondent's 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. While it is true
that respondents continued working for petitioner after the expiration of their contract, based on
the instruction of DNL Security, petitioner did not object to such assignment and allowed
respondents to render service. Thus, petitioner impliedly approved the extension of respondents
services.

Accordingly, petitioner is bound by the provisions of the Labor Code on indirect employment.
Petitioner cannot be allowed to deny its obligation to respondents after it had benefited from
their services. So long as the work, task, job, or project has been performed for petitioners
benefit or on its behalf, the liability accrues for such services. 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.

It should be understood, though, that the solidary liability of petitioner does not preclude the
application of Article 1217 of the Civil Code on the right of reimbursement from its co-debtor.

6. Sy et al., vs. Fairland Knitcraft Co Inc. G.R. No. 189658, December 12, 2011
FACTS: Fairland is a domestic corporation engaged in garments business, while Susan de Leon
(Susan) is the owner/proprietress of Weesan Garments (Weesan).

The complaining workers are sewers, trimmers, helpers, a guard and a secretary who were hired
by Weesan. They filed with the Arbitration Branch of the NLRC a Complaint for underpayment
and/or non-payment of wages, overtime pay, premium pay for holidays, 13th month pay and
other monetary benefits against Susan/Weesan.

Weesan filed before the Department of Labor and Employment-National Capital Region (DOLE-
NCR) a report on its temporary closure for a period of not less than six months. As the workers
were not anymore allowed to work on that same day, they filed an Amended Complaint, and on
March 13, 2003, another pleading entitled Amended Complaints and Position Paper for
Complainants, to include the charge of illegal dismissal.

Labor Arbiter Reyes rendered his Decision dismissing the complaint for lack of merit. The
workers filed their appeal which was granted by the NLRC. The NLRC however, denied both
motions of Atty. Geronimo and Fairland for lack of merit.

Fairland and Susan thus filed their separate Petitions for Certiorari before the CA. CAs First
Division denied Fairlands petition. It affirmed the NLRCs ruling that the workers were illegally
dismissed and that Weesan and Fairland are solidarily liable to them as labor-only contractor and
principal, respectively.

Fairland filed its Motion for Reconsideration as well as a Motion for Voluntary Inhibition of
Associate Justices Celia C. Librea-Leagogo and Regalado E. Maambong from handling the case.
The Motion for Voluntary Inhibition was granted through a Resolution.

CAs Special Ninth Division reversed the First Divisions ruling. It held that the labor tribunals did
not acquire jurisdiction over the person of Fairland, and even assuming they did, Fairland is not
liable to the workers since Weesan is not a mere labor-only contractor but a bona fide
independent contractor.

Aggrieved, the workers filed before us their Petition for Review on Certiorari. Susan moved for
reconsideration which was denied by the CA. Hence, she filed before this Court a Petition for
Review on Certiorari which was denied in this Courts on technicality and for failure to
sufficiently show any reversible error in the assailed judgment.

Susan and Fairland filed their respective Motions for Reconsideration. But before said motions
could be resolved, the Court ordered the consolidation of Susans petition with that of the
workers. Susans Motion for Reconsideration of this Courts Resolution in G.R No. 189658 is
granted. Consequently, her Petition for Review on Certiorari is reinstated.

ISSUES: Whether or not petitioner is a labor-only contractor acting as an agent of respondent

Fairland? Whether or not the individual private respondents were illegally dismissed?
HELD:

"There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or
places workers to perform a job, work or service for a principal. In labor-only contracting, the
following elements are present:

(a) 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

(b) The workers recruited and placed by such person are performing activities which are directly
related to the principal business of the employer."

Suffice it to say that "[t]he presumption is that a contractor is a labor-only contractor unless such
contractor overcomes the burden of proving that it has substantial capital, investment, tools and
the like." As Susan/Weesan was not able to adduce evidence that Weesan had any substantial
capital, investment or assets to perform the work contracted for, the presumption that Weesan is
a labor-only contractor stands.

Article 283 of the Labor Code allows as a mode of termination of employment the closure or
termination of business. "Closure or cessation of business is the complete or partial cessation of
the operations and/or shut-down of the establishment of the employer. It is carried out to either
stave off the financial ruin or promote the business interest of the employer." "The decision to
close business [or to temporarily suspend operation] is a management prerogative exclusive to
the employer, the exercise of which no court or tribunal can meddle with, except only when the
employer fails to prove compliance with the requirements of Art. 283, to wit: a) that the
closure/cessation of business is bona fide, i.e ., its purpose is to advance the interest of the
employer and not to defeat or circumvent the rights of employees under the law or a valid
agreement ; b) that written notice was served on the employees and the DOLE at least one month
before the intended date of closure or cessation of business; and c) in case of closure/cessation of
business not due to financial losses, that the employees affected have been given separation pay
equivalent to month pay for every year of service or one month pay, whichever is higher."

It bears stressing that "[t]he burden of proving that x x x a temporary suspension is bona fide
falls upon the employer." Clearly here, Susan/Weesan was not able to discharge this burden. The
documents Weesan submitted to support its claim of severe business losses cannot be considered
as proof of financial crisis to justify the temporary suspension of its operations since they clearly
appear to have not been duly filed with the BIR. Weesan failed to satisfactorily explain why the
Income Tax Returns and financial statements it submitted do not bear the signature of the
receiving officers. Also hard to ignore is the absence of the mandatory 30-day prior notice to the
workers.

7. Polyfoam-RGC International Corp., vs. Concepcion, G.R. No. 172349, June 13, 2012
FACTS: In his February 08, 2000 complaint for illegal dismissal against Polyfoam and Natividad
Cheng, Edgardo Concepcion alleged that he was hired by Polyfoam as an "all-around" factory
worker and served as such for almost six years. On January 14, 2000, he allegedly discovered
that his time card was not in the rack and was later informed by the security guard that he could
no longer punch his time card. When he protested to his supervisor, the latter allegedly told him
that the management decided to dismiss him due to an infraction of a company rule. Cheng, the
company manager, also refused to face him. Respondent counsel later wrote a letter to Polyfoam
manager requesting that respondent be re-admitted to work, but the request remained unheeded
prompting the latter to file the complaint for illegal dismissal.

On April 28, 2000, Gramaje filed a Motion for Intervention claiming to be the real employer of
respondent. On the other hand, Polyfoam and Cheng filed a Motion to Dismiss on the grounds
that the NLRC has no jurisdiction over the case, because of the absence of employer-employee
relationship between Polyfoam and respondent and that the money claims had already
prescribed.

On May 24, 2000, Labor Arbiter Adolfo Babiano issued an Order granting Gramaje motion for
intervention, it appearing that she is an indispensable party and denying Polyfoam and Cheng
motion to dismiss as the lack of employer-employee relationship is only a matter of defense.

In their Position Paper, Polyfoam and Cheng insisted that the NLRC has no jurisdiction over the
case, because respondent was not their employee. They likewise contended that respondent
money claims had already prescribed. Finally, they fault respondent for including Cheng as a
party-defendant, considering that she is not even a director of the company.
In her Position Paper,Gramaje claimed that P.A. Gramaje Employment Services (PAGES) is a
legitimate job contractor who provided some manpower needs of Polyfoam. It was alleged that
respondent was hired as "packer" and assigned to Polyfoam, charged with packing the latter
finished foam products. She argued, however, that respondent was not dismissed from
employment, rather, he simply stopped reporting for work.

On December 14, 2001, Labor Arbiter rendered a Decision finding respondent to have been
illegally dismissed from employment and holding Polyfoam and Gramaje/PAGES solidarily
liable for respondent money claims.

On appeal by petitioners, the NLRC modified the LA decision by exonerating Polyfoam from
liability for respondent claim for separation pay and deleting the awards of backwages, 13th
month pay, damages, and attorney fees.

Aggrieved, respondent elevated the case to the CA in a special civil action for certiorari under
Rule 65 of the Rules of Court. On December 19, 2005, the appellate court granted the petition.
The CA agreed with the LA conclusion that Gramaje is not a legitimate job contractor but only a
"labor-only" contractor. The appellate court affirmed the LA findings of illegal dismissal as
respondent was dismissed from the service without cause and due process.Consequently,
separation pay in lieu of reinstatement was awarded. The CA quoted with approval the LA
conclusions on the award of respondent other money claims.

ISSUES:

1. Whether or not Gramaje is an independent job contractor?

2. Whether or not respondent was illegally dismissed from employment?

HELD: The decision of the Court of Appeals is affirmed.

Gramaje is a Labor-Only Contractor - Article 106 of the Labor Code explains the relations which
may arise between an employer, a contractor, and the contractor employees, thus:

ART. 106. Contractor or subcontracting. Whenever an employer enters into a contract with
another person for the performance of the former work, the employees of the contractor and of
the latter subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under the Code. In so
prohibiting or restricting, he may make appropriate distinctions between labor-only contracting
and job contracting as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.

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.

The test 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 results of the work." In San Miguel Corporation v.
Semillano, the Court laid down the criteria in determining the existence of an independent and
permissible contractor relationship, to wit:

x x x [W]hether or not the contractor is carrying on an independent business; the nature and
extent of the work; the skill required; the term and duration of the relationship; the right to assign
the performance of a specified piece of work; the control and supervision of the work to another;
the employer power with respect to the hiring, firing and payment of the contractor workers; the
control of the premises; the duty to supply the premises, tools, appliances, materials, and labor;
and the mode, manner and terms of payment.

Simply put, the totality of the facts and the surrounding circumstances of the case are to be
considered. Each case must be determined by its own facts and all the features of the relationship
are to be considered.

Applying the foregoing tests, we agree with the CA conclusion that Gramaje is not an
independent job contractor, but a "labor-only" contractor.

First, Gramaje has no substantial capital or investment. The presumption is that a contractor is a
labor-only contractor unless he overcomes the burden of proving that it has substantial capital,
investment, tools, and the like. The employee should not be expected to prove the negative fact
that the contractor does not have substantial capital, investment and tools to engage in job-
contracting.

Gramaje claimed that it has substantial capital of its own as well as investment in its office,
equipment and tools. She pointed out that she furnished the plastic containers and carton boxes
used in carrying out the function of packing the mattresses of Polyfoam. She added that she had
placed in Polyfoam workplace ten (10) sealing machines, twenty (20) hand trucks, and two (2)
forklifts to enable respondent and the other employees of Gramaje assigned at Polyfoam to
perform their job. Finally, she explained that she had her own office with her own staff.
However, aside from her own bare statement, neither Gramaje nor Polyfoampresented evidence
showing Gramaje ownership of the equipment and machineries used in the performance of the
alleged contracted job. Considering that these machineries are found in Polyfoam premises, there
can be no other logical conclusion but that the tools and equipment utilized by Gramaje and her
"employees" are owned by Polyfoam. Neither did Polyfoam nor Gramaje show that the latter had
clients other than the former. Since petitioners failed to adduce evidence that Gramaje had any
substantial capital, investment or assets to perform the work contracted for, the presumption that
Gramaje is a labor-only contractor stands.

Second, Gramaje did not carry on an independent business or undertake the performance of its
service contract according to its own manner and method, free from the control and supervision
of its principal,Polyfoam, its apparent role having been merely to recruit persons to work for
Polyfoam.It is undisputed that respondent had performed his task of packing Polyfoam foam
products in Polyfoam premises. As to the recruitment of respondent, petitioners were able to
establish only that respondent application was referred toGramaje, but that is all. Prior to his
termination, respondent had been performing the same job in Polyfoambusiness for almost six
(6) years. He was even furnished a copy of Polyfoam "Mga Alituntunin at
KarampatangParusa,"which embodied Polyfoam rules on attendance, the manner of performing
the employee duties, ethical standards, cleanliness, health, safety, peace and order. These rules
carried with them the corresponding penalties in case of violation.

While it is true that petitioners submitted the Affidavit of Polyfoam supervisor Victor Abadia,
claiming that the latter did not exercise supervision over respondent because the latter was not
Polyfoam but Gramajeemployee, said Affidavit is insufficient to prove such claim. Petitioners
should have presented the person who they claim to have exercised supervision over respondent
and their alleged other employees assigned toPolyfoam. It was never established that Gramaje
took entire charge, control and supervision of the work and service agreed upon. And as aptly
observed by the CA, "it is likewise highly unusual and suspect as to the absence of a written
contract specifying the performance of a specified service, the nature and extent of the service or
work to be done and the term and duration of the relationship."

A finding that a contractor is a "labor-only" contractor, as opposed to permissible job

contracting, is equivalent to declaring that there is an employer-employee relationship between
the principal and the employees of the supposed contractor, and the "labor-only" contractor is
considered as a mere agent of the principal, the real employer.In this case, Polyfoam is the
principal employer and Gramaje is the labor-only contractor. Polyfoam and Gramaje are,
therefore, solidarily liable for the rightful claims of respondent.

Respondent was Illegally DismissedFrom Employment - Respondent stated that on January 14,
2000, his time card was suddenly taken off the rack. His supervisor later informed him that
Polyfoam management decided to dismiss him due to infraction of company rule. In short,
respondent insisted that he was dismissed from employment without just or lawful cause and
without due process. Polyfoam did not offer any explanation of such dismissal. It, instead,
explained that respondent real employer is Gramaje. Gramaje, on the other hand, denied the
claim of illegal dismissal. She shifted the blame on respondent claiming that the latter in fact
abandoned his work.

The LA gave credence to respondent narration of the circumstances of the case. Said conclusion
was affirmed by the CA. We find no reason to depart from such findings.
Abandonment cannot be inferred from the actuations of respondent. When he discovered that his
time card was off the rack, he immediately inquired from his supervisor. He later sought the
assistance of his counsel, who wrote a letter addressed to Polyfoam requesting that he be re-
admitted to work. When said request was not acted upon, he filed the instant illegal dismissal
case. These circumstances clearly negate the intention to abandon his work.

Petitioners failed to show any valid or authorized cause under the Labor Code which allowed it
to terminate the services of respondent. Neither was it shown that respondent was given ample
opportunity to contest the legality of his dismissal. No notice of termination was given to him.
Clearly, respondent was not afforded due process. Having failed to establish compliance with the
requirements of termination of employment under the Labor Code, the dismissal of respondent
was tainted with illegality. Consequently, respondent is entitled to reinstatement without loss of
seniority rights, and other privileges and to his full backwages inclusive of allowances and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld up to the time of his actual reinstatement. However, if reinstatement is no longer
feasible as in this case, separation pay equivalent to one-month salary for every year of service
shall be awarded as an alternative. Thus, the CA is correct in affirming the LA award of
separation pay with full backwages and other monetary benefits.

8. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012
FACTS: The petitioner Superior Packaging Corporation (principal) engaged the services of
Lancer (agent) to provide reliever services to its business, which involves the manufacture and
sale of commercial and industrial corrugated boxes. According to petitioner, the respondents
were engaged for four (4) months from February to June 1998 and their tasks included
loading, unloading and segregation of corrugated boxes. Pursuant to a complaint filed by the
respondents against the petitioner and its President, Cesar Luz (Luz), for underpayment of
wages, non-payment of premium pay for worked rest, overtime pay and non-payment of salary,
the DOLE conducted an inspection of the petitioners premises and found several violations, to
wit:
(1)non-presentation of payrolls and daily time records;
(2)non-submission of annual report of safety organization;
(3)medical and accident/illness reports;
(4)non-registration of establishment under Rule 1020 of Occupational and Health Standards; and
(5)no trained first aide.
Due to the petitioners failure to appear in the summary investigations conducted by the DOLE,
an Order was issued on June 18, 2003 finding in favor of the respondents and adopting the
computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay
respondents their total claims in the amount of P 840,463.38. Petitioner and Luz filed a motion
for reconsideration on the ground that respondents are not its employees but of Lancer and that
they pay Lancer in lump sum for the services rendered.
The DOLE, however, denied its motion in its Resolution dated February 16, 2004, ruling that the
petitioner failed to support its claim that the respondents are not its employees, and even
assuming that they were employed by Lancer, the petitioner still cannot escape liability as
Section 13 of the Department Order No. 10, Series of 1997, makes a principal jointly and
severally liable with the contractor to contractual employees to the extent of the work performed
when the contractor fails to pay its employees wages.
Their appeal to the Secretary of DOLE was dismissed per Order dated July 30, 2004 and the
Order dated June 18,2003 and Resolution dated February 16, 2004 were affirmed. Their motion
for reconsideration likewise having been dismissed by the Secretary of DOLE in an Order dated
January 21, 2005, petitioner and Luz filed a petition for certiorariwiththe Court of Appeals
(CA).On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the
modification in that Luz was absolved of any personal liability under the award.
The petitioner filed a partial motion for reconsideration insofar as thefinding of solidary liability
with Lancer is concerned but it was denied by the CA in a Resolution dated July 10, 2007.The
petitioner is now before the Court on petition for review under Rule 45 of the Rules of Court.
ISSUE:
(1)Whether the DOLE has authority to make a finding of an employer-employee relationship
concomitant to its visitorial and enforcement power
(2)Whether Superior Packaging Corporation (petitioner) may be held solidarily liable with
Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims.
RULING: The DOLE has authority to make a finding of an employer-employee relationship
concomitant to its visitorial and enforcement power. The DOLE clearly acted within its authority
when it determined the existence of an employer-employee relationship between the petitioner
and respondents as it falls within the purview of its visitorial and enforcement powerunder
Article 128(b) of the Labor Code. In Peoples Broadcasting (Bombo Radyo Phils., Inc.) v.
Secretary of the Department of Labor and Employment, the Court stated that it can be assumed
that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a
determination of the existence of an employer-employee relationship. Such determination,
however, is merely preliminary, incidental and collateral to the DOLEs primary function of
enforcing labor standards provisions. Also, the existence of an employer-employee relationship
is ultimately a question of fact. The determination made in this case by the DOLE, albeit
provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the ambit of a
petition for review on certiorari.
Lancer was engaged in labor-only contracting. It was the consistent conclusion of the DOLE and
the CA that Lancer was not an independent contractor but was engaged in "labor-only
contracting"; hence, the petitioner was considered an indirect employer of respondents and liable
to the latter for their unpaid money claims. At the time of the respondents employment in 1998,
the applicable regulation was DOLE Department Order No. 10, Series of 1997. Under said
Department Order, labor-only contracting was defined as follows:
Sec. 9. Labor-only contracting. - Any person who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only contracting where such person:
(1)Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary 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. According to the CA,
the totality of the facts and surrounding circumstances of this case point to such conclusion. The
Court agrees.
The ratio of Lancers authorized capital stock of P 400,000.00 as against its subscribed and paid-
up capital stock of P25,000.00 shows the inadequacy of its capital investment necessary to
maintain its day-to-day operations. And while the Court does not set an absolute figure for what
it considers substantial capital for an independent job contractor, it measures the same against the
type of work which the contractor is obligated to perform for the principal.
Moreover, the nature of respondents work was directly related to the petitioners business. The
marked disparity between the petitioners actual capitalization (P 25,000.00) and the resources
needed to maintain its business, i.e., "to establish, operate and manage a personnel service
company which will conduct and undertake services for the use of offices, stores, commercial
and industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-only
contractor. Aside from these is the undisputed fact that the petitioner failed to produce any
written service contract that might serve as proof of its alleged agreement with Lancer.
Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that
there is an employer-employee relationship between the principal and the employees of the
supposed contractor, and the "labor only" contractor is considered as a mere agent of the
principal, the real employer. The former becomes solidarily liable for all the rightful claims of
the employees. The petitioner therefore, being the principal employer and Lancer, being the
labor-only contractor, are solidarily liable for respondents unpaid money claims.

9. Digital Telecommunications Phils Inc. vs. Digitel Employees Union et al., G.R. No. 184903-
04, October 10, 2012
FACTS:
By virtue of a certification election, Digitel Employees Union (Union) became the exclusive
bargaining agent of all rank and fileemployees of Digitel in 1994. The Union and Digitel then
commenced collective bargaining negotiations which resulted in abargaining deadlock. The
Union threatened to go on strike, but then the Labor Secretary assumed jurisdiction over the
disputeand eventually directed the parties to execute a CBA. However, no CBA was forged
between Digitel and the Union. SomeUnion members abandoned their employment with Digitel.
The Union later became dormant.Ten (10) years thereafter or on 28 September 2004, Digitel
received from Esplana, who was President of the Union, aletter containing the list of officers,
CBA proposals and ground rules.
Digitel was reluctant to negotiate with the Union anddemanded that the latter Union show
compliance with the provisions of the Unions Constitution and By
-laws on union membership and election of officers.On 4 November 2004, Esplana and his group
filed a case for Preventive Mediation before the National Conciliation and Mediation Board
based on Digitels violation of the duty to bargain. On 25 November 2004, Esplana filed a notice
of strike. On 10 March 2005, the then Labor Secretary issued an Order assuming jurisdiction
over the labor dispute.During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a
non-profit enterprise engaged in call centerservicing, filed with the DOLE an Establishment
Termination Report stating that it will cease its business operation. Theclosure affected at least
100 employees, 42 of whom are members of the herein respondent Union.Alleging that the
affected employees are its members and in reaction to Digiservs action, Esplana and his group
filed another Notice of Strike for union busting, illegal lock-out, and violation of the assumption
order. On 23 May 2005, the LaborSecretary ordered the second notice of strike subsumed by the
previous Assumption Order.

Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau of Labor Relations (BLR)
seeking cancellation of the Unions registration. In a Decision dated 11 May 2005, the Regional
Director of the DOLE dismissed the petition forcancellation of union registration for lack of
merit. The appeal filed by Digitel with the BLR was eventually dismissed for lackof merit in a
Resolution dated 9 March 2007.In an Order dated 13 July 2005, the Secretary of Labor directed
Digitel to commence the CBA negotiation with theUnion and certified for compulsory arbitration
before the NLRC the issue of unfair labor practice.In accordance with the 13 July 2005 Order of
the Secretary of Labor, the unfair labor practice issue was certified forcompulsory arbitration
before the NLRC. On 31 January 2006, NLRC rendered a Decision dismissing the unfair labor
practicecharge against Digitel but declaring the dismissal of the 13 employees of Digiserv as
illegal and ordering their reinstatement . The Union manifested that out of 42 employees, only 13
remained, as most had already accepted separation pay.In view of this unfavorable decision,
Digitel filed a petition on 9 June 2006 before the Court of Appeals, challenging theabove NLRC
Decision and Resolution and arguing mainly that Digiserv employees are not employees of
Digitel.On 18 June 2008, CA partially granted the case for ULP, thus modifying the assailed
NLRC dispositions. The CAlikewise sustained the finding that Digiserv is engaged in labor-only
contracting and that its employees are actually employeesof Digitel.Digitel filed a motion for
reconsideration but was denied in a Resolution dated 9 October 2008. Hence, this petition
forreview on certiorari.

ISSUES:
1) Whether Digiserv is a legitimate contractor; and
2) Whether there was a valid dismissal.

RULING:
Digiserv is a labor-only contractor. Labor-only contracting is expressly prohibited by our labor
laws. After an exhaustivereview of the records, there is no showing that first, Digiserv has
substantial investment in the form of capital, equipment ortools. The NLRC, as echoed by the
CA, did not find substantial Digiservs authorized capital stock of P 1,000,000.00. It pointedout
that only P 250,000.00 of the authorized capital stock had been subscribed and only P 62,500.00
had been paid up. Therewas no increase in capitalization for the last 10 years.Moreover, in the
Amended Articles of Incorporation, as well as in the General Information Sheets for the years
1994,2001 and 2005, the primary purpose of Digiserv is to provide manpower services. In PCI
Automation Center, Inc. v. National Labor Relations Commissionthe Court made the following
distinction: "the legitimate job contractor provides services whilethe labor-only contractor
provides only manpower. The legitimate job contractor undertakes to perform a specific job for
theprincipal employer while the labor-only contractor merely provides the personnel to work for
the principal employer."The services provided by employees of Digiserv are directly related to
the business of Digitel. It is undisputed that asearly as March 1994, the affected employees,
except for two, were already performing their job as Traffic Operator which waslater renamed as
Customer Service Representative (CSR). It is equally undisputed that all throughout their
employment, their function as CSR remains the same until they were terminated effective May
30, 2005. Their long period of employment as suchis an indication that their job is directly
related to the main business of DIGITEL which is telecommunications.Furthermore, Digiserv
does not exercise control over the affected employees. Digiserv shared the same
HumanResources, Accounting, Audit and Legal Departments with Digitel which manifested that
it was Digitel who exercised controlover the performance of the affected employees. The NLRC
also relied on the letters of commendation, plaques of appreciationand certification issued by
Digitel to the Customer Service Representatives as evidence of control.Considering that Digiserv
has been found to be engaged in labor-only contracting, the dismissed employees aredeemed
employees of Digitel.
The affected employees were illegally dismissed.
In addition to finding that Digiserv is a labor-only contractor, records teemwith proof that its
dismissed employees are in fact employees of Digitel. The NLRC enumerated these pieces of
evidence, thus:

The remaining affected employees, except for two (2), were already hired by DIGITEL even
before the existence of DIGISERV. Likewise, the remaining affected employees continuously
held the position of Customer ServiceRepresentative, which was earlier known as Traffic
Operator, from the time they were appointed on March 1, 1994until they were terminated on
May 30, 2005.Further, the Certificates issued to Customer Service Representative likewise show
that they are employees of DIGITEL, Take for example the "Service Award" issued to Ma.
Loretta C. Esen, one of the remaining affected employees. The "Service Award" was signed by
the officers of DIGITEL, the VP-Customer Services Division, the VP-Human Resources
Division and the Group Head-Human Resources Division. It cannot be gainsaid that it is only
theemployer that issues service award to its employees. As an alternative argument, Digitel
maintains that the affected employees were validly dismissed on the grounds of closure of
Digiserv, a department within Digitel.In the recent case of Waterfront Cebu City Hotel v.
Jimenez ,we referred to the closure of a department or division of acompany as retrenchment.
For a valid retrenchment, the following elements must be present:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merelyde minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively andin good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month
pay or at least month payfor every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retainedamong the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.

Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is
management prerogative to close adepartment of the company. Digitels decision to outsource
the call center operation of the company is a valid reason to closedown the operations of a
department under which the affected employees were employed. The fifth element regarding
thecriteria to be observed by Digitel clearly does not apply because all employees under Digiserv
were dismissed.The instant case is all about the fourth element, that is, whether or not the
affected employees were dismissed in goodfaith. We find that there was no good faith in the
retrenchment.

Prior to the cessation of Digiservs operations,the Secretary of Labor had issued the first and
second assumptionorder. The effects of the assumption order issued by the Secretary of Labor
are two-fold. It enjoins an impending strike on thepart of the employees and orders the employer
to maintain the status quo.There is no doubt that Digitel defied the assumption order by abruptly
closing down Digiserv. The closure of adepartment is not illegal per se. What makes it unlawful
is when the closure is undertaken in bad faith. In St. John Colleges, Inc.v. St. John Academy
Faculty and Employees Union bad faith was evidenced by the timing of and reasons for the
closure andthe timing of and reasons for the subsequent opening.

10. Norkis Trading Corp., vs. Buenavista, et al., G.R. No. 182018, October 10, 2012
Facts:
The petition stems from an amended complaint for illegal suspension, illegal dismissal, unfair
labor practice and other monetary claims filed with the National Labor Relations Commission
(NLRC) by herein respondents Joaquin Buenavista (Buenavista), Henry Fabroa (Fabroa),
Ricardo Cape (Cape), Bertuldo Tulod (Tulod), Willy Dondoyano (Dondoyano) and Glen
Villariasa (Villariasa) against Norkis Trading and Panaghiusa sa Kauswagan Multi-Purpose
Cooperative (PASAKA). The respondents were hired by Norkis Trading. Although they worked
for Norkis Trading as skilled workers assigned in the operation of industrial and welding
machines owned and used by Norkis Trading for its business, they were not treated as regular
employees by Norkis Trading. Instead, they were regarded by Norkis Trading as members of
PASAKA, a cooperative organized under the Cooperative Codeof the Philippines, and which
was deemed an independent contractor that merely deployed the respondents to render services
for Norkis Trading.4 The respondents nonetheless believed that they were regular employees of
Norkis Trading. Despite having served respondent Norkis Trading for many years and
performing the same functions as regular employees, complainants were not accorded regular
status. It was made to appear that complainants are not employees of said company but that of
respondent PASAKA.6The respondents filed on June 9, 1999 with the Department of Labor and
Employment (DOLE) a complaint against Norkis Trading and PASAKA for labor-only
contracting and non-payment of minimum wage and overtime pay. On August 26, 1999,
PASAKA informed the respondents of the cooperatives decision to suspend them for fifteen
(15) working days.On October 13, 1999, the respondents were to report back to work but during
the hearing in their NLRC case, they were informed by PASAKA that they would be transferred
to Norkis Tradings sister company, Porta Coeli Industrial Corporation (Porta Coeli), as washers
of Multicab vehicles.The respondents opposed the transfer as it would allegedly result in a
change of employers, from Norkis Trading to Porta Coeli. The respondents also believed that the
transfer would result in a demotion since from being skilled workers in Norkis Trading, they
would be reduced to being utility workers.These circumstances made the respondents amend
their complaint for illegal suspension, to include the charges of unfair labor practice, illegal
dismissal, damages and attorneys fees.

The Ruling of the Labor Arbiter:

Dismissed the complaint via a Decision. The allegation of unfair labor practice and claim for
monetary awards were likewise rejected by the LA. Feeling aggrieved, the respondents appealed
from the decision of the LA to the NLRC.
The Ruling of the NLRC:
Affirmed with modification the decision of LA. It held that the respondents were not illegally
suspended from work, as it was their membership in the cooperative that was suspended after
they were found to have violatedthe cooperatives rules and regulations. It also declared that the
respondents dismissal was not established by substantial evidence. The NLRC however declared
that the LA had no jurisdiction over the dispute because the respondents were not employees, but
members of PASAKA.

The Ruling of the CA:

Reversed and set aside the decision and resolution of the NLRC. In ruling that the respondents
were illegally dismissed, the CA held that Norkis Tradings refusal to accept the respondents
back to their former positions, offeringthem instead to accept a new assignment as washers of
vehicles in its sister company, was a demotion that amounted to a constructive dismissal.

Issue:
Whether or not the respondents shall be regarded as employees (or whether or not PASAKA is a
labor-only contractor).

Ruling:
Norkis Trading is the principal employer of the respondents, considering that PASAKA is a mere
labor-only contractor.Labor-only contracting, a prohibited act, is an arrangement where the
contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work,
or service for a principal. In labor-only contracting, the following elementsare present: (a) the
contractor or subcontractor does not have substantial capital or investment to actually perform
the job, work, or service under its own account and responsibility; and (b) the employees
recruited, supplied or placed by such contractor or subcontractor perform activities which are
directly related to the main business of the principal. These differentiate it from permissible or
legitimate job contracting or subcontracting, which refers to an arrangement whereby a principal
agrees to put out or farm out with the contractor or subcontractor the performance or completion
of a specific job, work, or service within a definite or predetermined period, regardless of
whether such job, work, or service is to be performed or completed within or outside the
premises of the principal. A person is considered engaged in legitimate job contracting or
subcontracting if the following conditions concur: (a) the contractor carries on a distinct and
independent business and partakes the contract work on his account under his own responsibility
according to his own manner and method, free from thecontrol and direction of his employer or
principal in all matters connected with the performance of his work except as to the results
thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between
the principal and the contractor or subcontractor assures the contractual employees entitlement
to all labor and occupational safety and health standards, free exercise of the right to self-
organization, security of tenure, and social welfare benefits.

