1.

Lockheed Detective and Watchman Agency, Inc. vs. University of The Philippines
G.R. No. 185918, April 18, 2012

Facts:
The petition is for review on certiorari under Rule 45. Petitioner Lockheed entered into a contract of security with the
University of the Philippines. On 1998, several of the guards assigned to UP filed a complaint for unpaid wages, 25% overtime
pay, premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift differentials, 13th
month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from
December 16-31, 1998, and attorney's fees.

The Labor Arbiter declared UP solidarily liable. The decision was appealed but sustained by the NLCR, albeit a few
modifications. The parties motion to reconsider were likewise denied. On July 25, 2005, a Notice of Garnishment 10 was
issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award of P12,142,522.69 (inclusive of
execution fee).

On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being
subjected to garnishment at PNB are government/public funds. However, the execution of the garnishment was carried out.
UP elevated their case to the court of appeals. On reconsideration, however, the CA issued the assailed Amended Decision. It
held that without departing from its findings that the funds covered in the savings account sought to be garnished do not fall
within the classification of public funds, it reconsiders the dismissal of the petition in light of the ruling in the case of National
Electrification Administration v. Morales which mandates that all money claims against the government must first be filed with
the Commission on Audit (COA).

Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case should not apply and that
UP could be both sued and held liable. And that the quashal of garnishment sought was moot because it had already become
fait accompli.

Issues:
1. Whether or not the NEA Case applies and the funds be garnished directly bypassing the COA.
2. Whether or not the previous garnishment and withdrawal of funds was fait accompli.

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

2. NO.
As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be done since the funds
of UP had already been garnished, since the garnishment was erroneously carried out and did not go through the proper
procedure (the filing of a claim with the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per
annum, to be computed from the time of judicial demand to be reckoned from the time UP filed a petition for certiorari before
the CA which occurred right after the withdrawal of the garnished funds from PNB.

1
2.
Portillo v. Rudolf Lietz, Inc. et.al
G.R. No. 196539, October 10, 2012

Facts:
Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in any other gainful
employment by himself or with any other company either directly or indirectly without written consent of Lietz Inc., otherwise
Potillo will be liable for liquidated damages.

Upon his promotion, Potillo signed another letter agreement containing a “Goodwill Clause” stating that:
“…on the termination of his employment and for a period of three (3) years thereafter, he shall not
engage directly or indirectly as employee, manager, proprietor, or solicitor for himself or others in a
similar or competitive business or the same character of work which he was employed by Lietz Inc.
to do and perform. Should he breach this good will clause of this Contract, he shall pay Lietz Inc. as
liquidated damages the amount of 100% of his gross compensation over the last 12 months.”

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo declared
that she intended to engage in businessa rice dealership, selling rice in wholesale.

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

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

Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions went
unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions were still being computed.

Subsequently, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-payment of 1
months salary, two (2) months commission, 13th month pay, plus moral, exemplary and actual damages and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of P110,662.16.
However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should be offset against her liability to
Lietz Inc. for liquidated damages for Portillos alleged breach of the "Goodwill Clause" in the employment contract when she
became employed with Ed Keller Philippines, Limited.

Issue:
1. Who has jurisdiction over the present controversy?
2. Whether Portillos money claims for unpaid salaries may be offset against respondents claim for liquidated damages.

Ruling:
1. Jurisdiction belongs to the Civil Courts.

Petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief
sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor
benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.

Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-employment relations of the parties.
The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after the cessation of the
employment relationship between the parties. In accordance with jurisprudence, breach of the undertaking is a civil
law dispute, not a labor law case.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the
parties contract of employment as redress for respondents breach thereof. Such cause of action is within the realm of
Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present
case, what with the reality that the stipulation refers to the postemployment relations of the parties.
2
2. No, it may not be.

Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which
prohibits wage deductions except in three circumstances:

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

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

3
3.
Building Care Corp vs Macaraeg
G.R. No. 198357, December 12, 2012

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

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

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

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

Ruling:
Yes.
It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules,
must remain as the exception to the well-settled principle that rules must be complied with for the orderly administration of
justice.In
Marohomsalic v. Cole the Court stated:

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

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

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

In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are, the
importance of the issue raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should be
"afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities,"
considering that the belated filing of respondent's appeal before the NLRC was the fault of respondent's former counsel. Note,
however, that neither respondent nor her former counsel gave any explanation or reason citingextraordinary circumstances for
her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss in
4
following up her case with said lawyer.It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind
the client. A departure from thisrule would bring about never- ending suits, so long as lawyers could allege their own fault or
negligence to support the client’s case and obtain remedies and reliefs already lost by the operation of law.

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

5
4.
McBurnie vs. Ganzon
GR No. 178034/1718117, 17 October 2013

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

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

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

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

The motion for reconsideration was denied, the respondents appealed to the CA via a Petition for Certiorari and
Prohibition (with extremely urgent prayer for the issuance of a Preliminary Injunction and/or Temporary Restraining Order)
docketed as CA-G.R. SP No. 90845.

The NLRC dismissed their appeal due to respondent's failure to post the required additional bond. The respondents
motion for reconsideration was denied on June 30, 2006. This prompted respondents to filed with the CA the Petition for
Certiorari docketed as CA-G.R SP No. 95916, which was later consolidated with CA-G.R. SP No. 90845

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

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

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

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

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

6
 The NLRC, acting on the CA order of remand, accepted the appeal from the LA decision and reversed and set aside
the decision of the LA, and entered a new on dismissing McBurnie complaint.

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

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

Issue:
Whether or not the second motion for reconsideration was valid.

Ruling:
At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as a general rule,
prohibited. Section 2, Rule 52 of the Rules of Court provides that no second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained. The rule rests on the basic tenet of immutability of judgments. At some
point, a decision becomes final and executory and, consequently, all litigations must come to an end.

The general rule, however, against second and subsequent motions for reconsideration admits of settled exceptions.
In a line of cases, the Court has then entertained and granted second motions for reconsideration n the higher interest of
substantial justice,as allowed under the Internal Rules when the assailed decision is legally erroneous,patently unjust and
potentially capable of causing unwarranted and irremediable injury or damage to the parties. In Tirazona v. Philippine EDS
Techno-Service, Inc. (PET, Inc.), we also explained that a second motion for reconsideration may be allowed in instances of
xtraordinarily persuasive reasons and only after an express leave shall have been obtained.In Apo Fruits Corporation v. Land
Bank of the Philippines, we allowed a second motion for reconsideration as the issue involved therein was a matter of public
interest, as it pertained to the proper application of a basic constitutionally-guaranteed right in the government implementation
of its agrarian reform program.In San Miguel Corporation v. NLRC, the Court set aside the decisions of the LA and the NLRC
that favored claimants-security guards upon the Court review of San Miguel Corporation second motion for reconsideration.In
Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et al., the Court en banc reversed on a third motion for reconsideration
the ruling of the Court Division on therein private respondentsclaim for wages and monetary benefits.

