Nicario v. NLRC et al, GR No.

125340 Sept 17 1998

Interpretation of Labor Law, Rationale, Intent
Ponente: ROMERO, J
Facts:
Emelita Nicario, was employed with respondent company Mancao Supermarket, on June 6, 1986 as
a salesgirl and was later on promoted as sales supervisor. However, private respondent terminated
her services on February 7, 1989.
A complaint for illegal dismissal with prayer for backwages, wage differential, service incentive leave
pay, overtime pay, 13th month pay and unpaid wages was filed by petitioner before the National
Labor Relations Commission, Sub-Regional Arbitration Branch X in Butuan City. On July 25, 1989,
Labor Arbiter Amado M. Solamo dismissed the complaint for lack of merit. Petitioner appealed to the
National Labor Relations Commission.
NLRC set aside the labor arbiter's decision for lack of due process. It ruled that since petitioner
assailed her supposed signatures appearing on the payrolls presented by the company as a forgery,
the labor arbiter should not have merely depended on the xerox copies of the payrolls, as submitted
in evidence by the private respondent but ordered a formal hearing on the issue. Thus, the
Commission ordered the case remanded to the arbitration branch for appropriate proceedings.
The Labor Arbiter Macaraig-Guillens rendered a decision in favor of the petitioner. Not satisfied with
the decision, private respondent appealed to the NLRC, and in a resolution dated August 16, 1995,
the Commission affirmed in toto Labor Arbiter Macaraig-Guillens decision. Private respondent then
filed a motion for reconsideration.
In a resolution dated December 21, 1995, public respondent NLRC modified its earlier resolution by
deleting the award for overtime pay and ruling that private respondent Antonio Mancao is not jointly
and severally liable with Mancao Supermarket to pay the petitioner the monetary award adjudged.
Petitioner now comes before this Court alleging grave abuse of discretion on the part of the public
respondent NLRC in ruling that (a) she is not entitled to overtime pay and (b) private respondent,
Antonio Mancao cannot be held jointly and severally liable with respondent supermarket as to the
monetary award.

Issue:
Whether or not the NLRC committed a grave abuse of discretion in ruling that Nicario is not entitled
to overtime pay.

Ruling:
Yes. This Court, in previously evaluating the evidentiary value of daily time records, especially those
which show uniform entries with regard to the hours of work rendered by an employee, has ruled
that such unvarying recording of a daily time record is improbable and contrary to human experience.
It is impossible for an employee to arrive at the workplace and leave at exactly the same time, day in
and day out. The uniformity and regularity of the entries are badges of untruthfulness and as such
indices of dubiety (the DTR’s shows that petitioner, throughout her employment from June 6, 1986 to
February 1989, worked for only eight hours a day from 9:00 a.m. to 12:00 p.m. and 2:00 p.m. to
7:00 p.m., and did not render work on her rest days). The observations made by the Solicitor General
regarding the unreliability of the daily time records would therefore seem more convincing. On the
other hand, the respondent company failed to present substantial evidence, other than the disputed
DTRs, to prove that petitioner indeed worked for only eight hours a day. It is a well-settled doctrine,
that if doubts exist between the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a
laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of
agreements and writing should be resolved in the former's favor. This rule should be applied in the
case at bar, especially since the evidence presented by private respondent company is not
convincing. Accordingly, we uphold the finding that petitioner rendered overtime work, entitling her
to overtime pay.
 Manaya v. Alabang Country Club,
G.R. No. 168988 June 19, 2007
Interpretation of Labor Law, Rationale, Intent
Ponente: CHICO-NAZARIO, J.
Facts:
Petitioner alleged that in 1989 he was initially hired by the respondent as a maintenance helper and
was later designated as a company electrician. He continued to work until 1998 when respondent
informed him that his services were no longer required by the company. Petitioner filed a complaint
with the Labor Arbiter contending that respondent illegally dismissed him without just cause and
without due process. The former further asserted that with his more or less nine years of service with
respondent, he had become a regular employee.
Respondent, on the other hand denied employment of petitioner and contended that the latter was
employed by First Staffing Network Corp. (FSNC) with which the respondent had an existing
memorandum of agreement (MOA). Thus, by virtue of a legitimate job contracting, petitioner, as an
employee of FSNC, came to work with the respondent.
The Labor Arbiter ruled in favor of Petitioner and held respondent and FFSNC solidarily liable with the
petitioner. Respondent filed an appeal but dismissed by NLRC for failure to perfect an appeal. In CA,
the latter reversed NLRC's decision and order the latter to give due course to respondent's appeal.
Hence this petition.

Issue:
Whether or not the NLRC should allow Alabang Country Club to file its Appeal even beyond the
reglementary period.

Ruling:
No. The Court will only allow the liberal interpretation of the Rules when there is an extraordinary
circumstance that justify deviation from its stringent rules. In this case no extraordinary existed. It is
a basic and irrefragable rule that in carrying out and in interpreting the provisions of the Labor Code
and its implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. The interpretation herein made gives meaning and substance to the liberal and
compassionate spirit of the law enunciated in Article 4 of the Labor Code that "all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing
rules and regulations shall be resolved in favor of labor."
The NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the
interpretation of rules in deciding labor cases. However, such liberality should not be applied in the
instant case as it would render futile the very purpose for which the principle of liberality is adopted.
The liberal interpretation in favor of labor stems from the mandate that the workingman's welfare
should be the primordial and paramount consideration.
Indeed, there is no room for liberality in the instant case "as it would render futile the very purpose
for which the principle of liberality is adopted." As so rightfully enunciated, "the liberal interpretation
in favor of labor stems from the mandate that the workingman's welfare should be the primordial and
paramount consideration." This Court has repeatedly ruled that delay in the settlement of labor cases
cannot be countenanced. Not only does it involve the survival of an employee and his loved ones who
are dependent on him for food, shelter, clothing, medicine and education; it also wears down the
meager resources of the workers to the point that, not infrequently, they either give up or
compromise for less than what is due them.
 St. Theresa’s School of Novaliches Foundation et al v NLRC et al,
GR No 122955, April 15 1998
Interpretation of employment contract
Ponente: PURISIMA, J.
Facts:
The petitioner is the president of St. Theresa's School of Novaliches Foundation. She hired private
respondent Esther Reyes on a contract basis provided for a fixed term of nine (9) months, from June
1, 1991 to March 31, 1992.
On March 2, 1992, private respondent reported for work, but she only stayed in her place of work
from 6:48 to 9:38 a.m. Thereafter, she never returned.Petitioners theorize that the private
respondent abandoned her work. On March 25, 1992, petitioners sent private respondent a letter,
informing her that her contract, is due to expire on March 31, 1992, would not be renewed. The
private respondent then filed a complaint to the NLRC NCR against the herein petitioners for "unfair
labor practice based on harassment, illegal dismissal, 13th month pay, allowances, removal of desk
and chair form place of work, and refusal to communicate, moral and exemplary damages." The
labor Arbiter decided in favor of the complainant.
The petitioner appealed the decision of the Labor Arbiter was reversed and set aside and another one
rendered, declaring the separation of Esther Reyes service legal and valid. Both parties moved for
reconsideration, petitioner assailed the award of backwages in favor of the private respondent.
Hence, this instant case.

Issue:
Whether or not the award of backwages in favor of the private respondent is proper even though her
dismissal was valid.

Ruling:
No. The private respondent is not qualified for backwages.
The contract between the petitioner and the private respondent is on a fixed term of nine (9)
months, from June 1, 1991 to March 31, 1992. Such stipulation, not being contrary to law, morals,
good customs, public order and public policy, is valid, binding and must be respected.
The term "backwages" has been defined as that for earnings lost by a worker due to his illegal
dismissal.Backwages are generally granted on grounds of equity.
Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee
illegally dismissed. But where, as in this case of a pitiful employee rendered hapless by her lawyer's
inaction or ignorance, the dismissal has been adjudged valid and lawful, the challenged award of
backwages is decidedly improper and contrary to law and jurisprudence.
 Bantolino et al v Coca Cola Bottlers Phils,
GR No 153660, July 10, 2003
Art 221, Labor Code, Technical Rules Not Binding
Ponente: BELLOSILLO, J
Facts:
Sixty-two (62) employees of respondent Coca-Cola Bottlers, Inc., and its officers filed a complaint
against respondents for unfair labor practice through illegal dismissal, violation of their security of
tenure and the perpetuation of the "Cabo System." They thus prayed for reinstatement with full back
wages, and the declaration of their regular employment status.
For failure to prosecute as they failed to either attend the scheduled mandatory conferences or
submit their respective affidavits, the claims of fifty-two (52) complainant-employees were dismissed.
Thereafter, Labor Arbiter Jose De Vera conducted clarificatory hearings to elicit information from the
ten (10) remaining complainants (petitioners herein).
Labor Arbiter Jose De Vera rendered a decision ordering respondent company to reinstate
complainants to their former positions with all the rights and to pay their full back wages. On appeal,
the NLRC sustained the finding of the Labor Arbiter that there was indeed an employer-employee
relationship between the complainants and respondent company when it affirmed in toto the latter's
decision.
Respondent Coca-Cola Bottlers appealed to the Court of Appeals which, although affirming the
finding of the NLRC that an employer-employee relationship existed between the contending parties,
nonetheless agreed with respondent that the affidavits of some of the complainants should not have
been given probative value for their failure to affirm the contents thereof and to undergo cross-
examination. As a consequence, the appellate court dismissed their complaints for lack of sufficient
evidence. In the same Decision however, other complainants were declared regular employees since
they were the only ones subjected to cross-examination. Petitioners now pray for relief from the
adverse Decision of the Court of Appeals; that, instead, the favorable judgment of the NLRC be
reinstated.

Issue:
WON the Court of Appeals erred in dismissing their complaints of the Coca-cola employees for failure
to affirm the contents thereof and to undergo cross-examination.

Ruling:
YES. Administrative bodies like the NLRC are not bound by the technical niceties of law and
procedure and the rules obtaining in courts of law.
Southern Cotabato Dev. and Construction Co. v. NLRC succinctly states that under Art. 221 of the
Labor Code, the rules of evidence prevailing in courts of law do not control proceedings before the
Labor Arbiter and the NLRC. Further, it notes that the Labor Arbiter and the NLRC are authorized to
adopt reasonable means to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law and procedure, all in the interest of due process. We find no compelling
reason to deviate therefrom.
The Revised Rules of Court and prevailing jurisprudence may be given only stringent application, i.e.,
by analogy or in a suppletory character and effect. The submission by respondent, citing People v.
Sorrel, that an affidavit not testified to in a trial, is mere hearsay evidence and has no real evidentiary
value, cannot find relevance in the present case considering that a criminal prosecution requires a
quantum of evidence different from that of an administrative proceeding. Under the Rules of the
Commission, the Labor Arbiter is given the discretion to determine the necessity of a formal trial or
hearing. Hence, trial-type hearings are not even required as the cases may be decided based on
verified position papers, with supporting documents and their affidavits.
 Austria v. NLRC,
G.R. No. 124382 August 16, 1999
Applicability, Article 6
Ponente: Kapunan, J.
Facts:
Petitioner Pastor Dionisio V. Austria worked with the SDA which is a religious corporation duly
organized and existing under Philippine law for 28 years from 1963 to 1991. In January, 1991,
petitioner was transferred to Bacolod City. He held the position of district pastor until his services
were terminated on 31 October 1991. From August up to October, 1991 petitioner received several
communications from Mr.Ibesate, the treasurer of the Negros Mission asking him to admit
accountability and responsibility for the church tithes and offerings collected by his wife, Mrs. Thelma
Austria, in his district which amounted to P15,078.10, and to remit the same to the Negros Mission.
In which he reasoned out that he should not be made accountable since it was not him who
authorized his wife for the collection. The fact-finding committee conducted an investigation of
petitioner and on 29 October 1991, petitioner received a letter of dismissal citing misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of
duties, and commission of an offense against the person of employer's duly authorized
representative, as grounds for the termination of his services.
Petitioner filed a complaint before the Labor Arbiter against the SDA and its officers and prayed for
reinstatement with backwages and benefits, moral and exemplary damages and other labor law
benefits. The Labor Arbiter rendered a decision in favor of Austria. The SDA appealed this decision to
the National Labor Relations Commission (NLRC), which consequently dismissed the case for want of
merit. Austria filed a motion for reconsideration, which resulted in the NLRC reversing its original
decision contending that Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to
the constitutional provision on the separation of church and state since the case allegedly involved an
ecclesiastical affair to which the State cannot interfere. Thus, this petition.

Issue:
Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by
petitioner against the SDA

Ruling:
Yes. The principle of separation of church and state finds no application in this case. The case at bar
does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance
of the same. Involved here is the relationship of the church as an employer and the minister as an
employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or
doctrines of the church. Petitioner was terminated from the employment which is purely secular in
nature as he was dismissed based on Article 282 of the Labor Code which enumerates the just
causes for termination of employment. By this alone, it is palpable that the reason for Austria’s
dismissal is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC with a
copy of Austria’s letter of termination. Aside from these, SDA admitted in a certification issued by its
officer, Mr. Ibesate, that petitioner has been its employee for 28 years. SDA even registered
petitioner with the Social Security System (SSS) as its employee. As a matter of fact, the worker's
records of petitioner have been submitted by private respondents as part of their exhibitseven
submitted petitioner’s worker records as part of their exhibits. From all of these it is clear that when
the SDA terminated the services of petitioner, it was merely exercising its management prerogative
to fire an employee which it believes to be unfit for the job. As such, the State, through the Labor
Arbiter and the NLRC, has the right to take cognizance of the case and to determine whether the
SDA, as employer, rightfully exercised its management prerogative to dismiss an employee. This is in
consonance with the mandate of the Constitution to afford full protection to labor. Under the Labor
Code, the provision which governs the dismissal of employees is comprehensive enough to include
religious corporations, such as the SDA. Article 278 of the Labor Code on post-employment states
that "the provisions of this Title shall apply to all establishments or undertakings, whether for profit
or not, which does not make any exception in favor of a religious corporation. With this clear
mandate, the SDA cannot hide behind the mantle of protection of the doctrine of separation of
church and state to avoid its responsibilities as an employer under the Labor Code.
 Rodolfo v. People,
G.R. No. 146964 August 10, 2006
Recruitment includes the act of referral
Ponente: CARPIO MORALES, J.
Facts:
On August and September 1984, accused-appellant, Rodolfo approached private complainants
Necitas Ferre and Narciso Corpus individually and invited them to apply for overseas employment in
Dubai. Rodolfo being their neighbor, Ferre and Corpus agreed and went to the former’s office. In that
office, Ferre gave P1,000.00 as processing fee and another P4,000.00. Likewise, Corpus gave
appellant P7,000.00. Appellant then told them that they were scheduled to leave for Dubai on
September 8, 1984. However, they were not able to depart on the said date as their employer
allegedly did not arrive. Thus, their departure was rescheduled to September 23, but the result was
the same. Suspecting that they were being hoodwinked, they demanded to return their money.
Except for the refund of P1,000.00 to Ferre, Rodolfo was not able to return other’s money. Tired of
excuses, private complainants filed the a case for illegal recruitment against the accused-appellant
with the Regional Trial Court (RTC) against Rodolfo. The Court finds the accused ROSA C. RODOLFO
as GUILTY of the offense of ILLEGAL RECRUITMENT but taking note of the fact that while the
information reflected the commission of illegal recruitment in large scale, only the complaint of the
two of the five complainants was proven. The CA affirmed the decision of the RTC except the
penalty.
Hence this petition.

Issue:
Whether or not Rodolfo is guilty of illegal recruitment in large scale.

Ruling:
Yes. The elements of the offense of illegal recruitment, which must concur, are: (1) that the offender
has no valid license or authority required by law to lawfully engage in recruitment and placement of
workers; and (2) that the offender undertakes any activity within the meaning of recruitment and
placement under Article 13(b), or any prohibited practices enumerated under Article 34 of the Labor
Code. 13 If another element is present that the accused commits the act against three or more
persons, individually or as a group, it becomes an illegal recruitment in a large scale.
Article 13 (b) of the Labor Code defines "recruitment and placement" as "[a]ny act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit or
not."
That the first element is present in the case at bar, there is no doubt that records of the POEA do not
show that petitioner is authorized to recruit workers for overseas employment.
The second element is doubtless also present. The act of referral, which is included in recruitment,
18 is "the act of passing along or forwarding of an applicant for employment after an initial interview
of a selected applicant for employment to a selected employer, placement officer or bureau." 19
Petitioner’s admission that she brought private complainants to the agency whose owner she knows
and her acceptance of fees including those for processing betrays her guilt.
That petitioner issued provisional receipts indicating that the amounts she received from the private
complainants were turned over to Luzviminda Marcos and Florante Hinahon does not free her from
liability. For the act of recruitment may be "for profit or not." It is sufficient that the accused
"promises or offers for a fee employment" to warrant conviction for illegal recruitment.
 Capricorn International Travel and Tours, Inc. v. CA
G.R. No. 91096 April 3, 1990
Ponente: CORTES, J.
Facts:
In Civil Case No. 86-36195 of the Regional Trial Court of Manila, judgment was rendered in favor of
Capricorn and against Sameer, ordering the latter to pay P91,216.60 with legal interest from the filing
of the complaint, 10% attorney's fees, and costs. A writ of execution was issued and a notice of
garnishment of the cash bond posted by Sameer was served on the POEA.
The POEA, through its officials, was against delivering the amount of Sameer's cash bond to the
sheriff, but subsequently, left with no other recourse but to comply with the trial court's orders, the
POEA delivered a check for One Hundred Thousand Pesos (P100,000.00) representing the amount of
the cash bond to Capricorn's counsel.
In the meantime, Sameer moved to quash the notice of garnishment, but this was denied by the trial
court. A motion for reconsideration was filed, but this was also denied.
The Court of Appeals granted the petition for certiorari filed by Sameer and annulled the trial court's
orders relative to the notice of garnishment. It also permanently enjoined Capricorn from attaching,
levying and garnishing Sameer's cash bond and ordered Capricorn to return it to the POEA, if still
unreturned.