PASAKA as a mere labor-only contractor, and Norkis Trading as the true employer of herein
respondents. The respondents claim that the machinery, equipment and supplies they used to
perform their duties were owned by Norkis Trading, and not by PASAKA, was undisputed.
Herein petitioner failed to prove that their sub-contracting arrangements fall under any of the
conditions set forth in Sec. 6 of D.O. # 10 S. 1997 to qualify as permissible contracting or
subcontracting as provided for as follows:

Sec. 6. Permissible contracting or subcontracting.

Subject to conditions set forth in Sec. 4 (d) and (e) and Section 5 hereof, the principal may
engage the services of a contractor or subcontractor for the performance of any of the following:
a.) Works or services temporarily or occasionally needed to meet abnormal increase in the
demand of products or services..
b) Works or services temporarily or occasionally needed by the principal for undertakings
requiring expert or highly technical personnel to improve the management or operations of an
enterprise;
c) Services temporarily needed for the introduction or promotion of new products;
d) Works or services not directly related or not integral to main business or operation of the
principal including casual work, janitorial, security, landscaping and messengerial services and
work not related to manufacturing processes in manufacturing establishments.
e) Services involving the public display of manufacturers products;
f) Specialized works involving the use of some particular, unusual or peculiar skills... and
g) Unless a reliever system is in place among the regular workforce, substitute services for
absent regular employees

It is therefore evident that herein respondents are engaged in "labor-only" contracting as defined
in Art. 106 of the Labor Code. Furthermore, such contracting/sub-contracting arrangement not
only falls under labor-only contracting but also fails to qualify as legitimate subcontracting as
defined under Sec. 4 par. e of D.O. #10 S. 1997, to wit:
Sec. 4. Definition of terms. d) Subject to the provisions of Sections 6, 7 and 8 of this Rule,
contracting or subcontracting shall be legitimate if the following circumstances concur:
i) The contractor or subcontractor carries on a distinct and independent business and undertakes
to perform the job, work or service on its own account and under its own responsibility,
according to its own manner and method, and free from the control and direction of the principal
in all matters connected with the performance of the work except to the results thereof;
ii) The contractor or subcontractor has substantial capital or investment; and
iii) The agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational and safety and health standards, free exercise
of the right to self-organization, security of tenure and social and welfare benefits.

This Court agrees with the finding of the DOLE Regional Director, as affirmed by the Secretary
of Labor in her assailed Order, that petitioners among them, herein petitioner were engaged in
labor-only contracting.First. PASAKA failed to prove that it has substantial capitalization or
investment in the form of tools, equipment, machineries, work premises, among others, to
qualify as an independent contractor. Private respondents were using machineries and equipment
owned by and located at the premises of NORKIS TRADING.Second. PASAKA likewise did
not carry out an independent business from NORKIS TRADING. Based on facts. The Project
Contract dated December 18, 1998 with NORKIS INTERNATIONAL is nothing more than an
afterthought by the petitioners to confuse its workers and defeat their rightful claims.Third.
Private respondents performed activities directly related to the principal business of NORKIS
TRADING. They worked as welders and machine operators engaged in the production of steel
crates which were sent to Japan for use as containers of motorcycles that are then sent back to
NORKIS TRADING. Private respondents functions therefore are directlyrelated and vital to
NORKIS TRADINGs business of manufacturing of Yamaha motorcycles.All the foregoing
considerations affirm by more than substantial evidence that NORKIS TRADING and PASAKA
engaged in labor-only contracting. Termination of an employment for no just or authorized cause
amounts to an illegal dismissal.As to the issue of whether the respondents were illegally
dismissed by Norkis Trading, we answer in the affirmative, although not by constructive
dismissal as declared by the CA, but by actual dismissal.Where an entity is declared to be a
labor-only contractor, the employees supplied by said contractor to the principal employer
become regular employees of the latter. Having gained regular status, the employees are entitled
to security of tenure and can only be dismissed for just or authorized causes and after they had
been afforded due process. Termination of employment without just or authorized cause and
without observing procedural due process is illegal. claiming that they were illegally dismissed
from their employment, the respondents alleged having been informed by PASAKA that they
would be transferred, upon the behest of Norkis Trading, as Multicab washers or utility workers
to Porta Coeli, a sister company of Norkis Trading. Norkis Trading does not dispute that such job
transfer was relayed by PASAKA unto the respondents, although the company contends that the
transfer was merely an "offer" that did not constitute a dismissal. It bears mentioning, however,
that the respondents were not given any other option by PASAKA and Norkis Trading but to
accede to said transfer. In fact, there is no showing that Norkis Trading would still willingly
accept the respondents to work for the company. Worse, it still vehemently denies that the
respondents had ever worked for it. Respondents transfer to Porta Coeli, although relayed to the
respondents by PASAKA was effectively an act of Norkis Trading. Where labor-only
contracting exists, the Labor Code itself establishes an employer-employee relationship between
the employer and the employees of the labor-only contractor. The statute establishes this
relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the latter is responsible to
the employees of the labor-only contractor as if such employees had been directly employed by
the principal employer.

11. Goya Inc. vs. Goya Inc. Employees Union-FFW G.R. No. 170054, Jan. 21, 2013
FACTS:
Petitioner Goya Inc. (Goya) hired contractual employees from PESO Resources Development
Corporation (PESO). This prompted Goya, Inc. Employees Union-FFW (Union) to request for a
grievance conference on the ground that the contractual workers do not belong to the categories
of employees stipulated in their CBA. The Union also argued that hiring contractual employees
is contrary to the union security clause embodied in the CBA.
When the matter remained unresolved, the grievance was referred to the NCMB for voluntary
arbitration. The Union argued that Goya is guilty of ULP for gross violation of the CBA. The
voluntary arbitrator dismissed the Unions charge of ULP but Goya was directed to observe and
comply with the CBA. While the Union moved for partial consideration of the VA decision,
Goya immediately filed a petition for review before the Court of Appeals to set aside the VAs
directive to observe and comply with the CBA commitment pertaining to the hiring of casual
employees. Goya argued that hiring contractual employees is a valid management prerogative.
The Court of Appeals dismissed the petition.
ISSUE: Whether the act of hiring contractual employees is a valid exercise of management
prerogative?
HELD: The petition must fail.
LABOR LAW: management prerogative; ULP; collective bargaining agreement
The CA did not commit serious error when it sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent and spirit of the CBA. In this case, a
complete and final adjudication of the dispute between the parties necessarily called for the
resolution of the related and incidental issue of whether the Company still violated the CBA but
without being guilty of ULP as, needless to state, ULP is committed only if there is gross
violation of the agreement.

Goya kept on harping that both the VA and the CA conceded that its engagement of contractual
workers from PESO was a valid exercise of management prerogative. It is confused. To
emphasize, declaring that a particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise thereof. What the VA
and the CA correctly ruled was that the Companys act of contracting out/outsourcing is within
the purview of management prerogative. Both did not say, however, that such act is a valid
exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon
by Goya and the Union delimit the free exercise of management prerogative pertaining to the
hiring of contractual employees.

A collective bargaining agreement is the law between the parties. 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.

As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the
limitations found in law, collective bargaining agreement or the general principles of fair play
and justice.
Petition is DENIED.

12. Vigilla et al., vs. Phil. College of Criminology Inc., G.R. No. 200094, June 10, 2013
Law Principle:
Anything favorable to the labor-only contractor redounds to the benefit of the employer under
the principle of solidary liability

Facts:

The petitioners work for the Philippine College of Criminology Inc. (PCCr) as janitors, janitress
and supervisor in its maintenance department. The petitioners were made to understand by the
respondent PCCr that they are under the Metropolitan Building Services, Inc. (MBMSI) which is
a corporation engaged in providing janitorial services. PCCr terminated the services of MBMSI
on 2009 which resulted in the dismissal of the petitioners. An illegal dismissal complaint was
then filed against PCCr by the petitioners contending that it is their real employer and not
MBMSI. Subsequently, the PCCr submitted to the Labor Arbiter waivers, releases and
quitclaims that were executed by the petitioners in favor to MBMSI.

The Labor Arbiter and NLRC ruled in favor of the petitioner, however upon filing the petition
for review on certiorari before the Court of Appeals, the CA ruled that the quitclaims, releases
and waivers executed by the petitioners in favor to MBMSI redounds to the benefit of PCCr by
virtue of solidary liability under Article 1217 of the NewCivil Code. The petitioners contend that
under Article 106 of the Labor Code a labor-only contractor's liability is not solidary as it is the
employer who should be directly responsible to the supplied worker.

Issue

Whether or not the quitclaims, releases and waivers executed by the petitioners in favor to
MBMSI redounds to the benefit of PCCr?

Held

Yes.
The Supreme Court held that the basis of the solidary liability of the principal with those
engaged in labor-only contracting is the last paragraph of Article 106 of the Labor Code that
provides, "In such cases of labor-only contracting, 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."

It also pointed out D.O. No. 18-A, s. 2011 section 27 providing for the effects of labor-only
contracting "where upon the finding by competent authority of labor-only contracting shall
render the principal jointly and severally liable with the contractor to the latter's employees, in
the same manner and extent that the principal is liable to employees directly hired by him/her, as
provided in Article 106 of the Labor Code."

Hence, the PCCr's solidary liability was already expunged by virtue of the releases, waivers and
quitclaims executed by the petitioners in favor of MBMSI by virtue of Article 1217 of the Civil
Code providing that "payment made by one of the solidary debtors extinguishes the obligation."

13. BPI Employees Union-Davao city-FUBU vs. Bank of the Phil Islands et al., G.R. No.
174912, July 24, 2013
Facts:
BOMC(BPI Operations Management Corporation), which was created pursuant to Central
Bank5 Circular No. 1388, Series of 1993 (CBP Circular No. 1388, 1993), and primarily engaged
in providing and/or handling support services for banks and other financial institutions, is a
subsidiary of the Bank of Philippine Islands (BPI) operating and functioning as an entirely
separate and distinct entity. A service agreement between BPI and BOMC was initially
implemented in BPIs Metro Manila branches. In this agreement, BOMC undertook to provide
services such as check clearing, delivery of bank statements, fund transfers, card production,
operations accounting and control, and cash servicing, conformably with BSP Circular No. 1388.
Not a single BPI employee was displaced and those performing the functions, which were
transferred to BOMC, were given other assignments. The Manila chapter of BPI Employees
Union (BPIEU-Metro Manila- FUBU) then filed a complaint for unfair labor practice (ULP).
The Labor Arbiter (LA) decided the case in favor of the union. The decision was, however,
reversed on appeal by the NLRC. BPIEU-Metro Manila-FUBU filed a petition for certiorari
before the CA which denied it, holding that BPI transferred the employees in the affected
departments in the pursuit of its legitimate business. The employees were neither demoted nor
were their salaries, benefits and other privileges diminished.

The Union is of the position that the outsourcing of jobs included in the existing bargaining unit
to BOMC is a breach of the union-shop agreement in the CBA. In transferring the former
employees of FEBTC to BOMC instead of absorbing them in BPI as the surviving corporation in
the merger, the number of positions covered by the bargaining unit was decreased, resulting in
the reduction of the Unions membership. For the Union, BPIs act of arbitrarily outsourcing
functions formerly performed by the Union members and, in fact, transferring a number of its
members beyond the ambit of the Union, is a violation of the CBA and interfered with the
employees right to self organization.
Issues:
Whether or not BOMC is labor-only contracting

Ruling:
The court has held on the negative. While D.O. No. 10, Series of 1997, enumerates the
permissible contracting or subcontracting activities, it is to be observed that, particularly in Sec.
6(d) invoked by the Union, the provision is general in character x x x Works or services not
directly related or not integral to the main business or operation of the principal x x x. This
does not limit or prohibit the appropriate government agency, such as the BSP, to issue rules,
regulations or circulars to further and specifically determine the permissible services to be
contracted out. CBP Circular No. 138838 enumerated functions which are ancillary to the
business of banks, hence, allowed to be outsourced. Thus, sanctioned by said circular, BPI
outsourced the cashiering (i.e., cash-delivery and deposit pick-up) and accounting requirements
of its Davao City branches. The Union even described the extent of BPIs actual and intended
contracting out to BOMC as follows:

As an initiatory move, the functions of the Cashiering Unit of the

Processing Center of BPI, handled by its regular rank and file employees
who are members of the Union, xxx [were] transferred to BOMC with the
Accounting Department as next in line. The Distributing, Clearing and
Bookkeeping functions of the Processing Center of the former FEBTC
were likewise contracted out to BOMC.

Thus, the subject functions appear to be not in any way directly related to the core activities of
banks. They are functions in a processing center of BPI which does not handle or manage deposit
transactions. Clearly, the functions outsourced are not inherent banking functions, and, thus, are
well within the permissible services under the circular. The Court agrees with BPI that D.O. No.
10 is but a guide to determine what functions may be contracted out, subject to the rules and
established jurisprudence on legitimate job contracting and prohibited labor-only contracting.
Even if the Court considers D.O. No. 10 only, BPI would still be within the bounds of D.O. No.
10 when it contracted out the subject functions. This is because the subject functions were not
related or not integral to the main business or operation of the principal which is the lending of
funds obtained in the form of deposits. From the very definition
of banks as provided under the General Banking Law, it can easily be discerned that banks
perform only two (2) main or basic functions deposit and loan functions. Thus, cashiering,
distribution and bookkeeping are but ancillary functions whose outsourcing is sanctioned under
CBP Circular No. 1388 as well as D.O. No. 10. Even BPI itself recognizes that deposit and loan
functions cannot be legally contracted out as they are directly related or integral to the main
business or operation of banks. The CBP's Manual of Regulations has even categorically stated
and emphasized on the prohibition against outsourcing inherent banking functions, which refer to
any contract between the bank and a service provider for the latter to supply, or any act whereby
_the latter supplies, the manpower to service the deposit transactions of the former.

In one case, the Court held that it is management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature. What is of primordial
importance is that the service agreement does not violate the employee's right to security of
tenure and payment of benefits to which he is entitled under the law. Furthermore, the
outsourcing must not squarely fall under labor-only contracting where the contractor or sub-
contractor merely recruits, supplies or places workers to perform a job, work or service for a
principal or if 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) The contractor does not exercise the right to control over
the performance of the work of the contractual employee

14. Alilin et al., vs. Petron Corp., GR No. 177592, June 9, 2014
Facts:
Petron is a domestic corporation engaged in the oil business. It owns several bulk plants in the
country for receiving, storing and distributing its petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and operated by Romualdo D.
Gindang (Romualdo), started recruiting laborers for fielding to Petrons Mandaue Bulk Plant.
When Romualdo died in1989, his son Romeo D. Gindang (Romeo), through Romeo D. Gindang
Services (RDG), took over the business and continued to provide manpower services to Petron.
On June 1, 2000, Petron and RDG entered into a Contract for Services9 for the period from June
1, 2000 to May 31, 2002, whereby RDG undertook to provide Petron with janitorial,
maintenance, tanker receiving, packaging and other utility services in its Mandaue Bulk Plant.
This contract was extended on July 31, 2002 and further extended until September 30, 2002.
Upon expiration thereof, no further renewal of the service contract was done.
On October 16, 2002, petitioners Alilin, Calesa, Hindang, Gindang, Sungahid, Lee, Morato and
Gabilan filed a Complaint for illegal dismissal, underpayment of wages, damages and attorneys
fees against Petron and RDG on November 12, 2002. Petitioner Laurente filed another
Complaint for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday
pay, premium pay for holiday, rest day, 13th month pay, service incentive leave pay, allowances,
separation pay, retirement benefits, damages and attorneys fees against Petron and RDG.
Petitioners did not deny that RDG hired them and paid their salaries. They, however, claimed
that the latter is a labor-only contractor, which merely acted as an agent of Petron, their true
employer. They asseverated that their jobs, which are directly related to Petrons business,
entailed them to work inside the premises of Petron using the required equipment and tools
furnished by it and that they were subject to Petrons supervision. Claiming to be regular
employees, petitioners thus asserted that their dismissal allegedly in view of the expiration of the
service contract between Petron and RDG is illegal.
Petron, on the other hand, maintained that RDG is an independent contractor and the real
employer of the petitioners. It was RDG which hired and selected petitioners, paid their salaries
and wages, and directly supervised their work. Attesting to these were two former employees of
RDG and Petrons Mandaue Terminal Superintendent whose joint affidavit and
affidavit, respectively, were submitted by Petron.

Issues:
Whether or not RDG is an independent contractor or not

Ruling:
No, RDG is a labor-only contractor. Petitioners have rendered work for Petron for a long period
of time even before the service contract was executed in 2000. The respective dates on which
petitioners claim to have started working for Petron, as well as the fact that they have rendered
continuous service to it until October 16, 2002, when they were prevented from entering the
premises of Petrons Mandaue Bulk Plant, were not at all disputed by Petron. In fact, Petron even
recognized that some of the petitioners were initially fielded by Romualdo Gindang, the father of
Romeo, through RDGs precursor, Romualdo D.Gindang Contractor, while the others were
provided by Romeo himself when he took over the business of his father in 1989. Hence, while
Petron was able to establish that RDG was financially capable as a legitimate contractor at the
time of the execution of the service contract in 2000, it nevertheless failed to establish the
financial capability of RDG at the time when petitioners actually started to work for Petron in
1968, 1979, 1981, 1987, 1990,1992 and 1993.
Secondly, Petrons power of control over petitioner exists. [A] finding that a contractor is a
labor-only contractor is equivalent to declaring that there is an employer-employee relationship
between the principal and the employees of the supposed contractor. In this case, the employer
employee relationship between Petron and petitioners becomes all the more apparent due to the
presence of the power of control on the part of the former over the latter. One manifestation of
the power of control is the power to transfer employees from one work assignment to another.
Here, Petron could order petitioners to do work outside of their regular "maintenance/utility" job.
Also, petitioners were required to report for work everyday at the bulk plant, observe an 8:00
a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed
by the safety and security measures being implemented within the bulk plant. All these imply
control. In an industry where safety is of paramount concern, control and supervision over
sensitive operations, such as those performed by the petitioners, are inevitable if not at all
necessary.

In sum, the Court finds that RDG is a labor-only contractor. As such, it is considered merely as
an agent of Petron. Consequently, the employer-employee relationship which the Court finds to
exist in this case is between petitioners as employees and Petron as their employer. Petron
therefore, being the principal employer and RDG, being the labor-only contractor, are solidarily
liable for petitioners' illegal dismissal and monetary claims.

15. Ampeleloquio vs. Jaka Distribution Inc., GR No. 196936, July 2, 2014
Facts:
Petitioner Monchito R. Ampeloquio (Ampeloquio) is a reinstated employee of respondent
Jaka Distribution, Inc. (JAKA), formerly RMI Marketing Corporation (RMI).Previously,
Ampeloquio had filed a complaint for illegal dismissal against RMI before the National Labor
Relations Commission (NLRC). Subsequently, the Labor Arbiter found RMI guilty of illegal
dismissal. On 6 August 2004, Ampeloquio resumed work as merchandiser at JAKA and reported
at JAKAs outlets within Metro Manila, Shopwise Makati and Alabang. He received a daily
wage of P252.00, without meal and transportation allowance.On 4 April 2005, Ampeloquio was
transferred outside of Metro Manila, to Lucena City and subsequently to San Pablo City. At that
time, he was receiving the same daily wage of ?252.00, without meal and transportation
allowance. Ampeloquio was given a monthly cost of living allowance (COLA) of
P720.00.Ampeloquio requested for salary adjustment and benefits retroactive to the date of his
reinstatement, 6 August 2004, and payment of salary differential in the total amount of
P42,196.00. Ampeloquio wrote JAKA reiterating his request for salary adjustment and payment
of benefits retroactive to his reinstatement, and an increase from his previous request of salary
differential which amounted to a total of P180,590.00.Because of the discrepancy in wages,
Ampeloquio filed anew before the NLRC, a complaint for underpayment of wages, COLA, non-
payment of meal and transportation allowances
Ampeloquio seeks entitlement to underpayment or wage differential of P142.00, COLA
differential of P500.00 a month, meal allowance of P60.00 per day and average transportation
allowance of P100.00 per day; that he called the attention of [JAKAs general manager], Mr.
Ariel Villasenor about his concern on 16 March 2005 but to no avail although upon second
demand his ECOLA was increased to P1,200.00 per month starting 16 July 2006.
For their part, JAKA avers that it is engaged in the business of distribution of consumer
goods; that Ampeloquio is their only regular employee as merchandiser; that at the time of the
filing of this case, Ampeloquio is still working in a supermarket with a monthly salary of
P7,985.00; that their other merchandiser[s] are outsourced from manpower agencies or are
seasonal employees hired during peak season; that the salary of Ampeloquiowas based on the
minimum wage of P250.00 and ECOLA of P50.00 per day; that it is in the process of computing
the wage distortion in the implementation of 2005 wage increase of P25.00; that their exemption
in the implementation of wage increase expired last 25 June 2006 prior to the filing of this
complaint; that they did not act on Ampeloquiosdemand for money claims due to the pendency
of this case.In their reply, JAKA admits that Ampeloquio was reinstated in accordance with the
Labor Arbiters decision in the illegal dismissal case; that he received the same rate as that of his
co-employees, hence there is no basis for Ampeloquios money claims. On the other hand,
Ampeloquiostressed the discrepancy and discrimination in the payment of wages which he
allegedly suffered as he received lower than that of his co-workers and to substantiate his
arguments he submitted the payslips of his co-employees.
Issue:
Whether or not Ampeleloquio is correct when he ascertain that he was underpaid
comparing his salary to the contractual employees and if he was illegally dismissed?
Held:
The Supreme Court held that Ampeloquio is correct in asserting that he is a senior employee
compared to the other merchandisers whom he himself designates as casual or contractual
merchandisers. He is likewise senior to other regular employees subsequently hired by JAKA,
specifically two regular messenger employees which Ampeloquio claims receive wages higher
than what he is receiving from JAKA.He is not entitled to the same terms and conditions of
employment as that which was offered to the other regular employees (not merchandisers)
subsequently hired by JAKA.
JAKAs decision to grant or withhold certain benefits to other employees is part of its
management prerogative as a function of an employers constitutionally protected right to
reasonable return on investments.Ampeloquio cannot likewise compare his wages to that
received by casual or contractual merchandisers or merchandisers who are admittedly
outsourced from manpower agencies or those who are considered seasonal employees hired only
during peak season when JAKA is in need of extra merchandisers.To say the least, these
merchandisers are not, strictly speaking, employees of JAKA, but of a service provider company
which has a service contract with JAKA. The merchandisers in this case simply perform the
work at JAKAs outlets, wearing uniforms approved by JAKA but provided by the service
company who is actually their employer. There is no employer-employee relationship between
JAKA and these merchandisers.
The existence of an independent and permissible contractor relationship is generally established
by considering the following determinants: whether the contractor is carrying on an independent
business; the nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of a specified piece of work; the control and
supervision of the work to another; the employer's power with respect to the hiring, firing and
payment of the contractor's workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the mode, manner and terms of payment.
Section 8 of DOLE Department Order No. 10, series of 1997.
Sec. 8. Job contracting. - There is job contracting permissible under the Code if the following
conditions are met:

(1) The 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; and

(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his
business.

In the same vein, seasonal employees hired only for the peak season do not have the same status
as regular employees and do not receive amounts considered as part of a compensation and
benefits scheme for regular employees. These seasonal employees only receive payment for
work rendered during the period for which they were hired, i.e., peak season. The wages and
other monies seasonal employees may receive for the duration of their limited employment
period constitute bulk or wholesale payment for services rendered.Seasonal employment
involves work or service that is seasonal in nature or lasting for the duration of the season.
Seasonal employees differ from those classified as regular employees, in that: (1) the employee
must be performing work or services that are seasonal in nature; and (2) he had been employed
for the duration of the season.
Hencer, Ampeleloquiowas employed under circumstances far different from that of his other co-
employees. Thus he is not underpaid nor illegally dismissed.

16.FVR Skills & Services Exponenets Inc. vs. Seva, et al., GR No. 200857, Oct. 22, 2014
Facts: The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills
and Services Exponents, Inc. (petitioner), an independent contractor engaged in the business of
providing janitorial and other manpower services to its clients. As early as 1998, some of the
respondents had already been under the petitioner's employ.On April 21, 2008, the petitioner
entered into a Contract of Janitorial Service (service contract) with Robinsons Land Corporation
(Robinsons). Both agreed that the petitioner shall supply janitorial, manpower and sanitation
services to Robinsons Place Ermita Mall for a period of one year -from January 1, 2008 to
December 31, 2008.Pursuant to this, the respondents were deployed to Robinsons.Halfway
through the service contract, the petitioner asked the respondents to execute individual contracts
which stipulated that their respective employments shall end on December 31, 2008, unless
earlier terminated.

The petitioner and Robinsons no longer extended their contract of janitorial services.
Consequently, the petitioner dismissed the respondents as they were project employees whose
duration of employment was dependent on the petitioner's service contract with Robinsons.

The respondents responded to the termination of their employment by filing a complaint for
illegal dismissal with the NLRC. They argued that they were not project employees; they were
regular employees who may only be dismissed for just or authorized causes. The respondents
also asked for payment of their unpaid wage differential, 13th month pay differential, service
incentive leave pay, holiday pay and separation pay.
Issue:
Whether or not the petitioners are Regular Employees or Contractual Employees?
Held:
The respondents are regularemployees, not project employees.
Article 280 (now Article 294) of the Labor Code governs the determination of whether an
employee is a regular or a project employee. Under this provision, there are two kinds of regular
employees, namely: (1) those who were engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who became regular after one year of service, whether continuous or broken, but only
with respect to the activity for which they have been hired.
We distinguish these two types of regular employees from a project employee, or one whose
employment was fixed for a specific project or undertaking, whose completion or termination
had been determined at the time of engagement.
A careful look at the factual circumstances of this case leads us to the legal conclusion that the
respondents are regular and not project employees.
The primary standard in determining regular employment is the reasonable connection between
the particular activity performed by the employee and the employer's business or trade. This
connection can be ascertained by considering the nature of the work performed and its relation to
the scheme of the particular business, or the trade in its entirety.
Guided by this test, we conclude that the respondents' work as janitors, service crews and
sanitation aides, arenecessary or desirable to the petitioner's business of providing janitorial and
manpower services to its clients as an independent contractor.
Also, the respondents had already been working for the petitioner as early as 1998. Even before
the service contract with Robinsons, the respondents were already under the petitioner's
employ.They had been doing the same type of work and occupying the same positions from the
time they were hired and until they were dismissed in January 2009. The petitioner did not
present any evidence to refute the respondents' claim that from the time of their hiring until the
time of their dismissal, there was no gap in between the projects where they were assigned to.
The petitioner continuously availed of their services by constantly deploying them to its clients.
Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the petitioner's
case, the contractor or subcontractor is considered as the employer of the contractual employee
for purposes of enforcing the provisions of the Labor Code and other social legislation.
DO 18-02 grants contractual employees all the rights and privileges due a regular employee,
including the following: (a) safe and healthful working conditions; (b) labor standards such as
service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits; (d) self-organization, collective bargaining and peaceful
concerted action; and (e) security of tenure.

In this light, we thus conclude that although the respondents were assigned as contractual
employees to the petitioner's various clients, under the law, they remain to be the petitioner's
regular employees, who are entitled to all the rights and benefits of regular employment.

17. Fonterra Brand Phils vs. Largado et al., GR No. 205300, March 18, 2015
Facts:
Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of ZytronMarketing and
Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy products.
Pursuant to the contract, Zytron provided Fonterra with trade merchandising representatives
(TMRs), including respondents Leonardo Largado (Largado) and Teotimo Estrellado
(Estrellado). The engagement of their services began on September 15, 2003 and May 27, 2002,
respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract, effective June
5, 2006. Fonterra then entered into an agreement for manpower supply with A.C. Sicat
Marketing and Promotional Services (A.C. Sicat). Desirous of continuing their work as TMRs,
respondents submitted their job applications with A.C. Sicat, which hired them for a term of five
(5) months, beginning June 7, 2006 up to November 6, 2006.
When respondents' 5-month contracts with A.C. Sicat were about to expire, they allegedly
sought renewal thereof, but were allegedly refused. This prompted respondents to file complaints
for illegal dismissal, regularization, non-payment of service incentive leave and 13th month pay,
and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.

Issues:
1.Whether or not Zytron and A.C.Sicat are labor-only contractors, making Fonterra the
employer of herein respondents; and
2.Whether or not respondents were illegally dismissed.
Ruling:
1. No, neither Zytron nor A.C. Sicat are labor-only contractors.
The termination of respondents' employment with Zytron was brought about by the cessation of
their contracts with the latter.By refusing to renew their contracts with Zytron, respondents
effectively resigned from the latter. Resignation is the voluntary act of employees who are
compelled by personal reasons to dissociate themselves from their employment, done with the
intention of relinquishing an office, accompanied by the act of abandonment.
Respondents voluntarily terminated their employment with Zytron by refusing to renew their
employment contracts with the latter, applying with A.C. Sicat, and working as the latter's
employees, thereby abandoning their previous employment with Zytron. Too, it is well to
mention that for obvious reasons, resignation is inconsistent with illegal dismissal. This being the
case, Zytron cannot be said to have illegally dismissed respondents.
As regards respondents' employment with A.C. Sicat and its termination via nonrenewal of their
contracts,it is proper to dispose of the issue on A.C. Sicat's status as a job contractor first before
resolving the issue on the legality of the cessation of respondents' employment.

A person is considered engaged in legitimate job contracting or subcontracting if the following

conditions concur:
1. The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, and free from the control and
direction of the principal in all matters connected with the performance of the work
except as to the results thereof;
2. The contractor or subcontractor has substantial capital or investment; and
3. The agreement between the principal and contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational safety and health
standards, free exercise of the right to self-organization, security of tenure, and social
and welfare benefits.

On the other hand, contracting is prohibited when the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work or service for a principal and if any of the
following elements are present, thus:
1. The contractor or subcontractor does not have substantial capital or investment which
relates to the job, work or service to beperformed 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 DTAHEC
2. The contractor does not exercise the right to control over the performance of the work
of the contractual employee.
The evidence presented in the instant case sufficiently show that A.C. Sicat carries out its
merchandising and promotions business, independent of Fonterra's business. As such, A.C. Sicat
is engaged in legitimate job contracting.

2. No, the respondents were not illegally dismissed. The termination of respondents'
employment with the latter was simply brought about by the expiration of their employment
contracts.

Foremost, respondents were fixed-term employees. As previously held by this Court,

fixed-term employment contracts are not limited, as they are under the present Labor Code, to
those by nature seasonal or for specific projects withpredetermined dates of completion; they
also include those to which the parties by free choice have assigned a specific date of
termination. The determining factor of such contracts is not the duty of the employee but the day
certainagreed upon by the parties for the commencement and termination of theemployment
relationship.
In the case at bar, it is clear that respondents were employed by A.C. Sicat asproject employees.
Respondents, by accepting the conditions of the contract with A.C. Sicat, werewell aware of and
even acceded to the condition that their employment thereatwill end on said pre-determined date
of termination. They cannot now argue thatthey were illegally dismissed by the latter when it
refused to renew theircontracts after its expiration. This is so since the non-renewal of their
contractsby A.C. Sicat is a management prerogative, and failure of respondents to provethat such
was done in bad faith militates against their contention that they wereillegally dismissed.