The instant case qualifies as an exception to, first, the proscription against second and subsequent motions for
reconsideration, and second, the rule on immutability of judgments; a reconsideration of the Decision dated September 18,
2009, along with the Resolutions dated December 14, 2009 and January 25, 2012, is justified by the higher interest of
substantial justice.

In League of Cities of the Philippines (LCP) v. Commission on Elections, we reiterated a ruling that when a motion for
leave to file and admit a second motion for reconsideration is granted by the Court, the Court therefore allows the filing of the
second motion for reconsideration.In such a case, the second motion for reconsideration is no longer a prohibited pleading.
Similarly in this case, there was then no reason for the Court to still consider the respondent's second motion for
reconsideration as a prohibited pleading, and deny it plainly on such ground.The Court intends to remedy such error through
this resolution.

Upon review, the Court is constrained to rule differently on the petitions.We have determined the grave error in
affirming the NLRC rulings, promoting results that are patently unjust for the respondents, as we consider the facts of the case,
pertinent law, jurisprudence, and the degree of the injury and damage to the respondents that will inevitably result from the
implementation of the Court Decision dated September 18, 2009.

7
5.

Indophil Textile Mills, Inc. vs. Engr. Salvador Adviento

G.R. No. 171212, August 4, 2014

Facts:

The present dispute stemmed from a complaint filed by the respondent in the RTC for damage and injury due to
gross negligence. It was alleged in the complaint that respondent used to work as a facility maintenance officer for the
petitioner’s factory which was engaged in the deleterious industry of dying and chemical manufacture. Daily confrontations
with these hazards prompted him to forwards suggestions to the management in his and all the other workers’ behalf.
Unfortunately, these matters fell on deaf ears fell on deaf ears. It was finally alleged that the petitioner’s negligence in heeding
to the call and acting to the complaints eventually resulted in the deterioration of respondent’s health which caused his
eventual dismissal.
For the petitioner’s part, they argued that the matter falls outside the jurisdiction of the RTC considering that these are
matters within the sole jurisdiction of the Labor Arbiter considering that the controversy arose from an employer-employee
relationship. Further, they argued that that there is a pending case involving the same parties and cause in the NLRC.
The RTC then resolved the complaint by affirming its jurisdiction over the matter. The court noted that matters
involving negligence, notwithstanding the fact that it arose during employment, is a case of quasi-delict within its jurisdiction.
The petitioner then appealed to the RTC which dismissed the complaint and affirmed the RTC’s decision.

ISSUE:

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

RULING:
Yes.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action
for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil
Code and not the Labor Code.

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the civil
Courts. While seemingly petitioner's claim for damages arises from employer-employee relations, and the latest amendment to
Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-
employee relationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for damages is
grounded on the "wanton failure and refusal without just cause of private respondent Cruz to report for duty despite repeated
notices served upon him of the disapproval of his application for leave of absence without pay. This, coupled with the further
averment that Cruz "maliciously and with bad faith" violated the terms and conditions of the conversion training course
agreement to the damage of petitioner removes the present controversy from the coverage of the Labor Code and brings it
within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz of his job—as the
latter was not required in the Complaint to report back to work—but on the manner and consequent effects of such
abandonment of work translated in terms of the damages which petitioner had to suffer. x x x. 42

However, it should be stressed that respondent’s claim for damages is specifically grounded on petitioner’s gross
negligenceto provide a safe, healthy and workable environment for its employees −a case of quasi-delict.
Thus, the matter rightfully belongs to the jurisdiction of the trial courts.

8
6.
Manila Mining Corporation v Amor, et al
April 20, 2015, GR 182800

Facts:

Petitioners were regular employees of Manila Mining Corp. In December 2000, the petitioner temporarily shut down
its mining operations pending approval of its application to increase said facility's capacity. Although the DENR-EMB issued a
temporary authority for it to be able to continue operating for another six (6) months and to increase its capacity, petitioner
failed to secure an extension permit when said temporary authority eventually lapsed. Thus, petitioner served notice to its
employees and DOLE of its temporary suspension for six months and the temporary lay-off off of two thirds of its employees.
However, the shutdown was extended for another six months. Adversely affected by the petitioner’s continued failure to
resume its operations, respondents filed a complaint of constructive dismissal and monetary claims.

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

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

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

1. Despite receipt of the decision on Nov 24, 2004, the memorandum of appeal was only mailed on Feb 7, 2005.
2. Appeal bond tendered by petitioner was so grossly disproportionate to the monetary award for the same to be
considered as substantial compliance.

NLRC granted the appeal. The case was raised to the CA, which nullified the NLRC decision on the grounds that the NLRC
did not have jurisdiction over the case since the appeal was not perfected.

ISSUE:
Whether or not the appeal was perfected?

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

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

On timeliness of appeal
Having received the Labor Arbiter's Decision on 24 November 2004, petitioner had ten (10) calendar days or until 4 December
2004 within whichto perfect an appeal. Considering that the latter date fell on a Saturday,petitioner had until the next working
day, 6 December 2004, within which tocomply with the requirements for the perfection of its appeal. Our perusal ofthe record
shows that, despite bearing the date 3 December 2004, petitioner'smemorandum of appeal was subscribed before Notary
Public only on 6 December 2004. Without proof as to the actual date offiling of said pleading being presented by both parties,
the CA discounted the timeliness of its filing in light of the established fact that the copy thereofintended for respondents was
only served by registered mail on 7 February2005.Since proof of service of the memorandum on appeal is required for the
perfection of an appeal from the decision of the Labor Arbiter, the CA ruled that "respondents filed its appeal not earlier than
07 February 200[5], which is way beyond the ten-day reglementary period to appeal."

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

9
On the validity of the cash bond

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

We find that both conditions are not met in the case at bar. On the first requisite, the petitioners did not provide any proof to
substantiate its claim on the preferred basis of serious losses and reverses it supposedly sustained.

On the second requisite, petitioner posted an amount of 100,000php as provisional bond sufficient to suspend the running of
the 10 day reglementary period. However, the check was dishonored, thereby rendering the tender thereof as ineffectual.
Since it is the posting of a cash or surety bond which confers jurisdiction upon the NLRC,the rule is settled that non-
compliance is fatal and has the effect of rendering the award final and executory.

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

10
7.
TOYOTA ALABANG, INC., v. EDWIN GAMES
G.R. No. 206612, August 17, 2015

FACTS:

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

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

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

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

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

Petitioner elevated the case to the CA via a Petition for Certiorari, but the action was dismissed. Firstly, the CA ruled
that the NLRC did not gravely abuse its discretion in denying the appeal, given that petitioner had failed to comply faithfully
with the bond requirement. Secondly, it echoed the ruling of the NLRC that a final judgment is no longer appealable. Thirdly,
the CA found that petitioner's own negligence had caused it to lose its right to appeal.

Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for Injunctive Relief before this Court.
It disputed the finding that it did not show proof of its security deposit for the appeal bond. It also insisted that its counsel's
gross negligence justified the reopening of the proceedings below.

ISSUE:

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

2. Whether or not the NLRC gravely abused its discretion in requiring petitioner to post an appeal bond
3. Whether or not an appeal bond must be accompanied by a "proof of security deposit or collateral securing the bond."

RULING OF THE COURT:

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

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

b) Moreover, petitioner had failed to exhibit diligence when it did not attend the hearing on 11 January
2008, or any of the proceedings thereafter, despite its manifestation that it no longer had any legal
representative. Given the instances of negligence by petitioner itself, the Court finds that the CA
justly refused to reopen the case in the former's favor. Definitely, petitioner cannot now be allowed
to claim denial of due process when it was petitioner who was less than vigilant of its rights.

11
2. The NLRC did not commit any mistake in requiring petitioner to post an appeal bond. The paraphrased proposition
that "an appeal bond is not required in appeals from decisions of the LA denying a motion to quash a writ of
execution" lacks any citation sourced from a statute or case law. Article 223 of the Labor Code and Section 6, Rule VI
of the 2011 NLRC Rules of Procedure, uniformly state thus:

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

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

Clearly, this construction is but proper considering the avowed purpose of appeal bonds demanded by the law from
employers in labor cases. If we are to construe otherwise, then an aggrieved party may simply seek the quashal of a
writ of execution, instead of going through the normal modes of appeal, to altogether avoid paying for an appeal
bond. This ruse will then circumvent the requirement of both labor rules and jurisprudence 16to post an appeal bond
before contesting the LA's grant of monetary award. Hence, the first point is not only incorrect, but also dangerous.

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

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

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

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

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

12
8.
SOCIAL SECURITY SYSTEM, v. DEBBIE UBAÑA
G.R. No. 200114, August 24, 2015

Facts:

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

She was made to sign a six-month Service Contract in May, 1996; and when she reported to the SSS Daet Branch,
she was assigned to various sections and divisions as Processor and Data Encoder. Her salary was only P229.00 daily
compared to a regular SSS Processor who receives P846.45 daily. While her service contract with the DBP Service
Corporation was never renewed, she continued to be employed by the SSS; she was continually assured of being absorbed
into the SSS; in fact she was qualified for the position as she passed the required training.

Because of the oppressive and prejudicial treatment of the SSS, she was forced to resign in August, 2002 as she
could not stand anymore the exploitation, the agony of dissatisfaction, anxiety, demoralization, and injustice. Respondent
Ubana therefore alleges that the defendants conspired to exploit her and violate civil service rules and regulations and Civil
Code provisions on Human relations, specifically Articles 19, 20 and 21. Thus, she prayed for actual damages by way of
unrealized income, moral and exemplary damages, and attorneys fees.

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

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

Thus, this present petition before the Court.

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

The Ruling:
The Court denies the Petition.

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

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

In her Complaint, respondent acknowledges that she is not petitioner’s employee, but that precisely she was promised that
she would be absorbed into the SSS plantilla after all her years of service with SSS; and that as SSS Processor, she was paid
only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives a monthly salary of P18,622.00, or P846.45
daily wage. In its pleadings, petitioner denied the existence of an employer-employee relationship between it and respondent;
in fact, it insists on the validity of its service agreements with DBP Service Corporation and SSS Retirees Association –

13
meaning that the latter, and not SSS, are respondent’s true employers. Since both parties admit that there is no employment
relation between them, then there is no dispute cognizable by the NLRC. Thus, respondent’s case is premised on the claim
that in paying her only P229.00 daily – or P5,038.00 monthly – as against a monthly salary of P18,622.00, or P846.45 daily
wage, paid to a regular SSS Processor at the time, petitioner exploited her, treated her unfairly, and unjustly enriched itself at
her expense.

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

x x x It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction, x x x The action is within the realm of civil law hence jurisdiction
over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference
to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-
employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction
only over the following:

1. Unfair labor practices;

2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts;
and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising
from employer- employee relations, including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

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

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

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

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

14
9.
ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils,
GR No. 198675, Sept 23, 2015

Facts:

The petitioner union staged a strike against Nestle Philippines Inc. company's Ice Cream and Chilled Products
Division on the following grounds: alleged violation of the collective bargaining agreement (CBA), dismissal of union officers
and members, discrimination and other unfair labor practice (ULP) acts. However, after a series of conciliation meetings and
discussions between the parties, they agreed to resolve their differences and came up with a compromise which was
embodied in a Memorandum of Agreement (MOA). After a lapse of more than eleven (11) years from the time of execution of
the subject MOA, petitioners filed with the NLRC a Motion for Writ of Execution contending that they have not been paid the
amounts they are entitled to in accordance with the MOA. Respondent filed its Opposition to the Motion for Writ of Execution
contending that petitioners' remedy is already barred by prescription because, under the 2005 Revised Rules of the NLRC, a
decision or order may be executed on motion within five (5) years from the date it becomes final and executory and that the
same decision or order may only be enforced by independent action within a period often (10) years from the date of its
finality.Petitioners' basic contention is that respondent cannot invoke the defense of prescription because it is guilty of
deliberately causing delay in paying petitioners' claims and that petitioners, on the other hand, are entitled to protection under
the law because they had been vigilant in exercising their right as provided for under the subject MOA.

Issue:

Whether or not the Petitioners' demand to be paid has prescribed

Ruling:

No, it has not.

The compromise agreement between petitioner and respondent was executed on August 4, 1998 and was
subsequently approved via the NLRC Decision dated October 12, 1998. However, considering petitioners' allegation that the
terms and conditions of the agreement have not been complied with by respondent, petitioners should have moved for the
issuance of a writ of execution.

It is settled that when a compromise agreement is given judicial approval, it becomes more than a contract binding upon the
parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force and effect of
a judgment. It is immediately executory and not appealable, except for vices of consent or forgery.The non-fulfillment of its
terms and conditions justifies the issuance of a writ of execution; in such an instance, execution becomes a ministerial duty of
the court. A decision on a compromise agreement is final and executor and has the force of law and is conclusive between the
parties. It becomes a judgment that is subject to execution in accordance with the Rules.

Section 8, Rule XI, 2005 Revised Rules of Procedure of the NLRC provides that a judgment may be executed on motion within
five years from the date of its entry or from the date it becomes final and executory. After the lapse of such time, and before it
is barred by the statute of limitations, a judgment may be enforced by action. If the prevailing party fails to have the decision
enforced by a mere motion after the lapse of five years from the date of its entry (or from the date it becomes final and
executory), the said judgment is reduced to a mere right of action in favor of the person whom it favors and must be enforced,
as are all ordinary actions, by the institution of a complaint in a regular form.