Issue:
Whether or not the cash bond posted by a recruitment agency in the Philippine Overseas
Employment Administration (POEA) may be garnished by a judgment creditor of the agency.

Ruling:
NO. Explicit from provisions of the Labor Code and the POEA Rules and Regulation are:
a. that the cash bond is a requisite for the issuance and renewal of a license or authority to engage
in the business of recruitment and overseas placement;
b. that the cash bond is to answer for the liabilities of the agency arising from violations of the
conditions for the grant or use of the license or authority or the contracts of employment, the Labor
Code, the POEA rules and Labor Department issuances and all liabilities that the POEA may impose;
c. that the amount of the cash bond must be maintained during the lifetime of the license or
authority; and
d. that the amount of the cash bond shall be returned to the agency only when it surrenders its
license or authority, and only upon posting of a surety bond of the same amount valid for three (3)
years.
It must also be added that the requirement for the posting of a cash bond is also an indispensable
adjunct to the requirement that the agency undertakes to assume joint and solidary liability with the
employer for all claims and liabilities which may arise in connection with the implementation of the
contract of overseas employment and to guarantee compliance with existing labor and social
legislation of the Philippines and the country of employment.
On a broader scale, the undertaking to assume joint and solidary liability and to guarantee
compliance with labor laws, and the consequent posting of cash and surety bonds, may be traced all
the way back to the constitutional mandate for the State to "afford full protection to labor, local and
overseas" [Art. XIII, sec. 3]. The peculiar nature of overseas employment makes it very difficult for
the Filipino overseas worker to effectively go after his foreign employer for employment-related
claims and, hence, public policy dictates that, to afford overseas workers' protection from
unscrupulous employers, the recruitment or placement agency in the Philippines be made to share in
the employer's responsibility.
Considering the rationale for requiring the posting of a cash bond and its nature, it cannot therefore
be argued that the cash bond is not exempt from execution by a judgment creditor simply because it
is not one of those enumerated in Rule 39, sec. 12 of the Rules of Court. To accede to such an
argument would be tantamount to turning a blind eye to the clear intent of the law to reserve the
cash bond for the employment-related claims of overseas workers and for violations of labor laws.
From a different angle, neither may it be argued that Capricorn's 5 judgment credit, pertaining as it
does to the value of airline tickets ostensibly used by Sameer to transport overseas workers abroad,
this one of those for which the cash bond should answer. Sameer's liability to Capricorn relates to a
purely contractual obligation arising from the purchase and sale of airline tickets. While the liability
may have been incurred in connection with the business of recruiting or placing overseas workers, it
is definitely not one arising from violations of the conditions for the grant and use of the license or
authority and contracts of employment. Nor is it one arising from the violation of labor laws.
Thus, it cannot be said that the Court of Appeals erred when it annulled the assailed orders of
respondent judge, enjoined Capricorn from garnishing the cash bond, and ordered it to return the
amount of the bond to the POEA if it had not yet done so.
ACCORDINGLY, after deliberating on the Petition, Comment and Reply, the Court Resolved to DENY
the petition for lack of merit.
 Facilities Management Corporation v. De la Rosa
G.R. No. L-38649 March 26, 1979
Ponente: MAKASIAR, J
Facts:
Petitioner Facilities Management Corporation was ordered to pay private respondent Leonardo de la
Osa his overtime compensation, as well as his swing shift and graveyard shift premiums at the rate of
fifty (50%) percent of his basic salary. Petitioner alleged that he was employed by respondents as,
painter, houseboy and cashier.
Petitioner interposed the following special defenses, namely: That respondents Facilities Management
Corporation and J. S. Dreyer are domiciled in Wake Island which is beyond the territorial jurisdiction
of the Philippine Government; that respondent J. V. Catuira, though an employee of respondent
corporation presently stationed in Manila, is without power and authority of legal representation; and
that the employment contract between petitioner and respondent corporation carries -the approval of
the Department of Labor of the Philippines. The petitioner contended that because it was domiciled
outside and not doing business in the Philippines, it could not be sued in the country.

Issue:
Whether petitioner has been 'doing business in the Philippines' so that the service of summons upon
its agent in the Philippines vested the Court of First Instance of Manila with jurisdiction.

Ruling:
Yes. The Court ruled that the petitioner can be considered as doing business in the Philippines. Under
the promulgated rules by the Board of Investments the following are considered ‘doing business’:
(f) the performance within the Philippines of any act or combination of acts enumerated in section l(l)
of the Act shall constitute 'doing business' therein. in particular, 'doing business includes:
(1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a
foreign firm, not acting independently of the foreign firm amounting to negotiation or fixing of the
terms and conditions of sales or service contracts, regardless of whether the contracts are actually
reduced to writing, shall constitute doing business even if the enterprise has no office or fixed place
of business in the Philippines.
(2) Appointing a representative or distributor who is domiciled in the Philippines, unless said
representative or distributor has an independent status, i.e., it transacts business in its name and for
its own account, and not in the name or for the account of the principal.
xxx xxx xxx
(4) Opening offices, whether called 'liaison' offices, agencies or branches, unless proved otherwise.
xxx xxx xxx
(10) Any other act or acts that imply a continuity of commercial dealings or arrangements, and
contemplate to that extent the performance of acts or works, or the exercise of some of the functions
normally incident to, or in the progressive prosecution of, commercial gain or of the purpose and
objective of the business organization (54 O.G. 53).
Moreover, FMC had to appoint an agent, pursuant to Department of Labor Order, with authority to
execute Employment Contracts and receive legal services and be bound by the processes of the
Philippine Courts for as long as he remains an employee of FMC. According to the Rules of Court,
service of summons upon foreign corporations may be made on its resident agent (Sec14, Rules of
Court old).
Further, if a foreign corporation, not engaged in business in the Philippines, is not banned from
seeking redress from courts in the Philippines, that same corporation cannot claim exemption from
being sued in Philippine courts for acts done against a person or persons in the Philippines.
 People v. Dujua G.R. Nos. 149014-16 February 5, 2004
Ponente:
Facts:
One of the accused, Ramon Dujua, by representing World Pack Travel and Tours ( World Pack) as a
recruiter, offered job placements as factory workers in Japan and Taiwan to 3 applicants namely;
Beldon Calutin, Jaime Cabus and Roberto Perlas.
After Dujua promised the 3 applicants to facilitate the processing of the pertinent papers if given the
necessary amounts to meet the requirements thereof. Thus, all of them paid the required amounts by
installments until fully paid. However, Ramon Dujua and his mother, a co-accused in this case, Rose
Dujua, did not issue receipts to most of these payments.
Notwithstanding their payments to the accused, and after series of promises, the flight and the job of
Calutin, Cabus and Perlas never materialized. The money they paid was never refunded to them
which made them file their complaints against the accused before the NBI.
Seeking the reversal of his conviction, Ramon Dujua contends that the prosecution failed to prove
beyond reasonable doubt that he committed the crimes of illegal recruitment in large scale and estafa

Issue:
Whether the accused is guilty of the crime of illegal recruitment in large scale.

Ruling:
Yes. Roberto Dujua committed the crime of illegal recruitment in large scale.
The essential elements of the crime of illegal recruitment in large scale are: (1) the accused engages
in acts of recruitment and placement of workers defined under Article 13(b) or in any prohibited
activities under Art. 34 of the Labor Code; (2) the accused has not complied with the guidelines
issued by the Secretary of Labor and Employment, particularly with respect to the securing of a
license or an authority to recruit and deploy workers, either locally or overseas; and (3) the accused
commits the unlawful acts against three or more persons, individually or as a group.
All three elements have been established beyond reasonable doubt. First, the testimonies of the
complaining witnesses satisfactorily prove that appellant promised them employment and assured
them placement overseas. Second, appellant did not have any license or authority to recruit persons
for overseas work, as shown by the Certification issued by the POEA. Neither did his employer, the
World Pack Travel and Tours, possess such license or authority. Third, it has been alleged and proven
that appellant undertook the recruitment of not less than three persons, namely, Cabus, Caluten and
Perlas.
 People v. Domingo G.R. No. 181475 April 7, 2009
Facts:
RTC rendered a Decision finding herein appellant guilty of one count of illegal recruitment in large
scale and two counts of Estafa. This is based from the complaints of 23 persons, of which 5 testified
accusing him of promising employment in Marianas Island and Saipan and asking the amounts
ranging from 10, 000 to 30, 000 from each complainant representing expenses for passporting, NBI
clearance and medical examination. All complaints were scheduled for departure but such never
materialized. One of the five who testified, Simeon Cabigao later recanted his testimony. Appellant
denies all accusation against him and contends that it was Danilo Gimeno who undertook recruitment
activities. He questions the trial court’s decision since there is no receipt or document presented as
evidence showing that he received money from complaints, and its failure to give weight to Cabigao’s
retraction. Aggrieved by the above decision, appellant filed an appeal to the CA, which affirmed RTC’s
decision. Hence, this appeal.

Issue: WON the trial court erred in convicting the accused appellant of illegal recruitment in large
scale and Estafa although the crime was not proved beyond reasonable doubt.

Ruling:
No. The Court affirmed the decision of the CA. The Court has held that the following are the essential
elements of illegal recruitment in large scale: 1) the person charged undertook a recruitment activity
under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) he/she did not
have the license or the authority to lawfully engage in the recruitment and placement of workers;
and (3) he/she committed the prohibited practice against three or more persons individually or as a
group. Here, the Court finds that the prosecution ably discharged its onus of proving the guilt beyond
reasonable doubt of appellant of the crimes charged. As to the lack of receipt, it is sufficient that the
appellant promised or offered employment for a fee to the complaining witnesses to warrant his
conviction for illegal recruitment under Article 13(b). As to Cabigao’s retraction, the Court notes that
it has not overcome the testimonies of the four other complainants, whose credibility has not been
impaired. Also, the Court stresses, citing People vs Comila, that a person may be charged and
convicted of both illegal recruitment and estafa. Appellant, who did not have the authority or license
to recruit and deploy, misrepresented to the complaining witnesses that he had the capacity to send
them abroad for employment. This misrepresentation, which induced the complaining witnesses to
part off with their money for placement and medical fees, constitutes estafa under Article 315, par.
2(a) of the Revised Penal Code.
 People v. Gallo G.R. No. 185277 March 18, 2010
Ponente: PEREZ, J.
Facts: Accused-appellant Gallo and accused Pacardo and Manta together with Mardeolyn and 9
others, were charged with syndicated illegal recruitment and 18 counts of estafa committed against
eighteen complainants.
The present appeal concerns solely accused-appellants conviction for syndicated illegal recruitment in
and for estafa. According to the prosecution, Dela Caza was introduced by Panuncio to accused-
appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean
national at the office of MPM Agency located in Malate, Manila. Accused-appellant Gallo then
introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to
send many workers abroad. Together with Pacardo and Manta, he also told Dela Caza about the
placement fee of PhP150,000 with a down payment of PhP45,000 and the balance to be paid through
salary deduction. With accused- appellants assurance that many workers have been sent abroad, as
well as the presence of the 2 Korean nationals and upon being shown the visas procured for the
deployed workers, Dela Caza was convinced to part with his money and paid the agency.
After 2 weeks, the said agency moved and changed their name. After 2 more months of waiting in
vain to be deployed, Dela Caza and the other applicants decided to act. The first attempt was
unsuccessful because the agency again moved to another place. However, with the help of the Office
of Ambassador Seres and the Western Police District, they were able to locate the new address at
Carriedo, Manila.
The agency explained that it had to move in order to separate those who are applying as entertainers
from those applying as factory workers. Accused-appellant Gallo, together with Pacardo and Manta,
were then arrested. For his defense, accused-appellant denied having any part in the recruitment of
Dela Caza. In fact, he testified that he also applied with MPM Agency for deployment to Korea as a
factory worker. RTC and CA convicted the appellants. Hence this appeal, accused appellant
contended that even assuming he was an employee, such cannot warrant his outright conviction sans
evidence that he acted in conspiracy with the officers of the agency.

Issue: Is the accused-appellant guilty of illegal recruitment committed by a syndicate?

Ruling: Yes. Supreme Court stressed out that in establishing conspiracy, it is not essential that there
be actual proof that all the conspirators took a direct part in every act. It is sufficient that they acted
in concert pursuant to the same objective.
To commit syndicated illegal recruitment, three elements must be established: (1) the offender
undertakes either any activity within the meaning of recruitment and placement defined under Article
13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no
valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and (3) the illegal recruitment is committed by a group of three (3) or more
persons conspiring or confederating with one another.
When illegal recruitment is committed by a syndicate or in large scale, i., if it is committed against
three (3) or more persons individually or as a group, it is considered an offense involving economic
sabotage. Under Art. 13(b) of the Labor Code, recruitment and placement refers to any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or abroad, whether for
profit or not.
SC believes that the prosecution was able to establish the elements of the offense sufficiently. The
evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for
overseas employment. In the instant case, accused-appellant committed the acts enumerated in Sec.
6 of R. 8042. Testimonial evidence presented by the prosecution clearly shows that, in consideration
of a promise of foreign employment, accused-appellant received the amount of Php 45,000 from Dela
Caza. When accused-appellant made misrepresentations concerning the agency's purported power
and authority to recruit for overseas employment, and in the process, collected money in the guise of
placement fees, the former clearly committed acts constitutive of illegal recruitment.
Salazar v. Achacoso G.R. No. 81510 March 14, 1990
Ponente: SARMIENTO, J
Facts: Rosalie Tesoro of Pasay City in a sworn statement filed with the POEA, charged petitioner
Salazar with illegal recruitment. Public respondent Atty. Ferdinand Marquez sent petitioner a
telegram directing him to appear to the POEA regarding the complaint against him. On the same day,
after knowing that petitioner had no license to operate a recruitment agency, public respondent
Administrator Tomas Achacoso issued a Closure and Seizure Order No. 1205 to petitioner. It stated
that there will a seizure of the documents and paraphernalia being used or intended to be used as
the means of committing illegal recruitment, it having verified that petitioner has— (1) No valid
license or authority from the Department of Labor and Employment to recruit and deploy workers for
overseas employment; (2) Committed/are committing acts prohibited under Article 34 of the New
Labor Code in relation to Article 38 of the same code. A team was then tasked to implement the said
Order. The group, accompanied by media men and Mandaluyong policemen, went to petitioner’s
residence. They served the order to a certain Mrs. For a Salazar, who let them in. The team
confiscated assorted costumes. Petitioner filed with POEA a letter requesting for the return of the
seized properties, because she was not given prior notice and hearing. The said Order violated due
process. She also alleged that it violated sec 2 of the Bill of Rights, and the properties were
confiscated against her will and were done with unreasonable force and intimidation.

Issue: Whether or Not the Secretary of Labor can validly issue warrants of search and seizure under
Article 38 of the Labor Code.

Ruling: No. Mayors and prosecuting officers cannot issue warrants of seizure or arrest. The Closure
and Seizure Order was based on Article 38 of the Labor Code. The Supreme Court held, “We reiterate
that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence,
the authorities must go through the judicial process. To that extent, we declare Article 38, paragraph
(c), of the Labor Code, unconstitutional and of no force and effect… The power of the President to
order the arrest of aliens for deportation is, obviously, exceptional. It (the power to order arrests)
cannot be made to extend to other cases, like the one at bar. Under the Constitution, it is the sole
domain of the courts.” Furthermore, the search and seizure order was in the nature of a general
warrant. The court held that the warrant is null and void, because it must identify specifically the
things to be seized.
 People v. Sison G.R. No. 187160 August 9, 2017
Ponente:
Facts:
Casuera and Magalona met appellant and the latter briefed Castuera on the requirements for working
as a fruit picker in Australia. She introduced Castuera to another man who related that he was able to
go to Australia with her help. She also showed Castuera pictures of other people she had supposedly
helped to get employment in Australia. Appellant further narrated that a couple she had helped had
given her their car as payment. Because of her representations, Castuera believed in her promise
that she could send him to Australia. Appellant asked Castuera for ₱180,000 for processing his
papers.
Appellant, however, failed to secure an Australian visa for Castuera. Together with Dedales and
Bacomo, appellant convinced Castueara that it was difficult to get an Australian visa in the Philippines
so they had to go to Malaysia or in Indonesia to get one. Subsequently, Castuera's application for an
Australian visa in Indonesia was denied. Dedales asked for US$1,000 for the processing of his U.S.
visa, which he paid. However, when his U.S. visa came, Castuera saw that it was in an Indonesian
passport bearing an Indonesian name. Because of this, Castuera decided to just return to the
Philippines.