18. W.M Manufacturing Inc. vs. Dalag, GR No. 209418, December 7, 2015
Facts:
On January 3, 2010, petitioner, as client, and respondent Golden Rock, as contractor,
executed a contract denominated as "Service Agreement," In relation to the Service Agreement,
Golden Rock, on April 26, 2010, engaged the services of respondent Dalag as a factory worker
to be assigned at petitioner's factory. For this purpose, respondents inked a five-month
Employment Contract for Contractual Employees (Employment Contract)
Notwithstanding the five-month duration stipulated in the contract, respondent Dalag
would allege in his complaint for illegal dismissal 6 that on August 7, 2010, one of WM MFG's
security guards prevented him from going to his work station and, instead, escorted him to the
locker room and limited his activity to withdrawing his belongings therefrom. Having been
denied entry to his work station without so much as an explanation from management, Dalag
claimed that he was illegally dismissed. He further alleged that WM MFG and Golden Rock
engaged in the illegal act of labor-only contracting based on the following circumstances: that all
the equipment, machine and tools that he needed to perform his job were furnished by WM
MFG; that the jobs are to be performed at WM MFG's workplace; and that he was under the
supervision of WM MFG'steam leaders and supervisors.
 In their joint position paper, therein respondents argued that Dalag was not dismissed and
that, on the contrary, it was he who abandoned his work. They offered as proof WM MFG's
memos addressed to Dalag, which ordered him to answer within 24-hours the accusations
relating to the following alleged infractions: gross negligence, qualified theft, malicious
mischief, incompetence, grave misbehavior, insubordination, dishonesty, and machine
sabotageable, however, allegedly refused to receive the memos, and instead turned his back on
his superiors, informing them that he will no longer return, and then walked away. And on that
very same day, WM MFG, through a letter addressed to Golden Rock, informed the manpower
company of its intentionto exercise its right to ask for replacement employees under the Service
Agreement. As per the letter, WM MFG no longer needed Dalag's services.
The parties would later file their respective replies in support of the allegations and arguments
raised in their position papers.
Issues:
1. Whether or not WM MFG and Golden Rock engaged in labor-only Contracting; and
2. Whether or not Dalag was illegally dismissed.
Ruling:
1. WM MFG and Golden Rock engaged in labor-only contracting.
There is "labor-only" contracting where the person supplying workers toan 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 andextent as if the latter were directly employed
by him.
Section 5 of DO 18-02 laid down the criteria in determining whether or not labor-only
contracting exists between two parties, as follows:
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) The contractor does not exercise the right to control over the performance of the work of the
contractual employee.
xxx xxx xxx
As to the presence of the confirmatory elements, Dalag draws our attention to (1) Golden Rock's
lack of substantial capital, coupled with the necessity and desirability of the job he performed in
WM MFG; and (2) Golden Rocks lack of control over the employees it supplied WM MFG.

DO 18-02defines "substantial capital or investment" in the context of labor-only contracting as

referring not only to a contractor's financial capability, but also encompasses the tools,
equipment, implements, machineries and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work or service
contracted out. Here, the Certificate of Registration may have prevented the presumption of
labor-only contracting from arising, but the evidence Dalagadduced was sufficient to overcome
the disputable presumption that Golden Rock is an independent contractor. To be sure, in
performing his tasks, Dalag made use of the raw materials and equipment that WM MFG
supplied. He also operated the side-seal machine in the workplace of WM MFG, not of Golden
Rock. With these attendant circumstances, the Court rules that the first confirmatory element
indubitably exists.

The second confirmatory element under DO 18-02 does not require the application of the
economic test and, even more so, the four-fold test to determine whether or not the relation
between the parties is one of labor-only contracting: All it requires is that the contractor does not
exercise control over the employees it supplies, making the control test of paramount
consideration. Under the same DO 18-02, the "right to control" refers to the right to determine
not only the end to be achieved, but also the manner and means to be used in reaching that end.
Here, notwithstanding the contract stipulation leaving Golden Rock the exclusive right to control
the working warm bodies it provides WM MFG, evidence irresistibly suggests that it was WM
MFG who actually exercised supervision over Dalag's work performance.

Having ascertained that the essential element and at least one confirmatory element obtain in the
extant case, there is then no other result than for the Court to rule that WM MFG and Golden
Rock engaged in labor-only contracting. As such, they are, by legal fiction, considered principal
and agent, respectively, jointly and severally liable to their illegally dismissed employees. We
stress, however, that this finding of labor-only contracting does not preclude the Court from re-
examining, in future cases, the nature of the contractual relationship between WM MFG and
Golden Rock under Department Order No. 18-A, series of 2011, which redefined the parameters
of legitimate service contracting, private recruitment and placement services, and labor-only
contracting.

2. WM MFG dismissed Dalag for just cause, but did not comply with the procedural
requirements.
To constitute just cause for an employee's dismissal, the neglect of duties must not only be gross
but also habitual. Gross neglect means an absence of that diligence that an ordinarily prudent
man would use in his own affairs. Meanwhile, to be considered habitual, the negligence must not
be a single or isolated act.

Here, WM MFG duly established that Dalag was terminated for just cause on the second ground.
The litany of Dalag's infractions, as detailed in memos 2010-13 up to 2010-18 demonstrated how
Dalag repeatedly failed to report to his supervisor the problems he encountered with the side-seal
machine assigned to him for operation. This failure resulted in repeated machine breakdowns
that caused production and delivery delays, and lost business opportunities for the
company.Dalag's gross and habitual neglect of his duty to report to his superiors the problems he
encountered with the side-seal machine he was assigned to operate was well-documented and
duly investigated by WM MFG. The Court, therefore, holds that there was, indeed, just cause to
terminate Dalag's employment under Art. 282 (2) of the Labor Code.

Anent the conformity of Dalag's dismissal to procedural requirements,the cardinal rule in our
jurisdiction is that the employer must furnish the employee with two written notices before the
termination of his employment can be effected: (1) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the second informs the
employee of the employer's decision to dismiss him. The twin notice rule is coupled with the
requirement of a hearing, which is complied with as long as there was an opportunity to be
heard, and not necessarily that an actual hearing was conducted.
In the case at bar, while petitioner submitted as evidence memos that it supposedly attempted to
serve Dalag, there was no proof that these were, indeed, received by the latter.

19. Diamond Farms vs. Southern Phils Fed of Labor, GR No. 173254-55, January 13, 2016,
citing 2014 Alilin
FACTS:
DFI (Diamond Farms Inc.) owned 800 hectares of Agricultural land. Due to the enactment of
CARL or RA 6657, DFI was forced to offer its land through a voluntary offer to sell to the
government. Out of the 800 hectares, only about 600 hectares was accepted by the government.
Said land was then redistributed to the beneficiaries who were the very laborers who used to
work for DFI. The beneficiaries already tilling the distributed land formed a cooperative by the
name of DARBMUPCO. DARBMUPCO and DFI both entered into an agreement whereby
DARBMUPCO was to produce high grade exportable bananas and only sell them to DFI. DFI
also agreed to shoulder the costs of packaging and irrigation.
Since DARBMUPCO was short on manpower, mainly because the members refused to work,
DFI was forced to avail of the services of respondent contractors. Out of this agreement, three
separate cases arose and were consolidated before the CA.
The first case filed by SPFL, the contractors employees, was a petition for the conduct of a
certification election. In this case, the SOLE ultimately held that DFI was their employer. DFI
appealed this decision up to the CA.
The second case was for underpayment of wages filed by SPFL against DARMUBPCO and DFI.
Both DARMUPCO and DFI allege that their SPFLs true employers were the respondent
contractors. This time, the NLRC adjudged both DARMUPCO and DFI solidarily liable to pay
for the unpaid wages. Both organizations jointly filed an appeal before the CA.
The third appeal stemmed out of the resolution of the SOLE in conducting the certification
election. The SOLE ruled that the election protest was premature due to the pendency of the first
case filed by SPFL, because of this adverse decision, both DFI and DARMUPCO appealed said
decision.
The CA held that DFI was the statutory employer of the respondent workers. The CA observed
that the respondent contractors were supervised by DFIs managers. Also the SOLE resolutions
were consistent in finding that respondent contractors were labor only contractors, therefore, DFI
must necessarily be regarded as the statutory employers of the respondent workers. On the
second issue, the CA held that the SOLE decision on the election protest was final and executory
in nature. Since the DFI and DARBMUPCO appeal was not coupled with a motion to stay, the
assailed decision had already become final and executory.
ISSUE:
Who among the respondent contractors, DFI and DARBMUPCO were the employers of the
respondent employees.
HELD:
The SC held that DFI was employer. As a general rule, a contractor is presumed to be engaged in
labor only contracting until he proves that he has substantial capital in the form of investment,
tools and the like. In this case, the SC emphasized the fact that the party which alleges a
legitimate labor contracting arrangement must substantiate such claim. DFI hardly presented any
evidence to prove that the respondent contractors had sufficient capital. To make matters worse
for DFI, the respondent contractors had already made judicial admissions that they were engaged
in labor only contracting. The respondent contractors admitted before the SC that they did not
have enough capital and that they were directly supervised by DFIs managers. These
admissions, which were made in open court are binding on the party which makes them,
therefore, the SC held that respondent contractors were labor only contractors.
The existence of an employer employee relationship cannot be made subject to stipulation.
Since DFI was the party that really exercised and possessed the power of control over respondent
workers, it must be regarded as the true employer. DFI even admitted that it exercised control
over the respondent contractors. With all of these facts taken together, the SC held that the
respondent contractors were merely agents of DFI and held that DFI was the true employer.
20. Philippine Airlines vs. Ligan et al., GR No. 203932, June 8, 2016
PAL and Synergy Services Corporation (Synergy) entered into a station services agreement and
a janitorial services agreement whereby Synergy provided janitors and station attendants to PAL
at Mactan airport. Enrique Ligan, Eduardo Magdaraog, Jolito Oliveros, Richard Goncer, Emelito
Soco, Virgilio P. Campos, Jr., Lorenzo Butanas, Ramel Bernardes, Nelson M. Dulce, Clemente
R. Lumayno, Arthur M. Capin, Allan Bentuzal, and Jeffrey Llenes (respondents) were among the
personnel of Synergy posted at PAL to carry out the contracted tasks. Claiming to be performing
duties directly desirable and necessary to the business of PAL, the respondents, along with 12
other co-employees, filed complaints in March 1992 against PAL and Synergy in the NLRC
Region VII Office in Cebu City for regularization of their status as employees of PAL,
underpayment of salaries and non-payment of premium pay for holidays, premium pay for rest
days, service incentive leave pay, 13th month pay and allowances.[7]

In the Decision dated August 29, 1994, the Labor Arbiter (LA) ruled that Synergy was an
independent contractor and dismissed the complaint for regularization, but granted the
complainants' money claims.[8] On appeal, the NLRC, 4th Division, Cebu City on January 5, 1996
declared Synergy a labor-only contractor and ordered PAL to accept the complainants as regular
employees and as such, to pay their salaries, allowances and other benefits under the Collective
Bargaining Agreement subsisting during the period of their employment.[9]PAL went to this
Court on certiorari, but pursuant to St. Martin Funeral Home v. NLRC,[10] the case was referred
to the CA. On September 29, 2000, the CA, in CA-G.R. SP No. 52329, affirmed the NLRC in
toto.[11]

On petition for review, this Court, on February 29, 2008, affirmed but modified the NLRC
decision,[12] as follows:

WHEREFORE, the [CA] Decision of September 29, 2000 is AFFIRMED with

MODIFICATION.

[PAL] is ORDERED to:

accept respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN PANQUE, JOLITO

OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO YBANEZ,
BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M.
CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON CARESUSA,
JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA, CLEMENTE R.
a) LUMAYNO, NELSON TAMPUS, ROLANDO TUNACAO, CHERRIE ALEGRES,
EDUARDO MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its
regular employees in their same or substantially equivalent positions, and pay the wages
and benefits due them as regular employees plus salary differential corresponding to the
difference between the wages and benefits given them and those granted to petitioner's
other regular employees of the same rank; and
 pay respondent BENEDICTO AUXTERO salary differential; backwages from the time of
b) his dismissal until the finality of this decision; and separation pay, in lieu of reinstatement,
equivalent to one (1) month pay for every year of service until the finality of this decision.

There being no data from which this Court may determine the monetary liabilities of petitioner,
the case is REMANDED to the [LA] solely for that purpose.

SO ORDERED.[13] (Emphasis, italics and underscoring in the original)

On motion for reconsideration by PAL, the Court on April 30, 2009 modified the above
decision,[14] to read as follows:

WHEREFORE, the [CA] Decision of September 29, 2000 is AFFIRMED with

MODIFICATION.

[PAL] is ORDERED to recognize respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN

PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON PILAPIL, AQUILINO
YBANEZ, BERNABE SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR.,
ARTHUR M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON
CARISUSA, JEFFREY LLENES, ANTONIO M. PAREJA, CLEMENTE R. LUMAYNO,
NELSON TAMPUS, ROLANDO TUNACAO, CHERIE ALEGRES, EDUARDO
MAGDADARAUG, NELSON M. DULCE and ALLAN BENTUZAL as its regular employees
in their same or substantially equivalent positions, and pay the wages and benefits due them as
regular employees plus salary differential corresponding to the difference between the wages and
benefits given them and those granted to petitioner's other regular employees of the same or
substantially equivalent rank, up to June 30. 1998, without prejudice to the resolution of the
illegal dismissal case.

There being no data from which this Court may determine the monetary liabilities of petitioner,
the case is REMANDED to the [LA] solely for that purpose.

SO ORDERED.[15] (Emphasis, italics and underscoring in the original)

Meanwhile, while the above regularization cases were pending in the CA, PAL terminated its
service agreements with Synergy effective June 30, 1998, alleging serious business losses.
Consequently, Synergy also terminated its employment contracts with the respondents, who
forthwith filed individual complaints[16] for illegal dismissal against PAL. PAL in turn filed a
third-party complaint[17] against Synergy.[18]

In his Decision[19] dated July 27, 1998, Executive LA Reynoso A. Belarmino declared that
Synergy was an independent contractor and the respondents were its regular employees, and
therefore Synergy was solely liable for the payment of their separation pay, wage differential,
and attorney's fees. In their appeal to the NLRC, docketed as NLRC Case No. V-000112-2000,
the respondents cited seven previous cases wherein the NLRC also declared that Synergy was a
labor-only contractor. They argued that Synergy and PAL dismissed them without just cause.[20]

In the Decision[21] dated August 27, 2004, the NLRC found that the functions performed by the
respondents under Synergy's service contracts with PAL indicated that they were directly related
to PAL's air transport business, that Synergy serviced PAL exclusively and had no other clients,
that its activities were carried out within PAL's premises and PAL shared supervision and control
over the respondents. In declaring that the respondents were regular employees of PAL, the
NLRC cited a CA case, Philippine Airlines, Inc. v. NLRC, CA-G.R. SP No. 50138, dated April
30, 1999, with similar factual findings which also ruled that Synergy was a labor-only contactor
and a mere agent of PAL. After ruling that the respondents were dismissed without just cause
and without observance of procedural due process, the NLRC ordered PAL to pay them
separation pay, backwages, and wage differential. The fallo of NLRC decision reads:

WHEREFORE, the Decision dated 27 July 1998 of the Executive [LA] is SET ASIDE and a new
one is rendered declaring [PAL] to have illegally dismissed the complainants, and ordering
[PAL] to pay to the thirteen (13) complainants the following:

1. SEPARATION PAY in lieu of reinstatement from the start of their employment until the
finality of this decision, computed as described above;

2. BACKWAGES from the time compensation is withheld from them until the finality of
this decision[; and]

3. Wage differentials of P390.00 for each complainant.

All other claims are dismissed for lack of merit.

SO ORDERED.[22]
PAL moved for reconsideration arguing that as janitors, the respondents were hired under a
permissible job-contracting arrangement. In its Resolution dated April 25, 2005 denying the
motion for reconsideration,[23] the NLRC pointed out that in fact most of the respondents worked
as station attendants or station loaders, not janitors, and that PAL could have submitted their
contracts as janitors, but did not. The NLRC also noted that in all seven previous cases appealed
to it involving the same parties, it invariably ruled that PAL was the employer of the respondents
and Synergy was a labor-only contractor.

On petition for review on certiorari to the CA, docketed as CA-G.R. CEB SP No.
00922,[24] PAL's main contention was that since only this Court's decisions form part of
jurisprudence, the NLRC erred in adopting the CA decision in CA-G.R. SP No. 50138 which
held that Synergy was a labor-only contractor, although it was still on review in this Court.

On February 15, 2012, the CA dismissed PAL's petition,[25] and on September 27, 2012, it also
denied its motion for reconsideration.[26]

Hence, the instant petition for review on certiorari[27] was filed by PAL, raising a sole legal issue,
as follows:

WHETHER OR NOT THE DECISION OF TFIE [NLRC] WHICH WAS ARRIVED AT BY

SIMPLY ADOPTING THE SUPPOSED "FINDINGS AND CONCLUSION" OF THE [CA] IN
A NON-EXISTENT DECISION IS A VALID AND LEGALLY BINDING DECISION.[28]
On November 12, 2012, the Court denied the petition outright for failure to show any reversible
error committed by the CA.[29] On January 24, 2013, PAL moved for reconsideration of the
denial,[30] to which the respondents filed their "Vehement Opposition with Motion to Sanction
the Petitioner for Forum Shopping."[31]

The motion for reconsideration is denied.

A.

In the illegal dismissal cases before the LA, the issue was whether the termination of the
respondents' employment by Synergy in June 1998 was without just cause and observance of due
process. In the instant petition, PAL argues in the main that in reversing the LA, the NLRC (in
NLRC Case No. V-000112-2000) cited for its factual and legal basis an inexistent CA decision,
docketed as CA-G.R. SP No. 50138. Culling from its own "Compliance" dated April 4, 2006 in
CA-G.R. CEB SP No. 00922,[32] PAL tells the Court that CA-G.R. SP No. 50138 is actually
entitled "Anita Danao, Owner of Wonder Baker v. NLRC and Eufemio Famis" not "Philippine
Airlines, Inc. v. NLRC" as mistakenly mentioned by the NLRC, and that it was promulgated on
December 31, 1999, not April 30, 1999; that a verification with the CA docket section showed
that another PAL case, CA-G.R. SP No. 50161, is actually dated April 30, 1999 and involved the
issue of payment of 13th month pay to PAL employees, but had nothing to do with Synergy or its
status as a labor-only contractor; and, that what was actually elevated from the NLRC,
4th Division, to this Court, and then referred to the CA pursuant to St. Martin Funeral Home, was
CA-G.R. SP No. 52329, decided on September 29, 2000, not CA-G.R. SP No. 50138.

In its assailed decision, the CA pointed out that both CA-G.R. SP No. 00922 and CA-G.R. SP
No. 52329 involve the same facts and employer, PAL, and the herein respondents were among
the complainants in the regularization cases. Noting that this Court in GR. No. 146408 has ruled
that the respondents were regular employees of PAL, the CA ruled that they cannot be
whimsically terminated by PAL but it must show that: (1) their dismissal was for any of the
causes authorized in Article 282 of the Labor Code; and (2) they were given opportunity to be
heard and to defend theirselves.[33] Article 282 of the Labor Code reads:

ART. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:

a. Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

b. Gross and habitual neglect by the employee of his duties;

 c. Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;

d. Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives; and

e. Other causes analogous to the foregoing.

According to the CA, PAL failed to show that the respondents were guilty of any of the causes
above-mentioned. Neither was due process observed by PAL in dismissing them, who were
merely notified of their termination through a notice sent to them by Synergy, which reads:

PAL has terminated our contract effective June 30, 1998. In view of this contract termination by
PAL, our contract with employees like you who have been contracted as Station Loader/Station
Attendant, will be terminated also on 30 June 1998.

Please be guided accordingly.[34]

Moreover, PAL cannot deny that all along it had always known of the ruling in CA-G.R. SP No.
52329, which as PAL itself also pointed out, was elevated for review to this Court in G.R. No.
146408. PAL is aware that G.R. No. 146408 was decided on February 29, 2008, and its motion
for reconsideration was resolved on April 30, 2009, whereas the instant petition was filed only
on November 6, 2012. As the petitioner in CA-G.R. SP No. 52329, PAL even attached in Annex
"E" of this petition a copy of the decision in CA-G.R. SP No. 52329.[35]PAL has thus always
known that the issue therein was whether Synergy was a labor-only contractor or a legitimate
contractor; that the respondents were adjudged as regular employees of PAL entitled to all the
benefits of its regular employees, that Synergy was a labor-only contractor and thus a mere agent
of PAL.

As the petitioner in G.R. No. 146408, PAL certainly cannot pretend ignorance of the Court's
decision therein. Moreover, on April 28, 2008, the respondents had manifested in CA-G.R. CEB
SP No. 00922 that a decision had been rendered in G.R. No. 146408,[36] with a copy thereof
attached; on May 26, 2008, PAL itself also manifested that it had filed a motion for
reconsideration in G.R. No. 146408, which then prompted the CA to suspend the resolution of
CA-G.R. CEB SP No. 00922, since the regularization cases are intimately connected to the
illegal dismissal cases.

In Resolution dated April 30, 2009 in G.R. No. 146408, this Court mentioned that PAL had
revealed for the first time in its Motion for Reconsideration the matter of the lay-off of the
respondents on June 30, 1998 due to financial woes;[37] that the respondents likewise disclosed
that they were all terminated in June 1998 in the guise of retrenchment. Except for the employees
who had died, they either accepted settlement earlier, or had been declared as employee of
Synergy.[38]

The Court further noted that PAL in its motion for reconsideration from the CA's decision in
CA-G.R. SP No. 52329 also invoked its financial difficulties, not by way of defense to a charge
of illegal dismissal but to manifest that supervening events had rendered it impossible to comply
with the order to accept the respondents as regular employees.[39]

B.

In G.R. No. 146408, the Court noted that the termination of the respondents in June 1998 was in
disregard of a subsisting temporary restraining order which the Court issued in 1996 to preserve
the status quo, before the case was transferred to the CA in January 1999. The Court also held
that PAL failed to establish such economic losses which rendered impossible its compliance with
the order to accept the respondent as regular employees. Thus:

Other than its bare allegations, [PAL] presented nothing to substantiate its impossibility of
compliance. In fact, [PAL] waived this defense by failing to raise it in its Memorandum filed on
June 14, 1999 before the [CA]. x x x.[40] (Citation omitted)
While retrenchment is a valid exercise of management prerogative, it is well settled that
economic losses as a ground for dismissing an employee is factual in nature, and in order for a
retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor
Code must concur or be present,[41] to wit:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month
pay or at least one-half QA) month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to security of
tenure; and,

(5) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.
The absence of one element renders the retrenchment scheme an irregular exercise of
management prerogative. The employer's obligation to exhaust all other means to avoid further
losses without retrenching its employees is a component of the first element enumerated above.
To impart operational meaning to the constitutional policy of providing full protection to labor,
the employer's prerogative to bring down labor costs by retrenching must be exercised essentially
as a measure of last resort, after less drastic means have been tried and found wanting.[42]

PAL has insisted that the NLRC erroneously relied on an inexistent CA decision, and therefore
its decision is void, but the CA in its resolution of September 27, 2012 has concluded that "[a]
perusal of the Decision of the NLRC shows that it is not without basis,"[43] that the NLRC "made
findings of facts, analyzed the legal aspects of the case taking into consideration the evidence
presented and formed conclusions after noting the relevant facts of the case."[44] But more
importantly, the Court cannot lose sight of the settled rule that in illegal dismissal cases, the onus
to prove that the employee was not dismissed, or if dismissed, that his dismissal was not illegal,
rests on the employer, and that its failure to discharge this burden signifies that the dismissal is
not justified and therefore illegal.[45]Unfortunately, in this petition, PAL has advanced no such
justification whatsoever to dismiss or retrench the respondents. The Court is left with no
conclusion: PAL's petition is misleading and clearly baseless and dilatory.

WHEREFORE, the motion for reconsideration is DENIED with finality.

21. Cagayan Electric Power & Light Company Inc., vs.

Which government agency has jurisdiction to hear and decide a dispute involving recovery of
sums of money collected by electric power plants from consumers, the regular courts or the
Energy Regulatory Board (ERB)?
Before the Court is an appeal via certiorari from a decision of the Court of Appeals and its
resolution denying reconsideration, ruling that it is the regular courts that have jurisdiction over
an action for recovery of excess payments for electric consumption since 1977 until October
1985.Respondents were customers of
petitioner Cagayan Electric Power and Light Company, Inc.
Since 1977, petitioner had been collecting payments for electric consumption from respondents
under the so-called Power Adjustment Clause without deducting the discounts and other credit
adjustments granted by the National Power Corporation.
Respondents allege that on October 1, 1985, they tendered payments for their individual bills less
charges for power cost adjustment, currency exchange rate adjustment and surcharge, which
petitioner refused to accept. Because of petitioner's refusal, respondents consigned their
payments to the court. dctai
On the same date, respondents filed with the Regional Trial Court, Misamis Oriental, Branch
24, Cagayan de Oro City a complaint against petitioner for unjust enrichment, recovery of sums
of money, recovery of customers' deposits, breach of contract, consignation, injunction and
damages with prayer for preliminary injunction.
On November 8, 1985, the City of Cagayan de Oro filed with the trial court a complaint in
intervention.
By an order dated December 20, 1985, the trial court denied respondents' application for
preliminary injunction.
On January 6, 1986, the trial court dismissed the complaint and complaint in intervention on the
ground that the court had no jurisdiction over the subject matter of the complaint which was
within the jurisdiction of the Board of Energy, now the ERB under Section 9 (c) Presidential
Decree No. 1206. On March 26, 1986, the trial court denied respondents' motion for
reconsideration of its Order of January 6, 1986.
In due time, respondents appealed to the Court of Appeals.
On November 28, 1990, the Court of Appeals rendered a decision the dispositive portion of
which reads:
"WHEREFORE, the Orders of January 6, 1986, dismissing the complaint and
complaint in intervention, and of March 26, 1986 denying the appellants'
Motion for Reconsideration of the previous order, are hereby set aside, while
the Order of December 20, 1985 denying the issuance of a writ of preliminary
injunction is hereby affirmed. The case is hereby remanded to the court a
quo for proceedings appropriate hereto, including the trial on the merits. No
costs."
Hence, this petition. The issue raised is whether jurisdiction over the subject matter of the
complaint in the case below is vested with the regular courts or the Energy Regulatory Board.
The complaint does not charge any violation of either currency exchange rate adjustment
(CERA) or power cost adjustment (PCA). Respondents only allege that petitioner charged them
with the full rate of electric consumption despite absence of any increases in the cost of energy.
We rule that the subject matter of the complaint is within the jurisdiction of the regional trial
court.
The regional trial court is a court of general jurisdiction. On the other hand, Republic Act No.
6173, as amended by Presidential Decree No. 1206 empowered the ERB to regulate and fix
the power rates to be charged by electric companies. The power to fix rates
of electric consumption does not carry with it the power to determine whether or not petitioner is
guilty of overcharging customers for consumption of electric power. This falls within the
jurisdiction of the regular courts. llcd
We have ruled that the question of determining the breakdown and itemization of
the power adjustment billed by an electric power company to its customers is not a matter that
pertains to the ERB's supervision, control or jurisdiction to regulate and fix power rate but falls
within the jurisdiction of the regular courts. Petitioner is a public utility company. If, indeed,
petitioner used the deposits, discounts, surcharges, PCA and CERA rates as instruments to obtain
undue profits through various loan activities and benefits provided to petitioner's employees,
then respondents may have causes of action against petitioner to be litigated before the regular
courts and decided on the basis of evidence which the parties may present during the trial.|

22. Cepalco Employees Labor union-ALU TUCP, Gr. No. 211015, 213835, June 20, 2016
Respondent is the duly certified bargaining representative of CEPALCO's regular rank-and-Ble
employees. On the other hand, CEPALCO is a domestic corporation engaged in electric
distribution in Cagayan de Oro and other municipalities in Misamis Oriental; while CESCO is a
business entity engaged in trading and services.

On February 19, 2007, CEPALCO and CESCO (petitioners) entered into a Contract for Meter
Reading Work where CESCO undertook to perform CEPALCO's meterreading activities. As a
result, several employees and union members of CEPALCO were relieved, assigned in Foating
positions, and replaced with CESCO workers, prompting respondent to Ble a complaint for
ULP against petitioners, docketed as CD Technologies Asia, Inc. 2016 cdasiaonline.com
NLRC Case No. RAB-10-07-00408-2007. Respondent alleged that when CEPALCO engaged
CESCO to perform its meter-reading activities, its intention was to evade its responsibilities
under the Collective Bargaining Agreement (CBA) and labor laws, and that it would ultimately
result in the dissipation of respondent's membership in CEPALCO. 1Thus, respondent claimed
that CEPALCO's act of contracting out services, which used to be part of the functions of the
regular union members, is violative of Article 259 (c) of the Labor Code, as amended,
1governing ULP of employers. It further averred that for engaging in labor-only contracting, the
workers placed by CESCO must be deemed regular rank-and-Ble employees of CEPALCO, and
that the Contract for Meter Reading Work be declared null and void.

In defense, petitioners averred that CESCO is an independent job contractor and that the
contracting out of the meter-reading services did not interfere with CEPALCO's regular workers'
right to self-organize, denying that none of respondent's members was put on Foating status. 16
Moreover, they argued that the case is only a labor standards issue, and that respondent is not the
proper party to raise the issue regarding the status of CESCO's employees and, hence, cannot
seek that the latter be declared as CEPALCO's regular employees.

In a Decision dated August 20, 2008, the Labor Arbiter (LA) dismissed the complaint for lack of
merit. The LA found that petitioners have shown by substantial evidence that CESCO carries on
an independent business of contracting services, in this case for CEPALCO's meter-reading
work, and that CESCO has an authorized capital stock of P100,000,000.00, as well as equipment
and materials necessary to carry out its business. As an independent contractor, CESCO is the
statutory employer of the workers it supplied to CEPALCO pursuant to their contract. Thus,
there is no factual basis to say that CEPALCO committed ULP as there can be no splitting or
erosion of the existing rank-and-Ble bargaining unit that negates interference with the exercise of
CEPALCO workers' right to self-organize.

The Issues Before the Court

In both G.R. Nos. 211015 and 213835, petitioners lament that the CA erred in declaring CESCO
as a labor-only contractor notwithstanding the fact that CEPALCO has already been absolved of
the charges of ULP. To this, petitioners argue that the issue of whether or not CESCO is an
independent contractor was mooted by the Bnality of the Bnding that there was no ULP on the
part of CEPALCO. Also, they aver that respondent is not a party-in-interest in this issue because
the declaration of the CA that the employees of CESCO are considered regular employees will
not even beneBt the respondent. If there is anyone who stands to beneBt from such rulings, they
are the employees of the CESCO who are not impleaded in these cases. In any event, petitioners
insist that CESCO is a legitimate contractor. Overall, they prayed that the assailed CA rulings be
reversed and set aside insofar as the CA found CESCO as engaged in labor-only contracting and
that its employees are actually the regular employees of CEPALCO.

To be speciBc, petitioners failed to show that CESCO has substantial capital or investment
which relates to the job, work or service to be performed. While it is true that: (a) CESCO's
Amended Articles of Incorporation as of November 26, 2008 shows that CESCO's authorized
capital stock is P200,000,000.00 as of September 26, 2008, which was increased from
P100,000,000.00 on May 30, 2007; and (b) its Bnancial statement as of 2010 and 2011 shows
that its paid-up capital stock is in the sum of P81,063,000.00, there is no available document to
show CESCO's authorized capital stock at the time of the contracting out of CEPALCO's
meterreading activities to CESCO on February 19, 2007. As it is, the increases in its authorized
capital stock and paid-up capital were only made after November 26, 2008, hence, are only
relevant with regard to the time CEPALCO contracted out its warehousing works to CESCO on
January 5, 2010. Since the amount of CESCO's authorized capital stock at the time CEPALCO
contracted out its meter-reading activities was not shown, the Court has no means of determining
whether it had substantial capital at the time the contract therefor was entered into. Furthermore,
the list of CESCO's ofBce equipment, furniture and Bxtures, and vehicles offered in evidence by
petitioners does not satisfy the requirement that they could have been used in the performance of
the speciBc work contracted out, i.e., meter-reading service. As the CA aptly pointed out, the
tools and equipment utilized by CESCO in the meterreading activities are owned by CEPALCO,
emphasizing the fact that CESCO has no basic equipment to carry out the service contracted out
by CEPALCO.