In the present case, the five-and ten-year periods provided by law and the rules are more than sufficient to enable petitioners
to enforce their right under the subject MOA. In this case, it is clear that the judgment of the NLRC, having been based on a
compromise embodied in a written contract, was immediately executory upon its issuance on October 12, 1998. Thus, it could
have been executed by motion within five (5) years. It was not. Nonetheless, it could have been enforced by an independent
action within the next five (5) years, or within ten (10) years from the time the NLRC Decision was promulgated. It was not.
Therefore, petitioners' right to have the NLRC judgment executed by mere motion as well as their right of action to enforce the
same judgment had prescribed by the time they filed their Motion for Writ of Execution on January 25, 2010.

15
10.

Quantum Foods, Inc. vs. Esloyo

GR. No. 213696, December 9, 2015

Facts:

Petitioner, Quantum Foods, Inc. (QFI) is a domestic corporation engaged in the distribution and selling of food
products nationwide. It hired respondent, Esloyo as Major Accounts Representative, and Magsila as Key Accounts
Representative. Esloyo and Magsila were each required to post a cash bond in the amount of P10,000.00 and P7,000.00,
respectively. However, later on, both were terminated, Esloyo for alleged misbehavior and violations of various company rules
and regulations, such as sexual harassment, misappropriation of company funds/ property, falsification/padding of reports and
serious misconduct, and Magsila was retrenched because QFI decided to reorganize its sales force nationwide following a
drastic drop in net income.

Esloyo asserted that his dismissal was illegal, claiming that: (a) the charges were all fabricated; (b) no formal
investigation was conducted; and (c) he was not given the opportunity to confront his accusers. Magsila, on the other hand,
averred that there was no valid retrenchment as the losses claimed by QFI were unsubstantiated and that he was merely
replaced

The Labor Arbiter found respondents to have been illegally dismissed

QFI filed its Notice of Appeal and Memorandum of Appeal before the NLRC, accompanied by: (a) a Motion to Reduce Bond
averring that it was encountering difficulty raising the amount of the bond and finding an insurance company that can cover
said amount during the short period of time allotted for an appeal; and (b) a cash bond in the amount of P400,000.00 (partial
bond).

Respondents filed a motion to dismiss the appeal for QFI's failure: (a) to attach a Verification and Certification of Non-
Forum Shopping as required by the New Rules and Procedure of the NLRC; and (b) to post a bond in an amount equivalent to
the monetary judgment as mandated by law.

The NLRC denied respondents' motion to dismiss and gave due course to QFI's appeal, holding that: (a) the lack of
verification was a formal defect that could be cured by requiring an oath; (b) the belated filing of the certificate of non-forum
shopping may be allowed under exceptional circumstances as technical rules of procedure should be used to promote, not
frustrate justice; and (c) there was substantial compliance with the bond requirement, and merit in QFI's appeal that would
justify a liberal application of the requirement on the timely filing of the appeal bond

The CA reversed and set aside the NLRC's ruling and reinstated the LA's Decision. It ruled that QFI's failure to post
the required bond in an amount equivalent to the monetary judgment impeded the perfection of its appeal, and rendered the
LA's Decision final and executory.Thus, the NLRC was bereft of jurisdiction and abused its discretion in entertaining the
appeal.It also held that the posting of the partial bond together with the Motion to Reduce Bond did not stop the running of the
period to perfect the appeal, considering that: (a) the grounds relied upon by QFI are not meritorious; and (b) the partial bond
posted was not reasonable in relation to the monetary judgment

Issue:

Whether or not the CA erred in ascribing grave abuse of discretion on the part of the NLRC in giving due course to
QFI's appeal holding that: (a) the lack of verification was a formal defect that could be cured by requiring an oath; (b) the
belated filing of the certificate of non-forum shopping may be allowed under exceptional circumstances as technical rules of
procedure should be used to promote, not frustrate justice;and (c) there was substantial compliance with the bond
requirement, and merit in QFI's appeal that would justify a liberal application of the requirement on the timely filing of the
appeal bond

Ruling:

Yes, there was grave abuse of discretion on the part of the NLRC in giving due course to QFI's appeals: Art. 229 of the Labor
Code provides that decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such
appeal may be entertained only on any of the provided grounds. And an appeal by the employer may be perfected only upon
16
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from.

Posting of a cash or surety bond is indispensable to the perfection of an appeal in cases involving monetary awards from the
decision of the LA,in several cases, the Court has relaxed this stringent requirement whenever justified. Thus, the Rules -
specifically Section 6, Rule VI - thereof, allow the reduction of the appeal bond upon a showing of: (a) the existence of a
meritorious ground for reduction, and (b) the posting of a bond in a reasonable amount in relation to the monetary award:

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

Case law has held that for purposes of justifying the reduction of the appeal bond, the merit referred to may pertain to (a) an
appellant's lack of financial capability to pay the full amount of the bond, or (b) the merits of the main appeal such as when
there is a valid claim that there was no illegal dismissal to justify the award, the absence of an employer-employee
relationship, prescription of claims, and other similarly valid issues that are raised in the appeal.

In this case, the NLRC held that a liberal application of the requirement on the timely filing of the appeal bond is justified,
finding that (a) the posting of a P400,000.00 cash bond within the reglementary period to appeal and the subsequent posting
of a surety bond constitute substantial compliance of the bond requirement; and (b) there is merit in QFI's appeal. The posting
of the said partial bond coupled with the subsequent posting of a surety bond in an amount equivalent to the monetary
judgment also signified QFI's good faith and willingness to recognize the final outcome of its appeal.

17
11.
DELA ROSA LINER INC ET VS. BORELA ET
GR NO. 207286, JULY 29, 2016
FACTS:
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo Amarille, conductor, filed separate
complaints against petitioners Dela Rosa Liner, Inc., a public transport company, Rosauro Dela Rosa, Sr., and Nora Dela
Rosa, for underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive leave pay, 13th month pay, sick
leave and vacation leave, night shift differential, illegal deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.
In a motion dated October 26, 2011, the petitioners asked the labor arbiter to dismiss the case for forum shopping. They
alleged that on September 28, 2011, the CA 13th Division disposed of a similar case between the parties after they entered
into a compromise agreement which covered all claims and causes of action they had against each other in relation to the
respondents' employment.

The respondents opposed the motion, contending that the causes of action in the present case are different from the
causes of action settled in the case the petitioners cited.

Labor Arbiter (LA) Danna A. Castillon, in an order dated November 24, 2011, upheld the petitioners' position and
dismissed the complaint on grounds of forum shopping. Respondents appealed the LA's ruling, and the NLRC 1st Division
granted the appeal.The NLRC held that the respondents could not have committed forum shopping as there was no identity of
causes of action between the two cases.