Issue:
Whether or not appellant is guilty of illegal recruitment through a syndicated estafa.

Ruling:
Yes. Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or
more persons conspiring or confederating with one another. Under RA 8042, a non-licensee or non-
holder of authority commits illegal recruitment for overseas employment in two ways: (1) by any act
of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes
referring, contract services, promising or advertising for employment abroad, whether for profit or
not; or (2) by undertaking any of the acts enumerated under Section 6 of RA 8042.
In this case, appellant herself admits that she has no license or authority to undertake recruitment
and placement activities. Since it was proven that the three accused were acting in concert and
conspired with one another, their illegal recruitment activity is considered done by a syndicate,
making the offense illegal recruitment involving economic sabotage.
 Feagle Construction Corporation v. Dorado G.R. No. 86042 April 30, 1991
Ponente: GANCAYCO, J.
Facts:
Before the Court is the motion for reconsideration filed by petitioner of the resolution of the Court
dated November 23, 1989 dismissing the petition on the ground that the issues raised being
particularly factual and there is no sufficient showing that the findings contained in the questioned
judgment are not supported by substantial evidence or that said judgment is tainted with grave
abuse of discretion.
Private respondents have been working in Saudi Arabia for three to five years with Algosaibi-Bison,
Ltd. (AB for short). Sometime in 1983, AB started encountering financial difficulties because of the
sudden drop in the price of oil in Saudi Arabia. Thus, in 1983, the remittance of allotments to
beneficiaries of Filipino workers employed with AB were delayed. Nevertheless, their salaries were
fully paid before they left Saudi Arabia to return to the Philippines.
During all these years, petitioner never charged its Filipino workers, including private respondents, for
sending them to work for AB. Petitioner even advanced all the mobilization expenses such as medical
fees, passport fees and visa application fees which were supposed to be reimbursed by AB. Because
of the financial problems of AB which could not reimburse petitioner for the mobilization expenses,
petitioner decided to stop sending back to Saudi Arabia Filipino workers who had returned to the
Philippines.
Sometime in July 1984, the Filipino workers employed with AB who had returned, including private
respondents, requested for a meeting with the management of the petitioner. They pleaded with the
petitioner to send them back to Saudi Arabia because they were jobless in the Philippines. Mr.
Florentino B. Aguila, president of petitioner, explained to them that petitioner would not want to send
any workers back to Saudi Arabia because of the big risk to them as AB was encountering financial
difficulties.
However, the Filipino workers insisted that rather than remain jobless in the Philippines, they would
rather take their chance in Saudi Arabia. They assured the petitioner that they were willing to assume
the risk in case the remittance of their salaries would be delayed. They said that they would seek the
assistance of the Saudi Arabia Labor Office in case the remittance of their salaries would be delayed.
They offered to sign any written statement or waiver pledging that they would not hold the petitioner
liable for any delay or non-payment of their unpaid salaries and any other amount due them from AB.
It was under these circumstances that the petitioner reluctantly agreed to send private respondents
to Saudi Arabia.

Issue:
Whether or not the respondent commission acted without and/or in excess of its jurisdiction and with
grave abuse of discretion when it declared, the petitioner jointly and severally liable with algosaibi-
bison, ltd. to pay the private respondents’ claim despite the absence of employee-employer
relationship between the petitioner and the private respondents

Ruling:
When an overseas worker persuades the local representative of the principal or recruiter to send him
abroad to work despite the refusal of said local representative or recruiter to accede to the request
due to the unstable condition in the area of work desired so much so that the regular payment of the
remuneration of the employee or worker and his security of tenure cannot be assured, and still such
employee or worker insists on taking a calculated risk by signing a waiver rendering the local
representative or recruiter free from any liability to said employee or laborer arising from such
overseas employment, thus in such instance, the local representative or recruiter cannot be jointly
and severally held liable with the foreign principal or employer for any claim of such employee or
worker arising thereunder. Where the liquidator had a standing commitment to pay what is due
private respondents, the claim of private respondents should be paid by the liquidator. In the case at
bar, it is not improbable that private respondents may have collected by now partially if not fully what
is due them. For this additional reason, the Court cannot allow the private respondents to unjustly
enrich themselves by collecting twice from the liquidator and petitioner.
People v. Valenciano
G.R. No. 180926 December 10, 2008
Ponente:
Facts: In May 1996, Lourdes Valenciano, claiming to be an employee of Middle East International
Manpower Resources, Inc., went with one Susie Caraeg to the house of Agapito De Luna, and told
him he could apply for a job in Taiwan. A week later, De Luna went to Valencianos house, there to be
told to undergo a medical examination, with the assurance that if there were a job order abroad, he
would be able to leave. He was also told that the placement fee for his employment as a factory
worker in Taiwan was PhP 70,000.
After passing the medical examination, De Luna paid Valenciano. The first and last payments were
turned over by Valenciano to Teresita Imperial, who issued the corresponding receipts, and the
second payment was turned over by Valenciano to Rodante Imperial, who also issued a receipt.
Also in May 1996, Valenciano visited the house of Allan De Villa, accompanied by Euziel N. Dela
Cuesta, Eusebio T. Candelaria, and De Luna, to recruit De Villa as a factory worker in Taiwan. De Villa
was also asked for PhP 70,000 as placement fee. He paid Valenciano.
On May 20, 1996, Valenciano, accompanied by Rodante and Puring Caraeg, went to the house of
Dela Cuesta to recruit her for employment as a factory worker in Taiwan. Dela Cuesta paid
Valenciano.
On May 1, 1996, Valenciano, with Rodante, Teresita, and Rommel Imperial, went to Lian, Batangas
to recruit workers for employment abroad. Candelaria applied for a job as a factory worker in Taiwan
when Valenciano went to his residence in Lian. On May 30, 1996, Candelaria paid Valenciano.
After the payments were made, Valenciano brought the prospective workers to the office of Middle
East International Manpower Resources, Inc. in Pasay City, where they were made to fill out
application forms for their employment as factory workers in Taiwan.
She assured the prospective workers that they could leave for Taiwan within one month from the
filing of their applications. During the period material, they have not yet found employment as factory
workers in Taiwan.
Valenciano, Rodante, Teresita, and Rommel were charged with the offense of illegal recruitment in
large scale, as defined under Article 13(b) of Presidential Decree No. (PD) 442, otherwise known as
the Labor Code of the Philippines, as amended, in relation to Art. 38(a), and penalized under Art.
39(c) of the Code, as amended by PD 1920 and PD 2018.
The RTC found accused-appellant guilty. Accused-appellant appealed to this Court, but the case was
transferred to the CA through a Resolution dated September 6, 2004, following People v. Mateo.

Issue: 1. Whether or not the appellant, being an ordinary employee, is guilty of illegal recruitment (in
large scale).
Ruling: Yes. As held in Jamilosa: To prove illegal recruitment in large scale, the prosecution is
burdened to prove three (3) essential elements, to wit: (1) the person charged undertook a
recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code;
(2) accused did not have the license or the authority to lawfully engage in the recruitment and
placement of workers; and (3) accused committed the same against three or more persons
individually or as a group.[13] x
The claim of accused-appellant that she was a mere employee of her other co-accused does not
relieve her of liability. An employee of a company or corporation engaged in illegal recruitment may
be held liable as principal, together with his employer, if it is shown that the employee actively and
consciously participated in illegal recruitment.

As testified to by the complainants, accused-appellant was among those who met and transacted
with them regarding the job placement offers. In some instances, she made the effort to go to their
houses to recruit them. She even gave assurances that they would be able to find employment
abroad and leave for Taiwan after the filing of their applications. Accused-appellant was clearly
engaged in recruitment activities, notwithstanding her gratuitous protestation that her actions were
merely done in the course of her employment as a clerk.

Almodiel v. NLRC G.R. No. 100641 June 14, 1993

Ponente:
Facts: Petitioner Farle P. Almodiel is a certified public accountant who was hired in October, 1987 as
Cost Accounting Manager of respondent Raytheon Philippines, Inc. through a reputable placement
firm, John Clements Consultants, Inc. Before said employment, he was the accounts executive of
Integrated Microelectronics, Inc. for several years. He left his lucrative job therein in view of the
promising career offered by Raytheon. He started as a probationary or temporary employee as Cost
Accounting Manager.
On August 17, 1988, he recommended and submitted a Cost Accounting/Finance Reorganization,
affecting the whole finance group but the same was disapproved by the Controller. However, he was
assured by the Controller that should his position or department which was apparently a one-man
department with no staff becomes untenable or unable to deliver the needed service due to
manpower constraint, he would be given a three (3) year advance notice.
In the meantime, the standard cost accounting system was installed and used at the Raytheon plants
and subsidiaries worldwide. It was likewise adopted and installed in the Philippine operations. As a
consequence, the services of a Cost Accounting Manager allegedly entailed only the submission of
periodic reports that would use computerized forms prescribed and designed by the international
head office of the Raytheon Company in California, USA.
On January 27, 1989, petitioner was summoned by his immediate boss and in the presence of IRD
Manager, Mr. Rolando Estrada, he was told of the abolition of his position on the ground of
redundancy. He pleaded with management to defer its action or transfer him to another department,
but he was told that the decision of management was final and that the same has been conveyed to
the Department of Labor and Employment. Thus, he was constrained to file the complaint for illegal
dismissal before the Arbitration Branch of the National Capital Region, NLRC, Department of Labor
and Employment.

Issue:
Whether the public respondent committed grave abuse of discretion amounting to (lack of) or in
excess of jurisdiction in declaring as valid and justified the termination of petitioner on the ground of
redundancy in the face of clearly established finding that petitioner's termination was tainted with
malice, bad faith and irregularity.

Ruling:
Petitioner held a position which was definitely managerial in character, Raytheon had a broad latitude
of discretion in abolishing his position. An employer has a much wider discretion in terminating
employment relationship of managerial personnel compared to rank and file employees. The reason
obviously is that officers in such key positions perform not only functions which by nature require the
employer's full trust and confidence but also functions that spell the success or failure of an
enterprise.
Termination of an employee's services because of redundancy is governed by Article 283 of the Labor
Code which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate
the employment of any employee due to installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the worker and the Department of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to
at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closure or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be equivalent to at least
one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered as one (1) whole year.
There is no dispute that petitioner was duly advised, one (1) month before, of the termination of his
employment on the ground of redundancy in a written notice by his immediate superior, Mrs.
Magdalena B.D. Lopez sometime in the afternoon of January 27, 1989. He was issued a check for
P54,863.00 representing separation pay but in view of his refusal to acknowledge the notice and the
check, they were sent to him thru registered mail on January 30, 1989. The Department of Labor and
Employment was served a copy of the notice of termination of petitioner in accordance with the
pertinent provisions of the Labor Code and the implementing rules.
Petitioner relies on the testimony of Raytheon's witness to the effect that corollary functions
appertaining to cost accounting were dispersed to other units in the Finance Department. And
granting that his department has to be declared redundant, he claims that he should have been the
Manager of the Payroll/Mis/Finance Department which handled general accounting, payroll and
encoding. As a B. S. Accounting graduate, a CPA with M.B.A. units, 21 years of work experience, and
a natural born Filipino, he claims that he is better qualified than Ang Tan Chai, a B.S. Industrial
Engineer, hired merely as a Systems Analyst Programmer or its equivalent in early 1987, promoted as
MIS Manager only during the middle part of 1988 and a resident alien.
Raytheon insists that petitioner's functions as Cost Accounting Manager had not been absorbed by
Ang Tan Chai, a permanent resident born in this country. It claims to have established below that
Ang Tan Chai did not displace petitioner or absorb his functions and duties as they were occupying
entirely different and distinct positions requiring different sets of expertise or qualifications and
discharging functions altogether different and foreign from that of petitioner's abolished position.
An objection founded on the ground that one has better credentials over the appointee is frowned
upon so long as the latter possesses the minimum qualifications for the position. In the case at bar,
since petitioner does not allege that Ang Tan Chai does not qualify for the position, the Court cannot
substitute its discretion and judgment for that which is clearly and exclusively management
prerogative. To do so would take away from the employer what rightly belongs to him as aptly
explained in National Federation of Labor Unions v. NLRC.
 People v. Panis G.R. No L-58674-77 July 11, 1990
Ponente:
Facts:
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a license
from the Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did
then and there willfully, unlawfully and criminally operate a private fee charging employment agency
by charging fees and expenses and promising employment in Saudi Arabia" to four separate
individuals. in violation of Article 16 in relation to Article 39 of the Labor Code. Abug filed a motion to
quash on the ground that the information did not charge an offense because he was accused of
illegally recruiting only one person in each of the four informations. Under the proviso in Article
13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any
manner promised or offered any employment for a fee."

Issue: Whether Article 13(b) of P.D. 442, otherwise known as the Labor Code is applicable against
Abug.

Ruling:
Yes. The number of persons dealt with is not an essential ingredient of the act of recruitment and
placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute
recruitment and placement even if only one prospective worker is involved. The proviso merely lays
down a rule of evidence that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create
that presumption. In the instant case, the word "shall be deemed" should by the same taken be
given the force of a disputable presumption or of prima facie evidence of engaging in recruitment
and placement.
 Sunace International Management Services v. NLRC G.R. No. 161757 January 25, 2006
Ponente:
Facts:
Petitioner, Sunace International Management Services (Sunace), deployed to Taiwan Divina A.
Montehermozo as a domestic helper under a 12-month contract effective February 1, 1997. The
deployment was with the assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown
International Co., Ltd.
After her 12-month contract expired on February 1, 1998, Divina continued working for her
Taiwanese employer, Hang Rui Xiong, for two more years, after which she returned to the Philippines
on February 4, 2000.
Shortly after her return or on February 14, 2000, Divina filed a complaint before the National Labor
Relations Commission (NLRC) against Sunace, one Adelaide Perez, the Taiwanese broker, and the
employer-foreign principal alleging that she was jailed for three months and that she was underpaid.
Reacting to Divina's Position Paper, Sunace filed on April 25, 2000 an answer alleging that Divina's 2-
year extension of her contract was without its knowledge and consent, hence, it had no liability
attaching to any claim arising therefrom, and Divina in fact executed a Waiver/Quitclaim and Release
of Responsibility and an Affidavit of Desistance, copy of each document was annexed to said
The Labor Arbiter, rejected Sunace's claim that the extension of Divina's contract for two more years
was without its knowledge and consent.

Issue: Whether the act of the foreigner-principal in renewing the contract of Divina be attributable to
Sunace

Ruling:
No, the act of the foreigner-principal in renewing the contract of Divina is not attributable to Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner"
cannot be held solidarily liable for any of Divina's claims arising from the 2-year employment
extension.
Furthermore, as Sunace correctly points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of the original employment contract,
the foreign principal directly negotiated with Divina and entered into a new and separate employment
contract in Taiwan.
 Serrano v. Gallant Maritime Services, Inc. G.R. No. 167614 March 24, 2009
Ponente:
Facts:
Antonio Serrano, claims that the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042 violates
the OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of equal
protection and denies them due process.
Section 10, Republic Act (R.A.) No. 8042 provides:Sec. 10. Money Claims. - x x x In case of
termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less. x x x x
(Emphasis and underscoring supplied)
Antonio Serrano (serrano for brevity) was a Filipino sea fairer employed as Chief Officer by Gallant
Maritime Services Inc and Marlow Navigation Co., Inc (respondents for brevity) under a 12- month
contract with Basic Monthly Salary of US$1400. However, when he departed on March 19. 1998,
Serrno was constrained to accept a downgraded employment of Second Officer with monthly salary
of US$1,000 with the assurance that he would be made Chief Officer by the end of April 1998.
However, respondents failed to keep their promise so Serrano refused to stay as Second Oficer and
was repatriated to the Philippines, having served only 2 months and 7 days fot eh 12 month contract.
Serrano filed a complaint before the Labor arbiter for constructive dismissal and payment of money
claims (total US$26442.73), moral and exemplary damages, and attorney’s fees.
LABOR ARBITER: Serrano was declared illegally dismissed and was awarded monetary benefits,
representing Serrano’s salary for three (3) months of the unexpired portion of his employment
contract (total USD8,770) at the exchange rate of USD45 and attorney’s fees equivalent to 10% of
total amount awarded. LA’s basis was Serrano’s basic pay (USD1,400), fixed overtime pay (USD700),
vacation leave pay (USD490).
Serrano appealed to the NLRC, arguing that he is entitled to his salaries for the unexpired portion of
his contract pursuant to Tripe Intefrated Services Inc vs. NLRC.
NLRC: NLRC modified the monetary awards and ordered respondents to pay only USD4669 which is
equivalent to 3 months salary (USD1400 x 3); Salary differential of USD45 and 10% attorney’s fees
of USD424.5, reasoning that R.A. No. 8042 "does not provide for the award of overtime pay, which
should be proven to have been actually performed, and for vacation leave pay. Other findings were
affirmed.
Serrano questioned the constitutionality of said provision.
Court of Appeals: The CA affirmed the NLRC’s ruling on the reduction but skirted the constitutional
issue. Respondents argue that respondent cannot belatedly question the constitutionality of the said
law on appeal. The Sol Gen (OSG) argues that since the law preceded Serrano’s contract, it
(especially the monetary claims) is deemed incorporated therat sans stipulation. The OSG further
contends that there is a reasonable and valid basis to differentiate OFW from local workers; and
therefore the provision does not violate the equal protection clause nor sec. 18 Art. II of the
Constitution.