It is also evident that meter-reading is a job that is directly related to the main business of
CEPALCO, considering that the latter is an electric distribution utility, which is necessarily
tasked with the evaluation and appraisal of meters in order to bill its clients.

More significantly, records are devoid of evidence to prove that the work undertaken in
furtherance of the meter-reading contract was made under the sole control and supervision of
CESCO. Instead, as noted 81 by the CA, it was CEPALCO that established the working
procedure and methods and supervised CESCO's workers in their tasks.
23. Quintanar et al., vs. Coca-Cola Bottlers Phils GR No. 210565, June 28, 2016
Complainants allege that they are former employees directly hired by respondent Coca-Cola on
different dates from 1984 up to 2000, assigned as regular Route Helpers under the direct
supervision of the Route Sales Supervisors. Their duties consist of distributing bottled Coca-Cola
products to the stores and customers in their assigned areas/routes, and they were paid salaries
and commissions at the average of P3,000.00 per month. After working for quite sometime as
directly-hired employees of Coca-Cola, complainants were allegedly transferred successively as
agency workers to the following manpower agencies, namely, Lipercon Services, Inc., People's
Services, Inc., ROMAC, and the latest being respondent Interserve Management and Manpower
Resources, Inc
Further, complainants allege that the Department of Labor and Employment (DOLE) conducted
an inspection of Coca-Cola to determine whether it is complying with the various mandated
labor standards, and relative thereto, they were declared to be regular employees of Coca-Cola,
which was held liable to pay complainants the underpayment of their 13th month pay,
emergency cost of living allowance (ECOLA), and other claims. As soon as respondents learned
of the ?ling of the claims with DOLE, they were dismissed CD Technologies Asia, Inc. 2016
cdasiaonline.com on various dates in January 2004. Their claims were later settled by the
respondent company, but the settlement allegedly did not include the issues on reinstatement and
payment of CBA bene?ts. Thus, on November 10, 2006, they filed their complaint for illegal
dismissal.

Respondent Coca-Cola denies employer-employee relationship with the complainants pointing to

respondent Interserve with whom it has a service agreement as the complainants' employer. As
alleged independent service contractor of respondent Coca-Cola, respondent Interserve "is
engaged in the business of rendering substitute or reliever delivery services to its own clients and
for CCBPI in particular, the delivery of CCBPI's softdrinks and beverage products." It is
allegedly free from the control and direction of CCBPI in all matters connected with the
performance of the work, except as to the results thereof, pursuant to the service agreement.
Moreover, respondent Interserve is allegedly highly capitalized with a total of P21,658,220.26
and with total assets of P27,509,716.32.

Further, respondent Coca-Cola argued that all elements of employeremployee relationship exist
between respondent Interserve and the complainants. It was allegedly Interserve which solely
selected and engaged the services of the complainants, which paid the latter their salaries, which
was responsible with respect to the imposition of appropriate disciplinary sanctions against its
erring employees, including the complainants, without any participation from Coca-Cola, which
personally monitors the route helpers' performance of their delivery services pointing to Noel
Sambilay as the Interserve Coordinator

The Court's Ruling

Essentially, the core issue presented by the foregoing petition is whether the petitioners were
illegally dismissed from their employment with Coca-Cola. This, in turn, necessitates a
determination of the characterization of the relationship between routehelpers such as the
petitioners, and softdrink manufacturers such as Coca-Cola, notwithstanding the participation of
entities such as ISI, Lipercon, PSI, ROMAC, and Interserve. The petitioners insist that ISI,
Lipercon, PSI, ROMAC, and Interserve are labor-only contractors, making Coca-Cola still liable
for their claims. The latter, on the other hand, asserts that the said agencies are independent job
contractors and, thus, liable to the petitioners on their own.
In this case, Coca-Cola has not shown any strong and compelling reason to convince the Court
that the doctrine of stare decisis should not be applied. It failed to successfully demonstrate how
or why both the LA and the NLRC committed grave abuse of discretion in sustaining the pleas of
the petitioners that they were its regular employees and not of Interserve. Second. A reading of
the decision of the CA and the pleadings submitted by Coca-Cola before this Court reveals that
they both lean heavily on the service agreement 52 entered into by Coca-Cola and Interserve; the
admission by Interserve that it paid the petitioners' salaries; and the af?davit of Sambilay who
attested that it was Interserve which exercised the power of control over the petitioners. Third.
As to the characterization of Interserve as a contractor, the Court ?nds that, contrary to the
conclusion reached by the CA, the petitioners were made to suffer under the prohibited practice
of labor-only contracting. Article 106 of the Labor Code provides the definition of what
constitutes labor-only contracting. Fourth. In this connection, even granting that the petitioners
were last employed by Interserve, the record is bereft of any evidence that would show that the
petitioners voluntarily resigned from their employment with Coca-Cola only to be later hired by
Interserve. Other than insisting that the petitioners were last employed by Interserve, Coca-Cola
failed not only to show by convincing evidence how it severed its employer relationship with the
petitioners, but also to prove that the termination of its relationship with them was made through
any of the grounds sanctioned by law.

For failure to overcome this burden, the Court concurs in the observation of the LA that it was
highly inconceivable for the petitioners, who were already enjoying a stable job at a multi-
national company, to leave and become mere agency workers. Indeed, it is contrary to human
experience that one would leave a stable employment in a company like Coca-Cola, only to
become a worker of an agency like Interserve, and be assigned back to his original employer
Coca-Cola.

24. Soliman Security Services Inc. et al., vs. Sarmiento et al., GR No. 194649, August 10, 2016
This case stemmed from a complaint led by respondents against petitioners Soliman Security
Services, Inc. (the agency) and Teresita L. Soliman (Teresita) for illegal dismissal;
underpayment of salaries, overtime pay and premium pay for holiday and rest day; damages;
attorney's fees; illegal deduction and non-payment of ECOLA.
Respondents were hired as security guards by petitioner Soliman Security Services, Inc. and
were assigned to Interphil Laboratories, working seven (7) days a week for twelve (12) straight
hours daily. Respondents alleged that during their employment from May 1997 until January
2007 for Robis and from May 2003 until January 2007 for Sarmiento and Cada they were
paid only P275.00 a day for eight (8) hours of work or P325.00 for twelve (12) hours of work but
were not paid ECOLA, night shift differentials, holiday pay, as well as rest day premiums. For
cash bond and mutual aid contributions, the amounts of P400.00 and P100.00, respectively, were
deducted from their salaries per month. Respondents claimed that they sought a discussion of the
nonpayment of their bene9ts with petitioner Teresita Soliman but the latter refused to take heed
and told them to tender their resignations instead. According to respondents, on 21 January 2007,
they received an order relieving them from their posts and since then, they were not given any
assignments.
On the other hand, the agency's version of the story hinges on an alleged placement of the
respondents under a "Eoating status." The agency admitted relieving the respondents from duty
on 20 January 2007 but insists that the same was only done pursuant to its contract with client
Interphil Laboratories. To support this claim, petitioners presented a standing contract 5 with
Astrazeneca Pharmaceuticals, Interphil's predecessor-in-interest. The contract contained
stipulations pertaining to the client's policy of replacing guards on duty every six (6) months
without repeat assignment. The agency further posits that respondent guards were directed
several times to report to the of9ce for their new assignments but they failed to comply with such
directives.
The Court is mindful of the fact that most contracts for services stipulate that the client may
request the replacement of security guards assigned to it. Indeed, the employer has the right to
transfer or assign its employees from one area of operation to another, "provided there is no
demotion in rank or diminution of salary, bene9ts, and other privileges, and the transfer is not
motivated by discrimination or bad faith, or effected as a form of punishment or demotion
without suf9cient cause." During that period of time when they are in between assignments or
when they are made to wait for new assignments after being relieved from a previous post,
guards are considered on temporary "off-detail" or under "Eoating status." It has long been
recognized by this Court that the industry practice of placing security guards on Eoating status
does not constitute dismissal, as the assignments primarily depend on the contracts entered into
by the agency with third parties and the same is a valid exercise of management prerogative.
However, such practice must be exercised in good faith and courts must be vigilant in assessing
the different situations, especially considering that the security guard does not receive any salary
or any Financial assistance provided by law when placed on floating status.
Though respondents were not per se dismissed on 20 January 2007 when they were ordered
relieved from their posts, we 9nd that they were constructively dismissed when they were not
given new assignments. As previously mentioned, placing security guards under Eoating status
or temporary off-detail has been an established industry practice. It must be emphasized,
however, that they cannot be placed under Eoating status inde9nitely; thus, the Court has applied
Article 292 (formerly Article 286) of the Labor Code by analogy to set the specific period of
temporary off-detail to a maximum of six (6) months. It must also be clarified that such
provision does not entitle agencies to retain security guards on Eoating status for a period of not
more than six (6) months for whatever reason. Placing employees on Eoating status requires the
dire exigency of the employer's bona fide suspension of operation. In security services, this
happens when there is a surplus of security guards over available assignments as when the clients
that do not renew their contracts with the security agency are more than those clients that do. The
crux of the controversy lies in the consequences of the lapse of a significant period of time
without respondents having been reassigned. Petitioner agency faults the respondents for their
repeated failure to comply with the directives to report to the office for their new assignments.

25. De Castro et al., vs. Court of Appeals, GR No. 204261, October 5, 2016
Nuvoland, a corporation formed primarily "to own, use, improve, develop, subdivide, sell,
exchange, lease and hold for investment or otherwise, real estate of all kinds, including
buildings, houses, apartments and other structures," was registered with the Securities and
Exchange Commission (SEC) on August 9, 2006. Respondent Ramon Bienvenida (Bienvenida)
was the principal stockholder and member of the Board of Directors while Raul Martinez
(Martinez) was its President.
Silvericon, on the other hand, was registered with the SEC on December 19, 2006. Its Articles of
Incorporation described it as a "corporation organized 'to own, use, improve, develop, subdivide,
sell, exchange, lease and hold for investment or otherwise, real estate of all kinds, including
buildings, houses, apartments and other structures.'"
Sometime in 2007, Martinez recruited petitioner Edward de Castro (De Castro), a sales and
marketing professional in the ;eld of real estate, to handle its sales and marketing operations,
including the hiring and supervision of the sales and marketing personnel. To formalize this
undertaking, De Castro was made to sign a Memorandum of Agreement (MOA), denominated as
Shareholders Agreement, wherein Martinez proposed to create a new corporation, through
which the latter's compensation, bene;ts and commissions, including those of other sales
personnel, would be coursed. It was stipulated in the said MOA that the new corporation would
have an authorized capital stock of P4,000,000.00, of which P1,000,000.00 was subscribed and
paid equally by the Martinez Group and the De Castro Group.

Thereafter, the Sales and Marketing Agreement (SMA), dated February 26, 2008, was
purportedly executed by Nuvoland and Silvericon, stipulating that all payments made for the
condominium projects of Nuvoland were to be given directly to it. Clients secured by the sales
and marketing personnel would issue checks payable to Nuvoland while the cash payments, as
the case may be, were deposited to Nuvoland's account. Meanwhile, the corresponding sales
commission of the sales personnel were issued to them by Nuvoland, with Martinez signing on
behalf of the said company. In a Letter, dated December 12, 2008 and signed by Bienvenida,
Nuvoland terminated the SMA on the ground that Silvericon personnel committed an
unauthorized walkout and abandonment of the Nuvo City Showroom for two (2) days. In the
same letter, Nuvoland demanded that Silvericon make a full accounting of all its uses of the
marketing advances from Nuvoland. It, however, assured that all sales commissions earned by
Silvericon personnel would be released as per existing policy.
After the issuance of the said termination letter, De Castro and all the sales and marketing
personnel of Silvericon were barred from entering the of;ce premises. Nuvoland, eventually, was
able to secure the settlement of all sales and marketing personnel's commissions and wages with
the exception of those of De Castro and Platon. The claims of one of Silvericon's senior manager
were settled during the pendency of a complaint with the LA.
As to the substantive issues, the Court is faced with divergent views in the arguments raised. On
one hand, the petitioners strongly urge the Court to consider numerous factors that would justify
the piercing of the corporate veil showing that Silvericon was just a business conduit of
Nuvoland. On the other, the respondents vehemently deny the existence of an employer-
employee relationship between Nuvoland and the petitioners. This absence of a juridical tie,
according to Nuvoland, necessarily directs the claims of the petitioners to Silvericon as their
employer, being an independent contractor
In order to determine whether a dispute constitutes an intra-corporate controversy or not, the
Court considers two elements instead, namely: (a) the status or relationship of the parties; and (b)
the nature of their controversy. Concurrence of these two renders a case as an intra-corporate
dispute.
Under the nature-of-the-controversy test, the dispute must not only be rooted in the existence of
an intra-corporate relationship, but must also refer to the enforcement of the parties' correlative
rights and obligations under the Corporation Code, as well as the internal and intra-corporate
regulatory rules of the corporation. The combined application of the relationship test and the
nature-of-the-controversy test has, consequently, become the norm in determining whether a case
is an intra-corporate controversy or purely civil in character. In the absence of any one of these
factors, the case cannot be considered an intra-corporate dispute and the RTC acting as a special
commercial court cannot acquire any jurisdiction. The criteria for distinguishing between
corporate of;cers who may be ousted from of;ce at will, on one hand, and ordinary corporate
employees, who may only be terminated for just cause, on the other hand, do not depend on the
nature of the services performed, but on the manner of creation of the office.
As it had been determined that Silvericon was a mere subterfuge for Nuvoland's sales and
marketing activities, the circumstances surrounding the nature of De Castro's hiring and the very
nature of his claims must be fully considered to determine jurisdiction. It must be remembered
that De Castro was hired by Martinez and Bienvenida to be the President and COO of Silvericon.
This appears in the SMA, which the Court has interpreted as a ruse to conceal Nuvoland's labor-
contracting activities. As previously discussed, the contrived cancellation of the SMA was, in
effect, a termination of its personnel assigned to Silvericon. Equally important for contemplation
is the nature of the petitioners' claims and arguments which not only demonstrates a ;rm avowal
of labor-only contracting on the part of Nuvoland and Silvericon but also shows that the ultimate
issue to be resolved is not rooted in a corporate issue governed by the Corporation Code and its
implementing rules, but a labor problem, the resolution of which is covered by labor laws and
DOLE issuances.
The records are bereft of any evidence at all that respondents Martinez and Bienvenida acted
with malice, ill will or bad faith when the SMA was terminated. Hence, the said individual
of;cers cannot be held solidarily liable for the money claims due the petitioners.

26. Nestle Philippines Inc. vs. Puedan, Jr. GR No. 220617, January 30, 2017
The instant case arose from an amended complaint dated July 6, 2012 for illegal dismissal,
damages, and attorney's fees filed by respondents against, inter alia, ODSI and NPI. Respondents
alleged that on various dates, 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 the 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.
For its part, 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.

The Issues Before the Court

The essential issues for the Court's resolution are whether or not the CA correctly ruled that: (a)
NPI was accorded due process by the tribunals a quo; and (b) ODSI is a labor-only contractor of
NPI, and consequently, NPI is respondents' true employer and, thus, deemed jointly and
severally liable with ODSI for respondents' monetary claims.
To justify the grant of the extraordinary remedy of certiorari, the petitioner must satisfactorily
show that the court or quasi-judicial authority gravely abused the discretion conferred upon it.
Grave abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a
despotic manner by reason of passion or personal hostility, the character of which being so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law.
The observance of fairness in the conduct of any investigation is at the very heart of procedural
due process. The essence of due process is to be heard, and, as applied to administrative
proceedings, this means a fair and reasonable opportunity to explain one's side, or an opportunity
to seek a reconsideration of the action or ruling complained of. Administrative due process
cannot be fully equated with due process in its strict judicial sense, for in the former a formal or
trial-type hearing is not always necessary, and technical rules of procedure are not strictly
applied.
However, 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 ?ndings, 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
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. As a consequence, NPI
cannot be held jointly and severally liable to ODSI's monetary obligations towards respondents.

27. Valencia vs. Classique Vinyl Products Corp., GR No. 206390, January 30, 2017
On March 24, 2010, Valencia filed with the Labor Arbiter a Complaint 3 for Underpayment of
Salary and Overtime Pay; Non-Payment of Holiday Pay, Service Incentive Leave Pay, 13th
Month Pay; Regularization; Moral and Exemplary Damages; and, Attorney's Fees against
respondents Classique Vinyl Products Corporation (Classique Vinyl) and its owner Johnny
Chang (Chang) and/or respondent Cantingas Manpower Services (CMS). When Valencia,
however, asked permission from Chang to attend the hearing in connection with the said
complaint on April 17, 2010, the latter allegedly scolded him and told him not to report for work
anymore. Hence, Valencia amended his complaint to include illegal dismissal.
In his Sinumpaang Salaysay, Valencia alleged that he applied for work with Classique Vinyl but
was told by the latter's personnel office to proceed to CMS, a local manpower agency, and
therein submit the requirements for employment. Upon submission thereof, CMS made him sign
a contract of employment but no copy of the same was given to him. He then proceeded to
Classique Vinyl for interview and thereafter started working for the company in June 2005 as
felitizer operator. Valencia claimed that he worked 12 hours a day from Monday to Saturday and
was receiving P187.52 for the first eight hours and an overtime pay of P117.20 for the next four
hours, or beyond the then minimum wage mandated by law. Five months later, he was made to
serve as extruder operator but without the corresponding increase in salary. He was neither paid
his holiday pay, service incentive leave pay, and 13th month pay. Worse, premiums for
Philhealth and Pag-IBIG Fund were not paid and his monthly deductions for Social Security
System (SSS) premiums were not properly remitted. He was also being deducted the amounts of
P100.00 and P60.00 a week for Cash Bond and Agency Fee, respectively. Valencia averred that
his salary was paid on a weekly basis but his pay slips neither bore the name of Classique Vinyl
nor of CMS; that all the machineries that he was using/operating in connection with his work
were all owned by Classique Vinyl; and, that his work was regularly supervised by Classique
Vinyl. He further averred that he worked for Classique Vinyl for four years until his dismissal.
Hence, by operation of law, he had already attained the status of a regular employee of his true
employer, Classique Vinyl, since according to him, CMS is a mere labor-only contractor.
Valencia, therefore, argued that Classique Vinyl should be held guilty of illegal dismissal for
failing to comply with the twin-notice requirement when it dismissed him from the service and
be made to pay for his monetary claims
There is no merit in the Petition. The core issue here is whether there exists an employer-
employee relationship between Classique Vinyl and Valencia. Needless to state, it is from the
said determination that the other issues raised, i.e., whether Valencia was illegally dismissed by
Classique Vinyl and whether the latter is liable for his monetary claims, hinge. However, as
correctly pointed out by Classique Vinyl, "[t]he issue of whether or not an employer-employee
relationship existed between [Valencia] and [Classique Vinyl] is essentially a question of fact."
"The Court is not a trier of facts and will not review the factual findings of the lower tribunals as
these are generally binding and conclusive." While there are recognized exceptions, none of
them applies in this case.
Indeed, there is no hard and fast rule designed to establish the afore-mentioned elements of
employer-employee relationship. "Any competent and relevant evidence to prove the
relationship may be admitted." In this case, however, Valencia failed to present competent
evidence, documentary or otherwise, to support his claimed employer-employee relationship
between him and Classique Vinyl. All he advanced were mere factual assertions unsupported by
proof.
Aside from the afore-mentioned inconsistent allegations of Valencia, his claim that his work was
supervised by Classique Vinyl does not hold water. Again, the Court ?nds the same as a self-
serving assertion unworthy of credence. On the other hand, the employment contract which
Valencia signed with CMS categorically states that the latter possessed not only the power of
control but also of dismissal over him.
Clearly, therefore, no error can be attributed on the part of the labor tribunals and the CA in
ruling out the existence of employer-employee relationship between Valencia and Classique
Vinyl. Further, the Court ?nds untenable Valencia's argument that neither Classique Vinyl nor
CMS was able to present proof that the latter is a legitimate independent contractor and
therefore, unable to rebut the presumption that a contractor is presumed to be a labor-only
contractor. "Generally, the presumption is that the contractor is a labor-only [contractor] unless
such contractor overcomes the burden of proving that it has the substantial capital, investment,
tools and the like." Here, to prove that CMS was a legitimate contractor, Classique Vinyl
presented the former's Certificate of Registration with the Department of Trade and Industry
and, License as private recruitment and placement agency from the Department of Labor and
Employment. Indeed, these documents are not conclusive evidence of the status of CMS as a
contractor. However, such fact of registration of CMS prevented the legal presumption of it
being a mere labor-only contractor from arising. In any event, it must be stressed that "in labor-
only contracting, the statute creates an employeremployee relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent
of the principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal employer. The
principal employer therefore becomes solidarily liable with the labor-only contractor for all the
rightful claims of the employees." The facts of this case, however, failed to establish that there is
any circumvention of labor laws as to call for the creation by the statute of an employer-
employee relationship between Classique Vinyl and Valencia. In fact, even as against CMS,
Valencia's money claims has been debunked by the labor tribunals and the CA. Again, the Court
is not inclined to disturb the same.
 B. WORKER'S PREFERENCE
CASES:

1. Barayoga vs. Asset Privatization Trust, G.R. No. 160073, October 24, 2005
Facts: Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar
Development Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili,
Camarines Sur. Asset Privatization Trust (APT), a public trust was created under Proclamation
No. 50, as amended, mandated to take title to and possession of, conserve, provisionally manage
and dispose of non-performing assets of the Philippine government identified for privatization or
disposition. Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino
issued Administrative Order No.14 identifying certain assets of government institutions that were
to be transferred to the National Government. Among the assets transferred was the financial
claim of the Philippine National Bank against BISUDECO in the form of a secured loan.

Consequently, by virtue of a Trust Agreement executed between the National Government and
APT on February 27, 1987, APT was constituted as trustee over BISUDECOs account with the
PNB.

Sometime later, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor)
to take over the management of the sugar plantation and milling operations until August 31,
1992.Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan
with PNB, its mortgaged properties were foreclosed and subsequently sold in a public auction to
APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriff s Certificate of Sale.

The union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and
underpayment of wages and other labor standard benefits plus damages. In the meantime, APT s
Board of Trustees issued a resolution accepting the offer of Bicol-Agro-Industrial Cooperative
(BAPCI) to buy the sugar plantation and mill. Again, on September 23, 1992, the board passed
another resolution authorizing the payment of separation benefits to BISUDECO s employees in
the event of the companys privatization.

Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT
and took over its sugar milling operations under the trade name Peafrancia Sugar Mill
(Pensumil). The unionalleged that when Philsucor initially took over the operations of the
company, it retained BISUDECO s existing personnel under the same terms and conditions of
employment. Nonetheless, at the start of the season sometime in May1991, Philsucor started
recalling workers back to work, to the exception of the union members. Management told them
that they will be re-hired only if they resign from the union. Just the same, thereafter, the
company started to employ the services of outsiders under the pacqiao system.

Issue:
Whether APT is liable to pay petitioners monetary claims, including back wages from May 1,
1991, to October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI).

Held:
No. Pursuant to Administrative Order No. 14, Series of 1987, PNB s assets, loans and
receivables from its borrowers were transferred to APT as trustee of the national government.
Among the liabilities transferred to APT was PNB s financial claim against BISUDECO, not the
latter s assets and chattel.
BISUDECO remained the owner of the mortgaged properties in August 1988, when the
Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar
plantation until August 31,1992, under a so-called Contract of Lease between the two
corporations. At the time, APT was merely a secured creditor of BISUDECO.

2. Phil. Airlines vs. Zamora, G.R. No. 166996, Feb. 6, 2007

Facts: Respondent Zamora had been in the employ of petitioner PAL since 9 February 1981
when the former was hired as a Cargo Representative at petitioner PAL s Import Operations
Division. Respondent Zamora was then dismissed from service for having been found by
petitioner PAL s management to be liable for insubordination, neglect of customer, disrespect
for authority and absence without official leave. On 12 March 1996, respondent Zamora filed a
complaint against petitioners PAL and Francisco X. Yngente IV before the NLRC for illegal
dismissal, unfair labor practice, non-payment of wages, damages and attorneys fees. On 1
February 2005, the Court of Appeals promulgated an Amended Decision modifying its 13
August 2004 Decision but at the same time resolving petitioner PAL's Motion for
Reconsideration in this wise:
WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED, the dispositive
portion to read as follows:WHEREFORE, in view of the foregoing, the petition is GRANTED.
The NLRC resolution dated April 27, 2001 is MODIFIED.
Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is
hereby ordered to pay petitioner Zamora his separation pay, in lieu of reinstatement, to be
computed at one-month salary for every year of service from February 9, 1981 and back wages
to be computed from December 19, 1995, both up to October 1, 2000, the date of his
incarceration.Considering that PAL is still under receivership, the monetary claims of petitioner
Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference
of credits. The Court of Appeals took into account respondent Zamora's incarceration when it
recalled its order of reinstatement. Anent its earlier pronouncement against the suspension of the
proceedings of the case owing to the present rehabilitation of petitioner PAL, the appellate court
only had this to say: However, since PAL is still under receivership, the provisions of PD 902-A,
should apply. The enforcement of the monetary claims of petitioner should be brought before the
PAL Rehabilitation Receiver for proper disposition.
Issue: WON respondent Zamora s monetary claim should be presented to the PAL rehabilitation
receiver, subject to the rules on preference of credits.
Ruling: No. The relevant law dealing with the suspension of actions for claims against
corporations is Presidential Decree No. 902-A, 52 as amended. The term "claim," as
contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts or demands of a
pecuniary nature. It means 'the assertion of a right to have money paid.It is plain from the
foregoing provisions of law that "upon the appointment [by the SEC] of a management
committee or a rehabilitation receiver"all actions for claims against the corporation pending
before any court, tribunal or board shall ipso jure be suspended.
The law is clear: upon the creation of a management committee or the appointment of a
rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in
favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions,
neither should this Court.
Otherwise stated, no other action may be taken in, including the rendition of judgment during the
state of suspension what are automatically stayed or suspended are the proceedings of an
action or suit and not just the payment of claims during the execution stage after the case had
become final and executory.
The suspension of action for claims against a corporation under rehabilitation receiver or
management committee embraces all phases of the suit, be it before the trial court or any tribunal
or before this Court. Furthermore, the actions that are suspended cover all claims against a
distressed corporation whether for damages founded on a breach of contract of carriage, labor
cases, collection suits or any other claims of a pecuniary nature. As to the appellate court's
amended directive that "the monetary claims of petitioner Zamora must be presented to the PAL
Rehabilitation Receiver, subject to the rules on preference of credits," the same is erroneous for
there has been no declaration of bankruptcy or judicial liquidation. Thus, the rules on preference
of credits does not apply.

3. Phil. Airlines vs. Phil. Airlines Employees Association, 525 SCRA 29 [2007], citing
Rubberworld vs. NLRC, 305 SCRA 721 [1999]
Facts:
On 6 February 1987, herein parties, PAL and PALEA, the collective bargaining agent of the rank
and file employees of PAL, entered into a CBA that was to cover the period of 1986 1989. Part
of said agreement required PAL to pay its rank and file employees the following bonuses:
Section 4 13th Month Pay (Mid-year Bonus)A 13th month pay, equivalent to one month's
current basic pay, consistent with the existing practice shall be paid in advance in May.
Section 5 Christmas Bonus. The equivalent of one month's basic pay as of November 30, shall
be paid in December as a Christmas bonus. Payment may be staggered in two (2) stages. It is
distinctly understood that nothing herein contained shall be construed to mean that the Company
may not at its sole discretion give an additional amount or increase the Christmas bonus.
Prior to the payment of the 13th month pay (mid year bonus), PAL released an implementing
guideline on 22 April 1988. It stated that:
1)Eligibility
a) Ground employees in the general payroll who are regular as of April 30, 1988;
b) Other ground employees in the general payroll, not falling within category) above shall
receive their 13th Month Pay on or before December 24, 1988;
2) Amount
a) For category a) above, one-month basic salary as of April 30,1988;
b) Employees covered under 1 b) above shall be paid not less than 1/12 of their basic salary for
every month of service within the calendar year.
3) Payment Date:
May 9, 1988 for category 1 a) above.
PALEA assailed the implementation of the foregoing guideline. In response to the above, PAL
informed PALEA that rank and file employees who were regularized after 30 April 1988 were
not entitled to the 13th month pay as they were already given the Christmas bonus in December
of 1988, per the Implementing Rules of Presidential Decree No. 851. PALEA, disagreeing with
PAL, filed a Complaint for unfair labor practice before the NLRC.PAL answered that those rank
and file employees who were not regularized by 30 April of a particular year are, in principle,
not denied their 13 month pay, considering they receive said mandatory bonus in the form of the
Christmas Bonus.

Issue:
Can a court or quasi-judicial agency amend or alter a Collective Bargaining Agreement by
expanding its coverage to non-regular employees who are not covered by the bargaining unit?

Ruling:
The Securities and Exchange Commission (SEC) had mandated the rehabilitation of PAL. Thus,
PAL is still undergoing rehabilitation.The pertinent law concerning the suspension of actions for
claims against corporations due to its rehabilitation is Presidential Decree No. 902-A, as
amended.

The aforementioned law provides that SEC assumes jurisdiction in cases where the corporation
is undergoing rehabilitation with pending money claims against the corporation. The underlying
principle behind the suspension of claims pending rehabilitation proceedings was explained in
the case of BF Homes, Incorporated v.Court of Appeals:the real justification is to enable the
management committee or rehabilitation receiver to effectively exercise its/his powers free from
any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the
debtor company. To allow such other action to continue would only add to the burden of the
management committee or rehabilitation receiver, whose time, effort and resources would be
wasted in defending claims against the corporation instead of being directed toward its
restructuring and rehabilitation. The Supreme Court citing Rubberworld vs. NLRC said:we
held that worker's claims before the NLRC and labor arbiters are included among the
actionssuspended upon the placing under receivership of the employer-corporations. Although
strictly speaking, the ruling in Rubberworld dealt with actions for claims pending before the
NLRC and labor arbiters, we find that the rationale for the automatic suspension therein set out
would apply to the instant case where the employee's claim was elevated on certiorari before this
Court. In another PAL case, specifically, Philippine Airlines, Inc. v. Court of Appeal, the SC
held that:that this Court is "not prepared to depart from the well-established doctrines"
essentially maintaining that all actions for claims against a corporation pending before any court,
tribunal or board shall ipso jure be suspended in whatever stage such actions may be found upon
the appointment by the SEC of a management committee or a rehabilitation receiver. In view of
the ongoing rehabilitation of petitioner
Philippine Airlines, Inc., herein proceedings are heretofore. SUSPENDED.

4. Garcia vs. Phil Air Lines, G.R. No. 164856, January 20, 2009
Facts:
The case stemmed from the administrative charge filed by PAL against its employees-herein
petitioners after they were allegedly caught in the act of sniffing shabu when a team of company
security personnel and law enforcers raided the PAL Technical Center s Toolroom Section on
July 24, 1995.

After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code
of Discipline, prompting them to file a complaint for illegal dismissal and damages resolved by
the LaborArbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the
reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiter s decision, the Securities and Exchange
Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from
severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced
by a Permanent Rehabilitation Receiver on June 7, 1999.
The Labor Arbiter issued a Writ of Execution (Writ) respecting therein statement aspect of his
January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment
(Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while petitioners
moved to release the garnished amount.