The first complaint, the NLRC pointed out, charged the petitioners with illegal dismissal and unfair labor practice;
while the second complaint was based on the petitioners' alleged nonpayment/underpayment of their salaries and monetary
benefits, and violation of several wage orders. The petitioners moved for reconsideration, but the NLRC denied their motion,
prompting them to file with the CA a petition for certiorari.
.
CA 15th Division denied the petition; it found no grave abuse of discretion in the NLRC ruling that the respondents did
not commit forum shopping when they filed their second complaint. The NLRC likewise held that neither was the case barred
by res judicata arising from the CA judgment in the first case.

The appeals court explained that the first case involved the issues of whether respondents had been illegally
dismissed and whether petitioners should be liable for unfair labor practice. The labor arbiter dismissed the first complaint for
lack of merit in his decision of November 6, 2008. On the respondents' appeal against the LA ruling in this first case, the NLRC
6th Division reversed the dismissal of the complaint. It awarded respondents back wages (P442,550.00) for Borela and
P215,775.00 for Amarille), damages (P10,000.00 each in moral and exemplary damages for Borela), and moral and
exemplary damages (P25,000.00 each for Amarille), plus 10% attorney's fees for each of them.

On the petitioners' motion for reconsideration of the NLRC issued a new ruling that followed the LA's ruling, with
modification. It awarded the respondents financial assistance of P10,000.00 each, in consideration of their long years of
service to the company.

The respondents sought relief from the CA through a petition for certiorari (CA-G.R. SP No. 118038). Thereafter, the
parties settled the case (involving the first complaint) amicably through the compromise agreement adverted to earlier. Under
the terms of this agreement, "(t)he parties has (sic) agreed to terminate the case now pending before the Court of Appeals and
that both parties further agree that no further action based on the same grounds be brought against each other, and this
Agreement applies to all claims and damages or losses either party may have against each other whether those damages or
losses are known or unknown, foreseen orunforeseen."

Based on this agreement, Borela and Amarille received from respondents P350,000.00 and P150,000.00,
respectively, and executed a quitclaim. In this manner, the parties resolved the first case.

To go back to the present case CA-G.R. SP No. 128188, which arose from the second complaint the respondents
subsequently filed), the CA 15th Division upheld the NLRC's (1st Division) decision and ruled out the presence of forum
shopping and res judicata as bars to the respondents' subsequent money claims against the petitioners. The petitioners
moved for reconsideration, but the CA denied the motion.

ISSUE:
The petitioners now ask the Court to nullify the CA judgment in CA-G.R. SP No. 128188 (arising from the second complaint),
contending that the appellate court erred in upholding the NLRC ruling that there was no forum shopping nor res judicata that
would bar the second complaint.

The respondents pray for the denial of the petition for having been filed out of time and for lack of merit.
They argue that the petition should not prosper as it was belatedly filed.

18
Respondents contend that their second complaint involved two causes of action: (1) their claim for sick leave, vacation leave,
and 13th-month pay under the collective bargaining agreement of the company; and (2) the petitioners' noncompliance with
wage orders since the year 2000 until the present.

HELD: The petition is dismissed for lack of merit.

The petition for review on certiorari is timely filed pursuant to Rule 45, Section 2 of the Rules of Court. The last day for filing of
the petition, as respondents claim, fell on June 12, 2013, Independence Day, a legal holiday. The filing of the petition therefore
on June 13, 2013, a working day, fully complied with the rules.

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

Contrary to the petitioners' submission, respondents' second complaint (CA-G.R. SP No. 128188), a money claim, is not a
"similar case" to the first complaint (CA-G.R. SP No. 118038). Thus, the filing of the second complaint did not constitute
forum shopping and the judgment in the first case is not a res judicata ruling that bars the second complaint.

The elements of forum shopping are: (1) identity of parties; (2) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other
action will, regardless of which party is successful, amount to res judicata in the action under consideration.
We concur with the CA that forum shopping and res judicata are not applicable in the present case. There is no identity of
rights asserted and reliefs prayed for, and the judgment rendered in the previous action will not amount to res judicata in the
action now under consideration. There is also no identity of causes of action in the first complaint and in the second complaint.

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

The same facts or evidence would not support both action, that is, the facts or the evidence that would determine whether
respondents were illegally dismissed, illegally suspended, or had been the subject of an unfair labor practice act by the
petitioners are not the same facts or evidence that would support the charge of non-compliance with labor standards benefits
and several wage orders. Thus, there is no basis for petitioners' claim that "the same action had been settled . . . .” and the
petitioners' argument that "The Compromise Agreement covered all claims and causes of action that the parties may have
against each other in relation to the private respondents' employment."

While the parties agreed that no further action shall be brought by the parties against each other, they pointedly stated that
they referred to actions on the same grounds. The phrase same grounds can only refer to the grounds raised in the first
complaint and not to any other grounds. The compromise agreement's application "to all claims and damages or losses
either party may have against each other whether those damages or losses are known or unknown, foreseen or
unforeseen,” is also too sweeping and effectively excludes any claims by the respondents against the petitioners, including
those that by law and jurisprudence cannot be waived without appropriate consideration such as nonpayment or
underpayment of overtime pay and wages.

In labor law, respondents' claim for 13th-month pay, overtime pay, and statutory wages (under Wages Orders 13, 14, 15 and
16), among others, cannot simply be generally waived as they are granted for workers' protection and welfare; it takes more
than a general waiver to give up workers' rights to these legal entitlements.

Lastly, the petitioners' insinuation, that the respondents are not and should not be entitled to anything more, because they had
already "received a considerable amount for the settlement"(P350,000.00 for Borela and P150,000.00 for Amarille), should be
placed and understood in its proper context. The illegal dismissal case where the compromise
agreement took place, the NLRC 6th Division (acting on the appeal from theLA's ruling) awarded Borela P442,550.00 in
backwages; P20,000.00 in moral and exemplary damages, plus 10% attorney's fees; and to Amarille P215,775.00 in back
wages and P50,000.00 in moral and exemplary damages, plus 10% attorney's fees.

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

19
13. OTHER IMPORTANT LABOR PROVISIONS

A. CONTRACTING ARRANGEMENT

1.
ALIVIADO ET AL VS. PROCTER & GAMBLE PHILS
GR NO. 160506, MARCH 9, 2010

FACTS:
Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as
June 1991, to either May 5, 1992 or March 11, 1993. They all individually signed employment contracts with either Promm-
Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets and
stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual
absenteeism, dishonesty or changing day-off without prior notice. P&G is principally engaged in the manufacture and
production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and
distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem
and SAPS for the promotion and merchandising of its products.

In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other
benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal.

On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no
employer-employee relationship between petitioners and P&G .He found that the selection and engagement of the petitioners,
the payment of their wages, the power of dismissal and control with respect to the means and methods by which their work
was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were
legitimate independent job contractors. On appeal, the NLRC dismissed the same. Petitioners filed a motion for
reconsideration but the motion was denied in the November 19, 1998Resolution.