Issues:
Whether or not the issue of Constitutionality was timely raised by Serrano and before the proper
tribunal
Whether or not Section 10 of Rep. Act No. 8402 is constitutional.
Whether or not Serrano is entitled to salaries equivalent of three months of the unexpired portion or
salaries equivalent of the entire nine months and 23 days left of his employment contract including
overtime pay and holiday pay.

Ruling:
The Court may exercise its power of judicial review of acts of a co-equal branch, i.e Congress, when
the following conditions are satisfied:
a. There is an actual controversy
b. The constitutional question is raised by proper party and at the earliest opportunity
c. The constitutional question is the very lis mota of the case.
In ruling that the conditions were met, the Court ruled that:
There is an actual controversy re the Labor and CA’s computation of Serrano’s monetary claims.
The issue on Constitutionality was timely raised when Serrano raised the same before the Court of
Appeals, such court having been vested with the power of judicial review to declare a law
unconstitutional.
The constitutional issue is critical to the resolution of the monetary claim of Serrano.
2. On Violation of Non-Impairment Clause (Sec 10, Art II of the Constitution)
The provision does not violate the principle of non-impairment of contract (as the law preceded the
contract and laws operate prospectively.
On Violation of Sec 1, Art III; Sec 18, Art II; and Section 3 of Article XIII of the Constitution
The subject clause VIOLATES the Equal Protection Clause and Right of an individual to due
Process(Sec 1, Art III), recognizing their rights as a protected Sector (Sec 18, Art II; and Section 3 of
Article XIII)
Prior to R.A. 8042, all OFWs who were illegally terminated were subjected to a uniform rule of
monetary benefits computation: basic salary times the entire unexpired portion of their employment.
However, upon the enactment of R.A. 8042, illegally dismissed employees with unexpired portion of 1
year or more are singled out and subjected to the disadvantageous monetary award of 3 months of
their unexpired portion; as opposed to those illegally terminated OFWs with unexpired contracts of
less than one year who are entitled to their salaries for the unexpired period; and illegally dismissed
local workers with fixed-term employment who are not subjected to the 3-cap limitation.
Filipino workers are protected and afforded certain rights under the Constitution subject to the
inherent power of Congress to incorporate a system of classification into its legislation.
There is a valid classification if the classification is
1.) based on substantial distinction,
2.) germane to the purpose of law,
3) it is not limited to existing conditions; and
4) it applies equally to all members of the class.

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification
embodied in a law:
1.) the deferential or rational basis scrutiny in which the challenged classification needs only be
shown to be rationally related to serving a legitimate state interest
2.) the middle-tier or intermediate scrutiny in which the government must show that the challenged
classification serves an important state interest and that the classification is at least substantially
related to serving that interest; and
3.)) strict judicial scrutiny in which a legislative classification which impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class is
presumed unconstitutional, and the burden is upon the government to prove that the classification is
necessary to achieve a compelling state interest and that it is the least restrictive means to protect
such interest
In American jurisprudence, strict scrutiny is triggered by suspect classifications based on race or
gender but not when the classification is drawn along income categories. However, foreign decisions,
although persuasive, are not per se controlling in the Philippines. Philippine laws are to be construed
in light of our lawmakers intent and construed to serve our own public interest.
Imbued with the same sense of "obligation to afford protection to labor," the Court in the present
case also employs the standard of strict judicial scrutiny, for it perceives in the subject clause a
suspect classification prejudicial to OFWs.
In the present case, the Court dug deep into the records but found no compelling state interest that
the subject clause may possibly serve.
The Court ruled that the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against OFWs under
the subject clause.
The Court declared the provision unconstitutional clause VIOLATES the Equal Protection Clause and
Right of an individual to due Process(Sec 1, Art III), recognizing their rights as a protected Sector
(Sec 18, Art II; and Section 3 of Article XIII).
Note how the Court approaches the issue applying Section 1, Art III and not solely on the provisions
re the Constitution’s state policy on labor.
This is so because Setion 3 of Article XII is not a self-executing provision and it cannot on its own, be
a source of enforceable right. What it does is recognize labor as a protected sector; otherwise, it will
lead to a broad interpretation would suggest a blanket shield in favor of labor.
In declaring the subject clause unconstitutional, the Court reasoned that since the same deprived
Serrano of property and money benefits without an existing valid and definitive governmental
purpose, it violated not only Serrano’s right to equal protection but as well as his right to substantive
due process under (Section1, Art. III of the Constitution); thus, entitling Serrano to his salaries for
the entire unexpired period.
3. Serrano is entitled to his salaries for the entire unexpired period, not including his overtime
and leave pay because there is no evidence that he performed work during those periods.
Salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas
overtime pay is compensation for all work "performed" in excess of the regular eight hours, and
holiday pay is compensation for any work "performed" on designated rest days and holidays.
 Santiago v. CF Sharp Crew Management G.R. No. 162419 July 10, 2007
Ponente:
Facts:
Petitioner had been working as a seafarer for Smith Bell Management Inc. for about 5 years. On
February 3, 1998, he signed a new contract of employment with respondent to be deployed on board
the MSV Seaspread, which was scheduled to leave for Canada on February 13, 1998.
A week before the scheduled date of departure, the respondent’s Vice President sent a message to
the captain of MSV Seaspread saying that the VP received a call from Santiago’s wife asking him not
to send her husband to MSV Seaspread and if he is allowed to depart he will jump ship in Canada
just like his brother.
On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but
he was reassured that he might be considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal against respondent and its foreign principal.
On appeal by respondent, the NLRC ruled that there is no employer-employee relationship between
petitioner and respondent because under the POEA Standard Contract, the employment contract shall
commence upon actual departure of the seafarer from the airport or seaport at the point of hire and
with a POEA-approved contract. The CA agreed with the NLRC’s finding that petitioner’s non-
deployment was a valid exercise of respondent’s management prerogative. It added that since
petitioner had not departed from the Port of Manila, no employer-employee relationship between the
parties arose and any claim for damages against the so-called employer could have no leg to stand
on.

Issue:
Whether or not employer-employee relationship has already commenced.

Ruling:
There is no question that the parties entered into an employment contract on February 3, 1998,
whereby petitioner was contracted by respondent to render services on board “MSV Seaspread” for 9
months. However, respondent failed to deploy petitioner from the port of Manila to Canada.
Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the
employment contract did not commence, and no employer-employee relationship was created
between the parties.
However, a distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred when petitioner and respondent agreed
on the object and the cause, as well as the rest of the terms and conditions therein. The
commencement of the employer-employee relationship would have taken place had petitioner been
actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of
certain rights and obligations, the breach of which may give rise to a cause of action against the
erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed
as agreed upon, he would be liable for damages.
 Auto Bus Transport Sytem v. Bautista G.R. No. 156367 May 16, 2005
Facts:
Bautista, a driver-conductor of the Autobus transport, was dismissed after his failure to pay an
amount demanded by the company for the repair of the bus damaged in an accident caused by him.
He receives compensation by way of commission per travel.
Bautista complained for illegal dismissal with money claims for nonpayment of 13th month pay and
service incentive leave pay against Autobus.
Auto Bus’ Defenses:
Bautista’s employment was replete with offenses involving reckless imprudence, gross negligence,
and dishonesty supported with copies of letters, memos, irregularity reports, warrants of arrest;
In the exercise of management prerogative, Bautista was terminated only after providing for an
opportunity to explain:
Labor Arbiter dismissed the complaint however awarded Bautista his 13th month pay and service
incentive leave pay.
Auto Bus appealed. NLRC deleted the 13th month pay award. In the CA, NLRC’s decision was
affirmed.

Issue: Whether or not respondent is entitled to service incentive leave pay.

Held: Yes.
Under Article 95 of the Labor Code, every employee who has rendered at least one year or service
shall be entitled to a yearly service incentive leave of five days with pay. In Section 1, Rule V, Book
III of the Implementing Rules and Regulations of the Labor Code, the rule shall apply to all, except…
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who
are paid in a fixed amount for performing work irrespective of the time consumed in the performance
thereof.
Petitioner’s contention that Bautista is not entitled to service incentive leave because he is paid on a
purely commission basis must fail. The phrase following “Field personnel” should not be construed as
a separate classification of employees but is merely an amplification of the definition of field
personnel defined under the Labor Code.
Bautista neither falls under the category field personnel. As defined, field personnel are those whose
performance of service is unsupervised by the employer, the workplace being away from the principal
place of business and whose hours and days of work cannot be determined with reasonable
certainty. Bus companies have ways of determining the hours worked by their drivers and conductors
with reasonable certainty. The courts have taken judicial notice of the following:
Along the routes traveled, there are inspectors assigned at strategic places who board the bus to
inspect the passengers, the punched tickets, and the conductor’s reports;
There is a mandatory once-a week car barn or shop day, where the bus is regularly checked;
The drivers and conductors must be at specified place and time, as they observe prompt departure
and arrival;
At every depot, there is always a dispatcher whose function is to see to it that the bus and crew
leaves and arrives at the estimated proper time.
By these reasons, drivers and conductors are therefore under constant supervision while in the
performance of their work.
 National Shipyards and Steel Corporation v. CIR G.R. No. L-17068
Facts:
Petition for review by certiorari of the orders of the Court of Industrial relations requiring it to pay its
bargeman, Malondras, an overtime service of 16 hours a day for a period from January 1, 1954 -
December 31, 1956, and from January 1, 1957 to April 30, 1957, inclusive.
NASSOO, engaged in the business of ship building and repair that needs a service of a bargeman.
Bargeman are required to stay in their barges for on call duty, so they are given living quarters and
subsistence allowance of P1.50 per day during the time they are on board. However, Malondras filed
with the Industrial Court a complaint for the payment of overtime compensation because of his
exclusion from the second report of the examiner. The examiner then submitted an amended report
giving Malondras an average of 16 overtime hours a day, and recommending the payment to him of
P15, 242.15 as overtime compensation during the period covered by the report. Hence, this petition.

Issue: Whether or not respondent Malondras is entitled to 16 hours a day overtime pay?

Held:
No. The Court ruled that the correct criterions in determining whether or not sailors are entitled to
overtime pay is not whether they were on board and cannot leave ship beyond the regular eight
working hours a day, but whether they actually rendered service in excess of said number of hours;
In such much as the parties show that the subsistence allowance is independent of and has nothing
to do with whatever additional compensation for overtime work was due the petitioner, the same
should not be deducted from his overtime compensation. Respondent Malondras should be credited
(5) overtime hours instead of (16) hours a day for the periods covered by the examiner’s report.
Order appealed is affirmed with modifications.
Drilon: Letter to Kodak Philippines, November 27, 1989
1.3 Shortened Meal Break upon Employees’ Request
But the employees themselves may request that their meal period be shortened so that they can
leave work earlier than the previously established schedule. In such a situation, the shortened meal
period is not compensable. For instance, the established work hours are from 8:00 a.m. to 5:00 p.m.,
with 12:00 noon to 1:00 p.m. as meal period. So that the employees could quit work at 4:30 p.m.
(and have more time for leisure, family, or other personal activity), they may request, and
management may agree, to shorten the meal time to thirty minutes (12:00 to 12:30 p.m.). This 30-
minute meal time is not compensable. From 12:31 to 4:30 the employee resumes work and should
be paid the regular rate. Work after 4:30 is overtime. The Department of Labor and Employment, in
allowing such arrangement, imposes, however, certain conditions, namely:
(1.) The employees voluntarily agree in writing to a shortened meal period of 30 minutes and are
willing to waive the overtime pay for such shortened meal period;
(2.) There will be no diminution whatsoever in the salary and other fringe benefits of the employees
existing before the effectivity of the shortened meal period;
(3.) The work of the employees does not involve strenuous physical exertion and they are provided
with adequate “coffee breaks” in the morning and afternoon;
(4.) The value of the benefits derived by the employees from the proposed work arrangement is
equal to or commensurate with the compensation due them for the shortened meal period as well as
the overtime pay for 30 minutes as determined by the employees concerned;
(5.) The overtime pay of the employees will become due and demandable if ever they are permitted
or made to work beyond 4:30 pm; and
(6.) The effectivity of the proposed working time arrangement shall be of temporary duration as
determined by the Secretary of Labor and Employment

There is no specific law, rule or jurisprudence which prohibits the employer tosplit the one hour meal
period as prescribed by the law. As long as the shortened mealperiod is not less than 20 minutes and
the total 60 minutes of the required meal period is given to the employees every work day, it is
submitted that the proposed “30-minute lunch break and 30 minute coffee break” is permissible
under the Labor Code.
 PH Airlines, Inc. v. NLRC G.R. 132805 February 02, 1999
Facts:
Dr. Fabros, the private respondent was employed as flight surgeon at petitioner company
assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00
midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have
his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic
received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta,
had suffered a heart attack. The nurse on duty, Mr. Eusebio, informed Dr. Fabros about the
emergency. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio
had already left with the patient. Mr. Acosta died the following day.
PAL conducted an investigation and Dr. Fabros was charged of abandonment of post while on
duty. Dr. Fabros denied that he abandoned his post on February 17, 1994, that he is entitled of 30
minute meal break and in fact, he returned to the clinic at 7:51 in the evening upon being informed
of the emergency. PAL decided to suspend private respondent for three months effective December
16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner. Labor Arbiter
rendered decision declaring the suspension illegal. Petitioner appealed to the NLRC however, it was
dismissed.
Hence, this petition.
Issue: Whether or not public respondents did not err in nullifying the three-month suspension of
private respondent
Ruling:
The facts do not support petitioner's allegation that private respondent abandoned his post on the
evening of February 17, 1994. Private respondent left the clinic that night only to have his dinner at
his house, which was only a few minutes' drive away from the clinic. His whereabouts were known to
the nurse on duty so that he could be easily reached in case of emergency. Upon being informed of
Mr. Acosta's condition, private respondent immediately left his home and returned to the clinic. These
facts belie petitioner's claim of abandonment.
Art. 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work. — The normal hours of work of any employee shall not exceed eight
(8) hours a day.
Art. 85. Meal periods. — Subject to such regulations as the Secretary of Labor may prescribe, it shall
be the duty of every employer to give his employees not less than sixty (60) minutes time-off for
their regular meals.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private
respondent's act, therefore, of going home to take his dinner does not constitute abandonment.
 Mercury Drug v. Dayao, GR No. L-30452 September 30, 1982
Facts:
Petition for review on certiorari of the decision of the Court of Industrial Relations.
Herein respondent, filed a petition against Mercury Drug Company, Incorporated contenting: 1)
payment of their unpaid back wages for work done on Sundays and legal holidays plus 25%
additional compensation from date of their employment up to June 30, 1962; 2) payment of the extra
compensation on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to
their former positions with back salaries; and as against the respondent union, for its
disestablishment and the refund of all monies it had collected from petitioners.
Mercury Drug is hereby ordered to pay the 69 petitioners another additional sum or premium
equivalent to 25% of their respective basic or regular salaries for nighttime services rendered from
March 20, 1961 up to June 30, 1962. Hence, this petition.

Issue: Whether or not private respondents are entitled for nighttime work premiums although there
is a waiver of said claims and the total absence of evidence there on?

Held:
Yes. Work done at night should be paid more than work done at daytime, and that if that work is
done beyond the worker’s regular hours of duty, he should also be paid additional compensation for
overtime work; Ruling of C.I.R awarding additional pay for nighttime work is supported by evidence.
No additional evidence was necessary to prove that the private respondents were entitled to
additional compensation for whether or not they were entitled to the same is a question of law which
the respondent court answered correctly. The “waiver rule” does not apply in the case at bar.
Additional compensation for nighttime work is founded on public policy; hence the same cannot be
waived. Petition is dismissed.
 PNB v. PEMA G.R. No. L-30279, July 30, 1982

Case Title: PHILIPPINE NATIONAL BANK V. PHILIPPINE NATIONAL BANK EMPLOYEES

ASSOCIATION (PEMA) AND COURT OF INDUSTRIAL RELATIONS G.R. No.: L-30279 Date: July 30,
1982 Petitioner: Philippine National Bank Respondent: Philippine National Bank Employees
Association (PEMA) And Court Of Industrial Relations

Ponente: J. Barredo

Facts: Appeal from the decision of the Court of Industrial Relations.