Issue/s:
1. Whether petitioners may collect their wages during the period between the Labor Arbiter
s order of reinstatement pending appeal and the NLRC decision overturning that of the
Labor Arbiter, now that respondent has exited from rehabilitation proceedings.

2. WON peculiar predicament of a corporate rehabilitation rendered it impossible for

respondent to exercise its option under the circumstances.

Ruling:
1. The decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein. The view as maintained in a number of
cases is that:x xx [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal,
it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the period.

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is
entitled to receive wages pending appeal upon reinstatement, which is immediately executory.
Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order
of reinstatement and it is mandatory on the employer to comply therewith.
The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal until reversal by the higher court. It
settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the
employer has to either re-admit them to work under the same terms and conditions prevailing
prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options
in the alternative, employer must pay the employee s salaries.
2. The spirit of the rule on reinstatement pending appeal animates the proceedings once the
Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its
execution needs no further elaboration. Reinstatement pending appeal necessitates its immediate
execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same
time, any attempt on the part of the employer to evade or delay its execution, as observed in
Panuncillo and as what actually transpired in Kimberly, Composite, Air Philippines, and
Roquero, should not be countenanced
After the labor arbiters decision is reversed by a higher tribunal, the employee may be barred
from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement
pending.
Appeal was without fault on the part of the employer.The test is two-fold: (1) there must be
actual delay or the fact that the order of reinstatement pending appeal was not executed prior to
its reversal; and (2) the delay must not be due to the employer s unjustified act or omission. If
the delay is due to the employer s unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the Labor Arbiter s decision.The new NLRC Rules
of Procedure, which took effect on January 7, 2006, now require the employer to submit areport
of compliance within 10 calendar days from receipt of the Labor Arbiter s decision,
disobedience to which clearly denotes a refusal to reinstate. The employee need not file a motion
for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio
issue the writ. With the new rules in place, there is hardly any difficulty in determining the
employers intransigence in immediately complying with the order.
In the case at bar, petitioners exerted efforts to execute the Labor Arbiter s order of
reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000
after the reversal by the NLRC of the Labor Arbiter s decision. Technically, there was still
actual delay which brings to the question of whether the delay was due to respondent s
unjustified act or omission.It is apparent that there was inaction on the part of respondent to
reinstate them, but whether such omission was justified depends on the onset of the exigency of
corporate rehabilitation.It is settled that upon appointment by the SEC of a rehabilitation
receiver, all actions for claims before any court, tribunal or board against the corporation shall
ipso jure be suspended. As stated early on, during the pendency of petitioners complaint before
the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After
the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver
with a Permanent Rehabilitation Receiver.
Case law recognizes that unless there is a restraining order, the implementation of the order of
reinstatement is ministerial and mandatory. This injunction or suspension of claims by legislative
fiat partakes of the nature of a restraining order that constitutes a legal justification for
respondent s non-compliance with the reinstatement order.
Respondent s failure to exercise the alternative options of actual reinstatement and payroll
reinstatement was thus justified. Such being the case, respondent s obligation to pay the salaries
pending appeal, as the normal effect of the non-exercise of the options, did not attach. While
reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even
the life of the dismissed employee and his family, it does not contemplate the period when the
employer-corporation itself is similarly in a judicially monitored state of being resuscitated in
order to survive.
The parallelism between a judicial order of corporation rehabilitation as a justification for the
non-exercise of its options, on the one hand, and a claim of actual and imminent substantial
losses asground for retrenchment, on the other hand, stops at the red line on the financial
statements. More importantly, there are legal effects arising from a judicial order placing a
corporation under rehabilitation. Respondent was, during the period material to the case,
effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by
virtue of the statutory injunction but also in view of the interim relinquishment of management
control to give way to the full exercise of the powers of the rehabilitation receiver. Had there
been no need to rehabilitate, respondent may have opted for actual physical reinstatement
pending appeal to optimize the utilization of resources. Then again, though the management may
think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence
of the injunction on claims.
In sum, the obligation to pay the employee s salaries upon the employer s failure to exercise the
alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering
the inherent constraints of corporate rehabilitation.
 C. ATTORNEY'S FEES & APPEARANCE OF LAWYERS
CASES:

1. Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008
Facts:
Petitioner filed against Undaloc Construction and/or Engineer CiriloUndaloc for illegal
dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc
Construction, a single proprietorship owned by CiriloUndaloc, is engaged in road construction
business in Cebu City.

Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was
terminated on the ground that the project he was assigned to was already finished, he being
allegedly a project employee. Petitioner asserted he was a regular employee having been
engaged to perform works which are usually necessary or desirable in respondents business.
He claimed that from 1 May to 31 August 1995 and from 1 September to 31 December 1995, his
daily wage rate was only P80.00 and P90.00, respectively, instead of P121.87 as mandated by
Wage Order No. ROVII-03. From 1 March 1996 to 30 May 1998, his daily rate was P105.00.
He further alleged that he was made to sign two payroll sheets, the first bearing the actual
amount he received wherein his signature was affixed to the last column opposite his name, and
the second containing only his name and signature. To buttress this allegation, petitioner
presented the payroll sheet covering the period from 4 to 10 December 1995 in which the entries
were written in pencil. He also averred that his salary from 18 to 30 May 1998 was withheld by
respondents.

Respondent CiriloUndaloc maintained that petitioner was hired as a project employee on 1 May
1995 and was assigned as watchman from one project to another until the termination of the
project on 30 May 1998. Refuting the claim of underpayment, respondent presented the payroll
sheets from 2 September to 8 December 1996, 26 May to 15 June 1997, and 12 January to 31
May 1998.

Issue:
Whether petitioner was entitled to the award of salary differential and attorneys fees.

Ruling:
While the SC adhered to the position of the appellate court that the tendency to alter the entries
in the payrolls was not substantiated, it did subscribe to the total deletion of the award of salary
differential and attorneys fees.
The Labor Arbiter erred in his computation, it granted a higher salary differential. He fixed the
daily wage rate actually received by petitioner at P105.00 without taking into consideration the
P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover, the
Labor Arbiter misapplied the wage orders when he wrongly categorized respondent as falling
within the first category. Based on the stipulated number of employees and audited financial
statements, respondents should have been covered by the second category (which is lower).

The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00. However,
pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188.
Respondents are required to pay double the amount owed to petitioner, bringing their total
liability to P13,156.00.

Section 12. Any person, corporation, trust, firm, partnership, association or entity
which refuses or fails to pay any of the prescribed increases or adjustments in the
wage rates made in accordance with this Act shall be punished by a fine not less
than Twenty-five thousand pesos (P25,000.00) nor more than One hundred
thousand pesos (P100,000.00) or imprisonment of not less than two (2) years nor
more than four (4) years, or both such fine and imprisonment at the discretion of
the court: Provided, That any person convicted under this Act shall not be entitled
to the benefits provided for under the Probation Law.

The employer concerned shall be ordered to pay an amount equivalent to double

the unpaid benefits owing to the employees: Provided, That payment of indemnity
shall not absolve the employer from the criminal liability imposable under this
Act.

If the violation is committed by a corporation, trust or firm, partnership,

association or any other entity, the penalty of imprisonment shall be imposed
upon the entitys responsible officers, including, but not limited to, the president,
vice president, chief executive officer, general manager, managing director or
partner. (Emphasis supplied)

The award of attorneys fees is warranted under the circumstances of this case. Under Article
2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of
wages of laborers and actions for indemnity under employer's liability laws but shall not exceed
10% of the amount awarded. The fees may be deducted from the total amount due the winning
party.
2. Atty. Ortiz vs. San Miguel Corp., G.R. No. 151983-84, July 31, 2008

Facts:
The petitioner in this case, Jose Max S. Ortiz, is a member of the Philippine Bar who
represented the complainants in NLRC Cases No. V-0255-94 (hereinafter referred to as
the Aguirre Cases) and No. V-0068-95 (hereinafter referred to as the Toquero Case)
instituted against herein private respondent San Miguel Corporation sometime in 1992
and 1993.The respondent is a corporation duly organized and existing under and by virtue
of the laws of the Republic of the Philippines. It is primarily engaged in the manufacture
and sale of food and beverage particularly beer products. In line with its business, it
operates breweries and sales offices throughout the Philippines. The complainants in
NLRC Cases, Aguirre Cases and Toquero Case were employees at private respondent's
Sales Offices in the Province of Negros Occidental.
The complainants of Cases, Aguire and Toquero got a favorable decision in NLRC
regarding their money claims against San Miguel Corporation. In effect, San Miguel
Corporation filed a Petitions for Certiorari. While this respondents petitions were
pending before the Court of Appeals, all but one of the remaining complainants in
Aguirre and Toquero Cases on various dates before two Labor Arbiters and in the
presence of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim in
favor of private respondent. Based on the Deeds they executed, complainants agreed to
settle their claims against private respondent for amounts less than what the NLRC
actually awarded. Private respondent withheld 10% of the total amount agreed upon by
the parties in the said Deeds as attorney's fees and handed it over to petitioner. Private
respondent then attached the Deeds to its Manifestation and Motion filed before the
appellate court. Then the Court of appeals rendered a decision affirming the NLRC
decisions, only in so far as it concerned complainant Alfredo Gadian, Jr. (complainant
Gadian), the only complainant who did not execute a Deed of Release, Waiver and
Quitclaim. With respect to the other complainants in the Aguirre and Toquero Cases, their
complaints were dismissed on account of their duly executed Deeds of Release, Waiver
and Quitclaim. In a Resolution dated 9 January 2002, the appellate court denied the
motion of complainant Gadian and his counsel, herein petitioner , that the award of
attorney's fees of 10% should be based on the monetary awards adjudged by the NLRC.
Thus, this petition filed before the Court praying to affirm the award of attorney's fees
equivalent to 10% of the monetary award adjudged by the NLRC in its Decisions dated
21 July 1995 and 25 July 1995 in Toquero Case and Aguirre Cases respectively.

Issue:
Whether he is entitled to the amount of attorney's fees as adjudged by the NLRC in its
Decisions in the Aguirre and Toquero Cases or only to the 10% of the amounts actually
paid to his clients, the complainants who signed the Deeds of Release, Waiver and
 Quitclaim.

Ruling:

The aforesaid issue evidently involves a question of law. What it needs to do is ascertain
and apply the relevant law and jurisprudence on the award of attorney's fees to the
prevailing parties in labor cases

Article 111 of the Labor Code, as amended, specifically 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.
(b) It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of the wages, attorney's fees
which exceed ten percent of the amount of wages recovered.

In PCL Shipping Philippines, Inc. v. National Labor Relations Commission citing Dr.
Reyes v. Court of Appeals, this Court enunciated 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 the former has rendered to the latter. The basis of this compensation
is the fact of the attorney's 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 in which these may be
awarded are those enumerated in Article 2208 of the Civil Code, specifically paragraph 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. Article 111 of the Labor Code, as amended,
contemplates the extraordinary concept of attorney's fees.

Based on the foregoing, the attorney's fees awarded by the NLRC in its Decisions in the
Aguirre and Toquero Cases pertain to the complainants, petitioner's clients, as indemnity
for damages; and not to petitioner as compensation for his legal services. Records show
that the petitioner neither alleged nor proved that his clients, the complainants, willingly
agreed that the award of attorney's fees would accrue to him as an additional
compensation or part thereof. What the complainants explicitly agreed to in their
individual Deeds of Release, Waiver, and Quitclaim was that the 10% attorney's fees of
the petitioner shall be deducted from the amount of the gross settlement.

Thus, this Court has no recourse but to interpret the award of attorney's fees by the NLRC
in its extraordinary concept. And since the attorney's fees pertained to the complainants
as indemnity for damages, it was totally within the complainants' right to waive the
amount of said attorney's fees and settle for a lesser amount thereof in exchange for the
immediate end to litigation. Petitioner cannot prevent complainants from compromising
and/or withdrawing their complaints at any stage of the proceedings just to protect his
anticipated attorney's fees.

Even assuming arguendo that the complainants in the Aguirre and Toquero Cases did
indeed agree that the attorney's fees awarded by the NLRC should be considered in their
ordinary concept, i.e., as compensation for petitioner's services, we refer back to Article
111 of the Labor Code, as amended, which provides that the attorney's fees should be
equivalent to 10% of the amount of wages recovered. Since the complainants decided to
settle their complaints against the private respondent, the amounts actually received by
them pursuant to the Deeds of Release, Waiver and Quitclaim are the amounts
"recovered" and the proper basis for determining the 10% attorney's fees.

To reiterate, the award of attorney's fees pertain to the prevailing parties in the NLRC
cases, namely, the complainants, all but one of whom no longer pursued their complaints
against private respondent after executing Deeds of Release, Waiver and Quitclaim. Not
being the party to whom the NLRC awarded the attorney's fees, neither is the petitioner
the proper party to question the non-awarding of the same by the appellate court.

If petitioner earnestly believes that the amounts he already received are grossly deficient,
petitioner's remedy is not against the private respondent, but against his own clients, the
complainants. He should file a separate action for collection of sum of money against
complainants to recover just compensation for his legal services, and not the present
Petition for Review to claim from private respondent the attorney's fees which were
adjudged by the NLRC in favor of complainants as the prevailing parties in the Aguirre
and Toquero Cases.

WHEREFORE, the instant Petition is hereby DENIED.

3. Masmud vs. NLRC et al., G.R. No. 183385, Feb. 13, 2009
Facts:
On July 9, 2003, EvangelinaMasmud's (Evangelina) husband, the late Alexander J. Masmud
(Alexander), filed a complaint against First Victory Shipping Services and Angelakos (Hellas)
S.A. for non-payment of permanent disability benefits, medical expenses, sickness allowance,
moral and exemplary damages, and attorney's fees. Alexander engaged the services of Atty.
Rolando B. Go, Jr. (Atty. Go) as his counsel.

In consideration of Atty. Go's legal services, Alexander agreed to pay attorney's fees on a
contingent basis, as follows: twenty percent (20%) of total monetary claims as settled or paid and
an additional ten percent (10%) in case of appeal. It was likewise agreed that any award of
attorney's fees shall pertain to respondent's law firm as compensation.

On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary
claims of Alexander.

Alexander's employer filed an appeal before the National Labor Relations Commission (NLRC).
During the pendency of the proceedings before the NLRC, Alexander died. After explaining the
terms of the lawyer's fees to Evangelina, Atty. Go caused her substitution as complainant. On
April 30, 2004, the NLRC rendered a Decision dismissing the appeal of Alexander's employer.

Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the
execution of the NLRC decision, which was later granted by the LA. The surety bond of the
employer was garnished. Upon motion of Atty. Go, the surety company delivered to the NLRC
Cashier, through the NLRC Sheriff, the check amounting to P3,454,079.20. Thereafter, Atty. Go
moved for the release of the said amount to Evangelina.

On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20
to Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum of P680,000.00.

Dissatisfied, Atty. Go filed a motion to record and enforce the attorney's lien alleging that
Evangelina reneged on their contingent fee agreement. Evangelina paid only the amount of
P680,000.00, equivalent to 20% of the award as attorney's fees, thus, leaving a balance of 10%,
plus the award pertaining to the counsel as attorney's fees.

In response to the motion filed by Atty. Go, Evangelina filed a comment with motion to release
the amount deposited with the NLRC Cashier. In her comment, Evangelina manifested that Atty.
Go's claim for attorney's fees of 40% of the total monetary award was null and void based on
Article 111 of the Labor Code.

Issue:
Whether the 40% Lawyers fee on contingent basis of Atty. Go is proper?

Ruling:
(AFFIRMATIVE)
There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the
reasonable compensation paid to a lawyer by his client for the legal services rendered to the
latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the
court as indemnity for damages to be paid by the losing party to the prevailing party, such that, in
any of the cases provided by law where such award can be made, e.g., those authorized in Article
2208 of the Civil Code, the amount 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.

Here, we apply the ordinary concept of attorney's fees, or the compensation that Atty. Go is
entitled to receive for representing Evangelina, in substitution of her husband, before the labor
tribunals and before the court.

Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Go's
compensation as her counsel and assiduously opposes their agreed retainer contract.

Article 111 of the said 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 the wages
recovered.rbl rl l lbrr

Contrary to Evangelina's proposition, Article 111 of the Labor Code deals with the extraordinary
concept of attorney's fees. It regulates the amount recoverable as attorney's fees in the nature of
damages sustained by and awarded to the prevailing party. It may not be used as the standard in
fixing the amount payable to the lawyer by his client for the legal services he rendered.

In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining
Atty. Go's compensation. The said Rule provides:

SEC. 24. Compensation of attorney's; agreement as to fees. - An attorney shall be entitled to

have and recover from his client no more than a reasonable compensation for his services, with a
view to the importance of the subject matter of the controversy, the extent of the services
rendered, and the professional standing of the attorney. No court shall be bound by the opinion of
attorneys as expert witnesses as to the proper compensation, but may disregard such testimony
and base its conclusion on its own professional knowledge. A written contract for services shall
control the amount to be paid therefor unless found by the court to be unconscionable or
unreasonable.

The retainer contract between Atty. Go and Evangelina provides for a contingent fee. The
contract shall control in the determination of the amount to be paid, unless found by the court to
be unconscionable or unreasonable. Attorney's fees are unconscionable if they affront one's sense
of justice, decency or reasonableness. The decree of unconscionability or unreasonableness of a
stipulated amount in a contingent fee contract will not preclude recovery.
The criteria found in the Code of Professional Responsibility are also to be considered in
assessing the proper amount of compensation that a lawyer should receive.rl Canon 20,
Rule 20.01 of the said Code provides:

CANON 20 - A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01. - A lawyer shall be guided by the following factors in determining his fees:
(a) The time spent and the extent of the services rendered or required;
(b) The novelty and difficulty of the question involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered case;
(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to
which he belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the
service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order
that clients may be protected from unjust charges. The amount of contingent fees agreed upon by
the parties is subject to the stipulation that counsel will be paid for his legal services only if the
suit or litigation prospers. A much higher compensation is allowed as contingent fees because of
the risk that the lawyer may get nothing if the suit fails. The Court finds nothing illegal in the
contingent fee contract between Atty. Go and Evangelina's husband. The CA committed no error
of law when it awarded the attorney's fees of Atty. Go and allowed him to receive an equivalent
of 39% of the monetary award.

Considering that Atty. Go successfully represented his client, it is only proper that he should
receive adequate compensation for his efforts. Even as we agree with the reduction of the award
of attorney's fees by the CA, the fact that a lawyer plays a vital role in the administration of
justice emphasizes the need to secure to him his honorarium lawfully earned as a means to
preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to
judicial protection against injustice or imposition of fraud on the part of his client as the client is
against abuse on the part of his counsel.

The duty of the court is not alone to ensure that a lawyer acts in a proper and lawful manner, but
also to see that a lawyer is paid his just fees. With his capital consisting of his brains and with his
skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is
entitled to the protection of any judicial tribunal against any attempt on the part of his client to
escape payment of his just compensation. It would be ironic if after putting forth the best in him
to secure justice for his client, he himself would not get his due.
4. Kaisahan at kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union vs.
Manila Water Company, G.R. No. 174179, November 16, 2011
Facts:
On February 21, 1997, the Metropolitan Waterworks and Sewerage System (MWSS) entered
into a Concession Agreement (Agreement) with the Manila Water Company to privatize the
operations of the MWSS. Article 6.1.3 of the Agreement provides that "the Concessionaire shall
grant [its] employees benefits no less favorable than those granted to MWSS employees at the
time of [their] separation from MWSS." Among the benefits enjoyed by the employees of the
MWSS were the amelioration allowance (AA) and the cost-of-living allowance (COLA). The
payment of the AA and the COLA was discontinued pursuant to Republic Act No. 6758,
otherwise known as the "Salary Standardization Law," which integrated the allowances into the
standardized salary. The Company initially turned down the demand to include the AA and
COLA, however, it subsequently agreed to an amendment of the CBA on the matter.

Thereafter, the Company integrated the AA into the monthly payroll of all its employees
beginning August 1, 2002. The Company, however, did not subsequently include the COLA
since the Commission on Audit disapproved its payment because the Company had no funds to
cover this benefit.

As a result, the Union and Borela filed on April 15, 2003 a complaint against the Company for
payment of the AA, COLA, moral and exemplary damages, legal interest, and attorney's fees
before the National Labor Relations Commission(NLRC).

In his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog (LA) ruled in favor of
the petitioners and ordered the payment of their AA and COLA, six percent (6%) interest of the
total amount awarded, and ten percent (10%) attorney's fees.On appeal by the Company, the
NLRC affirmed with modification the LA's decision. It set aside the award of the COLA benefits
because the claim was not proven and established, but ordered the Company to pay the
petitioners their accrued AA of about P107,300,000.00 in lump sum and to continue paying the
AA starting August 1, 2002. It also upheld the award of 10% attorney's fees to the petitioners.

In its Motion for Partial Reconsideration of the NLRC's December 19, 2003 decision, the
Company pointed out that the award of ten percent (10%) attorney's fees to the petitioners is
already provided for in their December 19, 2003 Memorandum of Agreement (MOA) which
mandated that attorney's fees shall be deducted from the AA and CBA receivables. It provided
that 10% Attorneys Fees are to be deducted from the AA and CBA receivables.Petitioners argue
that the 10% attorney's fees paid by the members/employees is separate and distinct from the
obligation of the company to pay the 10% awarded attorney's fees which we also gave to our
counsel as part of our contingent fee agreement.

The NLRC subsequently denied both parties' Motions for Partial Reconsideration, prompting the
Company to elevate the case to the CA via a petition for certiorari under Rule 65 of the Rules of
Court.

In its Decision promulgated on March 6, 2006, the CA modified the assailed NLRC rulings by
deleting "[t]he order for respondent MWCI to pay attorney's fees equivalent to 10% of the total
judgment awards." The CA recognized the binding effect of the MOA between the Company and
the Union; it stressed that any further award of attorney's fees is unfounded considering that it
did not find anything in the Agreement that is contrary to law, morals, good customs, public
policy or public order.

Issues:
The core issues posed for our resolution are:
(1) Whether the CA can review the factual findings of the NLRC in a Rule 65 petition; and
(2) Whether the NLRC gravely abused its discretion in awarding ten percent (10%) attorney's
fees to the petitioners.

The Court's Ruling

We find the petition and its arguments meritorious.

On the First Issue:

The CA cannot undertake a re-assessment of the evidence presented in the case
in certiorari proceedings under Rule 65 of the Rules of Court. However, the rule admits of
exceptions.

As discussed below, our review of the records and of the CA decision shows that the CA erred in
ruling that the NLRC gravely abused its discretion in awarding the petitioners ten percent (10%)
attorney's fees without basis in fact and in law.

On the Second Issue:

Article 111 of the Labor Code, as amended, governs the grant of attorney's fees in labor cases.

The Court explained in PCL Shipping Philippines, Inc. v. National Labor Relations
Commission, that there are two commonly accepted concepts of attorney's fees the 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 the former renders. In itsextraordinary concept,
attorney's fees are deemed indemnity for damages ordered by the court to be paid by the losing
party to the winning party. The instances when these may be awarded are enumerated in Article
2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and
is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the
award shall accrue to the lawyer as additional or part of compensation.

The Court also held in PCL Shipping that Article 111 of the Labor Code, as amended,
contemplates the extraordinary concept of attorney's fees and that Article 111 is an exception to
the declared policy of strict construction in the award of attorney's fees. Although 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 the wages.

In the present case, we find it undisputed that the union members are entitled to their AA
benefits and that these benefits were not paid by the Company. That the Company had no funds
is not a defense as this was not an insuperable cause that was cited and properly invoked. As a
consequence, the union members represented by the Union were compelled to litigate and incur
legal expenses. On these bases, we find no difficulty in upholding the NLRC's award of ten
percent (10%) attorney's fees.

The more significant issue in this case is the effect of the MOA provision that attorney's fees
shall be deducted from the AA and CBA receivables. In this regard, the CA held that the
additional grant of 10% attorney's fees by the NLRC violates Article 111 of the Labor Code,
considering that the MOA between the parties already ensured the payment of 10% attorney's
fees deductible from the AA and CBA receivables of the Union's members.

In the present case, the ten percent (10%) attorney's fees awarded by the NLRC on the basis of
Article 111 of the Labor Code accrue to the Union's members as indemnity for damages and not
to the Union's counsel as compensation for his legal services, unless, they agreed that the award
shall be given to their counsel as additional or part of his compensation;whichin this case, the
Union bound itself to pay 10% attorney's fees to its counsel under the MOA and also gave up the
attorney's fees awarded to the Union's members in favor of their counsel. This is supported by
Borela's affidavit which stated that "[t]he 10% attorney's fees paid by the members/employees is
separate and distinct from the obligation of the company to pay the 10% awarded attorney's fees
which we also gave to our counsel as part of our contingent fee agreement."The limit to this
agreement is that the indemnity for damages imposed by the NLRC on the losing party (i.e., the
Company) cannot exceed ten percent (10%).

Simply stated, the attorney's fees contracted under the MOA do not refer to the amount of
attorney's fees awarded by the NLRC; the MOA provision on attorney's fees does not have any
bearing at all to the attorney's fees awarded by the NLRC under Article 111 of the Labor
Code. Based on these considerations, it is clear that the CA erred in ruling that the LA's award of
attorney's fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the
Labor Code.

5. Malvar vs. Kraft Food Phils Inc. et al., G.R. No. 183952, Sept. 9, 2013
Facts: Malvar was a former employee of Kraft who eventually rose to the ranks to become Vice-
President. In 1999, she was asked to explain why no administrative sanctions should be imposed
on her for possible breach of trust and confidence and for willful violations of company rules and
regulations. She was then terminated on March 2000.

Malvar then filed a complaint for illegal suspension and illegal dismissal against Kraft and
Bautista against the NLRC. The LA found her dismissal illegal and ordered her reinstatement,
payment of her full backwages, inclusive of allowance and benefits plus attorneys fees.

When the judgment in her favor became final and executory, Malvar filed a motion for a writ of
execution. The RCU of the NLRC computed her award and arrived at a total sum of
P41,627,593.74. The Labor Arbiter found that this sum lacked basis and reduced the award to
P27,786,378.11. Both parties appealed to the NLRC who set aside the LAs decision and adopted
the computation by the RCU. Respondents went to the CA to assail the decision of the NLRC.
The CA granted the petition and ruled that the Labor Arbiter must compute the monetary award
based on her salary at the time of termination, without the projected salary increases. The CA
also allowed the garnishment of Krafts bank account from Citibank amounting to
P14,252,192.12 which would be deducted from the final amount to be awarded to Malvar. From
the judgement by the CA, Malvar appealed to the Court.

While her appeal was pending, Malvar and respondents entered into a Compromise Agreement.
It stipulated that Malvar would be receiving P40,000,000.00 from Kraft on top of the
P14,252,192.12 she had received. Thus, Malvar filed a Motion to Withdraw the Case in view of
the Compromise Agreement.
Before the Court could act on the Motion filed by Malvar, a Motion for Intervention to Protect
Attorneys Rights was filed by the firm of Dasal, Llasos and Associates where it sought that
Malvar and Kraft be ordered to pay jointly and severally its contingent fees.

Issues:
1. Whether Malvars Motion to dismiss would prosper in view of the Compromise
Agreement
2. Whether the Motion for Intervention will prosper to protect attorneys rights and if so,
how much it could recover

Ruling

The Court approved the Compromise Agreement. It held that it could do so despite favorable
action in the Motion for Intervention.

The Court found that the Intervenors services were unjustifiably terminated. In the absence of
the lawyers fault, a client cannot deprive the lawyer of his just fees already earned in the guise
of a justifiable reason. Here, Malvar not only downplayed the worth of the Intervenors legal
service to her but also attempted to camouflage the intent to defraud her lawyer by offering
excuses that were not only inconsistent with her actions, but most importantly, fell short of being
justifiable. The Intervenors withdrawal from the case neither cancelled nor terminated written
agreement on the contingent attorneys fees.

Kraft is also liable since they were shown to have connived with Malvar in the execution of the
compromise agreement, with the intention of depriving Intervenor of its Attorneys fees. There
was unusual timing of Malvars termination of her lawyers services, the execution of the
Compromise Agreement and the Motion to Withdraw Case. They are deemed joint tort-feasers,
those who command, instigate, promote, encourage, advise, countenance, cooperate in, aid, or
abet the commission of a tort, or who approve of it after it is done or if done for their benefit.

Therefore, the Court approves the compromise agreement. It also ordered Malvar and Kraft to
pay the Law Firm the stipulated contingent attorneys fees pf 10% P41,627,593.75 and a further
sum of 10% equivalent of the stock option.
6. T&H Shopfitters Corp., vs. T&H Shopfitters Corp Workers Union, GR No. 191714,
February 26, 2014
Facts:
On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union
(THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union
busting, and Illegal Lockout, with moral and exemplary damages and attorneys fees, against
T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before the Labor
Arbiter (LA).

In their desire to improve their working conditions, respondents and other employees of held
their first formal meeting on November 23, 2003 to discuss the formation of a union. The
following day, seventeen (17) employees were barred from entering petitioners factory premises
located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters warehouse at Subic
Bay Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen
(17) employees were repeatedly ordered to go on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work assignments,
while subcontractors were continuously hired to perform their functions. Respondents sought the
assistance of the National Conciliation and Mediation Board. Subsequently, an agreement
between petitioners and THS-GQ Union was reached. Petitioners agreed to give priority to
regular employees in the distribution of work assignments. Respondents averred, however, that
petitioners never complied with its commitment but instead hired contractual workers. Instead,
Respondents claimed that the work weeks of those employees in the SBFZ plant were drastically
reduced to only three (3) days in a month.

On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was
issued to hold the certification election in both T&H Shopfitters and Gin Queen.

On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The
officers and members of the THS-GQ Union were purportedly excluded from the field trip. On
the evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned
against the union in the forthcoming certification election.

When the certification election was scheduled on October 11, 2004, the employees were escorted
from the field trip to the polling center in Zambales to cast their votes. The remaining employees
situated at the SBFZ plant cast their votes as well. Due to the heavy pressure exerted by
petitioners, the votes for "no union" prevailed.

A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed
its employees of the expiration of the lease contract between Gin Queen and its lessor in
Castillejos, Zambales and announced the relocation of its office and workers to Cabangan,
Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or
grassland. The said union officers and members were made to work as grass cutters in Cabangan,
under the supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances,
the employees assigned in Cabangan did not report for work. The other employees who likewise
failed to report in Cabangan were meted out with suspension.

Issues:
Whether ULP acts were committed by petitioners against respondents, b) Whether or not the
respondents are entitled to attorneys fees

Ruling:
ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly
Article 248) of the Labor Code.

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its
employees, to the exclusion of union members, before the scheduled certification election; 2) the
active campaign by the sales officer of petitioners against the union prevailing as a bargaining
agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4)
the continuous hiring of subcontractors performing respondents functions; 5) assigning union
members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a
rotational basis for union members, taken together, reasonably support an inference that, indeed,
such were all orchestrated to restrict respondents free exercise of their right to self-organization.