Petitioners likewise failed to have a favorable decision in the CA hence, this petition.

ISSUE:
Whether or not Promm-Gem and SAPS are labor-only contractors or legitimate job contractors?

HELD: The petition is granted. Case remanded to Labor Arbiter for computation of backwages and other benefits.

Whether or not Promm-Gem is engaged in labor-only contracting. NO; it is a legitimate job contractor.
Promm-Gemm has substantial capital, as shown by its financial statements with an authorized capital stock of P1 million and
paid-in capital of P500,000. It has substantial investments in the form of warehouses, office spaces, and vehicles. Promm-
Gem has other clients aside from P&G. Promm-Gem provided its workers with uniforms and materials. The latter were
considered regular employees.

Whether or not SAPS is engaged in labor-only contracting. YES.

It does not have substantial capital—its paid-in capital is only P31,250. The monthly payroll already totaled P44,561. Its
contracts with P&G were for six-month periods. Its capital is not even sufficient for one month’s payroll. SAPS failed to show
that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate its needed revenue to sustain its
operations independently. Neither is there a showing of substantial investment in tools, equipment or other assets.
Furthermore, petitioners’ activities which consisted of merchandising and promotion of P&G products are directly related to the
manufacturing business. Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, the Court found that SAPS is engaged in
“labor-only contracting.”

Whether or not contracting out of a company’s core activities is allowed under the Labor Code and its Implementing Rules.
YES.
To be sure, the Labor Code and its Implementing Rules do not prohibit job contracting. The law allows contracting
arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of
its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to
be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only
contracting.

20
Labor-only contracting exists where the “contractor” merely recruits, supplies or places workers to perform a job, work or
service for a principal. Moreover, any of the following elements must concur:

a. The contractor or subcontractor does not have substantial capital or investment which relates to the job,
work or service to be performed and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the principal; or
b. The contractor does not exercise the right to control over the performance of the work of the contractual
employee.

Whether or not an employer-employee relationship exists between P&G and petitioners. YES.
Where labor-only contracting exits, the law establishes an employee-employer between the employer and the employees of
the “contractor to prevent circumvention of labor laws. The petitioners recruited by SAPS are considered P&G employees. The
petitioners who worked under Promm-Gem are not, since the latter is a legitimate job contractor.

Whether or not petitioners (Promm-Gem employees) were illegally dismissed. YES.

Promm-Gem dismissed petitioners for “grave misconduct and breach of trust” after they sought regularization from P&G.
Promm-Gem claimed that this “assailed the integrity of the company as a legitimate and independent promotion firm.” To be a
just cause for dismissal, misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c)
must show that the employee has become unfit to continue working for the employer.

In the instant case, petitioners-employees of Promm-Gem may have committed an error of judgment in claiming to be
employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. Thus, petitioners are
guilty only of simple misconduct.

Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust reposed in
the employee by his employer. The erring employee must hold a position of responsibility or of trust and confidence. And, in
order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is
unfit to continue to work for the employer. Here, the petitioners-employees of Promm-Gem have not been shown to be
occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to
continue to work as merchandisers for Promm-Gem.

Whether or not petitioners (SAPS-P&G employees) were illegally dismissed.

YES.
They were not afforded procedural due process (two notice rule). They were merely verbally informed of the termination of
their services. Petitioners were dismissed upon the initiation of P&G. When the latter did not renew its contract with SAPS,
petitioners’ services were automatically terminated evidently because SAPS had no other clients.

Whether or not petitioners are entitled to the payment of damages, costs, and attorney’s fees.
YES.
With regard to the employees of Promm-Gem, their dismissals were not attended with bad faith so as to warrant the award of
moral and exemplary damages. As for P&G, the records show that it dismissed its employees through SAPS in a manner
oppressive to labor. The sudden and peremptory barring of the concerned petitioners from work, and from admission to the
work place, after just a one-day verbal notice, and for no valid cause bellows oppression and utter disregard of the right to due
process of the concerned petitioners. Hence, an award of moral damages is called for. P&G is also liable for attorney’s fees.
Finally, all petitioners having been illegally dismissed, they are entitled to reinstatement with backwages.

21
2.
San Miguel vs Maerc Integrated Services (2003)

G.R. 144627

FACTS:

In a decision by the court, it Decision petitioner jointly and severally liable with MAERC for the payment of separation
benefits and wage differential of 291 complainants. Petitioner reiterated that no employer- employee relationship exists
between it and the complainants. And that MAERC is an independent contractor hence petitioner should not be Decision
solidarily liable with it. It disputes this court’s finding that MAERC solely engaged the services of complainants and exercised
control over the complainants conduct; that no intervention or influence could have been extended by it in the selection or
hiring of complainants or the majority of them had worked to the petitioner before it signed a contract with MAERC.

ISSUE:

WON employer- employee relationship exists between the parties.

HELD:

Petitioner’s contention must be rejected. While the continuity of service rendered by the workers to petitioner by itself does not
signify an employer- employee relationship, it was Decision to be so considering the other circumstances present. More so,
since the workers continued to work for petitioner without break from their former employer and then as employees of MAERC
even before the latter was incorporated. The record adequately supports the fact that MAERC admitted recruiting workers for
petitioner before its incorporation.

Most importantly, petitioner refutes this Court’s conclusion that petitioner exercised control over the workplace. It stresses that
checkers assigned to the workplace did not stay there continuously to merit the conclusion that they maintained constant
presence as Decision by the court.

We disagree. While petitioner’s checkers may not have stayed the full eight hours in the workplace because they had to leave
for their office to make their reports, their attendance need not be continuous to be considered constant and therefore an
indication of control. We find in fact that they maintained sufficient presence at the workplace to be able to pinpoint the workers
whose performance was not at par and to report who they are.

22
3.

Aliviado v. Procter & Gamble Philippines, Inc.,

GR No. 160506

Facts:

P&G is principally engaged in the manufacture and production of different consumer and health products, which it
sells on a wholesale basis to various supermarkets and distributors. To enhance consumer awareness and acceptance of the
products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.
Aliviado and other petitioners worked as P&G’s merchandisers, and individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets,
and stores where they handled all the products of P&G, and received their wages from Promm-Gem or SAPS. Promm-Gem
and SAPS imposed disciplinary measures on erring merchandisers. In December 1991, petitioners filed a complaint against
P&G for regularization, service incentive leave pay, and other benefits, with damages. The LA dismissed the case for lack of
merit and ruled that there was no employer-employee relationship between the petitioners and P&G. He found that the
selection and engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to
the means and methods by which their work was accomplished, were all done by Promm-Gem/SAPS. He further found that
Promm-Gem and SAPS were legitimate independent job contractors. The NLRC and the CA subsequently affirmed the LA’s
findings.

Issue:

W/N Promm-Gem and SAPS are legitimate job contractors.

Ruling:

Promm-Gem is a legitimate job contractor, while SAPS is a labor-only contractor.