Petitioner allegedly failed to comply with its commitment of organizing a committee on Personnel
Affairs to take change of screening and deliberating on the promotion of employees covered by a
collecting bargaining agreement then in force between the said parties. In the first and causes of
action the respondent’s Board of Directors approved a revision of the computation of overtime pay,
but since the grant of benefits in question, without just cause, withdrew said benefits and in spite of
repeated demands refused, and still refuses to reinstate the same up to the present. Petitioner has
repeatedly requested Respondent that the cost of living allowance and longevity pay be taken into
account in the computation of OT pay.

Issue: Whether or not the cost of living allowance and longevity pay should be included in the
computation of overtime pay?

Held: No. The Court ruled that the rationale for overtime pay is thus the additional work, labor or
service employed and the adverse effects of his longer stay in place of work that justify and is the
real reason for the extra compensation for overtime pay; There is presently a consciousness towards
helping our employees by giving of additional allowance in times of economic uncertainly; The
industrial court cannot even in a certified labor dispute impose upon the parties terms and conditions
inconsistent with existing law and jurisprudence; Longevity pay cannot be included in the
computation of overtime pay when the Collective Bargaining Agreement so stipulates; The basis of
computation of overtime pay beyond the required by law must be the Collective Bargaining
Agreement between the parties.
 Global Incorporated v. Atienza G.R. No. L-51612-13 July 22, 1986
FACTS: Rosal, herein private respondent, commenced her employment with petitioner Global
Incorporated in February, 1970, as a “Sales Clerk.” In November 1976 Global Inc. filed with the
Department of Labor Regional Office, an application for clearance to terminate the services of Clarita
Rosal, for having violated company rules and regulations by incurring repeated absences and
tardiness. The subject employee was placed under preventive suspension on November 16,
1976 pending resolution of the application for clearance. Clarita Rosal filed her opposition to the
clearance application as well as a counter-complaint against Global Inc., for illegal dismissal, overtime
pay and premium pay.
The officer-in-charge of Regional Office, Ministry of labor Leogardo, Jr. lifted the preventive
suspension of Clarita Rosal, finding her suspension not warranted, and reinstated her to her former
position without loss of rights and with full backwages from the time of preventive suspension up to
the date of her actual reinstatement. The Labor Arbiter rendered his decision dismissing the
complaint for illegal dismissal, overtime compensation and premium pay, and the clearance for the
complainant’s termination is granted. Rosal appealed the aforesaid decision to the NLRC.Respondents
Commissioners Atienza and Quadra modified the appealed decision, whereby:
(a) respondent is ordered to pay complainant overtime pay for the period Nov. 1, 1974 to Nov. 16,
1976 when she was suspended;
(b) respondent is likewise ordered to pay complainant backwages from Dec. 2, 1976 to May 31,
1978;
(c) the decision of the Labor Arbiter granting clearance to terminate the services of the complainant
is affirmed.
Respondent Commissioner Villatuya voted to affirm the Labor Arbiter’s decision. Hence, the instant
petition.

ISSUE: WON

Rosal is entitled to overtime pay

Rosal is entitled to backwages

HELD: The assailed decision of the NLRC is modified, where the order to pay overtime pay to Rosal is
set aside, the order to pay Rosal backwages affirmed, and the decision granting clearance to
terminate the services of Rosal likewise affirmed
1. NO. We agree with the conclusion of the Labor Arbiter that the same should be denied for want of
sufficient factual and legal basis. No employee is authorized to work after office hours, during
Sundays and Holidays unless required by a written memorandum from the General Manager. During
the period from Nov. 1, 1974 to Nov. 16, 1976, no employee of the company was never required to
work after 5:00 in the afternoon. There is nothing in the record except her bare allegations which
would show that she truly and actually rendered said overtime work
2. YES. the NLRC ordered petitioner to pay Rosal “backwages from Dec. 2, 1976 to May 31, 1978”,
the date when Asst. Secretary Leogardo, Jr., rendered his decision lifting the preventive suspension
of Rosal and ordering petitioner to reinstate her to her former position without loss of rights and with
full backwages from the time of preventive suspension up to the date of her actual reinstatement.c
We agree. We note that this decision of the Labor Arbiter ordering reinstatement had not been
complied with. Neither was it appealed by petitioner, therefore, the decision had become final and
executory. To exempt petitioner from the payment of backwages would be to give premium to the
blant disregard of orders of the Ministry of Labor. Moreover, it would be in consonance with
compassionate justice that Rosal be paid backwages during the period that she was supposed to be
reinstated
Note that the only ground for the imposition of preventive suspension is provided for under Sec. 4,
Rule XIV of the Implementing Regulations of the Ministry of Labor which reads-
SEC. 4. Preventive suspension. The employer may place the employee concerned under preventive
suspension only if the continued employment of the employee poses a serious and imminent threat
to the life or property of the employer or of the co-employees. Any preventive suspension before the
filing of the application shall be considered worked days, and shall be duly paid as such if the
continued presence of the employee concerned does not pose a serious threat to the life and
property of the employer or of the co-employees.
As aptly held by Asst. Secretary Leogardo Jr., the continued presence of Clarita Rosal never posed a
serious and imminent threat to the life or property of the employer or co-employees as would
warrant her preventive suspension
 AL Ammen Transporation Co v. Borja G.R. No. L-17750, August 31, 1962

Facts:
A labor dispute between A.L. Ammen Transportation Company Inc. and Consolidated Auto Lines, Inc.
and their former employee, Jose Borja. Borja was employed as a Supervising Inspector from January
1, 1952, to March 10, 1957, when he was dismissed from the service. Borja filed a complaint in the
Court of First Instance of Albay to recover compensation for overtime work and damages. Petitioners
denied his claim for overtime pay and stated that Borja had already filed the same claim with the
Department of Labor, which was dismissed. Borja filed a separate complaint in the Court of Industrial
Relations, seeking reinstatement and overtime wages.

Issue:
1. Whether the Court of Industrial Relations had jurisdiction over the case.
2. Whether Borja's cause of action has prescribed.
3. Whether the memorandum prohibiting Borja from working in excess of eight hours daily should be
considered.

Ruling:
The Court of Industrial Relations had jurisdiction over the case. Borja's cause of action has not
prescribed. The memorandum prohibiting Borja from working in excess of eight hours daily did not
apply to him.

Ratio:
The Court of Industrial Relations has jurisdiction over cases involving labor disputes, including claims
for reinstatement and overtime wages. The cause of action for overtime wages has not prescribed if
the action was commenced before the effective date of Republic Act No. 1787. A memorandum
prohibiting overtime work may not apply if there is evidence of verbal instructions from superior
authority and the employee has been rendering overtime service with the knowledge of the
employer.

They found sufficient evidence to support the award of overtime compensation to Borja, despite the
company's memorandum. Thus, the Supreme Court upheld the decision of the Court of Industrial
Relations
Ordered the companies to pay Borja for overtime work and include his bonus as part of his regular
salary
 NWSA v. NWSA Consolidated Unions, G.R. No. 18939, August 31, 1994
Facts:
Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled
corporation created under Republic Act No. 1383, while respondent NWSA Consolidated Unions are
various labor organizations composed of laborers and employees of the NAWASA. The other
respondents are intervenors Jesus Centeno, et al., hereinafter referred to as intervenors. Acting on a
certification of the President of the Philippines, the Court of Industrial Relations conducted a hearing
on the controversy then existing between petitioner and respondent unions which the latter
embodied in a "Manifesto", namely: implementation of the 40-Hour Week Law (Republic Act No.
1880); alleged violations of the collective bargaining agreement concerning "distress pay"; minimum
wage of P5.25; promotional appointments and filling of vacancies of newly created positions;
additional compensation for night work; wage increases to some laborers and employees; and strike
duration pay. Respondent intervenors filed a petition in intervention on the issue for additional
compensation for night work.
Later, however, they amended their petition by including a new demand for overtime pay in favor of
Jesus Centeno, Cesar Cabrera, Feliciano Duiguan, Cecilio Remotigue, and other employees receiving
P4,200.00 per annum or more. Respondent court rendered its decision stating that the NAWASA is an
agency not performing governmental functions and, therefore, is liable to pay additional
compensation for work on Sundays and legal holidays conformably to Commonwealth Act No. 444,
known as the Eight-Hour Labor Law, even if said days should be within the staggered five work days
authorized by the President; the intervenors do not fall within the category of "managerial
employees" as contemplated in Republic Act 2377 and so are not exempt from the coverage of the
Eight-Hour Labor Law.

Issue:
Whether one has worked in excess of eight hours, whether or not the undertime for that day should
be set off.

Ruling:
There is merit in the decision of respondent court that the method used by petitioner in offsetting the
overtime with the undertime and at the same time charging said undertime to the accrued leave of
the employee is unfair, for under such method the employee is made to pay twice for his undertime
because his leave is reduced to that extent while he was made to pay for it with work beyond the
regular working hours. The proper method should be to deduct the undertime from the accrued leave
but pay the employee the overtime to which he is entitled. This method also obviates the irregular
schedule that would result if the overtime should be set off against the undertime for that would
place the schedule for working hours dependent on the employee.
 Remerco Garments Manufacturing v. Minister of Labor & Employment G.R. Nos. L-56176-
77 February 28, 1985
Facts:
Remerco Garments Manufacturing is a garment manufacturing company. Zenaida Bustamante, Luz
Raymundo, and Ruth Corpuz are employees of the company. The company filed applications for
clearance to terminate the employment of the three employees. The company alleged
insubordination, abandonment, and defacing company property as grounds for dismissal. The Acting
Director of the National Capital Region, MOLE, granted the company's clearance applications and
dismissed the employees' complaints. The employees appealed the decision to the National Labor
Relations Commission.
The Acting Director forwarded the case records to the Labor Appeals and Review Staff, Office of the
Minister of Labor. The Minister of Labor rendered a decision reversing the Acting Director's order and
ordering the reinstatement of the employees with full backwages. The company filed a motion for
reconsideration, which was denied. The company then filed a petition for certiorari seeking to annul
the Minister of Labor's decision.

Issue:
Whether the Minister of Labor had jurisdiction over the appeal.
Whether the company was denied due process.
Whether there were sufficient grounds for the dismissal of the employees.

Ruling:
The court ruled in favor of the employees, finding that the dismissals were illegal. The court ordered
the company to reinstate Luz Raymundo and Zenaida Bustamante to their former or substantially
equivalent positions without loss of seniority rights and privileges. The court ordered the company to
provide Luz Raymundo and Zenaida Bustamante with three years of backwages computed from the
date of expiration of their suspension. The court dismissed the complaint/claim of Ruth Corpuz, who
had withdrawn her complaint against the company.

Ratio:
The court held that while it is the prerogative of the management to dismiss employees, such
exercise of prerogative must be made without abuse of discretion. The court found that there were
no reasonable grounds for the dismissals of Luz Raymundo and Zenaida Bustamante. The court held
that the failure to furnish a copy of the appeal memorandum to the adverse party and the alleged
lack of submission of documentary evidence did not invalidate the appeal or deny due process.
 Labor Congress of the PHL v. NLRC G.R. No. 123938, May 21, 1998
Facts:
The case involves a group of rank-and-file employees who were illegally dismissed by their employer,
Empire Food Products. The Labor Congress of the Philippines, acting as the bargaining representative
of the employees, filed a complaint against the company for various labor violations. The Labor
Arbiter initially absolved the company of the charges but ordered the reinstatement of the individual
complainants. On appeal, the National Labor Relations Commission (NLRC) vacated the decision and
remanded the case back to the Labor Arbiter for further proceedings. Another Labor Arbiter favored
the company, but on appeal, the NLRC affirmed the decision of the Labor Arbiter. The petitioners
then filed a petition for certiorari with the Supreme Court.

Issue:
1. Whether the NLRC gravely abused its discretion in disregarding evidence favorable to the
petitioners and in ignoring applicable jurisprudence and its own decisions, thereby depriving the
petitioners of their right to due process and resulting in manifest injustice.
2. Whether the NLRC deprived the petitioners of their constitutional rights to self-organization,
security of tenure, protection to labor, just and humane conditions of work, and due process.
3. Whether the petitioners were illegally eased out of or constructively dismissed from their only
means of livelihood.
4. Whether the petitioners should be reinstated from the date of their dismissal up to the time of
their reinstatement, with back wages, statutory benefits, damages, and attorney's fees.

Ruling:
The Supreme Court found in favor of the petitioners and reversed the decision of the NLRC. The
Court held that the Labor Arbiter and the NLRC failed to sufficiently discuss the facts and evidence in
the case, and their decisions were not supported by substantial evidence. The Court also found that
the burden of proving just cause for dismissal, such as abandonment, rested on the employer, which
the private respondents failed to discharge. Therefore, the Court declared that the petitioners were
illegally dismissed and entitled to full backwages, privileges, and separation pay. The Court also
recognized the petitioners as regular employees entitled to benefits such as holiday pay and overtime
pay. The case was remanded to the NLRC to determine the exact amounts owed to the petitioners.

Ratio:
The Labor Arbiter and the NLRC failed to sufficiently discuss the facts and evidence in the case, and
their decisions were not supported by substantial evidence. The burden of proving just cause for
dismissal rests on the employer, and in this case, the private respondents failed to discharge that
burden. The petitioners were illegally dismissed and are entitled to full backwages, privileges, and
separation pay. The petitioners should be recognized as regular employees entitled to benefits such
as holiday pay and overtime pay. The case was remanded to the NLRC to determine the exact
amounts owed to the petitioners.
Gaa v. CA G.R. No. L-144169 December 3, 1985
International School Alliance of Educators v. Quisumbing G.R. No. 128845 June 1, 2000

Facts:
 The case involves a challenge against the distinction in salary rates between foreign and local
hires in a Philippine educational institution. The petitioner, International School Alliance of
Educators (ISAE), contested the difference in salary rates during negotiations for a new
collective bargaining agreement. The Department of Labor and Employment (DOLE) assumed
jurisdiction over the dispute and issued an order resolving the issues in favor of the school.
The ISAE filed a motion for reconsideration, which was denied.
The ISAE then filed a petition with the Supreme Court.
Issue:
 Whether the distinction in salary rates between foreign and local hires is discriminatory.

Ruling:
 The court ruled that the point-of-hire classification used by the school to justify the salary
difference is invalid.
 The court found that there is no reasonable distinction between the services rendered by
foreign and local hires.
 The court held that the practice of according higher salaries to foreign hires contravenes public
policy.
 The court upheld the principle of equal pay for equal work.
 The court held that employees who perform substantially equal qualifications, skill, effort, and
responsibility under similar conditions should be paid similar salaries.
 The court also ruled that foreign hires and local hires do not belong to the same bargaining
unit.
Ratio:
 The court found that there is no reasonable distinction between the services rendered by
foreign and local hires. This means that the difference in salary rates based on the point-of-
hire classification used by the school is invalid.
 The court held that the practice of according higher salaries to foreign hires contravenes public
policy. This is because it goes against the principle of equal pay for equal work.
 The court upheld the principle of equal pay for equal work and held that employees who
perform substantially equal qualifications, skill, effort, and responsibility under similar
conditions should be paid similar salaries. This means that the distinction in salary rates
between foreign and local hires is discriminatory.
 However, the court also ruled that foreign hires and local hires do not belong to the same
bargaining unit. This is because foreign hires have limited tenure and are accorded certain
benefits not granted to local hires, such as housing, transportation, shipping costs, taxes, and
home leave travel allowance. These benefits are reasonably related to their status as foreign
hires and justify their exclusion from the bargaining unit with local hires.
. LABOR AND SOCIAL LEGISLATION; LABOR CODE; CONDITIONS OF EMPLOYMENT; EQUAL WORK
FOR EQUAL PAY; APPLIED IN CASE AT BAR. This rule applies to the School, its "international
character" notwithstanding. The School contends that petitioner has not adduced evidence that local-
hires perform work equal to that of foreign-hires. The Court finds this argument a little cavalier. If an
employer accords employees the same position and rank, the presumption is that these employees
perform equal work. This presumption is borne by logic and human experience. If the employer pays
one employee less than the rest, it is not for that employee to explain why he receives less or why
the others receive more. That would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated unfairly. The
employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires
perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions
and responsibilities, which they perform under similar working conditions. The School cannot invoke
the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates
without violating the principle of equal work for equal pay.
8. ID.;ID.;ID.;SALARY; DEFINED. "Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward
or recompense for services performed." Similarly, the Philippine Legal Encyclopedia states that
"salary" is the "consideration paid at regular intervals for the rendering of services." In Songco v.
National Labor Relations Commission,we said that: "salary" means a recompense or consideration
made to a person for his pains or industry in another man's business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered.
9. ID.;ID.;ID.;ID.;"DISLOCATION FACTOR" AND FOREIGN HIRES' LIMITED TENURE CANNOT SERVE
AS VALID BASES FOR DISTINCTION IN SALARY RATES. While we recognize the need of the School
to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires.
The local-hires perform the same services as foreign-hires and they ought to be paid the same
salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited
tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and
limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them
which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home
leave travel allowances.
10. ID.; ID.; THE STATE HAS THE RIGHT AND DUTY TO REGULATE THE RELATIONS BETWEEN
LABOR AND CAPITAL. The Constitution enjoins the State to "protect the rights of workers and
promote their welfare," "to afford labor full protection." The State, therefore, has the right and duty
to regulate the relations between labor and capital. These relations are not merely contractual but
are so impressed with public interest that labor contracts, collective bargaining agreements included,
must yield to the common good. Should such contracts contain stipulations that are contrary to public
policy, courts will not hesitate to strike down these stipulations.
11. ID.;ID.;CONDITIONS OF EMPLOYMENT; POINT-OF-HIRE CLASSIFICATION TO JUSTIFY THE
DISTINCTION IN THE SALARY RATES OF FOREIGN-HIRES AND LOCAL-HIRES IS AN INVALID
CLASSIFICATION. We find the point-of-hire classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and local-hires to be an invalid classification. There
is no reasonable distinction between the services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-hires contravenes public policy and,
certainly, does not deserve the sympathy of this Court.
Marcos v. NLRC G.R. No. 111744 September 8 1995
 Atok Big Wedge Company, Inc. v. Gison G.R. No. 169510 August 8, 2011
Facts:
Jesus P. Gison was engaged as part-time consultant on retainer basis by the petitioner Atok.
Petitioner did not require respondent to its office on a regular basis, except when occasionally
requested by the management to discuss matters needing his expertise as a consultant. As payment
for his services, respondent received a retainer fee of P3,000.00 which was delivered to him at his
residence or in a local restaurant. The said arrangement continued for the next eleven years.
Since the respondent was getting old he requested that petitioner cause his registration with the SSS
but petitioner did not accede his request.
Respondent filed a complaint with the SSS against petitioner for the latter’s refusal to cause his
registration with the SSS. On the same date the petitioner issued a memo advising the termination of
the respondent’s retainer contract. Thus he filed for illegal dismissal.