The Court is of the considered view those petitioners undisputed actions prior and immediately
before the scheduled certification election, while seemingly innocuous, unduly meddled in the
affairs of its employees in selecting their exclusive bargaining representative.
However, the respondents are not entitled to Attorneys Fees. The applicable law in this case is
Article 111 of the Labor Code. Pursuant thereto, the award of Attorneys Fees is limited to cases
of unlawful withholding of wages. In this case, the Court cannot find any claim or proof that
petitioners unlawfully withtheld the wages of respondents.
 TOPIC 14 MISCELLANEOUS PROVISIONS
A. SPECIAL TYPES OF WORKERS
CASES:

1. Bernardo vs. NLRC, 310 SCRA 186 [1999]

Facts:
The 43 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". The said agreement
provides for the manner of how they are hired and be rehired, the amount of their wages
(P118.00 per day), period of employment (5 days a week, 8 hours a day, training for 1 month, 6
months period) and the manner and methods of how their works are to be done (Sort out bills
according to color; Count each denomination per hundred, either manually or with the aid of a
counting machine; Wrap and label bills per hundred; Put the wrapped bills into bundles; and
Submit bundled bills to the bank teller for verification.) Many of their employments were
renewed every six months. Claiming that they should be considered as regular employees they
filed a complaint for illegal dismissal and recovery of various benefits.

Labor arbiters decision: complaint is dismissed for lack of merit (the terms of the contract shall
be the law between the parties.). Affirmed by the NLRC (Art. 280 is not controlling herein but
Art. 80) (the Magna Carta for Disabled Persons was not applicable, "considering the prevailing
circumstances of the case.") and denied motion for reconsideration.

Issues:
Does petitioners considered as regular employees?

Law:
Art.78 & 80 of the Labor Code and the Magna Carta for Disabled Persons.

Ruling:
Yes. The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employment was illegal.

The stipulations in the employment contracts indubitably conform with Article 80, however, the
application of Article 280 of the Labor Code is justified because of the advent of RA No. 7277
(the Magna Carta for Disabled Persons) which mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-bodied person
(compensation, privileges, benefits, fringe benefits, incentives or allowances) 27 of the
petitioners are considered regular employees by provision of law regardless of any agreement
between the parties as embodied in article 280 in relation to article 281 of the Labor Code.
The test is whether the former is usually necessary or desirable in the usual business or trade of
the employer. Hence, the employment is considered regular, but only with respect to such
activity, and while such activity exist. Without a doubt, the task of counting and sorting bills is
necessary and desirable to the business of respondent bank.

When the bank renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees. No employer is allowed to determine indefinitely
the fitness of its employees. Those who have worked for only 6 months and employments were
not renewed are not considered regular employees.

Opinion:
The Court correctly finds that 27 of the handicapped workers are regular employees. The test is
whether the activity is usually necessary or desirable in the usual business or trade of the
employer. The employment is considered regular, but only with respect to such activity, and
while such activity exist. Without a doubt, the task of counting and sorting bills is necessary and
desirable to the business of respondent bank. As regular employees, the twenty-seven petitioners
are entitled to security of tenure; that is, their services may be terminated only for a just or
authorized cause.

B. EMPLOYMENT OF WOMEN
CASES:

1. PT&T vs. NLRC, 272 SCRA 596 [1997]

Facts:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine
Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment of
civil status and defalcation of company funds as grounds to terminate the services of an
employee. That employee, herein private respondent Grace de Guzman, contrarily argues
that what really motivated PT&T to terminate her services was her having contracted marriage
during her employment, which is prohibited by petitioner in its company policies. She thus
claims that she was discriminated against in gross violation of law, such a proscription by an
employer being outlawed by Article 136 of the Labor Code. Issue: WON the policy of not
accepting or considering as disqualified from work any woman worker who contracts
marriage is valid?
Held:
Petitioners policy of not accepting or considering as disqualified from work any
woman worker who contracts marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws and by no less than the
Constitution. The Constitution, cognizant of the disparity in rights between men and women in
almost all phases of social and political life, provides a gamut of protective provisions.
Acknowledged as paramount in the due process scheme is the constitutional guarantee
of protection to labor and security of tenure. Thus, an employer is required, as a condition sine
qua non prior to severance of the employment ties of an individual under his employ, to
convincingly establish, through substantial evidence, the existence of a valid and just cause in
dispensing with the services of such employee, ones labor being regarded as constitutionally
protected property. The government, to repeat, abhors any stipulation or policy in the nature of
that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. - It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.
In the case at bar, it can easily be seen from the memorandum sent to private respondent by
the branch supervisor of the company, with the reminder, that fully aware that the company is
not accepting married women employee (sic), as it was verbally instructed to you. Again, in the
termination notice sent to her by the same branch supervisor, private respondent was made to
understand that her severance from the service was not only by reason of her concealment
of her married status but, over and on top of that, was her violation of the companys policy
against marriage ( and even told you that married women employees are not applicable [sic] or
accepted in our company.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor
Code on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment, b ut it likewise assaults good morals and public policy,
tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all
accounts inheres in the individual as an intangible and inalienable right.
Hence, while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not be contrary to
law, morals, good customs, public order, or public policy. Carried to its logical consequences,
it may even be said that petitioners policy against legitimate marital bonds would encourage
illicit or common-law relations and subvert the sacrament of marriage.

2. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007
Facts
Velasco started working with Del Monte Philippines (petitioner) on October 21, 1976
as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was
as Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences.
On May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her
absences without permission and a forfeiture of her vacation leave entitlement for the year 1990 -
1991 was imposed against her.
 On September 14, 1992, another warning letter was sent to respondent regarding her
absences without permission during the year 1991-1992. Her vacation entitlement for the said
employment year affected was consequently forfeited. In view of the said alleged absences
without permission, on September 17, 1994, a notice of hearing was sent t to respondent
notifying her of the charges filed against her for violating the Absence Without Official Leave
rule: that is for excessive absence without permission on August 15-18, 29-31 and
September 1-10, 1994.
Respondent having failed to appear on September 23, 1994 hearing, another notice of
hearing was sent to her resetting the investigation on September 30, 1994. It was again
reset to October 5, 1994. After hearing, the petitioner terminated the services of respondent
effective January 16, 1994 due to excessive absences without permission. Issue: WON the
employment of respondent had been terminated on account of her pregnancy, and therefore
violates the Labor Code which prohibits an employer to discharge an employee on account of the
latter's pregnancy.
Held:
Respondent's sickness was pregnancy-related and, therefore, the petitioner cannot terminate
respondent's services because in doing so, petitioner will, in effect, be violating the Labor
Code which prohibits an employer to discharge an employee on account of the latter's
pregnancy.
Article 137 of the Labor Code provides: that it shall be unlawful for any employer:
(1) To deny any woman employee the benefits provided for in this Chapter or to
discharge any woman employed by him for the purpose of preventing her from enjoying
any of the benefits provided under this Code; (2) To discharge such woman on account
of her pregnancy, while on leave or in confinement due to her pregnancy; or (3) To
discharge or refuse the admission of such woman upon returning to her work for fear that she
may again be pregnant. Respondent was able to subsequently justify her absences in
accordance with company rules and policy; that the respondent was pregnant at the time she
incurred the absences; that this fact of preg nancy and its related illnesses had been duly proven
through substantial evidence; that the respondent attempted to file leaves of absence but
thepetitioner's supervisor refused to receive them; that she could not have filed prior leaves due
to her continuing condition; and that the petitioner, in the last analysis, dismissed the respondent
on account of her pregnancy, a prohibited act.
Petitioner terminated the services of respondent on account of her pregnancy which
justified her absences and, thus, committed a prohibited act rendering the dismissal illegal.
 C. EMPLOYMENT OF NURSING EMPLOYEES
D. EMPLOYMENT OF NIGHTWORKERS
E. EMPLOYMENT OF CHILDREN
F. EMPLOYMENT OF DOMESTIC WORKERS
CASES:

1. Remington Industrial Sales Corp., vs. Castaneda, G.R. No. 169295-96, Nov. 20, 2006 citing
Apex Mining
Facts:
The present controversy began when private respondent, Erlinda Castaneda instituted on
March 2, 1998 a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime services, non-payment of service incentive leave pay and non-payment of 13th month
pay against Remington before the NLRC, National Capital Region, Quezon City. The complaint
impleaded Mr. Antonio Tan in his capacity as the Managing Director of Remington.
Erlinda alleged that she started working in August 1983 as company cook with a salary of
Php 4,000.00 for Remington, a corporation engaged in the trading business; that she worked for
six (6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would
end at around 5:30 p.m., or even later, after most of the employees, if not all, had left the
company premises; that she continuously worked with Remington until she was
unceremoniously prevented from reporting for work when Remington transferred to a new site in
Edsa, Caloocan City.
She averred that she reported for work at the new site in Caloocan City on January 15, 1998,
only to be informed that Remington no longer needed her services. Erlinda believed that her
dismissal was illegal because she was not given the notices required by law; hence, she filed her
complaint for reinstatement without loss of seniority rights, salary differentials, service incentive
leave pay, 13th month pay and 10% attorney's fees.
Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic
helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with
Remington's business of trading in construction or hardware materials, steel plates and wire rope
products. It also contended that contrary to Erlinda's allegations that the (sic) she worked for
eight (8) hours a day, Erlinda's duty was merely to cook lunch and "merienda", after which her
time was hers to spend as she pleased. Remington also maintained that it did not exercise any
degree of control and/or supervision over Erlinda's work as her only concern was to ensure that
the employees' lunch and "merienda" were available and served at the designated time.
Remington likewise belied Erlinda's assertion that her work extended beyond 5:00 p.m. as she
could only leave after all the employees had gone.
The truth, according to Remington, is that Erlinda did not have to punch any time card in the
way that other employees of Remington did; she was free to roam around the company premises,
read magazines, and to even nap when not doing her assigned chores. Remington averred that the
illegal dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda who refused
to report for work when Remington moved to a new location in Caloocan City.
Labor Arbiter
Decision of the Labor Arbiter on January 19, 1999, the labor arbiter dismissed the complaint
and ruled that the respondent was a domestic helper under the personal service of Antonio Tan,
finding that her work as a cook was not usually necessary and desirable in the ordinary course of
trade and business of the petitioner corporation, which operated as a trading company, and that
the latter did not exercise control over her functions. On the issue of illegal dismissal, the labor
arbiter found that it was the respondent who refused to go with the family of Antonio Tan when
the corporation transferred office and that, therefore, respondent could not have been illegally
dismissed.
Respondent appealed the decision to the NLRC.
Issues:
1) Whether or not, respondent is a domestic helper or a regular employee of the company
2) Whether or not, respondent was illegally dismissed.

Held:
1) Respondent is a regular employee of the company. There was no allegation by
respondent that complainant had ever worked in the residence of Mr. Tan. What is clear
from the facts narrated by the parties is that complainant continuously did her job as a
cook in the office of respondent serving the needed food for lunch and merienda of the
employees. Thus, her work as cook inured not for the benefit of the family members of
Mr. Tan but solely for the individual employees of respondent.
Complainant's work schedule and being paid a monthly salary of P4,000.00 are clear
indication that she is a company employee who had been employed to cater to the food needed
by the employees which were being provided by respondent to form part of the benefit granted
them.
In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the staff
houses of an industrial company was a regular employee of the said firm. We ratiocinated that:

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper"
or "domestic servant" are defined as follows:

"The term 'househelper' as used herein is synonymous to the term 'domestic servant' and shall
refer to any person, whether male or female, who renders services in and about the employer's
home and which services are usually necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's
family."
The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer's home to minister exclusively to the personal comfort and enjoyment
of the employer's family. Such definition covers family drivers, domestic servants, laundry
women, yayas, gardeners, houseboys and similar househelps.

The mere fact that the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its business, as in its staffhouses
for its guest or even for its officers and employees, warrants the conclusion that such househelper
or domestic servant is and should be considered as a regular employee of the employer and not
as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b),
Book 3 of the Labor Code, as amended

2)
As a regular employee, respondent enjoys the right to security of tenure under Article 279 38
of the Labor Code and may only be dismissed for a just 39 or authorized 40 cause, otherwise the
dismissal becomes illegal and the employee becomes entitled to reinstatement and full
backwages computed from the time compensation was withheld up to the time of actual
reinstatement.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a form of neglect of duty; hence, a just cause for termination of employment
by the employer under Article 282 of the Labor Code, which enumerates the just causes for
termination by the employer. For a valid finding of abandonment, these two factors should be
present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a
clear intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that the
employee has no more intention to work. The intent to discontinue the employment must be
shown by clear proof that it was deliberate and unjustified. This, the petitioner failed to do in the
case at bar.

2. Co vs. Vargas, G.R. No. 195167, November 16, 2011

FACTS:
On 22 April 2003, respondent, Lina B. Vargas, filed against Nathaniel Bakeshop and its owner,
Fernando Co, a complaint for underpayment or non-payment of wages and holiday pay. The
complaint was later amended to include illegal dismissal as a cause of action and the non-
payment of service incentive leave.
Respondent alleged that she started working at the bakeshop in October 1994 as a baker and
worked from 8:00am to 8:30pm, Monday to Saturday. Aside from baking, respondent also serve
the customers and supervised the other workers in the absence of the owner. Furthermore,
respondent claimed that she sometimes cooked and did the chores of the housemaid whenever
the latter was not available. Respondent has a salary of P202/day, which she received every
Saturday afternoon. During the period of her employment, respondent was not given a pay slip
and she was never asked to sign a payroll.

On April 6, 2003, petitioner Cos wife, Nely Co, told respondent to cook their lunch because the
housemaid was ironing clothes. Since respondent was busy preparing customers orders, she lost
track of time and was unable to cook lunch as instructed. Irate at respondents failure to cook,
Nely Co cussed respondent and told her to leave and never to return because she was not needed
anymore. Respondent was so humiliated and could no longer bear the treatment she received
from her employers that she decided to take her salary and leave that same day. Respondent later
filed the complaint against Nathaniel Bakeshop and its owner, Fernando Co.

ISSUE:

1. Whether or not respondent was an employee or a mere house help of the petitioner.
2. Whether of not respondent was illegally dismissed.

RULING:

1. The respondent of is an employee of the petitioner.

The evidence show that respondent is working within the premises of the business of Co and in
relation or in connection with such business. The place of business of Co and his residence is
located at the place. Thus, Co exercises control and supervision over petitioners functions. Even
if respondent was actually working as domestic servant in Cos residence, her act of taking
orders, would warrant the conclusion that respondent should be considered as a regular employee
and not as a mere family house helper or domestic servant of Co.

2. Yes, the respondent was illegally dismissed.

Since petitioner is an employee of private respondents, she is entitled to security of tenure.
Assuming further that respodent abandoned her job, the Supreme Court held in Ultra Villa Food
Haus and/or Rosie Tio vs. NLRC that to constitute abandonment, two requisites must concur: (1)
the failure to report to work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship as manifested by some overt acts, with the
second requisite as the more determinative factor. The burden of proving abandonment as a just
cause for dismissal is on the employer. Petitioner failed to discharge this burden. The only
evidence adduced by petitioner to prove abandonment was the affidavits of their househelpers
and employees.

G. EMPLOYMENT OF HOMEWORKERS
H. EMPLOYMENT OF NON-RESIDENT ALIENS
I. EMPLOYMENT OF STUDENTS & WORKING SCHOLAR
J. EMPLOYMENT OF ACADEMIC/NON-ACADEMIC PERSONNEL IN PRIVATE
EDUCATIONAL INSTITUTION
K. EMPLOYMENT OF SENIOR CITIZENS
L. EMPLOYMENT OF DRIVERS AND CONDUCTORS IN THE PUBLIC UTILITY TRANSPORT
INDUSTRY
CASES:

1. University of the East et al., vs. Pepanio, G.R. No. 193897, Jan. 23, 2013
FACTS:
In 1992, DECS issued the Revised Manual for Regulations for Private Schools. Article XI,
Section 44, par 1a, of which requires college faculty members to have a masters degree as a
minimum educational qualification for acquiring regular status.

In 1994, petitioner University of the East (UE) and the UE Faculty Association executed a five-
year CBA with effect up to 1999 which provided, that UE shall extend only semester-to-semester
appointments to college faculty staffs who did not possess the minimum qualifications. Those
with such qualifications shall be given probationary appointments and their performance on a
full-time or full-load basis shall be reviewed for every semester.

UE hired respondent Mariti D. Bueno in 1997 and respondent Analiza F. Pepanio in 2000, both
on a sem-to-sem basis to teach in its college.
Pursuant to the new CBA, UE extended probationary appointments to respondents. In October
2003, the Dean of UE College of Arts and Sciences, petitioner Eleanor Javier, sent notices to
probationary faculty members, reminding them of their expiration of probationary status of those
lacking post graduate qualification by the end of the first semester of SY 2003-2004. Pepanio
replied that she was enrolled at the Polytechnic University of the Philippines Graduate School.
Bueno replied that she was not interested in acquiring tenure as she was returning to her
province.

Bueno later wrote UE, demaning that it consider her a regular employee based on her six-and-a-
half-year service on a full-load basis, given that UE hired her in 1997 when what was in force
was still the 1994 CBA. Pepanio made the same demands, respondents filed cases of illegal
dismissal against the school before the LA office.

ISSUE:

Whether of not UE illegally dismissed Bueno and Pepanio.

RULING:

No. in 1994, the legislature transferred the power to prescribe such qualifications to the CHED.
CHEDs charter authorized it to set minimum standards for programs and institutions of higher
learning.

The manual of Regulations continued to apply to colleges and universities and suppletory to the
Joint Order until 2010 when CHED issued Revised Manual of Regulations which specifically
applies only to institutions involved in tertiary education.

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The
operation of educational institutions involves public interest. The government has a right to
ensure that only qualified persons, in possession of sufficient academic knowledge and teaching
skills, are allowed to teach in such institutions. Government regulation in this field of human
activity is desirable for protecting, not only the students, but the public as we;; from ill-prepared
teachers, who are lacking the required scientific or technical knowledge. They may be required
to take an examination or to possess postgraduate degrees as prerequisite to employment.
Respondents were each given only semester-to-semester appointments from the beginning of
their employment with UE precisely because they lacked the required masters degree. It was
only when UE and the faculty union signed their 2001 CBA that the school extended petitioners
a conditional probationary status subject to their obtaining a masters degree within their
probationary period. It is clear therefore, that the parties intended to subject respondents
permanent status appointments to the standards set by the law and the university.

Here UE gave respondents Bueno and Pepanio more than ample of opportunities to acquire the
postgraduate degree but they did not take advantage of such opportunities. Justice, fairness, and
due process demand that an employer should not be penalized for situations where it had little of
no participation or control.

2. Colegio Del Santisimo Rosario et al., vs. Rojo, G.R. No. 170388, Sept. 4, 2013 citing
Mercado et al., vs. AMA
Facts:
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on
probationary basis for the school years 1992-1993, 1993-1994 and 1994-1995. On April 5, 1995,
CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew respondent's
services.
Thus, on July 13, 1995, respondent filed a Complaint for illegal dismissal. He alleged that since
he had served three consecutive school years which is the maximum number of terms allowed
for probationary employment, he should be extended permanent employment. Citing paragraph
75 of the 1970 Manual of Regulations for Private Schools (1970 Manual).

On the other hand, petitioners argued that respondent knew that his Teacher's Contract for school
year 1994-1995 with CSR would expire on March 31, 1995. Accordingly, respondent was not
dismissed but his probationary contract merely expired and was not renewed. Petitioners also
claimed that the "three years" mentioned refer to "36 months," not three school years. Since
respondent served for only three school years of 10 months each or 30 months, then he had not
yet served the "three years" or 36 months mentioned in the Manual.

Issue:
Whether or not an elementary teacher hired for three consecutive school years as a probationary
employee automatically and/or by law becomes a permanent employee upon completion of his
third year of probation.

Ruling:
Petition denied. In Mercado v. AMA Computer College-Paraaque City, Inc. , it was decided
that cases dealing with employment on probationary status of teaching personnel are not
governed solely by the Labor Code as the law is supplemented, with respect to the period of
probation, by special rules found in the Manual of Regulations for Private Schools (the Manual).
With regard to the probationary period, Section 92 of the 1992 Manual provides:

Section 92. Probationary Period. Subject in all instances to compliance with the Department
and school requirements, the probationary period for academic personnel shall not be more than
three consecutive years of satisfactory service for those in the elementary and secondary levels,
six consecutive regular semesters of satisfactory service for those in the tertiary level, and nine
consecutive trimesters of satisfactory service for those in the tertiary level where collegiate
courses are offered on a trimester basis.

In this case, petitioners' teachers who were on probationary employment were made to enter into
a contract effective for one school year. Thereafter, it may be renewed for another school year,
and the probationary employment continues. At the end of the second fixed period of
probationary employment, the contract may again be renewed for the last time. Such
employment for fixed terms during the teachers' probationary period is an accepted practice in
the teaching profession.

However, this scheme "of fixed-term contract is a system that operates during the probationary
period and for this reason is subject to Article 281 of the Labor Code," which provides:

. . . The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.

That teachers on probationary employment also enjoy the protection afforded by Article 281 of
the Labor Code is supported by Section 93 of the 1992 Manual which provides:

Sec. 93. Regular or Permanent Status. Those who have served the probationary period shall
be made regular or permanent. Full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent.
The above provision clearly provides that full-time teachers become regular or permanent
employees once they have satisfactorily completed the probationary period of three school years.
The use of the term satisfactorily necessarily connotes the requirement for schools to set
reasonable standards to be followed by teachers on probationary employment. For how else can
one determine if probationary teachers have satisfactorily completed the probationary period if
standards therefor are not provided? As such, "no vested right to a permanent appointment shall
accrue until the employee has completed the prerequisite three-year period necessary for the
acquisition of a permanent status. However, mere rendition of service for three consecutive years
does not automatically ripen into a permanent appointment. It is also necessary that the employee
be a full-time teacher, and that the services he rendered are satisfactory."
However, for teachers on probationary employment, in which case a fixed term contract is not
specifically used for the fixed term it offers , it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be applied.
These terms, in addition to those expressly provided by the Labor Code, would serve as the just
cause for the termination of the probationary contract. The specific details of this finding of just
cause must be communicated to the affected teachers as a matter of due process. Corollarily,
should the teachers not have been apprised of such reasonable standards at the time specified,
they shall be deemed regular employees.

3. Computer College-Paranaque City, GR No. 183572, April 13, 2010

FACTS
The petitioners were faculty members who started teaching at AMACC. The petitioner
Mercado was engaged as a Professor 3, while petitioner Tonog was engaged as an Assistant
Professor 2. On the other hand, petitioners De Leon, Lachica and Alba, Jr., were all engaged
as Instructor 1. The petitioners executed individual Teacher's Contracts for each of the
trimesters that they were engaged to teach.
For the school year 2000-2001, AMACC implemented new faculty screening
guidelines, set forth in its Guidelines on the Implementation of AMACC Faculty
Plantilla. Under the new screening guidelines, teachers were to be hired or maintained based
on extensive teaching experience, capability, potential, high academic qualifications and
research background. The performance standards under the new screening guidelines were
also used to determine the present faculty members' entitlement to salary increases. The
petitioners failed to obtain a passing rating based on the performance standards; hence
AMACC did not give them any salary increase.
Because of AMACC's action on the salary increases, the petitioners filed a complaint
with the Arbitration Branch of the NLRC on July 25, 2000, for underpayment of wages, non-
payment of overtime and overload compensation, 13th month pay, and for discriminatory
practices.
ISSUE:

The petitioners cite the following errors in the CA decision:

1) The CA gravely erred in reversing the LA and NLRC illegal dismissal
rulings; and
2) The CA gravely erred in not ordering their reinstatement with full,
backwages.

RULING:
We find the petition meritorious.

The Conflict: Probationary Status

and Fixed-term Employment
The existence of the term-to-term contracts covering the petitioners' employment is
not disputed, nor is it disputed that they were on probationary status not permanent or
regular status from the time they were employed on May 25, 1998 and until the expiration
of their Teaching Contracts on September 7, 2000. As the CA correctly found, their teaching
stints only covered a period of at least seven (7) consecutive trimesters or two (2) years and
three (3) months of service. This case, however, brings to the fore the essential question of
which, between the two factors affecting employment, should prevail given AMACC's
position that the teachers contracts expired and it had the right not to renew them. In other
words, should the teachers' probationary status be disregarded simply because the contracts
were fixed-term?
Under the given facts where the school year is divided into trimesters, the school
apparently utilizes its fixed-term contracts as a convenient arrangement dictated by the
trimestral system and not because the workplace parties really intended to limit the period of
their relationship to any fixed term and to finish this relationship at the end of that term. If we
pierce the veil, so to speak, of the parties' so-called fixed-term employment contracts, what
undeniably comes out at the core is a fixed-term contract conveniently used by the school to
define and regulate its relations with
Given the clear constitutional and statutory intents, we cannot but conclude that in a
situation where the probationary status overlaps with a fixed-term contract not specifically
used for the fixed term it offers, Article 281 should assume primacy and the fixed-period
character of the contract must give way. This conclusion is immeasurably strengthened by
the petitioners' and the AMACC's hardly concealed expectation that the employment on
probation could lead to permanent status, and that the contracts are renewable unless the
petitioners fail to pass the school's standards.
To highlight what we mean by a fixed-term contract specifically used for the fixed
term it offers, a replacement teacher, for example, may be contracted for a period of one year
 to temporarily take the place of a permanent teacher on a one-year study leave. The
expiration of the replacement teacher's contracted term, under the circumstances, leads to no
probationary status implications as she was never employed on probationary basis; her
employment is for a specific purpose with particular focus on the term and with every intent
to end her teaching relationship with the school upon expiration of this term.
If the school were to apply the probationary standards (as in fact it says it did in the
present case),these standards must not only be reasonable but must have also been
communicated to the teachers at the start of the probationary period, or at the very least, at
the start of the period when they were to be applied. These terms, in addition to those
expressly provided by the Labor Code, would serve as the just cause for the termination of
the probationary contract. As explained above, the details of this finding of just cause must
be communicated to the affected teachers as a matter of due process.
AMACC, by its submissions, admits that it did not renew the petitioners' contracts
because they failed to pa ss the Performance Appraisal System for Teachers (PAST) and
other requirements for regularization that the school undertakes to maintain its high academic
standards. The evidence is unclear on the exact terms of the standards, although the school
also admits that these were standards under the Guidelines on the Implementation of
AMACC Faculty Plantilla put in place at the start of school year 2000-2001.
In this light, the CA decision should be reversed. Thus, the LA's decision, affirmed as
to the results by the NLRC, should stand as the decision to be enforced, appropriately re-
computed to consider the period of appeal and review of the case up to our level.
Given the period that has lapsed and the inevitable change of circumstances that must
have taken place in the interim in the academic world and at AMACC, which changes
inevitably affect current school operations, we hold that in lieu of reinstatement the
petitioners should be paid separation pay computed on a trimestral basis from the time of
separation from service up to the end of the complete trimester preceding the finality of this
Decision. The separation pay shall be in addition to the other awards, properly recomputed,
that the LA originally decreed.

4. Herrera-Manaois vs. St. Scholasticas College, GR No. 188914, December 11, 2013
Facts:
SSC, is a private educational institution offering elementary, secondary, and tertiary education.
Manaois graduated from SSC in October 1992 with a degree in Bachelor of Arts in English. In
1994, she returned to her alma mater as a part time English teacher. After taking a leave of
absence for one year, she was again rehired by SSC for the same position. Four years into the
service, she was later on recommended by her Department Chairperson to become a full-time
faculty member of the English Department.

Manaois applied for a position as full-time instructor for school year 2000-2001. She mentioned
in her application letter that she had been taking the course Master of Arts in English Studies,
Major in Creative Writing, at the University of the Philippines, Diliman (UP); that she was
completing her master's thesis; and that her oral defense was scheduled for June 2000. In a reply
letter dated 17 April 2000, the Dean of Arts and Sciences informed her of the SSC
Administrative Council's approval of her application. She was then advised to maintain the good
performance that she had shown for the past years and to submit the necessary papers pertaining
to her master's degree. Accordingly, SSC hired her as a probationary full-time faculty member
with the assigned rank of instructor for the school year 2000-2001. Her probationary
employment continued for a total of three consecutive years. Throughout her service as a
probationary full-time faculty member with no derogatory record, she was given above
satisfactory ratings by both the Department Chairperson and the Dean of Arts and Sciences.
Because of the forthcoming completion of her third year of probationary employment, Manaois
wrote the Dean of Arts and Sciences requesting an extension of her teaching load for the school
year 2003-2004. She again mentioned in her letter that she was a candidate for a master's degree
in English Studies; that the schedule of her oral defense may actually materialize anytime within
the first academic semester of 2003; and that she intended to fully earn her degree that year. She
also furnished the school with a Certification from UP, stating that she had already finished her
coursework in her master's studies. Furthermore, she indicated that it was her long-term goal to
apply for a return to full-time faculty status by then and for SSC to consider the aforesaid
matters. Manaois eventually received a letter from the Dean of College and Chairperson of the
Promotions and Permanency Board officially informing her of the board's decision not to renew
her contract.
Manaois sought clarification and reconsideration of the decision of SSC to terminate her
services. SSC denied her request in a letter dated 11 July 2003. Consequently, she filed a
complaint for illegal dismissal, payment of 13th month pay, damages, and attorney's fees against
SSC.
SSC explained that upon consideration of the written application of Manaois, the Dean of Arts
and Sciences wrote the following notation at the bottom of her letter of application
"APPROVED: on the basis that she finishes her MA." The college clarified that the application
for full-time faculty status of Manaois was accepted with the specific qualification that she
would submit the necessary papers pertaining to her master's degree. It stressed that permanency
may only be extended to full-time faculty members if they had fulfilled the criteria provided in
the SSC Faculty Manual. According to SSC, the Chair of the English Department did not
endorse the application for permanency of Manaois, since the latter had not finished her master's
degree within the three-year probationary period. SSC then refuted the supposed performance
ratings of Manaois and instead pointed out that she had merely received an average rating from
her students. Finally, it asserted that her specialization was the subject of writing and not English
Literature, which was the subject area that they needed a faculty member for.

Issue:
Whether or not the completion of a master's degree is required in order for a tertiary level
educator to earn the status of permanency in a private educational institution.
Ruling:
Upheld decision of CA in setting aside the NLRC Decision and in ruling that the requirement to
obtain a master's degree was made known to Manaois. The contract she signed clearly
incorporates the rules, regulations, and employment conditions contained in the SSC Faculty
Manual. Viewed next to the statements and actions of Manaois i.e., the references to
obtaining a master's degree in her application letter, in the subsequent correspondences between
her and SSC, and in the letter seeking the extension of a teaching load for the school year 2003-
2004; and her submission of certifications from UP and from her thesis adviser we find that
there is indeed substantial evidence proving that she knew about the necessary academic
qualifications to obtain the status of permanency. We also agree with the CA that the labor
arbiter and the NLRC gravely misinterpreted the section in the SSC Faculty Manual, which
purportedly provided for a lower academic requirement for full-time faculty members with the
rank of instructor, regardless of whether they have attained permanency or are still on probation.
The minimum requirements provided for the rank of instructor merely refer to how instructors
are ranked, and not to the academic qualifications required to attain permanency. It must be
noted that the section in the SSC Faculty Manual on the ranking of instructors cover those who
are still on probationary employment and those who have already attained permanency. It would
therefore be erroneous to simply read the section on the ranking of instructors without taking
into consideration the previously quoted section on permanency in order to determine the
academic qualifications for the position of permanent full-time faculty member with the rank of
instructor. Thus, to properly arrive at the criteria, the sections on both the permanency and the
ranking of an instructor, as provided in the SSC Manual, must be read in conjunction with each
another.
Reiterating the rule that mere completion of the three-year probation, even with an above-
average performance, does not guarantee that the employee will automatically acquire a
permanent employment status. It is settled jurisprudence that the probationer can only qualify
upon fulfillment of the reasonable standards set for permanent employment as a member of the
teaching personnel. In line with academic freedom and constitutional autonomy, an institution of
higher learning has the discretion and prerogative to impose standards on its teachers and
determine whether these have been met. Upon conclusion of the probation period, the college or
university, being the employer, has the sole prerogative to make a decision on whether or not to
re-hire the probationer. The probationer cannot automatically assert the acquisition of security of
tenure and force the employer to renew the employment contract. In the case at bar Manaois
failed to comply with the stated academic qualifications required for the position of a permanent
full-time faculty member.
There is no legal obligation on the part of SSC to reappoint Manaois after the lapse of her
temporary appointment.
 TOPIC 15 MEDICAL, DENTAL AND OCCUPATIONAL SAFETY
CASES:

1. Tolosa vs. NLRC, G.R. No. 149578, April 10, 2003

Facts: Captain Virgilio Tolosa was master of the vessel M/V Donna owned by Quana-Kaiun, and
was hired through its manning agent, Asia Bulk Transport Phils., Inc. (Asia Bulk). During
channeling activities upon the vessels departure from Yokohama on November 6, 1992, Capt.
Tolosa was drenched with rainwater. Subsequently, he contracted fever on November 11 which
was later on accompanied by loose bowel movement for the succeeding 12 days. His condition
was reported to Asia Bulk and the US Coast Guard Headquarters in Hawaii on November 15.
However, before he could be evacuated, he died on November 18, 1992.