Labor laws expressly prohibit “labor-only” contracting. To prevent its circumvention, the Labor Code establishes an employer-
employee relationship between the employer and the employees of the labor-only contractor.

There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies, or places workers to perform a
job, work, or service for a principal and any of the following elements are present:(i)The contractor or subcontractor does not
have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited,
supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main
business of the principal; or(ii)The contractor does not exercise the right to control over the performance of the work of the
contractual employee.

Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the
employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and
the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the
principal employer.

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for just and valid cause.

Therefore, the employees of SAPS are the employees of P&G, SAPS being merely the agent of P&G. Promm-Gem has shown
evidence that it has substantial investment which relates to the work to be performed, such as authorized stock of P1M and a
paid-in capital, or capital available for operations, of P500k; it has long-term assets worth over P400k and current assets worth
over P700k; it maintained its own warehouse and office space with a floor area of 870 square meters; it had under its name
three registered vehicles which were used for its promotional/merchandising business; and it has clients aside from P&G.
Promm-Gem also supplied its complainant-workers with the relevant materials, such as markers, tapes, liners, and cutters,
necessary for them to perform their work. Promm-Gem also issued them uniforms. Also, Promm-Gem already considered the
complainants working under it as its regular, not merely contractual or project, employees. This negates, on the part of
Promm-Gem, bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to
strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs, or public
order.

23
On the other hand, SAPS’ Articles of Incorporation shows that it has a paid-in capital of only little over P31k. There is no other
evidence presented to show how much its working capital and assets are. Furthermore, there is no showing of substantial
investment in tools, equipment, or other assets. It failed to show that its paid-in capital is sufficient for its 6-month contract
period with P&G to generate its needed revenue to sustain its operations independently. Instead, it could be readily seen that
its capital is not even sufficient for one month’s payroll, which is pegged at little over P44k. Furthermore, petitioners have been
charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the
Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. Considering that
SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related
to the principal business of P&G, SAPS is engaged in “labor-only” contracting.

24
4.
Manila Water Co., vs Pena (2004)

G.R. 158255

FACTS:

Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan
Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila. Under
the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose names and positions were
in the list furnished by the latter, while the employment of those not in the list was terminated. Private respondents, being
contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged
their services without written contract for three months. Before the end of the three-month contract, the 121 collectors
incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the
Balara Branch. Subsequently, most of the 121 collectors were asked by the petitioner to transfer to the First Classic Courier
Services, a newly registered corporation. Only private respondents remained with ACGI. Private respondents filed a complaint
for illegal dismissal and money claims against petitioner, contending that they were petitioner’s employees as all the methods
and procedures of their collections were controlled by the latter.

Petitioner on the other hand asserts that private respondents were employees of ACGI, an independent contractor. It
maintained that it had no control and supervision over private respondents’ manner of performing their work except as to the
results. Thus, petitioner did not have an employer-employee relationship with the private respondents, but only a service
contractor-client relationship with ACGI.

ISSUE:

Whether or not ACGI is an independent contractor;

HELD: ACGI is an independent contractor but a labor- only contractor.

First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises,
and other materials, to qualify as an independent contractor. While it has an authorized capital stock of P1,000,000.00, only
P62,500.00 is actually paid-in, which cannot be considered substantial capitalization. The 121 collectors subscribed to four
shares each and paid only the amount of P625.00 in order to comply with the incorporation requirements. Further, private
respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the
corporate address of ACGI was the residence of its president, Mr. Herminio D. Peña. Moreover, in dealing with the consumers,
private respondents used the receipts and identification cards issued by petitioner.

Second, the work of the private respondents was directly related to the principal business or operation of the petitioner. Being
in the business of providing water to the consumers in the East Zone, the collection of the charges therefore by private
respondents for the petitioner can only be categorized as clearly related to, and in the pursuit of the latter’s business. Lastly,
ACGI did not carry on an independent business or undertake the performance of its service contract according to its own
manner and method, free from the control and supervision of its principal, petitioner. Prior to private respondents’ alleged
employment with ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner
and method of performing their tasks. This form of control and supervision never changed although they were already under
the seeming employ of ACGI. Petitioner issued memoranda regarding the billing methods and distribution of books to the
collectors; it required private respondents to report daily and to remit their collections on the same day to the branch office or
to deposit them with Bank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform
his daily collection, he must notify petitioner or the branch office in the morning of the day that he will be absent; and although
it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated by petitioner as shown in
the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents. These are indications that
ACGI was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that ACGI
was not an independent contractor since it did not carry a distinct business free from the control and supervision of petitioner.

Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such, is considered
merely an agent of the petitioner. In labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been

25
directly employed by the principal employer. Since ACGI is only a labor-only contractor, the workers it supplied should be
considered as employees of the petitioner.

26
5.

Teng vs. Pahagac

GR No. 169704, November 17, 2010

FACTS:

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

On February 20, 2003, the respondent workers filed a complaint for illegal dismissal against Albert Teng Fish
Trading, Teng, and Chua before the NCMB, Region Branch No. IX, Zamboanga City. They alleged that Teng hired them,
without any written employment contract, to serve as his eyes and ears aboard the fishing boats; to classify the fish caught
by baera; to report to Teng via radio communication the classes and volume of each catch; to receive instructions from him as
to where and when to unload the catch; to prepare the list of the provisions requested by the maestro and the mechanic for his
approval; and, to procure the items as approved by him. They also claimed that they received regular monthly salaries,
13th month pay, Christmas bonus, and incentives in the form of shares in the total volume of fish caught. They asserted that
sometime in September 2002, Teng expressed his doubts on the correct volume of fish caught in every fishing voyage. In
December 2002, Teng informed them that their services had been terminated

In his defense, Teng maintained that he did not have any hand in hiring the respondent workers; the maestros, rather
than he, invited them to join the venture. According to him, his role was clearly limited to the provision of the necessary capital,
tools and equipment, consisting of basnig, gears, fuel, food, and other supplies.

The Voluntary Arbitrator (VA) rendered its decision in favor of Teng, that there was no employer-employee
relationship between them. The respondent workers filed a motion for reconsideration which was opposed by Teng because
according to him, the decision from the VA must be final and executory and therefore is not subject to motion for
reconsideration.

ISSUES:

1. Whether or not the VA's decision is not subject to a motion for reconsideration;

2. Whether there is an employer-employee relationship.

RULING:

1. No.

Article 262-A deleted the word"unappealable"from Article 263. The deliberate selection of the language in the amendatory act
differing from that of the original act indicates that the legislature intended a change in the law, and the court should endeavor
to give effect to such intent.Presumably, the decision may still be reconsidered by the Voluntary Arbitrator on the basis of a
motion for reconsideration duly filed during that period. The seasonable filing of a motion for reconsideration is a mandatory
requirement to forestall the finality of such decision.