Issue:
Whether or not employer-employee relationship exists

Ruling:
No. To ascertain the existence of an employer-employee relationship jurisprudence has invariably
adhered to the four-fold test to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct,
or the so-called “control test”.
The commonly so called control test is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-employee relationship. Under the control test,
an employer-employee relationship exists where the person for whom the services are performed
reserves the right to control not only the end achieved, but also the manner and means to be used in
reaching that end.
Applying the aforementioned test, an employer-employee relationship is apparently absent in the
case at bar. Among other things, respondent was not required to report everyday during regular
office hours of petitioner. Respondent’s monthly retainer fees were paid to him either at his residence
or a local restaurant. More importantly, petitioner did not prescribe the manner in which respondent
would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent
was left alone and given the freedom to accomplish the tasks using his own means and methods.
Respondent was assigned tasks to perform, but petitioner did not control the manner and methods
by which respondent performed these tasks. The absence of the element of control on the part of the
petitioner engenders a conclusion that he is not an employee of the petitioner.
 Sevilla v. CA G.R. No. L-41182-3 April 16, 1988
Facts:
A contract by and between Noguera and Tourist World Service (TWS), represented by Canilao,
wherein TWS leased the premises belonging to Noguera as branch office of TWS. When the branch
office was opened, it was run by appellant Sevilla payable to TWS by any airline for any fare brought
in on the efforts of Mrs. Sevilla, 4% was to go to Sevilla and 3% was to be withheld by the TWS.
Later, TWS was informed that Sevilla was connected with rival firm, and since the branch office was
losing, TWS considered closing down its office. On January 3, 1962, the contract with appellee for the
use of the branch office premises was terminated and while the effectivity thereof was January 31,
1962, the appellees no longer used it. Because of this, Canilao, the secretary of TWS, went over to
the branch office, and finding the premises locked, he padlocked the premises. When neither
appellant Sevilla nor any of his employees could enter, a complaint was filed by the appellants
against the appellees. TWS insisted that Sevilla was a mere employee, being the “branch manager”
of its branch office and that she had no say on the lease executed with the private respondent,
Noguera.

Issue:
Whether or not an employer-employee relationship exists between Sevilla and TWS.

Ruling:
NO. The records show that petitioner, Sevilla, was not subject to control by the private respondent
TWS. In the first place, under the contract of lease, she had bound herself in solidum as and for
rental payments, an arrangement that would belie claims of a master-servant relationship. That does
not make her an employee of TWS, since a true employee cannot be made to part with his own
money in pursuance of his employer’s business, or otherwise, assume any liability thereof. In the
second place, when the branch office was opened, the same was run by the appellant Sevilla payable
to TWS by any airline for any fare brought in on the effort of Sevilla. Thus, it cannot be said that
Sevilla was under the control of TWS. Sevilla in pursuing the business, relied on her own capabilities.
It is further admitted that Sevilla was not in the company’s payroll. For her efforts, she retained 4%
in commissions from airline bookings, the remaining 3% going to TWS. Unlike an employee, who
earns a fixed salary, she earned compensation in fluctuating amount depending on her booking
successes. The fact that Sevilla had been designated “branch manager” does not make her a TWS
employee. It appears that Sevilla is a bona fide travel agent herself, and she acquired an interest in
the business entrusted to her. She also had assumed personal obligation for the operation thereof,
holding herself solidary liable for the payment of rentals. Wherefore, TWS and Canilao are jointly and
severally liable to indemnify the petitioner, Sevilla. (SC decision in favor of Sevilla)
 Insular Life Assurance v. NLRC G.R. No. 84484 November 15, 1989
Facts:
On July 2, 1968, Insular Life Assurance Co. Ltd and Melecio T. Basiao entered into a contract by
which:
Basiao was “authorized to solicit within the Philippines applications for insurance policies and
annuities in accordance with the existing rules and regulations” of the company;
He would receive “compensation, in the form of commissions.. as provided in the schedule of
commissions” of the contract to “constitute a part of the consideration of (said) agreement,” and;
The “rules in (the company) rate book and its agent’s manual as well as all circulars and those which
may from time to time be promulgated by it,” were made part of said contract.
Some four years later, in April 1972, the parties entered into another contract – An agency manager’s
contract – and to implement his end of it Basiao organized an agency or office to which he gave the
name M Basiao and Associates, while concurrently fulfilling this commitments under the first contract
with the company.
In May 1979, the company terminated the Agency Manager’s contract. After seeking a
reconsideration, Basiao sued the company in a civil action and this was later to claim, prompted the
latter to terminate also his engagement under the first contract and to stop payment of his
commission starting April 1, 1980.
Issue:
Whether or not the Labor Arbiter have jurisdiction by virtue of the contract between the company
and Basiao.
Ruling:
No. In determining the existence of employer-employee relationship, the following elements are
generally considered namely:
The selection and engagement of the employee;
The payment of wages;
The power of dismissal; and
The power to control the employee’s conduct — although the latter is the most important element.
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed
in attaining it, and those that control or fix the methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. The
distinction acquires particular relevance in the case of an enterprise affected with public interest, as is
the business of insurance and is on that account subject to regulation by the state with respect, not
only to the internal affairs of the insurance company. Rules and Regulations governing the conduct of
the business are provided for in the insurance code and enforced by the insurance commissioner. It
is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its
commission agents in selling its policies that they may not run afoul of the law and what it requires
or prohibits. Of such a character are the rules which prescribes the qualifications of persons who may
be insured, subject insurance applications to processing and approval by the company and also
reserve to the company the determination of the premiums to be paid and the schedules of payment.
None of these really invades the agents contractual prerogative to adopt his own selling methods or
to sell insurance at his own time and convenience, hence cannot justifiably be said to establish on
employer-employee relationship between him and the company.
 Francisco v. NLRC G.R. No. 170087 August 31, 2006
Facts:
1995, Petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with the corporate
documents; neither did she attend any board meeting nor required to do so. She never prepared any
legal document and never represented the company as its Corporate Secretary. 1996, petitioner was
designated Acting Manager. Petitioner was assigned to handle recruitment of all employees and
perform management administration functions; represent the company in all dealings with
government agencies, especially with the BIR, SSS and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation.
January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. Kasei Corporation
reduced her salary, she was not paid her mid-year bonus allegedly because the company was not
earning well. On October 2001, petitioner did not receive her salary from the company. She made
repeated follow-ups with the company cashier but she was advised that the company was not
earning well. Eventually she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter. Private respondents averred that petitioner is not an
employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical
consultants on accounting matters and act concurrently as Corporate Secretary. As technical
consultant, petitioner performed her work at her own discretion without control and supervision of
Kasei Corporation. Petitioner had no daily time record and she came to the office any time she
wanted and that her services were only temporary in nature and dependent on the needs of the
corporation.
The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with modification the
Decision of the Labor Arbiter. On appeal, CA reversed the NLRC decision. CA denied petitioner’s MR,
hence, the present recourse.
Issue:
WON there was an employer-employee relationship between petitioner and private respondent; and
if in the affirmative,
Whether petitioner was illegally dismissed.
Ruling:
Generally, courts have relied on the so-called right of control test where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means
to be used in reaching such end. In addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help
in determining the existence of an employer-employee relationship.
There are instances when, aside from the employer’s power to control the employee, economic
realities of the employment relations help provide a comprehensive analysis of the true classification
of the individual, whether as employee, independent contractor, corporate officer or some other
capacity.
It is better, therefore, to adopt a two-tiered test involving: (1) the employer’s power to control; and
(2) the economic realities of the activity or relationship.
The control test means that there is an employer-employee relationship when the person for whom
the services are performed reserves the right to control not only the end achieved but also the
manner and means used to achieve that end.
There has to be analysis of the totality of economic circumstances of the worker. Thus, the
determination of the relationship between employer and employee depends upon the circumstances
of the whole economic activity, such as: (1) the extent to which the services performed are an
integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and
facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for
the success of the claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of dependency of the worker
upon the employer for his continued employment in that line of business. The proper standard of
economic dependence is whether the worker is dependent on the alleged employer for his continued
employment in that line of business
By applying the control test, it can be said that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical
Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison
Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same
job functions, that is, rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the corporation such as securing
business permits and other licenses over an indefinite period of engagement. Respondent corporation
had the power to control petitioner with the means and methods by which the work is to be
accomplished.
Under the economic reality test, the petitioner can also be said to be an employee of respondent
corporation because she had served the company for 6 yrs. before her dismissal, receiving check
vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as
deductions and Social Security contributions from. When petitioner was designated General Manager,
respondent corporation made a report to the SSS. Petitioner’s membership in the SSS evinces the
existence of an employer-employee relationship between petitioner and respondent corporation. The
coverage of Social Security Law is predicated on the existence of an employer-employee relationship.
The corporation constructively dismissed petitioner when it reduced her. This amounts to an illegal
termination of employment, where the petitioner is entitled to full backwages
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.
Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to an employee. Petition is GRANTED.
 Villamaria v. CA G.R. No. 165881 April 19, 2006
Facts:
Villamaria owner a jeepney business called Villamaria Motors which operated along the Baclaran-
Sucat route. Bustamante (R) was one of his drivers wherein Villamaria verbally agreed to sell the
jeepney to Bustamante under the "boundary-hulog scheme," where Bustamante would remit to
Villarama P550.00 a day for a period of 4 years; Bustamante would then become the owner of the
vehicle and continue to drive the same under Villamaria’s franchise. If Bustamante failed to pay the
boundary-hulog for 3 days, Villamaria Motors would hold on to the vehicle until Bustamante paid his
arrears, including a penalty of P50.00 a day. In case Bustamante failed to remit the daily boundary-
hulog for a period of 1 week, the Kasunduan would cease to have legal effect and Bustamante would
have to return the vehicle to Villamaria Motors. Under the Kasunduan, Bustamante was prohibited
from driving the vehicle without prior authority from Villamaria Motors. Bustamante failed to pay their
boundary-hulog so the jeepney was taken aback.
Respondent Bustamante filed for illegal dismissal before the Labor Arbiter but was denied. The NLRC
approved of this.
Issues:
1. Whether employer-employee relationship existed between Villamaria & Bustamante.
2. Whether there was valid dismissal.
Ruling:
1. Yes. Under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship
was created between petitioner and respondent: that of employer-employee and vendor-vendee. The
Kasunduan did not extinguish the employer-employee relationship of the parties extant before the
execution of said deed. The boundary system is a scheme by an owner/operator engaged in
transporting passengers as a common carrier to primarily govern the compensation of the driver, that
is, the latter’s daily earnings are remitted to the owner/operator less the excess of the boundary
which represents the driver’s compensation. Under this system, the owner/operator exercises control
and supervision over the driver. Moreover, taking back the jeepney doesn’t terminate employer-
employee rel. under the Kasunduan
2. No. Villamaria failed to prove that dismissal was valid.
Villamaria failed to substantiate allegations with solid, sufficient proof. Notably, private respondent’s
allegation viz, that he retrieved the vehicle from the gas station, where Bustamante abandoned it,
contradicted his statement in the Paalala that he would enforce the provision (in the Kasunduan) to
the effect that default in the remittance of the boundary hulog for 1 week would result in the
forfeiture of the unit. Villamaria did not submit any police report to support his claim that Bustamante
really figured in a vehicular mishap. Neither did he present the affidavit of the guard from the gas
station to substantiate his claim that Bustamante abandoned the unit there.
 Alhambra Industries, Inc. vs. Court of Industrial Relations Case
G.R. No. L-25984
Ponente
TEEHANKEE, J
Decision Date
Oct 30, 1970
In the case of Alhambra Industries, Inc. v. Court of Industrial Relations, the Court ruled in favor of
the drivers and helpers, ordering the company to provide them with retroactive privileges, rights, and
benefits, emphasizing the importance of companies fulfilling their duty to bargain collectively and not
discriminating against employees based on their union membership.
Facts:
The case involves Alhambra Industries, Inc. and the drivers and helpers who were members of the
Alhambra Employees Association (FTUP).
The company denied the drivers and helpers retroactive privileges, rights, and benefits.
The company argued that the drivers and helpers were not its employees, but separate and
independent employees of its salesmen and propagandists.
The selection, employment, compensation, suspension, and dismissal of the drivers and helpers were
controlled by the company.
Issue:
Whether or not the drivers and helpers were employees of Alhambra Industries, Inc.
Ruling:
The Court ruled in favor of the drivers and helpers, ordering the company to provide them with
retroactive privileges, rights, and benefits.
Ratio:
The Court found that the drivers and helpers were indeed employees of the company.
The selection, employment, compensation, suspension, and dismissal of the drivers and helpers were
controlled by the company.
The company's argument that the drivers and helpers were separate and independent employees of
its salesmen and propagandists was not valid.
The Court emphasized the importance of companies fulfilling their duty to bargain collectively and not
discriminating against employees based on their union membership.
The company's denial of privileges and benefits to the drivers and helpers constituted unfair labor
practice.
The Court ordered the company to provide the drivers and helpers with retroactive privileges, rights,
and benefits.
 Maraguinot and Enero v. NLRC and Viva Films

LABOR1 | fc
Hydro Resources Contractors Corp v. Pagalilauan & NLRC
Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie
xie!

G.R. No. L-62909 April 18, 1989

HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner,

vs.
LABOR ARBITER ADRIAN N. PAGALILAUAN and the NATIONAL LABOR RELATIONS COMMISSION,
public respondents, and ROGELIO A. ABAN, private respondent.

Facts:

Petitioner corporation hired the private respondent Aban as its "Legal Assistant” and received basic
monthly salary of Pl,500.00 plus an initial living allowance of P50.00 which gradually increased to
P320.00. On September 4, 1980, Aban received a letter from the corporation informing him that he
would be considered terminated effective October 4, 1980 because of his alleged failure to perform
his duties well.

Aban filed a complaint against the petitioner for illegal dismissal. The labor arbiter ruled that Aban
was illegally dismissed. This ruling was affirmed by the NLRC on appeal. Hence, this present petition.

Issue:
Whether or not there was an employer-employee relationship between the petitioner corporation and
Aban.

Held:
The Supreme Court dismissed the petition for lack of merit, and reinstate Aban to his former or a
similar position without loss of seniority rights and to pay three (3) years backwages without
qualification or deduction and P5,000.00 in attorney's fees. Should reinstatement not be feasible, the
petitioner shall pay the private respondent termination benefits in addition to the above stated three
years backpay and P5,000.00 attorney's fees.

A lawyer, like any other professional, may very well be an employee of a private corporation or even
of the government. This Court has consistently ruled that the determination of whether or not there
is an employer-employee relation depends upon four standards: (1) the manner of selection and
engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or
absence of a power of dismissal; and (4) the presence or absence of a power to control the putative
employee's conduct. Of the four, the right-of-control test has been held to be the decisive factor.