Evelyn Tolosa, the widow, filed a complaint before the POEA for damages against Pedro Garate,
Chief Mate of the vessel, Mario Asis, Second Mate, Asia Bulk and Quana-Kaiun. The case was
transferred to the NLRC. The Labor Arbiter ruled in favor of the widow, awarding actual
damages plus legal interest, as well as moral and exemplary damages and attorneys fees. On
appeal to the NLRC, the decision of the Labor Arbiter was vacated and the complaint was
dismissed for lack of jurisdiction over the subject matter of the action pursuant to the provisions
of the Labor Code, as amended. Sustaining the NLRC, the CA ruled that the labor commission
had no jurisdiction over the subject matter of the action filed by petitioner. Her cause did not
arise from an employer-employee relation, but from a quasi-delict or tort. Under Article 217
(a)(4) of the Labor Code which allows an award of damages incident to an employer-employee
relation, the damages awarded were not proper as she is not an employee, but merely the wife of
an employee.

Issues:
(1) Whether or not the Labor Arbiter and the NLRC had jurisdiction over petitioners action.
(2) Whether or not the monetary award granted by the Labor arbiter has already reached finality.

Held:
(1) The Court affirmed that the claim for damages was filed not for claiming damages under the
Labor Code but under the Civil Code. The Court was convinced that the allegations were based
on a quasi-delict or tort. Also, she had claimed for actual damages for loss of earning capacity
based on a life expectancy of 65 years, which is cognizable under the Civil Code and can be
recovered in an action based on a quasi-delict. Though damages under a quasi-delict may be
recoverable under the jurisdiction of labor arbiters and the NLRC, the relief must be based on an
action that has reasonable casual connection with the Labor Code, labor statutes or CBAs. It
must be noted that a workers loss of earning capacity and backlisting are not to be equated with
wages, overtime compensation or separation pay, and other labor benefits that are generally
cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a
quasi-delict or a similar cause within the realm of Civil Law.

In the present case, Evelyn Tolosas claim for damages is not related to any other claim under
Article 217, other labor statutes, or CBAs. She cannot anchor her claim for damages to Article
161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a
safety and health standard under Book IV of the same Code. The enforcement of this labor
standard rests with the labor secretary. It is not the NLRC but the regular courts that have
jurisdiction over action for damages, in which the employer-employee relation is merely
incidental, and in which the cause of action proceeds from a different source of obligation such
as a tort.

(2) On the finality of the award, the Court ruled that issues not raised in the court below cannot
be raised for the first time on appeal. Thus, the issue being not brought to the attention of the
Court of Appeals first, this cannot be considered by the Supreme Court. It would be tantamount
to denial of the right to due process against the respondents to do so.

2. U-Bix Corp., vs. Bandiola, 525 SCRA 566 (2007)

Facts: Sometime in April 1995, Bandiola was employed by U-BIX to install furniture for its
customers. On 13 April 1997, Bandiola and two other U-BIX employees were involved in
a vehicular accident on their way to Baguio, where they were assigned by U-BIX to install
furniture for an exhibit. As a result of the accident, Bandiola sustained a fracture on his left leg.
Bandiola and his co-employees were initially brought to the Rosario District Hospital. The next
day, 14 April 1997, they were transferred to the Philippine Orthopedic Hospital (Orthopedic).
After his broken leg was cemented, Bandiola was advised to go back for further medical
treatment. U-BIX paid for the medical expenses incurred in both hospitals. Bandiola claims that
he asked U-BIX for financial assistance but that the latter refused. He attached the receipts,
issued by Medical Center Paraaque (MCP) and Dr. Celestino Musngi, for medical expenses
with a total amount of P7,742.50. He also attached a copy of the Roentgenological Report by a
Radiologist in MCP.

Bandiola added that he paid for other medical expenses for which no receipts were issued. On
September 1998, Bandiola filed a Complaint before the Labor Arbiter, where he alleged
underpayment of salary; non-payment of overtime pay; premium pay for work performed on
holidays and rest days; separation pay; service incentive leave pay; 13th month pay; and the
payment of actual, moral and exemplary damages. The Labor Arbiter ordered in its Decision that
respondent pay the complainant: Salary Differential, Service incentive and 13th Month pay while
dismissing all other claims. Bandiola filed an appeal before the NLRC. The NLRC amended the
Decision rendered by the Labor Arbiter. It ruled that U-BIX should reimburse Bandiola the
amount of P12,742.50 for the medical expenses he incurred in connection with his fractured leg.
It further ruled that U-BIX is liable to pay Bandiola P25,000.00 in moral damages and
P25,000.00 in exemplary damages for refusing to reimburse Bandiola for the medical expenses
he incurred after it failed to report to the Social Security System (SSS) the injuries sustained
by Bandiola. Thereafter, U-BIX filed a Motion for Reconsideration, which was denied by the
NLRC. On appeal, the Court of Appeals modified the NLRC Resolution. It affirmed Bandiola's
entitlement to reimbursement of his medical expenses, but reduced the amount to P7,742.50, the
amount of actual damages he was able to prove. It also affirmed without modification the award
of moral and exemplary damages, and the monetary award granted by the Labor Arbiter.
Issue: Whether or not the Honorable Court of Appeals erred in ordering petitioner U-
Bix to reimburse respondent Bandiola for the alleged medical expenses when there was no
evidence submitted by respondent in support thereof.

Ruling: The petition is without merit. Contrary to the arguments put forward by U-BIX, it is
liable to reimburse Bandiola the amount of P7,742.50 for medical expenses because its failure to
comply with its duty to record and report Bandiola's injury to the SSS precluded Bandiola from
making any claims. Moreover, U-BIX, by its own admission, reimbursed its other employees
who were involved in the same accident for their medical expenses. Clearly, the reimbursement
of medical expenses for injuries incurred in the course of employment is part of the benefits
enjoyed by U-BIX's employees. The only justification for its refusal to reimburse Bandiola was
that he intended to defraud the company by presenting spurious receipts amounting to P7,742.50
that were allegedly issued four months before their presentation.

ART. 205 RECORD OF DEATH OR DISABILITY

(a) All employers shall keep a logbook to record chronologically the sickness, injury or death of
their employees, setting forth therein their names, dates and places of the contingency, nature of
the contingency and absences. Entries in the logbook shall be made within five days from notice
or knowledge of the occurrence of contingency. Within five days after entry in the logbook, the
employer shall report to the System only those contingencies he deems to be work-connected.

(b) All entries in the employers logbook shall be made by the employer or any of his authorized
official after verification of the contingencies or the employees absences for a period of a day or
more. Upon request by the System, the employer shall furnish the necessary certificate regarding
information about any contingency appearing in the logbook, citing the entry number, page
number and date. Such logbook shall be made available for inspection to the duly authorized
representatives of the System.

ART 206. NOTICE OF SICKNESS, INJURY OR DEATH - Notice of sickness, injury or death
shall be given to the employer by the employee or by his dependents or anybody on his
behalf within five days from the occurrence of the contingency. No notice to the employer shall
be required if the contingency is known to the employer or his agents or representatives. As a
general rule, the injured employee must notify his employer, who is obligated to enter the notice
in a logbook within five days after notification. Within five days after making the entry, the
employer of a private company reports the work-related sickness or injury to the SSS. The claim
is forwarded to the SSS, which decides on the validity of the claim. When the SSS denies the
claim, the denial may be appealed to the Employees' Compensation Commission (ECC) within
30 days. However, the law provides an exception to the rule requiring an employee to notify his
or her employer of his injuries.

Under Section B of ECC Board Resolution No. 2127, issued on 5 August 1982, notice of injury,
sickness or death of the employee need not be given to the employer in any of the following
situations:
(1) When the employee suffers the contingency within the employer's premises;
(2) When the employee officially files an application for leave of absence by reason of the
contingency from which he suffers;
(3) When the employer provides medical services and/or medical supplies to the employee who
suffers from the contingency; and
(4) When the employer can be reasonably presumed to have had knowledge of the employee's
contingency, in view of the following circumstances:(4.1) The employee was performing an
official function for the employer when the contingency occurred; (4.2) The employee's
contingency has been publicized through mass media outlets; or (4.3) The specific circumstances
of the occurrence of the contingency have been such that the employer can be reasonably
presumed to have readily known it soon thereafter; or (4.4) Any other circumstances that may
give rise to a reasonable presumption that the employer has been aware of the contingency.

In the present case, there is no dispute that Bandiola's leg injury was sustained in the course of
his employment with U-BIX. At the time of the accident, Bandiola was on the way to Baguio,
where he was ordered by U-BIX to install furniture for an exhibit. Moreover, U-BIX was aware
that Bandiola, as well as his other co-employees, were injured during the accident. U-BIX
admitted to providing Bandiola and his co-employees with medical assistance and it even sent its
representative, Rey Reynes, to Rosario District Hospital, where they were confined, and had
them transferred to the Orthopedic. U-BIX was also aware that the Orthopedic
instructed Bandiola to return for further medical treatment. Itis implicit that Bandiola needed
further treatment for his broken leg and was, thus, incapacitated to work. Given the foregoing
circumstances, U-BIX had the legal obligation to record pertinent information in connection with
the injuries sustained by Bandiola in its logbook within five days after it had known about the
injuries; and to report the same to the SSS within five days after it was recorded in the logbook,
in accordance with Articles 205 and 206 of the Labor Code. Had U-BIX performed its lawful
duties, the SSS, or the ECC on appeal, could have properly considered whether or
not Bandiola was entitled to reimbursement for his medical expenses, as well as disability
benefits while he was unable to work. However, U-BIX did not present any evidence showing
that it had complied with these legal requirements. It had not even replied to Bandiola's
allegations in his Position Paper, dated 13 April 1998, that its employees were not even members
of the SSS. By failing to report Bandiola's injury to the SSS, U-BIX disregarded the law and its
purpose; that is, to provide a proper and prompt settlement of his claims. Instead, U-BIX
arrogated upon itself the duty of determining which medical expenses are proper for
reimbursement. In doing so, it could unnecessarily delay and unjustifiably refuse to
reimburse Bandiola for medical expenses even if they were adequately supported by receipts, as
was done in this instance. The expense and delay undergone by Bandiola since 1997 in obtaining
reimbursement for his medical expenses of P7,742.50 very clearly defeat the purpose of the law.
The instant Petition is denied

3. Ocean Builders Construction vs. Sps. Cubacub, GR No. 150898, April 13, 2011
Facts: Bladimir Cubacub (Bladimir) was employed as maintenance man by petitioner-company
Ocean Builders Construction Corp. at its office in Caloocan City. On April 9, 1995, Bladimir
was afflicted with chicken pox. He was thus advised by petitioner Dennis Hao (Hao), the
company's general manager, to rest for three days which he did at the company's "barracks"
where he lives free of charge. Three days later or on April 12, 1995, Bladimir went about his
usual chores of manning the gate of the company premises and even cleaned the company
vehicles. Later in the afternoon, however, he asked a co-worker, Ignacio Silangga (Silangga), to
accompany him to his house in Capas, Tarlac so he could rest. Informed by Silangga of
Bladimir's intention, Hao gave Bladimir P1,000.00 and ordered Silangga to instead bring
Bladimir to the nearest hospital. Along with co-workers Narding and Tito Vergado, Silangga
thus brought Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a primary-care
hospital around one kilometer away from the office of the company. The hospital did not allow
Bladimir to leave the hospital. He was then confined, with Narding keeping watch over him. The
next day, April 13,1995, a doctor of the hospital informed Narding that they needed to talk to
Bladimir's parents, hence, on Silangga's request, their co-workers June Matias and Joel Edrene
fetched Bladimir's parents from Tarlac.

At about 8 o'clock in the evening of the same day, April 13, 1995, Bladimir's parents-respondent
spouses Cubacub, with their friend Dr. Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital
and transferred Bladimir to the Quezon City General Hospital (QCGH) where he was placed in
the intensive care unit and died the following day. The death certificate issued by the QCGH
recorded Bladimir's immediate cause of death as cardio-respiratory arrest and the antecedent
cause as pneumonia. On the other hand, the death certificate issued by Dr. Frias recorded the
causes of death as cardiac arrest, multiple organ system failure, septicemia and chicken pox.

Issue: Whether or not the petitioners are guilty of negligence and if they were, can the
respondents claims for damages based on torts?

Ruling: To successfully prosecute an action anchored on torts, three elements must be present:
(1) duty (2) breach (3) injury and proximate causation. The assailed decision of the appellate
court held that it was the duty of petitioners to provide adequate medical assistance to the
employees under Art. 161 of the Labor Code, failing which a breach is committed. Art. 161 of
the Labor Code provides:

ART. 161. Assistance of employer. It shall be the duty of any employer to provide all the
necessary assistance to ensure the adequate and immediate medical and dental attendance and
treatment to an injured or sick employee in case of emergency. (emphasis and underscoring
supplied) The Implementing Rules of the Code do not enlighten what the phrase "adequate and
immediate" medical attendance means in relation to an "emergency." In the present case, there is
no allegation that the company premises are hazardous. Neither is there any allegation on the
number of employees the company has. If Hao's testimony would be believed, the company had
only seven regular employees and 20 contractual employees
still short of the minimum 50 workers that an establishment must have for it to be required to
have a full-time registered nurse.

The Court can thus only determine whether the actions taken by petitioners when Bladimir
became ill amounted to the "necessary assistance" to ensure "adequate and immediate medical . .
. attendance" to Bladimir as required under Art. 161 of the Labor Code. As found by the trial
court and borne by the records, petitioner Hao's advice for Bladimir to, as he did, take a 3-day
rest and to later have him brought to the nearest hospital constituted "adequate and immediate
medical" attendance that he is mandated, under Art. 161, to provide to a sick employee in an
emergency. Chicken pox is self-limiting. Hao does not appear to have a medical background. He
may not be thus expected to have known that Bladimir needed to be brought to a hospital with
better facilities than the Caybiga Hospital, contrary to appellate court's ruling. AT ALL
EVENTS, the alleged negligence of Hao cannot be considered as the proximate cause of the
death of Bladimir. Proximate cause is that which, in natural and continuous sequence, unbroken
by an efficient intervening cause, produces injury, and without which, the result would not have
occurred.IN FINE, petitioner company and its co-petitioner manager Dennis Hao are not guilty
of negligence

TOPIC 16 MIGRANT WORKER'S ACT & OVERSEAS FILIPINO ACT OF 1995 &
RECRUITMENT AND PLACEMENT
CASES:

1. ATCI Overseas Corp. et al., vs. Echin, GR No. 178551, Oct. 11, 2010
FACTS: Respondent Echin was hired by petitioner ATCI in behalf of its principal co-petitioner,
Ministry of Public Health of Kuwait, for the position of medical technologist under a two-year
contract with a monthly salary of US$1,200.00.Within a year, Respondent was terminated for not
passing the probationary period which was under the Memorandum of Agreement. Ministry denied
respondents request and she returned to the Philippines shouldering her own fair. Respondent
filed with the National Labor Relations Commission (NLRC) a complaint against ATCI for illegal
dismissal. Labor Arbiter rendered judgment in favor of respondent and ordered ATCI to pay her $3,600.00, her
salary for the three months unexpired portion of the contract.

ATCI appealed Labor Arbiters decision, however, NLRC affirmed the latters decision and
denied
petitioner ATCIs motion for reconsideration. Petitioner appealed to the Court Appeals contending
that their principal being a foreign government agency is immune from suit, and as such, immunity extended to
them.

Appellate Court affirmed NLRCs decision. It noted that under the law, a private employment agency shall
assume all responsibilities for the implementation of the contract of employment of an overseas
worker; hence, it can be sued jointly and severally with the foreign principal for any violation of
the recruitment agreement or contract of employment. Petitioners motion for reconsideration was denied;
hence, this present petition.

Issue: Whether or not petitioners be held liable considering that the contract specifically
stipulates that respondents employment shall be governed by the Civil Service Law and Regulations of Kuwait.

Ruling: Court denied the petition. According to RA 8042: The obligations covenanted in the
recruitment agreement entered into by and between the local agent and its foreign principal are not coterminous
with the term of such agreement so that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees under the agreement do not at
all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited
and employed pursuant to the said recruitment agreement. In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden of proving the foreign law. Where a foreign
law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours.
Thus, we apply Philippine labor laws in determining the issues presented before us.

2. Yap vs. Thenamaris Ship Management et al., G.R. No. 179532, May 30, 2011
FACTS:
Petitioner was employed as an electrician of the vessel, M/T SEASCOUT by Intermare Maritime
Agencies, Inc. in behalf of its principal, Vulture Shipping Limited.The contract was for 12
months.On 23 August 2001,Yapboarded M/T SEASCOUT and commenced his job as
electrician. However, on or about 08 November 2001, the vessel was sold.

Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping
bonus.However, 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.

Respondents contended that Yap was not illegally dismissed.They further alleged that Yaps
contract was validly terminated due to the sale of the vessel and no arrangement was made for
Yaps transfer to Thenamaris other vessels.

Thus, Yap brought the issue before the Labor Arbiter (LA) which ruled that petitioner was
illegally dismissed; that respondents acted in bad faith when they assured petitioner of re-
embarkation but he was not able to board; and that petitioner was entitled to his salaries for the
unexpired portion of his contract for a period of nine months (US$12,870.00), P100,000 for
moral damages, and P50,000 for exemplary damages with 10% of the same for Attys fees.

Respondents sought recourse from the NLRC which modified the award of salaries from that
corresponding to nine months to only three months (US$4,290.00) pursuant to Section 10 R.A.
No. 8042.

Respondents and petitioner both filed a Motion for Partial Reconsideration.

NLRC affirmed the finding of Illegal Dismissal and Bad Faith on the part of respondent.
However, the NLRC reversed its earlier Decision, holding that "there can be no choice to grant
only 3 months salary for every year of the unexpired term because there is no full year of
unexpired term which this can be applied."

Respondents filed an MR, which the NLRC denied. Undaunted, respondents filed a petition
forcertiorariunder Rule 65 before the CA.

The CA affirmed the findings and ruling of the LA and the NLRC. However, the CA ruled that
the NLRC erred in sustaining the LAs interpretation of Section 10 of R.A. No. 8042. The CA
relied on 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.

Both parties filed their respective MRs which the CA denied. Thus, this petition.

ISSUE:

[1] Whether 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;

[2] Assuming that it is, whether the CA gravely erred in granting petitioner only three (3) months
backwages when his unexpired term of 9 months is far short of the "every year of the unexpired
term" threshold.

HELD:

The petition is impressed with merit.

We have previously declared that the clause "or for three months for every year of the unexpired
term, whichever is less" is unconstitutional for being violative of the rights of (OFWs) to equal
protection. Moreover, the subject clause does not state any definitive governmental purpose,
hence, it also violates petitioner's right to substantive due process.

Generally, an unconstitutional act is not a law. An exception to this is the doctrine of operative
fact applied when a declaration of unconstitutionality will impose an undue burden on those who
have relied on the invalid law. This case should not be included in the exception. It was not the
fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents.

Also, we cannot subscribe to respondents postulation that the tanker allowance of US$130.00
should not be included in the computation of the lump-sum salary. First, fair play, justice, and
due process dictate that this Court cannot now, for the first time on appeal, pass upon this
question. Second, the allowance was encapsulated in the basic salary clause.

3. Skippers United Pacific vs. Doza et al., G.R. No. 175558, February 8, 2012
Facts:
Petitioner deployed De Gracia, Lata and Aprosta to work on board the vessel MV Wisdom
Star.On December 3 1998, Skippers alleges that De Garcia smelling strongly of alcohol, went to
the cabin of Gabriel Oleszek, MV Wisdom Stars Master. Skippers claims that he was rude and
shouted noisily to the master. De Gracia left the masters cabin after a few minutes and was
heard shouting very loudly somewhere down the corridors. The incident was evidenced by
the Captains Report sent on said date.
Furthermore, Skippers also claim that on January 22, 1999, Aprosta, De Gracia, Lata and Daza
arrived in the masters cabin and demanded immediate repatriation because they were not
satisfied with the ship. De Gracia, et al. threatened that they may become crazy any moment and
demanded for all outstanding payments due to them. The incident is evidenced by a telex of
Cosmoship MV Wisdom to skippers but had conflicting dates. De Gracia claims that Skippers
failed to remit their respective allotments, compelling them to vent their grievances with the
Romanian Seafarers Union. On January 28, 1999, the Filipino seafarers were unceremoniously
discharged and immediately repatriated. Upon arrival in the Philippines, they filed a complaint
for illegal dismissal with the LA.

The LA dismissed the seafarers complaint as the seafarers demand for immediate repatriation
due to the dissatisfaction with the ship is considered a voluntary pre-termination of employment.
Such act was deemed akin to resignation recognized under Article 285 of the LC. The LA gave
credence to the telex of the masters report that the seafarers indeed demanded immediate
repatriation.

The NLRC agreed with the LAs decision. The CA however reversed the LAs and the NLRCs
decision. The Court deemed the telex message as a self-serving document that does not satisfy
the requirement of substantial evidence, or that amount of relevant evidence which a reasonable
mind might accept as adequate to justify the conclusion that petitioners indeed voluntarily
demanded their immediate repatriation. Aggrieved, Skippers appeals the case with the Supreme
Court.

Issue:
Whether or not the seafarers demand for immediate repatriation can be considered an act of
voluntary resignation.

Held:
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. In this case, there was no written notice furnished to De Gracia, et
al., regarding the cause of their dismissal. Cosmoship furnished a written notice (telex) to
Skippers, the local manning agency, claiming that De Gracia, et al., were repatriated because the
latter voluntarily pre-terminated their contracts. This telex was given credibility and weight by
the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment
contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA,
the telex message is "a biased and self-serving document that does not satisfy the requirement of
substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated their contracts,
then De Gracia, et al., should have submitted their written resignations.

4. International Management Services vs. Logarta, G.R. No. 163657, April 18, 2012
FACTS:
Petitioner International Management Services (IMS), owned by Marilyn Pascual, deployed respondent Roel
Logarta to work for Petrocon in connection with services of Petrocon for Saudi Arabian Oil
Company (Saudi Aramco). Logarta was hired as a Piping Designer for a period of 2 years commencing October 2,
1997.Saudi Aramco, due to changes in the general engineering services work forecast for 1998, reduced the
originally allotted man-hours by 40%. Consequently, due to the considerable decrease in the
work requirements of Saudi Aramco, Petrocon was constrained to reduce its personnel that were employed as
piping designers, instrument engineers, inside plant engineers, etc., which totaled to some 73personnel including
herein respondent Logarta. On June 1, 1998, Petrocon gave respondent Logarta a written notice informing the
latter that due to the lack of project works related to his expertise, he is given a 30-day notice of
termination, and that his last day of work with Petrocon will be on July 1, 1998.Upon his return to
the Philippines, respondent filed a complaint with the Regional Arbitration Branch VII, National Labor Relations
Commission (NLRC), Cebu City, against petitioner as the recruitment agency which employed him for
employment abroad. In filing the complaint, respondent sought to recover his unearned salaries covering the
unexpired portion of his employment contract with Petrocon on the ground that he was illegally
dismissed. Labor Arbiter ruled in favor of respondent. US$ 5,600 awarded to respondent as
payment for wages for the unexpired portion.

NLRC affirmed Labor Arbiters decision but modified the amount. US$ 4,800 awarded to respondent.CA agreed
with the findings of NLRC that retrenchment could be a valid cause to terminate respondents
employment with Petrocon. However, although there was a valid retrenchment, the same was implemented without
complying with the requisites of a valid retrenchment. Also, the CA concluded that although the respondent was
given a 30-day notice of his termination, there was no showing that the Department of Labor and
Employment (DOLE) was also sent a copy of the said notice as required by law. Moreover, the CA
found that a perusal of the check payroll details would readily show that respondent was not paid
his separation pay.

ISSUE:
Whether or not there was a valid retrenchment against the respondent

HELD:
Dismissal; retrenchment. Retrenchment is a valid exercise of management prerogative subject to
the strict requirements set by jurisprudence, to wit:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month
pay or at least month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, x x x efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.

As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative
to retrench its employees in good faith and the considerable reduction of work allotments of
Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its
personnel. As for the notice requirement, however, contrary to petitioners contention, proper
notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and
must be complied with despite the fact that respondent is an overseas Filipino worker. In the
present case, although respondent was duly notified of his termination by Petrocon 30 days
before its effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon
ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus, this
requirement of the law was not complied with. Despite the fact that respondent was employed by
Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the provisions
of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino
workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor
and social legislations.

5. Pert/Cpm Manpower Exponent Co., Inc. vs. Vinuya et al., G.R. No. 197528, September 8,
2012
Facts:
On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta,
Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T.
Ladea (respondents) filed a complaint for illegal dismissal against the petitioner Pert/CPM
Manpower Exponent Co., Inc. (agency), and its President Romeo P. Nacino.
Agency deployed respondents between March 29, 2007 and May 12, 2007 to work as aluminum
fabricator/installer for the agencys principal, Modern Metal Solution LLC/MMS Modern Metal
Solution LLC (Modern Metal) in Dubai, United Arab Emirates.
Respondents employment contracts, which were approved by the POEA, provided for a two-
year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance,
free and suitable housing (four to a room), free transportation, free laundry, and free medical and
dental services.
On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters with
terms different from those in the employment contracts which they signed at the agencys office
in the Philippines. Under the letters of appointment, their employment was increased to three
years at 1,000 to 1,200 AED and food allowance of 200 AED.
The respondents claimed that they were shocked to find out what their working and living
conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break
of only one hour to one and a half hours. When they rendered overtime work, they were most of
the time either underpaid or not paid at all. Their housing accommodations were cramped and
were shared with 27 other occupants. The lodging house was in Sharjah, which was far from
their jobsite in Dubai, leaving them only three to four hours of sleep a day because of the long
hours of travel to and from their place of work; there was no potable water and the air was
polluted.
When the respondents received their first salaries, they called up the agency and complained
about their predicament. The agency assured them that their concerns would be promptly
addressed, but nothing happened.
On May 5, 2007, Modern Metal required the respondents to sign new employment contracts. The
contracts reflected the terms of their appointment letters. Burdened by all the expenses and
financial obligations they incurred for their deployment, they were left with no choice but to sign
the contracts. They raised the matter with the agency, which again took no action.
On August 5, 2007, the respondents expressed to Modern Metal their desire to resign. Out of
fear, as they put it, that Modern Metal would not give them their salaries and release papers, the
respondents, except Era, cited personal/family problems for their resignation. Era mentioned the
real reason "because I dont want the company policy" for his resignation.
They all returned to Manila in September 2007. Except for Ordovez and Enjambre, all the
respondents shouldered their own airfare.
The agency countered that the respondents were not illegally dismissed; they voluntarily
resigned from their employment to seek a better paying job. It claimed that the respondents,
while still working for Modern Metal, applied with another company which offered them a
higher pay. Unfortunately, their supposed employment failed to materialize and they had to go
home because they had already resigned from Modern Metal.
The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim
and release after they resigned. It thus argued that their claim for benefits, under Section 10 of
Republic Act No. (R.A.) 8042, damages and attorneys fees is unfounded.
Labor Arbiter:
On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a Decision10 dismissing the
complaint, finding that the respondents voluntarily resigned from their jobs. He also found that
four of them Alcantara, Era, Anipan and Lumanta even executed a compromise agreement
(with quitclaim and release) before the POEA. He considered the POEA recourse a case of forum
shopping.
NLRC:
On May 12, 2009, the NLRC granted respondents appeal. It ruled that they had been illegally
dismissed. It anchored its ruling on the new employment contracts they were made to sign in
Dubai. It stressed that it is illegal for an employer to require its employees to execute new
employment papers, especially those which provide benefits that are inferior to the POEA-
approved contracts.
The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed
that the respondents executed the quitclaim documents under duress as they were afraid that they
would not be allowed to return to the Philippines if they did not sign the documents. Further, the
labor tribunal disagreed with the labor arbiters opinion that the compromise agreement they
executed before the POEA had effectively foreclosed the illegal dismissal complaint before the
NLRC and that the respondents had been guilty of forum shopping. It pointed out that the POEA
case involved pre-deployment issues; whereas, the complaint before the NLRC is one for illegal
dismissal and money claims arising from employment.
Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and
severally, the respondents
The agency moved for reconsideration, contending that the appeal was never perfected and that
the NLRC gravely abused its discretion in reversing the labor arbiters decision.The respondents,
on the other hand, moved for partial reconsideration, maintaining that their salaries should have
covered the unexpired portion of their employment contracts, pursuant to the Courts ruling
in Serrano v. Gallant Maritime Services, Inc.
The NLRC denied the agencys motion for reconsideration, but granted the respondents motion.
It sustained the respondents argument that the award needed to be adjusted, particularly in
relation to the payment of their salaries, consistent with the Courts ruling in Serrano. The ruling
declared unconstitutional the clause, "or for three (3) months for every year of the unexpired
term, whichever is less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of
illegally dismissed overseas Filipino workers to their salaries for the unexpired term of their
contract or three months, whichever is less. Accordingly, it modified its earlier decision and
adjusted the respondents salary entitlement.
CA:
It upheld the NLRC ruling.
The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with
resignation. Moreover, it found nothing in the records to substantiate the agencys contention
that the respondents resignation was of their own accord; on the contrary, it considered the
resignation letters "dubious for having been lopsidedly-worded to ensure that the petitioners
(employers) are free from any liability."
The appellate court likewise refused to give credit to the compromise agreements that the
respondents executed before the POEA. It agreed with the NLRCs conclusion that the
agreements pertain to the respondents charge of recruitment violations against the agency
distinct from their illegal dismissal complaint, thus negating forum shopping by the respondents.
Lastly, the CA found nothing legally wrong in the NLRC adjusting the respondents salary
award on the basis of the unexpired portion of their contracts, as enunciated in the Serrano case.
Issue:
Whether or not the respondents were illegally dismissed
Ruling:
Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency
and its principal, Modern Metal, committed a prohibited practice and engaged in illegal
recruitment when they altered or substituted the contracts approved by the Philippine Overseas
Employment Administration (POEA). Article 34 (i) of the Labor Code provides: It shall be
unlawful for any individual, entity, licensee, or holder of authority to substitute or alter
employment contracts approved and verified by the Department of Labor from the time of actual
signing thereof by the parties up to and including the period of expiration of the same without the
approval of the Secretary of Labor. Meanwhile, Article 38 (i) of the Labor Code, as amended by
R.A. 8042, defined illegal recruitment to include the substitution or alteration, to the prejudice
of the worker, of employment contracts approved and verified by the Department of Labor and
Employment 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 Department of Labor and Employment.
Furthermore, the agency and Modern Metal committed breach of contract by providing
substandard working and living arrangements, when the contract provided free and suitable
housing. The living quarters were cramped as they shared them with 27 other workers. The
lodging house was far from the jobsite, leaving them only three to four hours of sleep every
workday because of the long hours of travel to and from their place of work, not to mention that
there was no potable water in the lodging house which was located in an area where the air was
polluted. They complained with the agency about the hardships that they were suffering, but the
agency failed to act on their reports. Significantly, the agency failed to refute their claims.