In this case, Aban received basic salary plus living allowance, worked solely for the petitioner, dealt
only with legal matters involving the said corporation and its employees and also assisted the
Personnel Officer in processing appointment papers of employees which is not act of a lawyer in the
exercise of his profession. These facts showed that petitioner has the power to hire and fire the
respondent employee and more important, exercised control over Aban by defining the duties and
functions of his work which met the four standards in determining whether or not there is an
employee-employer relationship.
 FAR EASTERN UNIVERSITY v. CIR, GR No. L-17620, 1962-08-31
Facts:
Imployed at the rate of P6.00 per hour and then was contracted to teach in the Boy's High School
Department in the same university at the rate of P3.00.
"From the evidence on record, it appears that Tomas N. Aguirre became a faculty member of the
respondent in 1948. He was first employed at the rate of P6.00 per hour and then was contracted to
teach in the Boy's High School Department in the same university at the rate of
P30.00 per class, earning an average of P500.00 to P600.00 a month. Aguirre joined the PACUP, a
Legitimate labor organization, in June, 1953. In July or August, 1953, upon orders of the president of
the PACUP, Jose M. Fernandez, Aguirre began to campaign and recruit members for... the PACUP. As
a result of his efforts in campaigning for membership, he was able to influence seven members from
the faculty of the university (Exhibits 'B', 'B-1' to 'B-6' inclusive). In his campaign for membership, he
approached practically all of the faculty members of the... respondent's Institute of Education and
some from the Arts and Sciences, Business Administration and Finance, but most of them were afraid
to join the union. They were afraid of any retaliation that' the respondent may make because of their
joining the union.
"It is true that there were charges brought by respondent against Aguirre but the same had been
investigated and found to be groundless. On the other hand, Aguirre brought charges against the
respondent before the Department of Education when his teaching load was reduced and... the
Director of Private Schools, in his decision of November 5, 1954, directed the respondent to pay the
salary differential which Aguirre failed to earn from December 1, 1953 to 1954 and to give Aguirre
assignment in the college department during the first semester of that... current school year under
the same condition before his teaching load was reduced. The Secretary of Education, in his decision,
dated June 22, 1955, affirmed the de... tion of the balance sheet submitted by the respondent in
relation to its motion to dismiss. Said balance sheet shows that in the 1952-1953 fiscal year,
respondent made a net profit of
P153,035.25 and in 1953-1954, P258,619.98... xamination of the balance sheet submitted by the
respondent in relation to its motion to dismiss. Said balance sheet shows that in the 1952-1953 fiscal
year, respondent made a net profit of
P153,035.25 and in 1953-1954, P258,619.98, while in 1954-1955, a net profit of P707,003.70 and in
1955-1956, P999,766.88. These figures show that respondent from 1952 to 1956, has been steadily
increasing its income until in 1958-1959 when it made a net-income of P1,511,293.42.
And even on the assumption that enrolment in the department where Aguirre was teaching was
reduced,... balance sheet shows that in the 1952-1953 fiscal year, respondent made a net profit of
P153,035.25 and in 1953-1954, P258,619.98, while in 1954-1955, a net profit of P707,003.70 and in
1955-1956, P999,766.88. These figures show that respondent from 1952 to 1956, has been steadily
increasing its income until in 1958-1959 when it made a net-income of P1,511,293.42.
And even on the assumption that enrolment in the department where Aguirre was teaching was
reduced, still the
Issues:
"From the evidence on record, it appears that Tomas N. Aguirre became a faculty member of the
respondent in 1948. He was first employed at the rate of P6.00 per hour and then was contracted to
teach in the Boy's High School Department in the same university at the rate of
P30.00 per class, earning an average of P500.00 to P600.00 a month. Aguirre joined the PACUP, a
Legitimate labor organization, in June, 1953. In July or August, 1953, upon orders of the president of
the PACUP, Jose M. Fernandez, Aguirre began to campaign and recruit members for... the PACUP. As
a result of his efforts in campaigning for membership, he was able to influence seven members from
the faculty of the university (Exhibits 'B', 'B-1' to 'B-6' inclusive). In his campaign for membership, he
approached practically all of the faculty members of the... respondent's Institute of Education and
some from the Arts and Sciences, Business Administration and Finance, but most of them were afraid
to join the union. They were afraid of any retaliation that' the respondent may make because of their
joining the union.
Ruling:
"It is true that there were charges brought by respondent against Aguirre but the same had been
investigated and found to be groundless. On the other hand, Aguirre brought charges against the
respondent before the Department of Education when his teaching load was reduced and... the
Director of Private Schools, in his decision of November 5, 1954, directed the respondent to pay the
salary differential which Aguirre failed to earn from December 1, 1953 to 1954 and to give Aguirre
assignment in the college department during the first semester of that... current school year under
the same condition before his teaching load was reduced. The Secretary of Education, in his decision,
dated June 22, 1955, affirmed the decision of the Director o
Agro Commercial Security Services Agency, Inc. vs. National Labor Relations Commission
Case
G.R. Nos. 82823-24

Facts:
The case involves private respondents who worked as security guards and/or janitors under
individual contracts with the petitioner, Agro Commercial Security Services Agency, Inc.
The private respondents were assigned to firms and offices where the petitioner had contracts
providing security and janitorial services.
Due to the termination of the petitioner's service contracts with various corporations and government
agencies, many of the private respondents were placed on "floating status," meaning they did not
receive any salary or financial benefits.
The private respondents filed a complaint for illegal dismissal against the petitioner, seeking
separation pay, 13th month pay, and service incentive leave pay.
The labor arbiter ruled in favor of the private respondents, finding them to have been illegally
dismissed and ordering the petitioner to pay the corresponding benefits.
The decision of the labor arbiter was affirmed by the National Labor Relations Commission (NLRC).
Issue:
Whether there was an employer-employee relationship between the petitioner and the private
respondents.
Whether the private respondents who were placed on "floating status" for more than six months
were illegally dismissed and entitled to separation pay.
Whether the private respondents who accepted employment elsewhere without resigning were
entitled to any separation pay.

Ruling:
The court determined that there was an employer-employee relationship between the petitioner and
the private respondents.
The private respondents who were placed on "floating status" for more than six months were
deemed to have been illegally dismissed and entitled to separation pay.
The private respondents who accepted employment elsewhere without resigning were not entitled to
any separation pay.
Ratio:
The court examined the records and found that the private respondents were regular employees of
the petitioner. The petitioner determined their salaries, benefits, assignments, promotions, and
disciplinary measures.
The court cited the elements to determine the existence of an employee-employer relationship, which
include the selection and engagement of employees, payment of wages, power of dismissal, and
power to control employees' conduct. Based on these elements, the court concluded that an
employer-employee relationship existed between the petitioner and the private respondents.
The court applied Article 286 of the Labor Code, which states that if the bonafide suspension of the
operation of a business or undertaking exceeds six months, the employment of the employee shall be
deemed terminated. The court reasoned that if security guards remained without work or
assignment, in "floating status," for more than six months, they are considered constructively
dismissed. Therefore, the private respondents who were in "floating status" for more than six months
were deemed to have been illegally dismissed and entitled to separation pay.
However, the court also noted that some of the private respondents accepted employment in other
security agencies without resigning from their employment with the petitioner. The disciplinary rules
of the petitioner stated that acceptance of other employment without resigning is a cause for
dismissal. Therefore, the court ruled that these private respondents who accepted employment
elsewhere without resigning were not entitled to any separation pay.
 Pondoc vs. NLRC, G.R. No. 116347, 262 SCRA 632

FACTS:
- Petitioner Natividad Pondoc was the legitimate wife of Andres Pondoc. Atter her death on 5
December 1994, she was substituted by Hipolito Pondoc, her only legitimate son. Private respondent
Eulalio Pondoc is the owner-proprietor of Melleonor General Merchandise and Hardware Supply
located at Poblacion, Sindangan, Zamboanga del Norte. Respondent is engaged, among others, in
the business of buying and selling copra, rice, corn, "binangkol," junk iron and
empty bottles. He has in his employ more than twenty (20) regular workers (Records, pp. 9-11)
- Records disclose that Andres Pondoc was employed by Eulalio Pondoc as a laborer from October
1990 up to December 1991, receiving a wage rate of P20.00 per day. He was required to work twelve
(12) hours a day from 7:00 AM to 8:00 PM, Monday to Sunday. Despite working on his rest days and
holidays, he was not paid his premium pay as required by law (Ibid).
- Consequently, on May 14, 1992, Natividad Pondoc, on behalf of her husband, filed a complaint for
salary differential, overtime pay, 13th month pay, holiday pay and other money claims before the
Sub-Regional Arbitration Branch No. 9 of the NLRC, docketed as Sub-RAB Case No. 09-05-10102-92
(Records, p.1).
- In his position paper, private respondent questioned, among others, theexistence of [an] employer-
employee relationship between them. He further averred that Melleonor General Merchandise and
Hardware Supply is a fictitious establishment (Records, pp. 64-68).
- On June 17, 1993, Labor Arbiter Esteban Abecia rendered a Decision finding the existence of [an]
employer-employee relationship between the parties
- Private respondent filed a Manifestation before the Labor Arbiter praying that his liabilities be set-off
against petitioner's alleged indebtedness to him (Records, pp. 325-327). The Labor Arbiter denied,
however, the compensation, and, instead, issued a writ of execution as prayed for by petitioner
(Records, p. 328).
- Before the execution order could be implemented, however, private respondent was able to obtain
a restraining order from the NLRC,
- On February 28, 1994, public respondent NLRC allowed compensation between petitioner's
monetary award and her alleged indebtedness to private respondent.
- Petition filed for certiorari. The Office of the Solicitor General agreed with the petitioner and
stressed further that the asserted indebtedness was never proven to have arisen out of or in
connection with the employer-employee relationship between the private respondent and the late
Andres Pondoc, or to have any causal connection thereto.
- Accordingly, both the Labor Arbiter and the NLRC did not have jurisdiction over the private
respondent's claim.

ISSUES:
Whether the Fifth Division of the National Labor Relations Commission (NLRC) can validly defeat a
final judgment of the Labor Arbiter in favor of the complainant in a labor case by: (a) entertaining a
petition for injunction and damages, and an appeal from the Labor Arbiter's denial of a claim for set-
off based on an alleged indebtedness of the laborer and order of execution of the final judgment;
and, (b) thereafter, by receiving evidence and adjudging recovery on such indebtedness
and authorizing it to offset the Labor Arbiter's final award?

HELD: We rule for the petitioner. The proceedings before the NLRC were fatally flawed. Decision of
NLRC annulled and set aside.

RATIO:
- First, the NLRC should not have entertained the private respondent's separate or independent
petition for "Injunction and Damages" (NLRC IC No. M-000065).
- It was obvious that the petition was a scheme to defeat or obstruct the enforcement of the
judgment in NLRC Case
- Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its
divisions to issue writs of injunction, while Rule XI of the New Rules of Procedure of the NLRC makes
injunction only an ancillary remedy in ordinary labor disputes such as the one brought by the
petitioner in NLRC Case No. SRAB-09-05-10102-92.
- Secondly, the appeal of the private respondent in NLRC Case No. SRAB-09-05-10102-92 was not
from the decision therein, but from the order of the Labor Arbiter denying the set-off insisted upon
by the private respondent and
directing the execution of the judgment. Therefore, the private respondent admitted the final and
executory character of the judgment.
- As correctly contended by the Office of the Solicitor General, there is a complete want of evidence
that the indebtedness asserted by the private respondent against Andres Pondoc arose out of or was
incurred in connection with the employer-employee relationship between them. The Labor Arbiter did
not then have jurisdiction over the claim as under paragraph
(a) of Article 217 of the Labor Code, Labor Arbiters have exclusive and original jurisdiction only in the
following cases:
1. Unfair labor practice cases;
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. Claim 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 the
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 accompanies with a claim for reinstatement.
- On the other hand, under paragraph (b) thereof, the NLRC has exclusive appellate jurisdiction over
all cases decided by the Labor Arbiters.
- This simply means that the NLRC does not have original jurisdiction over the cases enumerated in
paragraph (a) and that if a claim does not fall within the exclusive original jurisdiction of the Labor
Arbiter, the NLRC cannot have appellate jurisdiction thereon.
- The conclusion then is inevitable that the NLRC was without jurisdiction, either original or appellate,
to receive evidence on the alleged indebtedness, render judgment thereon, and direct that its award
be set-off against the final
judgment of the Labor Arbiter.
- Finally, even assuming arguendo that the claim for the alleged indebtedness fell within the exclusive
original jurisdiction of the Labor Arbiter, it was deemed waived for not having been pleaded as an
affirmative defense or barred for not having been set up as a counterclaim before the Labor Arbiter
at any appropriate time prior to the rendition of the decision in NLRC Case No. SRAB-09-05-10102-
92.
- We do not then hesitate to rule that the NLRC acted without jurisdiction or with grave abuse of
discretion in entertaining an independent action for injunction and damages (NLRC IC No. M-
000065), in receiving evidence and rendering judgment on the alleged indebtedness of Andres
Pondoc, and in ordering such judgment to offset the final award of the Labor Arbiter in NLRC Case
No. SRAB-09-05-10102-92.
 Manila Golf & Country Club Inc. vs. Intermediate Appellate Court and Fermin Llamar
G.R. No. 64948 September 27, 1994
Facts:
Seventeen (17) persons rendering caddying services for members and guests of the Manila Golf &
Country Club and claiming to be affiliated with the Philippine Technical, Clerical, Commercial
Employees Association (PTCCEA), lodged with the Social Security Commission, a complaint for
coverage and availment of the benefits under the Social Security Act. Petitioners alleged that they
were employees of the Manila Golf & Country Club but the latter had not registered them as such
with the SSS. Respondent Club, on the other hand, asserts that petitioners were not subject to the
direction and control of the Club as regards the manner in which they performed their work, and
hence, they were not the club’s employees. Subsequently, all but two of the 17 petitioners withdrew
motu propio their claim for coverage realizing that indeed there was no employment relationship
between them and the Club. The SSC dismissed the petition for lack of merit.

Issue:
Whether or not persons rendering caddying services for members of golf clubs and their guests in
said clubs' courses or premises are the employees of such clubs and therefore within the compulsory
coverage of the Social Security System (SSS).

Ruling:
NO. Persons rendering caddying services for members of golf clubs and their guests in sad clubs’
courses or premises are not employees of said clubs. Petitioner Manila Golf & Country Club is under
no obligation to report
them for compulsory coverage to the SSS. The facts do not necessarily or logically point to an
employer-employee relationship, and to the exclusion of any form of arrangements, other than of
employment that would make the respondent's services available to the members and guest of the
petitioner. The various matters of conduct, dress, language, etc. covered by the petitioner's
regulations, does not so circumscribe the actions or judgment of the caddies concerned as to leave
them little or no freedom of choice whatsoever in the manner of carrying out their services. In the
very nature of things, caddies must submit to some supervision of their conduct while enjoying the
privilege of pursuing their occupation within the premises and grounds of whatever club they do their
work in. For all that is made to appear, they work for the club to which they attach themselves on
sufference but, on the other hand, also without having to observe any working hours, free to leave
anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the
observance of said rules, any discipline may be meted them beyond barring them from the premises
which, it may be supposed, the Club may do in any case even absent any breach of the rules, and
without violating any right to work on their part. All these considerations clash frontally with the
concept of employment. Deemed of title or no moment by the Appellate Court was the fact that the
caddies were paid by the players, not by the Club, that they observed no definite working hours and
earned no fixed income. The IAC would point to the fact that the Club suggests the rate of fees
payable by the players to the caddies as still another indication of the latter's status as employees. It
seems, however, that the intendment of such fact is to the contrary, showing that the Club has not
the measure of control over the incidents of the caddies' work and compensation that an employer
would possess. The group rotation system so-called, is less a measure of employer control than an
assurance that the work is fairly distributed, a caddy who is absent when his turn number is called
simply losing his turn to serve and being assigned instead the last number for the day. By and large,
there appears nothing in the record to refute the petitioner's claim.
 CASE No. 10
Singer Sewing Machine Co. vs. Drilon, et.al
GR. No. 91307
FACTS:
On February 15, 1989, the respondent union, collectors of Singer Sewing Machine Company-Singer
Machine Collectors Union-Baguio (SIMACUB), filed a petition for direct certification as the sole and
exclusive bargaining agent of all collectors of Petitioner (“Company”). The Company opposed the
petition mainly on the ground that the union members are actually not employees but are
independent contractors as evidenced by the collection agency agreement which they signed. Med-
Arbiter, finding that there exists an employer-employee relationship between the union members and
the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin M.
Drilon affirmed it. Petitioners contend that respondent Labor Secretary disregarded the well-settled
rule that commission agents are not employees but are independent contractors; the public
respondents patently erred in finding that there exists an employer-employee relationship. The
respondents, on the other hand, insist that the provisions of the Collection Agency Agreement
contradict the Company's position that the union members are independent contractors. To prove
that union members are employees, it is asserted that they "perform the most desirable and
necessary activities for the continuous and
effective operations of the business of the petitioner Company" (citing Article 280 of the Labor Code).
Petitioners quote paragraph 2 of the Collective Agency Agreement which states that an agent shall
utilize only receipt forms authorized and issued by the Company. They also note paragraph 3 which
states that an agent has to submit and deliver at least once a week or as often as required a report
of all collections made using report forms furnished by the Company. And that monthly collection
quota required by the Company is deemed by respondents as a control measure over the means by
which an agent is to perform his services.

ISSUE:
WON private respondents are regular employees of the company on the alleged ground that they are
performing activities desirable or necessary to the business.

HELD:
No. The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and neither are
all collecting agents independent contractors. The collectors could fall under either category
depending on the facts of each case. The Collecting Agency Agreement confirms the status of the
collecting agent in this case as an independent contractor not only because he is explicitly described
as such but also because the provisions permit him to perform collection services for the company
without being subject to the control of the latter except only as to the result of his work. After a
careful analysis of the contents of the agreement, The Court rules in favor of the petitioner. Further,
respondent Secretary Drilon did not consider existing facts in his decision:
1. The collection agents are not required to observe office hours or report to Singer's office everyday
except, naturally and necessarily, for the purpose of remitting their collections.
2. The collection agents do not have to devote their time exclusively for SINGER. There is no
prohibition on the part of the collection agents from working elsewhere. Nor are these agents
required to account for their time and submit a record of their activity.
3. The manner and method of effecting collections are left solely to the discretion of the collection
agents without any interference on the part of Singer.
4. The collection agents shoulder their transportation expenses incurred in the collections of the
accounts assigned to them.
5. The collection agents are paid strictly on commission basis. The amounts paid to them are based
solely on the amounts of collection each of them make. They do not receive any commission if they
do not effect any collection even if they put a lot of effort in collecting. They are paid commission on
the basis of actual collections.
6. The commissions earned by the collection agents are directly deducted by them from the amount
of collections they are able to effect. The net amount is what is then remitted to Singer." (Rollo, pp.
7-8) The Court finds the contention of the respondents that the union members are employees under
Article 280 of the Labor Code. The definition that regular employees are those who perform activities
which are desirable and necessary for the business of the employer is not determinative in this case.
Any agreement may provide that one party shall render services for and in behalf of another for a
consideration even without being hired as an employee. This is precisely true in the case of an
independent contractorship as well in an agency agreement. The Court agrees with the petitioner’s
argument that Article 280 is not the yardstick for determining the existence of an employment
relationship because it merely distinguishes between two kinds of employees, i.e. regular employees
and casual
employees, for purposes of determining the right of an employee to certain benefits, to join or form a
union, or to security of tenure. Article 280 does not apply where the existence of an employment
relationship is in dispute.
 G.R. No. 159890 May 28, 2004
EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and
JOSE LAMADRID, President, respondents.

TOPIC: Employer-employee relationship>Four-Fold Test>Control Test

FACTS:
 Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation
sometime in June 1985 as a salesman earning a commission of 3% of the total paid-up sales
covering the whole area of Mindanao.
 Aside from selling the merchandise of respondent corporation, he was also tasked to collect
payments from his various customers.
 Respondent corporation had complete control over his work because its President, respondent
Jose Lamadrid, frequently directed him to report to a particular area for his sales and collection
activities, and occasionally required him to go to Manila to attend conferences regarding product
competition, prices, and other market strategies.
 Sometime in 1998, petitioner encountered five customers/clients with bad accounts that owed the
company PHP600,000+ worth of debt.
 Petitioner was confronted by respondent Lamadrid over the bad accounts and warned that if he
does not issue his own checks to cover the said bad accounts, his commissions will not be released
and he will lose his job.
 On March 22, 2001, counsel for respondent corporation sent a letter to petitioner demanding that
he make good the dishonored checks or pay their cash equivalent.
 Petitioner responded to the letter conveying his willingness to continue working with he company
and asking for consideration from his employers.
 A few weeks after, petitioner sent another letter to respondent informing him that if he pursues
the case against him, he will refer the issue at hand to Mr. Paul Dominguez and Atty. Jesus Dureza to
solicit proper legal advice.
 While doing his usual rounds as commission salesman, petitioner was handed by his customers a
letter from the respondent company warning them not to deal with petitioner since it no longer
recognized him as a commission salesman.
 Petitioner thus filed a complaint for illegal dismissal with money claims against respondent
company and its president, Jose Lamadrid, before the NLRC Regional Arbitration Branch No. XI,
Davao City.

LA: ruled in favor of the petitioner

NLRC: reversed LA’s decision
CA: denied Petitioner’s appeal
PETITIONER’S ARGUMENT:
 he must be a regular employee pursuant to Article 280 of the Labor Code because an employment
shall be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer.
 disputes the finding of the appellate court that no employer-employee relationship exists between
him and respondent corporation since the power of control, which is the most decisive element to
determine such relationship, is wanting.

RESPONDENT’S ARGUMENT: respondents countered that petitioner was not its employee but a
freelance salesman on commission basis, procuring and purchasing auto parts and supplies from the
latter on credit, consignment and installment basis and selling the same to his customers for profit
and commission of 3% out of his total paid-up sales. Respondents cite the following as indicators of
the absence of an employer-employee relationship between them:
(1) petitioner constantly admitted in all his acts, letters, communications with the respondents that
his relationship with the latter was strictly commission basis salesman;
(2) he does not have a monthly salary nor has he received any benefits accruing to regular
employment;
(3) he was not required to report for work on a daily basis but would occasionally drop by the Manila
office when he went to Manila for some other purpose;
(4) he was not given the usual pay-slip to show his monthly gross compensation;
(5) neither has the respondent withheld his taxes nor was he enrolled as an employee of the
respondent under the Social Security System and Philhealth;
(6) he was in fact working as commission salesman of five other companies, which are engaged in
the same line of business as that of respondent, as shown by certifications issued by the said
companies;
(7) if respondent owed petitioner his alleged commissions, he should not have executed the
Promissory Note and the Deed of Real Estate Mortgage.
ISSUE: WON there is an employer-employee relationship

RULING:

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied

the four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages;
(3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power
of control. Of these four, the last one is the most important. The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, an employer-employee relationship exists where the
person for whom the services are performed reserves the right to control not only the end achieved,
but also the manner and means to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is notably absent in this case.
It is undisputed that petitioner Abante was a commission salesman who received 3% commission of
his gross sales. Yet no quota was imposed on him by the respondent; such that a dismal
performance or even a dead result will not result in any sanction or provide a ground for dismissal.
 He was not required to report to the office at any time or submit any periodic written report on his
sales performance and activities.
 Although he had the whole of Mindanao as his base of operation, he was not designated by
respondent to conduct his sales activities at any particular or specific place.
 He pursued his selling activities without interference or supervision from respondent company and
relied on his own resources to perform his functions.
 Respondent company did not prescribe the manner of selling the merchandise; he was left alone
to adopt any style or strategy to entice his customers.
 While it is true that he occasionally reported to the Manila office to attend conferences on
marketing strategies, it was intended not to control the manner and means to be used in reaching
the desired end, but to serve as a guide and to upgrade his skills for a more efficient marketing
performance.
 As correctly observed by the appellate court, reports on sales, collection, competitors, market
strategies, price listings and new offers relayed by petitioner during his conferences to Manila do not
indicate that he was under the control of respondent. Moreover, petitioner was free to offer his
services to other companies engaged in similar or related marketing activities as evidenced by the
certifications issued by various customers

All told, we sustain the factual and legal findings of the appellate court and accordingly, find no
cogent reason to overturn the same.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated March 7, 2003 in
CA-G.R. SP No. 73102, which denied the petition of Empermaco B. Abante, is AFFIRMED in toto.
 JOSE MEL BERNARTE, petitioner, vs. PHILIPPINE BASKETBALL ASSOCIATION (PBA),
JOSE EMMANUEL M. EALA, and PERRY MARTINEZ, respondents.
G.R. No. 192084 September 14, 2011 CARPIO, J.
FACTS:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as
referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts
on a year-to-year basis. During the term of Commissioner Eala, however, changes were made on the
terms of their employment. Complainant Bernarte, for instance, was not made to sign a contract
during the first conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It
was only during the second conference when he was made to sign a one and a half month contract
for the period July 1 to August 5, 2003. On January 15, 2004, Bernarte received a letter from the
Office of the Commissioner advising him that his contract would not be renewed citing his
unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded
Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon
order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of referees
in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a
yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a
memorandum to Guevarra expressing dissatisfaction over his questioning on the assignment of
referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a
contract. Respondents aver, on the other hand, that complainants entered into two contracts of
retainer with the PBA in the year 2003. The first contract was for the period January 1, 2003 to July
15, 2003; and the second was for September 1 to December 2003. After the lapse of the latter
period, PBA decided not to renew their contracts. Complainants were not illegally dismissed because
they were not employees of the PBA. Their respective contracts of retainer were simply not renewed.
PBA had the prerogative of whether or not to renew their contracts, which they knew were fixed. In
her 31 March 2005 Decision, the Labor Arbiter declared petitioner an employee whose dismissal by
respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and
the payment of backwages, moral and exemplary damages and attorney’s fees. The NLRC affirmed
the Labor Arbiter's judgment. Respondents filed a petition for certiorari with the Court of Appeals,
which overturned the decisions of the NLRC and Labor Arbiter.

ISSUE: Whether petitioner is an employee of respondents, which in turn determines whether

petitioner was illegally dismissed

HELD:
NO, Petitioner is not an employee of the respondents. The SC DENIED the petition and AFFIRMED
the assailed decision of the Court of Appeals. To determine the existence of an employer-employee
relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee on the means and methods by which the work is
accomplished. The so-called “control test” is the most important indicator of the presence or absence
of an employer-employee relationship.19 In this case, PBA admits repeatedly engaging petitioner’s
services, as shown in the retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem
or allowances, as stipulated in the retainer contract. PBA can terminate the retainer contract for
petitioner’s violation of its terms and conditions. However, respondents argue that the all-important
element of control is lacking in this case, making petitioner an independent contractor and not an
employee of respondents. The contractual stipulations do not pertain to, much less dictate, how and
when petitioner will blow the whistle and make calls. On the contrary, they merely serve as rules of
conduct or guidelines in order to maintain the integrity of the professional basketball league. As
correctly observed by the Court of Appeals, “how could a skilled referee perform his job without
blowing a whistle and making calls? x x x How can the PBA control the performance of work of a
referee without controlling his acts of blowing the whistle and making calls?” We agree with
respondents that once in the playing court, the referees exercise their own independent judgment,
based on the rules of the game, as to when and how a call or decision is to be made. The referees
decide whether an infraction was committed, and the PBA cannot overrule them once the decision is
made on the playing court. The referees are the only, absolute, and final authority on the playing
court. Respondents or any of the PBA officers cannot and do not determine which calls to make or
not to make and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referees. The very nature of petitioner’s job of officiating a professional
basketball game undoubtedly calls for freedom of control by respondents. Moreover, unlike regular
employees who ordinarily report for work eight hours per day for five days a week, petitioner is
required to report for work only when PBA games are scheduled or three times a week at two hours
per game. In addition, there are no deductions for contributions to the Social Security System,
Philhealth or Pag-Ibig, which are the usual deductions from employees’ salaries. These undisputed
circumstances buttress the fact that petitioner is an independent contractor, and not an employee of
respondents.
 OPULENCIA ICE PLANT AND STORAGE vs NLRC
GR No. L-98365 1993
Facts:
- MANUEL P. ESITA was a compressor operator of Tiongson Ice Plant in San Pablo City (for 20 years)
- In 1980 he was hired as compressor operator-mechanic for the ice plants of petitioner Dr. Melchor
Opulencia located in Tanauan, Batangas, and Calamba, Laguna.
- Initially assigned at the ice plant in Tanauan, Esita would work from seven o'clock in the morning to
five o'clock in the afternoon receiving a daily wage of P35.00.
- In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing overhauling,
taking the place of compressor operator Lorenzo Eseta, who was relieved because he was already old
and weak. For less than a month, Esita helped in the construction-remodeling of Dr. Opulencia's
house.
- In February 1989, for demanding the correct amount of wages due him, Esita was dismissed from
service.
- Consequently, he filed with Sub-Regional Arbitration in San Pablo City, a complaint for illegal
dismissal, underpayment, non-payment for overtime, legal holiday, premium for holiday and rest day,
13th month, separation/retirement pay and allowances against petitioners.
- Petitioners deny that Esita is an employee. They claim that Esita could not have been employed in
1980 because the Tanauan ice plant was not in operation due to low voltage of electricity and that
Esita was merely a helper/peon of one of the contractors they had engaged to do major repairs and
renovation of the Tanauan ice plant in 1986.
- Petitioners further allege that when they had the Calamba ice plant repaired and expanded, Esita
likewise rendered services in a similar capacity, and thus admitting that he worked as a helper/peon
in the repair or remodeling of Dr. Opulencia's residence in Tanauan.
- In December 1989, Labor Arbiter Villena rendered a decision finding the existence of an employer-
employee relationship between petitioners and Esita and accordingly directed them to pay him
separation pay, underpayment of wages, allowances, 13th month, holiday, premium for holiday, and
rest day pays.
- Almost a year after, NLRC affirmed the decision of Labor Arbiter Villena but reduced the monetary
award as it was not proven that Esita worked every day including rest days and on the days before
the legal holidays. In March 1991, petitioners' motion for reconsideration was denied.

Issue:
W/N there was an employee-employer relationship between Opulencia and Esita.

Ruling:
Yes.

Ratio:
No particular form of evidence is required to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted. For, if
only documentary evidence would be required to show that relationship, no scheming employer
would ever be brought before the bar of justice, as no employer would wish to come out with any
trace of the illegality he has authored considering that it should take much weightier proof to
invalidate a written instrument. On the claim that Esita's construction work could not ripen into a
regular employment in the ice plant because the construction work was only temporary and unrelated
to the ice-making business, needless to say, the one month spent by Esita in construction is
insignificant compared to his nine-year service as compressor operator in determining the status of
his employment as such, and considering further that it was Dr. Opulencia who requested Esita to
work in the construction of his house. In allowing Esita to stay in the premises of the ice plant and
permitting him to cultivate crops to augment his income, there is no doubt that petitioners should be
commended; however, in view of the existence of an employer-employee relationship as found by
public respondents, we cannot treat humanitarian reasons as justification for emasculating or taking
away the rights and privileges of employees granted by law. Benevolence, it is said, does not operate
as a license to circumvent labor laws. If petitioners were genuinely altruistic in extending to their
employees privileges that are not even required by law, then there is no reason why they should not
be required to give their employees what they are entitled to receive. Moreover, as found by public
respondents, Esita was enjoying the same privileges granted to the other employees of petitioners,
so that in thus treating Esita, he cannot be considered any less than a legitimate employee of
petitioners.
 San Miguel Corp vs NLRCgr no. 147566

FACTS:

Petitioner San Miguel Corporation (SMC) sponsored an Innovation Program which grants cash
rewards to all “SMC employees who submit to the corporation ideas and suggestions found to
beneficial to the corporation.

Private Respondent Rustico Vega, who is a mechanic in the Bottling Department of the SMC
submitted an innovation proposal which supposed to eliminate certain defects in the quality and taste
of the product “San Miguel Beer Grande.”

Petitioner Corporation did not accept the said proposal

and refused Mr. Vega’s subsequentdemands for cash award under the innovation program. Hence,
Vega filed a complaint with the then Ministry of Labor and Employment in Cebu. He argued that his
proposal had been accepted by the methods analyst and was implemented by the
SMC and it finally solved the problem of the Corporation in the production of Beer Grande.

Petitioner denied of having approved Vega’s proposal. It stated that said proposal was turned down
for “lack of originality” and the same, even if implemented, could not achieve the
desire result.Further, petitioner Corporation alleged that theLabor Arbiter had no jurisdiction.

The Labor Arbiter dismissed the complaint for lack of jurisdiction because the claim of Vega is “not a
necessary incident of his employment” and does not fall under Article 217 of the Labor Code.
However, in a gesture of compassion and to show the government’s concern for the working man,
the Labor Arbiter ordered petitioner to pay Vega P2, 000 as “financial assistance.” Both parties
assailed said decision of the Labor Arbiter. The NLRC set aside the decision of the Labor Arbiter and
ordered SMC to pay complainant the amount of P60, 000

Issue:
Whether the Labor Arbiter and the Commission has jurisdiction over the money claim filed by private
respondent

HELD:
NO
The Labor Arbiter and the Commission has no jurisdiction over the money claim of Vega.
The court ruled that the money claim of private respondent Vega arose out of or in connection with
his employment with petitioner. However, it is not enough to bring Vega’s money claim within the
original and exclusive jurisdiction of Labor Arbiters. In the CAB, the undertaking of petitioner SMC to
grantcash awards to employees could ripen into anenforceable contractual obligation on the part of p
etitioner SMC under certain circumstances. Hence, the issue whether an enforceable contract had
arisen between SMC and Vega, and whether it has been breached, are
legal questions that labor legislations cannot resolved because it’s recourse is the law on contracts.
Where the claim is to be resolved not by reference to the Labor Code or other labor relations statute
or a collective bargaining agreement BUT by the general civil law, the jurisdiction over the dispute
belongs to the regular courts of justice and not to the Labor Arbiter and NLRC.