Thus, with their original contracts substituted and their oppressive working and living conditions
unmitigated or unresolved, the decision to resign is not surprising. They were compelled by the
dismal state of their employment to give up their jobs; effectively, they were constructively
dismissed. A constructive dismissal or discharge is a quitting because continued employment is
rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a
diminution in pay.

Without doubt, continued employment with Modern Metal had become unreasonable. A
reasonable mind would not approve of a substituted contract that pays a diminished salary from
1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment
letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an
extended employment (from 2 to 3 years) at such inferior terms, or a free and suitable housing
which is hours away from the job site, cramped and crowded, without potable water and exposed
to air pollution.

We thus cannot accept the agencys insistence that the respondents voluntarily resigned since
they personally prepared their resignation letters in their own handwriting.

6. Hon. Sto. Tomas, et al., vs. Salac et al., G.R. No. 152642 & 152710, November 13, 2012
FACTS: Several cases were filed and consolidated questioning the constitutionality of certain
provisions of R.A 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995 whose purpose is to set the Governments policies on overseas employment and establishes
a higher standard of protection and promotion of the welfare of migrant workers, their families,
and overseas Filipinos in distress.

Respondent Salac et.al were recruiters questioning the validity of Sections 29 and 30 of the said
Act praying that the deployment of OFWs and other workers abroad be deregulated. Petitioner,
on the other hand was the Secretary of DOLE at the time, a government instrumentality that
issues orders and memorandums which regulates the recruitment, placement, and sending or
deploying of overseas workers abroad.

Sections 29 and 30 of the Act commanded the Department of Labor and Employment (DOLE) to
begin deregulating within one year of its passage the business of handling the recruitment and
migration of overseas Filipino workers and phase out within five years the regulatory functions
of the Philippine Overseas Employment Administration (POEA).

On April 10, 2007 former President Gloria Macapagal-Arroyo signed into law R.A. 9422 which
expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government
regulation of the recruitment and deployment of OFWs.

ISSUES: Whether or not Sections 29 and 30 of R.A 8042 which commands to deregulate the
recruitment, placement, and sending or deploying of overseas workers abroad still valid.

RULING: The Court DISMISSES the petitions for having become moot and academic.
Provisions stated in Sec. 29 and 30 of R.A 8042 has already been repealed due to passage of R.A
9422.

7. Sameer Overseas Placement Agency Inc., vs. Cabiles, GR No. 170139, August 5, 2014, En
Banc
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 LAs 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 attorneys 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 respondents 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 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.
Ruling on the constitutional issue
In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may
exercise its powers in any manner inconsistent with the Constitution, regardless of the existence
of any law that supports such exercise. The Constitution cannot be trumped by any other law. All
laws must be read in light of the Constitution. Any law that is inconsistent with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the
nullity cannot be cured by reincorporation or reenactment of the same or a similar law or
provision. A law or provision of law that was already declared unconstitutional remains as such
unless circumstances have so changed as to warrant a reverse conclusion.
The Court observed that the reinstated clause, this time as provided in Republic Act. No. 10022,
violates the constitutional rights to equal protection and due process.96 Petitioner as well as the
Solicitor General have failed to show any compelling change in the circumstances that would
warrant us to revisit the precedent.
The Court declared, once again, the clause, or for three (3) months for every year of the
unexpired term, whichever is less in Section 7 of Republic Act No. 10022 amending Section 10
of Republic Act No. 8042 is declared unconstitutional and, therefore, null and void.

8. Racelis vs. United Philippine Lines Inc. GR No. 198408, November 12, 2014
FACTS:
On January 15, 2008, Rodolfo L. Racelis (Rodolfo) was recruited and hired by respondent
United Philippine Lines, Inc. (UPL) for its principal, respondent Holland America Lines, Inc.
(HAL) to serve as "Demi Chef De Partie" on board the vessel MS Prinsendam, with a basic
monthly salary of US$799.55. The Contract of Employment was for a term of four (4) months,
extendible for another two (2) months upon mutual consent. After complying with the required
pre-employment medical examination where he was declared fit to work, Rodolfo joined the
vessel on January 25, 2008. Prior thereto, Rodolfo was repeatedly contracted by said respondents
and was deployed under various contracts since December 17, 1985.
In the course of his last employment contract, Rodolfo experienced severe pain in his ears and
high blood pressure causing him to collapse while in the performance of his duties. He consulted
a doctor in Argentina and was medically repatriated on February 20, 2008 for further medical
treatment. Upon arrival in Manila, he was immediately brought to Medical City, Pasig City,
where he was seen by a company-designated physician, Dr. Gerardo Legaspi, M.D. (Dr.
Legaspi), and was diagnosed to be suffering from Brainstem (pontine) Cavernous 10
Malformation. He underwent surgery twice for the said ailment but developed complications 12
and died on March 2, 2008. Through an electronic mail (e-mail) dated July 22, 2008, a certain
Dr. Antonio "Toby" Abaya (Dr. Abaya) informed Atty. Florencio L. Aquino, Managing
Associate of the law firm of Del Rosario and Del Rosario, counsel for UPL, HAL, and its officer,
Fernando T. Lising (respondents), that Rodolfo's illness was congenital and that there may be
familial strains in his case, hence, his death was not work-related.
Rodolfo's surviving spouse, Conchita, sought to claim death benefits pursuant to the
International Transport Workers' Federation-Collective Bargaining Agreement , of which her
husband was a member, but to no avail. Consequently, she filed a Complaint or death benefits,
burial assistance, moral and exemplary damages, and attorney's fees against herein respondents
before the NLRC.
Issue:
Whether or not the CA erred in annulling the NLRC's grant of death benefits to Conchita on
certiorari.
Ruling:
No. Conchita should be able to obtain death benefits from the death of Rodolfo.
Deemed incorporated in every seafarer's employment contract, denominated as the POEA-SEC
or the Philippine Overseas Employment Administration-Standard Employment Contract, is a set
of standard provisions determined and implemented by the POEA, called the "Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going
Vessels," which are considered to be the minimum requirements acceptable to the government
for the employment of Filipino seafarers on board foreign ocean-going vessels.
Among other basic provisions, the POEA-SEC specifically, its 2000 version stipulates that
the beneficiaries of a deceased seafarer may be able to claim death benefits for as long as they
are able to establish that (a) the seafarer's death is work-related, and (b) such death had occurred
during the term of his employment contract. These requirements are explicitly stated in Section
20 (A) (1) thereof, which reads:
SECTION 20. COMPENSATION AND BENEFITS.

A. COMPENSATION AND BENEFITS FOR DEATH

1. In the case of work-related death of the seafarer, during the term of his contract the employer
shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand
US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to
each child under the age of twenty-one (21) but not exceeding four (4) children, at the exchange
rate prevailing during the time of payment. (Emphases supplied)
After an assiduous examination of the records, and as will be expounded on below, the Court,
similar to both the LA and the NLRC, finds that the above-stated requirements positively attend
petitioner's claim for death benefits.
Moreso, under the 2000 POEA-SEC, the terms "work-related injury" and "work-related illness"
are, in turn, defined as follows:
Definition of Terms:
For purposes of this contract, the following terms are defined as follows:
xxx xxx xxx
11. Work-Related Injury injury(ies) resulting in disability or death arising out of and in the
course of employment.
12. Work-Related Illness any sickness resulting to disability or death as a result of an
occupational disease listed under Section 32-A of this contract with the conditions set therein
satisfied. (Emphases supplied)
Case law explains that "[t]he words 'arising out of' refer to the origin or cause of the accident,
and are descriptive of its character, while the words 'in the course of' refer to the time, place, and
circumstances under which the accident takes place. As a matter of general proposition, an injury
or accident is said to arise 'in the course of employment' when it takes place within the period of
the employment, at a place where the employee reasonably may be, and while he is fulfilling his
duties or is engaged in doing something incidental thereto."

While it is true that Brainstem (pontine) Cavernous Malformation is not listed as an occupational
disease under Section 32-A of the 2000 POEA-SEC, Section 20 (B) (4) of the same explicitly
provides that "[t]he liabilities of the employer when the seafarer suffers work-related injury or
illness during the term of his contract are as follows: (t)hose illnesses not listed in Section 32 of
this Contract are disputably presumed as work related." In other words, the 2000 POEA-SEC
"has created a disputable presumption in favor of compensability[,] saying that those illnesses
not listed in Section 32 are disputably presumed as work-related. This means that even if the
illness is not listed under Section 32-A of the POEA-SEC as an occupational disease or illness, it
will still be presumed as work-related, and it becomes incumbent on the employer to overcome
the presumption." This presumption should be overturned only when the employer's refutation is
found to be supported by substantial evidence, which, as traditionally defined is "such relevant
evidence as a reasonable mind might accept as sufficient to support a conclusion."

Moreso, the seafearers death is considered to be within the term of his employment. A medical
repatriation case constitutes an exception to the second requirement under Section 20 (A) (1) of
the 2000 POEA-SEC, i.e., that the seafarer's death had occurred during the term of his
employment, in view of the terminative consequences of a medical repatriation under Section 18
(B) of the same. In essence, the Court held that under such circumstance, the work-related death
need not precisely occur during the term of his employment as it is enough that the seafarer's
work-related injury or illness which eventually causes his death had occurred during the term of
his employment. In Canuel, the Court said, This is based on a liberal construction of the 2000
POEA-SEC as impelled by the plight of the bereaved heirs who stand to be deprived of a just and
reasonable compensation for the seafarer's death, notwithstanding its evident work-connection.

9. Pentagon International Shipping Services vs. Court of Appeals, GR No. 169158, July 1,
2015
Facts:
Pentagon International Shipping Services, Inc. a domestic corporation, was a private manning
agency licensed by the Philippine Overseas Employment Administration. They are engaged in
the recruitment of seafarers to service the crewing and personnel management needs of shipping
companies accredited to it.
On March 27, 1998, Pentagon hired respondents Madrio and Rubiano as chief officer and second
engineer, respectively, in behalf of its foreign principal, Baleen Marine, a corporation based in
Singapore. When their 10-month contract expired, they were repatriated to the Philippines.
Alleging non-payment and underpayment of wages, and claiming damages and attorney's fees,
they separately brought claims against
Pentagon and the owners and managers of Baleen Marine on January 13, 2000 and January 31,
2000,5 stating that Pentagon and Baleen Marine had reduced their monthly gross salary by 20%
without the prior approval by the POEA; and that Pentagon and Baleen Marine had not paid their
salaries from November 1, 1998 until their repatriation on March 24, 1999.
Pentagon denied liability, countering that it had ceased to be the manning agency of Baleen
Marine effective October 1, 1998; that on June 25, 1998, its Executive Vice-President, Meynardo
Bugia, Jr., had met with Baleen Marine in Singapore to notify the latter that it had been
meanwhile appointed by Neptank Bunkering Services Pte., Ltd. as its exclusive local manning
agency;
IDA Inter-Phil insisted that although it had applied with the POEA for the transfer and
accreditation of Baleen Marine's vessels in its favor, it withdrew the application and did not
execute an affidavit of assumption and responsibility as required; that, consequently, Pentagon
continued to be jointly and severally liable with Baleen Marine for the money claims of Madrio
and Rubiano
Issue/s:
Whether or not there was a valid substitution of the manning agent from Pentagon to IDA Inter-
Phil.
Ruling:
No. It was not a valid substitution. There was no effective transfer of agency from Pentagon to
JDA Inter-Phil. Even assuming arguendo that JDA Inter -Phil did not withdraw its application
for accreditation with the POEA, there was still no valid transfer of agency to speak of in the first
place because JDA Inter-Phil did not submit the required authenticated special power of attorney
and manning agreement. The minutes of the October 9, 1998 meeting could not, by any stretch
of the imagination, supplant this mandatory requirement.
It is relevant to observe that Pentagon cannot feign ignorance of Section 10, paragraph 2, of the
Migrant Workers' Act of 1995 to the effect that its liabilities would continue during the entire
period or duration of the employment contract, and would not be affected by any substitution,
amendment or modification of the contract made either locally or in a foreign country. The
provisions of the POEA Rules and Regulations to the effect that the manning agreement extends
up to and until the expiration of the employment contracts of the employees recruited and
employed pursuant to the recruitment agreement are also clear enough. As such, Pentagon is not
exempt from its liabilities and responsibilities towards Madrio and Rubiano.
Although JDA Inter-Phil undertook in the meeting of October 1, 1998 to assume the
responsibility as the local agent to Baleen Marine, the actual transfer of the accreditation would
not be completed without JDA Inter -Phil's compliance with the requirements under the
aforementioned rules. What actually happened between the time the meeting took place and the
eventual withdrawal of the application by the JDA Inter-Phil remained to be mere conjecture.
Nevertheless, Madrio and Rubiano should not be prejudiced by any purported transfer of
accreditation or agreement that they were not privy to. For sure, Pentagon remained under the
law the only recognized manning agent of Baleen Marine.

10. Austria vs. Crystal Shipping, GR No. 206256, Feb. 24, 2016

Facts:

Respondent Crystal Shipping, Inc., is a foreign juridical entity engaged in

maritime business. It is represented in the Philippines by its manning agent,
Larvik Shipping A/S, a corporation organized and existing under Philippine
laws.

Petitioner was hired by Crystal Shipping thru its manning agent, Larvik Shipping as
Chief Cook. His employment was to run for a period of eight months and he was to
receive,inter alia, a basic monthly salary of US$758.00 with an overtime pay of
US$422.00 each month as evidenced by his Contract of Employment.
Under his contract, petitioner was covered by the Norwegian International Ship
Register (NIS)-CBA.
Prior to the execution of the contract, petitioner underwent a thorough Pre-
Employment Medical Examination (PEME) and after compliance therewith, he was
certified as "fit to work" by the company designated physician.
On 27 August 2008, petitioner commenced his work as Chief Cook on board M/V
Yara Gas. Sometime in the last week of September 2008, petitioner, while on board
the vessel, started suffering from chronic cough with excessive phlegm and
experienced difficulty breathing.. Upon the arrival of the vessel in Hamburg,
Germany, petitioner was referred for medical examination and it was found that he
was suffering from "Bronchial Catarrh/Bronchitis; Pharnx Irritation." After giving
him proper medication, the examining physician declared him "fit for duty" and so he
resumed his work in the vessel.
In January 2009, petitioner again complained of similar symptoms, excessive cough
with phlegm and difficulty breathing, and, was again referred for further medical
examination in the Netherlands. This time he was confined at ZorgSaam Hospital
from 20 January 2009 to 12 February 2009 where he was diagnosed with "Dilated
Cardiomyopathy secondary to Viral Myocarditis," a condition which would require
further medical treatment and management. Considering the seriousness of his
ailment, petitioner's repatriation back to the Philippines was recommended by
doctors.
Escorted by a physician, petitioner arrived in the Philippines on 14 February 2009 and
was immediately confined at the Metropolitan Medical Center. After a series of tests,
 it was found that petitioner was suffering from "Dilated Cardiomyopathy, Bicuspid
Aortic Stenosis," rendering him unfit for any sea duty.
Claiming that his illness that rendered him totally unfit for any sea duty is work-
related, petitioner sought for the payment of permanent disability benefits but
respondents failed or refused to acknowledge that they are liable under the CBA.
This prompted petitioner to initiate an action for recovery of permanent disability
benefits in accordance with the NIS CBA, moral and exemplary damages, attorney's
fees and other benefits.
Petitioner asserted that he was in good health when he joined the vessel and assumed
his duties as chief cook as shown by his PEME. There is a high probability, however,
that the extreme working conditions in the vessel, the lifestyle on board, constant
exposure to chemicals, intensive heat and extreme weather changes caused to or
aggravated his illness.
For their part, respondents disavowed liability for the illness of petitioner citing the
medical report of the company designated physician that "Dilated Cardiomyopathy,
Bicuspid Aortic Stenosis" is a condition that is congenital in nature and is not caused
or aggravated by his work as a Chief Cook. They posited that due to non-exploratory
nature of PEME, serious diseases that require intensive test could not be discovered
before the seafarer's employ. There is a high probability therefore that petitioner
could be suffering from the said ailment prior to his engagement.
Since amicable settlement was not reached, the case was submitted to the Labor
Arbiter.
On 14 January 2010, the Labor Arbiter rendered a Decision in favor of petitioner,
and, ordered respondents to pay him total disability benefits in the amount of
US$110,000.00 pursuant to the CBA.
On appeal, the NLRC affirmed with modification the ruling of the Labor Arbiter in a
Decision dated 17 August 2010 deleting the award of moral and exemplary damages.
On 4 September 2012, the Court of Appeals rendered a Decision reversing the ruling
of both the Labor Arbiter and the NLRC.
Issue:
Whether or not the disability of the petitioner is compensable under the CBA.
Ruling:

The material statutory provisions are Articles 191 to 193 under Chapter VI (Disability
Benefits) of the Labor Code, in relation with Rule X of the Rules and Regulations
Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided
under Department Order No. 4, series of 2000 of the Department of Labor and
Employment, and the parties' CBA bind the seaman and his employer to each other.

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.

Gauged by the foregoing yardstick, the Court finds that the Court of Appeals
committed a reversible error in attributing grave abuse to the NLRC for awarding
compensation to the petitioner for his illness after the latter established his claim by
substantial evidence.
For one, petitioner was employed by respondent as Chief Cook which constantly
exposes him to heat while preparing the food for the entire crew all throughout the day
while he was under employ. The steady and prolonged exposure to heat naturally
causes exhaustion which could unduly burden his heart and interfere with the normal
functioning of his cardio-vascular system.
Even if it were shown that petitioner's condition is congenital in nature, it does
automatically take his ailment away from purview of compensability. Pre-existence of
an illness does not irrevocably bar compensability because disability laws still grant the
same provided seafarer's working conditions bear causal connection with his illness.
Every workman brings with him to his employment certain infirmities, and while the
employer is not the insurer of the health of his employees, he takes them as he finds
them, and assumes the risk of having the weakened condition aggravated by some
injury which might not hurt or bother a perfectly normal, healthy person.
All told, petitioner having established through substantial evidence that his illness was
aggravated by his work condition, and hence, compensable, no grave abuse of
discretion can be imputed against the NLRC in upholding the Labor Arbiter's grant of
disability benefits.

11. Asian International Manpower Services, Inc. vs. Department of Labor and Employment,
GR No. 210308, April 6, 2016
Facts:

On November 8, 2006, the Anti-Illegal Recruitment Branch of the POEA, pursuant to

Surveillance Order No. 033, Series of 2006, conducted a surveillance of Asian
International Manpower Services, Inc. (AIMS) with office address at 1653 Taft Avenue
corner Pedro Gil Street, Malate, Manila to determine whether it was operating as a
recruitment agency despite the cancellation of its license on August 28, 2006. The
operatives reported that their surveillance did not reveal the information needed, so
another surveillance was recommended.

On February 20, 2007, another surveillance was conducted on the premises of AIMS'
office pursuant to Surveillance Order No. 011. This time the POEA operatives observed
that there were people standing outside its main entrance, and there were announcements
of job vacancies posted on the main glass door of the office. Posing as applicants, the
 POEA operatives, Atty. Romelson E. Abbang and Edilberto V. Alogoc, inquired as to the
requirements for the position of executive
staff, and a lady clerk of AIMS handed them a flyer. Through the flyer, they learned that
AIMS was hiring hotel workers for deployment to Macau and grape pickers for
California. The POEA operatives later confirmed through the POEA Verification System
that AIMS had regained its license and good standing on December 6, 2006, but that it
had no existing approved job orders yet at that time.

In compliance with the Show Cause Order issued by the POEA, Danilo P. Pelagio,
AIMS President, wrote to the POEA on April 3, 2007 maintaining that AIMS was not
liable for any recruitment misrepresentation. Invoking the Surveillance Report dated
November 8, 2006, he cited the POEA operatives' own admission that when they first
came posing as applicants, the AIMS staff advised them that it had no job vacancies for
waiters and that its license had been cancelled.

In the Order dated June 30, 2008, then POEA Administrator Rosalinda Baldoz ruled that
on the basis of the Surveillance Report dated February 21, 2007 of the POEA operatives,
AIMS was liable for misrepresentation under Section 2 (e), Rule I, Part VI of the 2002
POEA Rules, since the POEA records showed that AIMS had no job orders to hire hotel
workers for Macau, nor grape pickers for California, as its flyer allegedly advertised.

AIMS filed a motion for reconsideration before the DOLE.

In an Order dated April 12, 2011, the DOLE affirmed the order of the POEA, asserting
that due process was observed. It cited AIMS's letter-answer to POEA's Show Cause
Order dated April 3, 2007 denying POEA's charge of misrepresentation. It likewise cited
the hearing held on May 9, 2007 wherein AIMS's representative, Lugatiman, after
manifesting that it had filed its answer, merely moved that the case be deemed submitted
for resolution instead of availing of the hearing to rebut the allegations of
misrepresentation against it.

AIMS moved for reconsideration from the DOLE ruling, which the DOLE denied on
December 22, 2011.

AIMS filed a petition for certiorari in CA. In its Decision dated July 9, 2013, the CA
dismissed AIMS's charge of denial of due process for failure of POEA to furnish it with
a copy of the Surveillance Report dated February 21, 2007

Issue: Whether or not the right to due process was violated when the copy of the POEA
Surveillance report on February 21, 2007 was never furnished to the petitioner, upon which the
public respondents anchored their finding of misrepresentation.

Ruling:
 In granting the petition, the SC pronounced "Due process is satisfied when a person is
notified of the charge against him and given an opportunity to explain or defend
himself." "The observance of fairness in the conduct of an investigation is at the very
heart of procedural due process." As long as he is given the opportunity to defend his
interests in due course, he is not denied due process. In administrative proceedings, the
filing of charges and giving reasonable opportunity to the person charged to answer the
accusations against him constitute the minimum requirements of due process.

In concluding that, through Lugatiman, AIMS was "obviously informed of the charges"
during the preliminary hearing, the CA overlooked the crucial fact that, as the POEA
itself admitted, it did not furnish AIMS with a copy of its Surveillance Report dated
February 21, 2007, which contains the factual allegations of misrepresentation
supposedly committed by AIMS. It is incomprehensible why the POEA would neglect
to furnish AIMS with a copy of the said report, since other than the fact that AIMS was
represented at the hearing on May 9, 2007, there is no showing that Lugatiman was
apprised of the contents thereof. In fact, as AIMS now claims, the alleged recruitment
flyer distributed to its applicants was not even presented.
The CA faulted AIMS for failing to avail itself of the opportunity to rebut the
allegations of the POEA operatives in the two Surveillance Reports, as well as "to
clarify the issues or the charges," during the May 9, 2007 preliminary
hearing. 27 Considering that AIMS was not furnished with the Surveillance Report
dated February 21, 2007, it cannot be expected to second-guess what charges and issues
it needed to clarify or rebut in order to clear itself. Needless to say, its right to due
process consisting of being informed of the charges against it has been grossly violated.
Moreover, AIMS also points out that the flyer advertising the jobs in Macau and
California was never presented or made part of the record, and neither was the AIMS
lady clerk who allegedly distributed the same even identified, as AIMS demanded.
Besides, granting that AIMS did advertise with flyers for hotel workers or grape pickers,
for which it allegedly had no existing approved job orders, it is provided in Sections 1
and 2 of Rule VII (Advertisement for Overseas Jobs), Part II of the 2002 POEA
Rules 28 that the said activity is permitted for manpower pooling purposes, without need
of prior approval from the POEA, upon the following conditions: (1) it is done by a
licensed agency; (2) the advertisement indicates in bold letters that it is for manpower
pooling only; (3) no fees are collected from the applicants; and (4) the name, address and
POEA license number of the agency, name and worksite of the prospective
registered/accredited principal and the skill categories and qualification standards are
indicated.

It is true that in administrative proceedings, as in the case below, only substantial

evidence is needed, or such relevant evidence as a reasonable mind may accept as
adequate to support a conclusion. 29 Unfortunately, there is no evidence against AIMS
to speak of, much less substantial evidence. Clearly, AIMS's right to be informed of the
charges against it, and its right to be held liable only upon substantial evidence, have
both been gravely violated.
12. Dagasdas vs. Grand Placement & General Services Corp. GR No. 20527, January 18,
2017

FACTS

Grand Placement and General Services Corp. (GPGS) is a licensed recruitment or placement
agency in the Philippines, while Saudi Aramco (Aramco) is its counterpart in Saudi Arabia. On
the other hand, Industrial & Management Technology Methods Co. Ltd. (ITM) is the principal
of GPGS, a company existing in Saudi Arabia.

In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network
Technician. He was to be deployed in Saudi Arabia under a one-year contract. Before leaving
the Philippines, Dagasdas underwent skill training and pre-departure orientation as Network
Technician. Nonetheless, his Job Offer indicated that he was accepted by Aramco and ITM for
the position of "Supt."

Dagasdas contended that although his position under his contract was as a Network
Technician, he actually applied for and was engaged as a Civil Engineer considering that he
had a degree in Civil Engineering, and his work experiences were all field-related. Purportedly
the position of Network Technician was only for the purpose of securing a visa for Saudi
Arabia because ITM could not support visa application for Civil Engineers.

Dagasdas then arrived in Saudi Arabia and signed with ITM a new employment contract which
stipulated that the latter contracted him as Superintendent or in any capacity within the scope
of his abilities with a corresponding salary and allowance per month. Under this contract,
Dagasdas shall be placed under a three-month probationary period; and, this new contract shall
cancel all contracts prior to its date from any source.

When Dagasdas reported for work, he was allegedly given tasks suited for a Mechanical
Engineer, which he had no experience in doing. Seeing that he would not be able to perform
well in his work, he was then transferred to the Civil Engineering Department, and was
temporarily given a position as Civil Construction Engineer.

Later, ITM gave him a termination notice indicating that his last day of work was on April 30,
2008, and he was dismissed pursuant to clause 17.4.3 of his contract, which provided that ITM
reserved the right to terminate any employee within the three-month probationary period
without need of any notice to the employee.

Dagasdas then signed a Statement of Quitclaim with Final Settlement stating that ITM paid
him all the salaries and benefits for his services from February 11, 2008 to April 30, 2008 and
ITM was relieved from all financial obligations due to Dagasdas.
 When Dagasdas returned to the Philippines, he filed an illegal dismissal case against GPGS,
ITM, and Aramco.
- He argued that although he was engaged as a project employee, he was still entitled to
security of tenure for the duration of his contract. He maintained that GPGS, ITM, and
Aramco merely invented "imaginary cause/s" to terminate him. Thus, he claimed that he
was dismissed without cause and due process of law.26

- GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They
explained that:
(1) Dagasdas was aware that he was employed as Network Technician but he
could not perform his work in accordance with the standards of his employer.
(2) He was informed of his poor performance, and he conformed to his
termination as evidenced by his quitclaim.
(3) He was only a probationary employee since he worked for ITM for less than
three months.

Ruling of the Labor Arbiter

According to the LA, for being more favorable, this new contract was not prohibited by law.
She also decreed that Dagasdas fell short of the expected work performance; as such, his
employer dismissed him as part of its management prerogative.

Ruling of NLRC

Dagasdas dismissal was illegal. It declared that while ITM has the prerogative to continue the
employment of individuals only if they were qualified, Dagasdas' dismissal amounted to illegal
termination since the mismatch between his qualifications and the job given him was no fault
of his. The NLRC added that Dagasdas should not be made to suffer the consequences of the
miscommunication between GPGS and ITM.

Ruling of the Court of Appeals

The CA set aside the NLRC Resolutions and reinstated the LA Decision dismissing the case
for lack of merit.

It faulted the NLRC for falling to consider that Dagasdas backed out as Superintendent on the
excuse that the same required the skills of a Mechanical Engineer.

It ruled that for having voluntarily accepted money from his employer, Dagasdas accepted his
termination and released his employer from future financial obligations arising from his past
employment with it.

ISSUE

WON, Dagasdas dismissal was illegal.

RULING

It is well-settled that employers have the prerogative to impose standards on the work quantity
and quality of their employees and provide measures to ensure compliance therewith. Non-
compliance with work standards may thus be a valid cause for dismissing an employee.
Nonetheless, to ensure that employers will not abuse their prerogatives, the same is tempered
by security of tenure whereby the employees are guaranteed substantive and procedural due
process before they are dismissed from work.

Security of Tenure of OFWs

Security of tenure remains even if employees, particularly the overseas Filipino workers
(OFW), work in a different jurisdiction. Since the employment contracts of OFWs are
perfected in the Philippines, and following the principle of lex loci contractus (the law of the
place where the contract is made), these contracts are governed by our laws, primarily the
Labor Code of the Philippines and its implementing rules and regulations. At the same time,
our laws generally apply even to employment contracts of OFWs as our Constitution explicitly
provides that the State shall afford full protection to labor, whether local or overseas. Thus,
even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other
constitutional rights.

Dagasdas' new contract is in clear violation of his right to security of tenure.

There is no clear justification for the dismissal of Dagasdas other than the exercise of ITM's
right to terminate him within the probationary period. The above-cited clause is contrary to law
because as discussed, our Constitution guarantees that employees, local or overseas, are
entitled to security of tenure. To allow employers to reserve a right to terminate employees
without cause is violative of this guarantee of security of tenure.

Moreover, even assuming that Dagasdas was still a probationary employee when he was
terminated, his dismissal must still be with a valid cause.

Here, ITM failed to prove that it informed Dagasdas of any predetermined standards from
which his work will be gauged. No job description - or such duties and responsibilities
attached to either position - was adduced in evidence. It thus means that the job for which
Dagasdas was hired was not definite from the beginning. Hence, ITM failed to show that it set
and communicated work standards for Dagasdas to follow, and on which his efficiency (or the
lack thereof) may be determined.

Dagasdas was not afforded procedural due process when he was dismissed from work.

A valid dismissal requires substantive and procedural due process. As regards the latter, the
employer must give the concerned employee at least two notices before his or her temination.
Specifically, the employer must inform the employee of the cause or causes for his or her
termination, and thereafter, the employer's decision to dismiss him. Aside from the notice
requirement, the employee must be accorded the opportunity to be heard.
 Here, Dagasdas was simply given a notice of termination. In fact, it appears that ITM intended
not to comply with the twin notice requirement. Without doubt, ITM violated the due process
requirement in dismissing an employee.

Dagasdas waiver in favor of his employer does not preclude him from filing this suit.

Unless it can be established that the person executing the waiver voluntarily did so, with full
understanding of its contents, and with reasonable and credible consideration, the same is not a
valid and binding undertaking. Moreover, the burden to prove that the waiver or quitclaim was
voluntarily executed is with the employer. In this case, however, neither did GPGS nor its
principal, ITM, successfully discharged its burden. GPGS and/or ITM failed to show that
Dagasdas indeed voluntarily waived his claims against the employer.

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and
voluntarily agreed to waive all his claims against his employer.

All told, the dismissal of Dagasdas WAS WITHOUT ANY VALID CAUSE AND DUE
PROCESS OF LAW. Hence, the NLRC properly ruled that Dagasdas was illegally dismissed.