The requirement that administrative remedies be exhausted is based on the doctrine that in providing for a remedy before an
administrative agency, every opportunity must be given to the agency to resolve the matter and to exhaust all opportunities for
a resolution under the given remedy before bringing an action in, or resorting to, the courts of justice.

27
2. Yes

While Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued to the
respondent workers identification cards (IDs) bearing their names as employees and Tengs signature as the employer.
Generally, in a business establishment, IDs are issued to identify the holder as a bona fide employee of the issuing entity. For
the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in addition to their shares
in the fish caught.

The element of control is present in this case. Teng not only owned the tools and equipment, he directed how the respondent
workers were to perform their job as checkers; they, in fact, acted as Tengs eyes and ears in every fishing expedition.

The dismissal of an employee, which the employer must validate, has a twofold requirement:one is substantive, the other is
procedural.Not only must the dismissal be for a just or an authorized cause, as provided by law; the rudimentary requirements
of due process the opportunity to be heard and to defend oneself must be observed as well. The employer has the burden of
proving that the dismissal was for a just cause; failure to show this, as in the present case, would necessarily mean that the
dismissal was unjustified and, therefore, illegal.

28
6.

GSIS vs NLRC et al.,

GR No. 18004, November 17, 2010

Facts:

Respondents Dionisio Banlasan, Alfredo T. Tafalla, Telesforo D. Rubia, Rogelio A. Alvarez, Dominador A. Escobal,
and Rosauro Panis were employed as security guards by DNL Security Agency (DNL Security). By virtue of the service
contract entered into by DNL Security and petitioner Government Service Insurance System on May 1, 1978, respondents
were assigned to petitioner’s Tacloban City office, each receiving a monthly income ofP1,400.00. Sometime in July 1989,
petitioner voluntarily increased respondents’ monthly salary to P3,000.00.3

In February 1993, DNL Security informed respondents that its service contract with petitioner was terminated. This
notwithstanding, DNL Security instructed respondents to continue reporting for work to petitioner. Respondents worked as
instructed until April 20, 1993, but without receiving their wages; after which, they were terminated from employment.4

On June 15, 1995, respondents filed with the National Labor Relations Commission (NLRC), Regional Arbitration
Branch No. VIII, Tacloban City, a complaint against DNL Security and petitioner for illegal dismissal, separation pay, salary
differential, 13th month pay, and payment of unpaid salary.

Issue:

WON GSIS is jointly and severally liable with DNL Security Agency for payment of the unsubstantiated amounts of Salary
Differentials and the 13th Month Pay to the private respondent security guards.

Held:

The fact that there is no actual and direct employer-employee relationship between petitioner and respondents does not
absolve the former from liability for the latter’s monetary claims. When petitioner contracted DNL Security’s services, petitioner
became an indirect employer of respondents, pursuant to Article 107 of the Labor Code, which reads:

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

After DNL Security failed to pay respondents the correct wages and other monetary benefits, petitioner, as principal, became
jointly and severally liable, as provided in Articles 106 and 109 of the Labor Code, which state:

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

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

xxxx

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

29
This statutory scheme is designed to give the workers ample protection, consonant with labor and social justice provisions of
the 1987 Constitution.

Petitioner’s liability covers the payment of respondents’ salary differential and 13th month pay during the time they worked for
petitioner. In addition, petitioner is solidarily liable with DNL Security for respondents’ unpaid wages from February 1993 until
April 20, 1993. While it is true that respondents continued working for petitioner after the expiration of their contract, based on
the instruction of DNL Security, petitioner did not object to such assignment and allowed respondents to render service. Thus,
petitioner impliedly approved the extension of respondents’ services. Accordingly, petitioner is bound by the provisions of the
Labor Code on indirect employment. Petitioner cannot be allowed to deny its obligation to respondents after it had benefited
from their services. So long as the work, task, job, or project has been performed for petitioner’s benefit or on its behalf, the
liability accrues for such services. The principal is made liable to its indirect employees because, after all, it can protect itself
from irresponsible contractors by withholding payment of such sums that are due the employees and by paying the employees
directly, or by requiring a bond from the contractor or subcontractor for this purpose.

Petitioner’s liability, however, cannot extend to the payment of separation pay. An order to pay separation pay is invested with
a punitive character, such that an indirect employer should not be made liable without a finding that it had conspired in the
illegal dismissal of the employees.

Lastly, we do not agree with petitioner that the enforcement of the decision is impossible because its charter unequivocally
exempts it from execution.

To be sure, petitioner’s charter should not be used to evade its liabilities to its employees, even to its indirect employees, as
mandated by the Labor Code.

30
7.

Sy et al., vs. Fairland Knitcraft Co Inc.

G.R. No. 189658, December 12, 2011

Facts:

Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the
owner/proprietress of Weesan Garments (Weesan).

On the other hand, the complaining workers, Marialy Sy and 33 others (the workers) are sewers, trimmers, helpers, a
guard and a secretary who were hired by Weesan.

The workers filed separate complaints for underpayment and/or non-payment of wages, overtime pay, premium pay,
13th month pay and other monetary benefits against Susan/Weesan. These complaints were then consolidated by the
Arbitration Branch of the NLRC in January 2003.

February 5, 2003, Weesan filed before the Department of Labor and Employment-National Capital Region (DOLE-
NCR) a report on its temporary closure for a period of not less than six months. On the same day, the workers were not
anymore allowed to work. So on February 18, 2003 they filed an Amended Complaint, and on March 13, 2003, another
pleading entitled Amended Complaints and Position Paper for Complainants, to include the charge of illegal dismissal and
impleaded Fairland and its manager, Debbie Manduabas (Debbie), as additional respondents.

At the Hearings set by the Labor Arbiter Ramon Valentin Reyes, Atty. Antonio Geronimo represented both
Susan/Weesan and Fairland. He submitted 2 position papers for the two entities. The workers filed a Reply, to which Atty.
Geronimo also submitted a Consolidated Reply by Susan/Weesan and Fairland. Workers answered back through a Rejoinder.

The Labor Arbiter dismissed the case for lack of merit, but ordered the respondent companies to pay each
complainant P5,000.00 by way of financial assistance.

The NLRC granted the worker’s appeal and set aside the Labor Arbiter’s decision. The Commission declared the
dismissal of the workers as illegal and ordered reinstatement, will full backwages from February 5, 2003 and payment all the
unpaid benefits to be paid solidarily by Susan/Weesan and Fairland.

Atty. Geronimo filed a Motion for Reconsideration. However, Fairland filed another Motion for
Reconsideration through Atty. Melina O. Tecson (Atty. Tecson) assailing the jurisdiction of the Labor Arbiter and the NLRC
over it, claiming that it was never summoned to appear, attend or participate in all the proceedings conducted therein. It also
denied that it engaged the services of Atty. Geronimo. These MRs were denied by the NLRC.

Thus, Fairland and Susan/Weesan filed their petitions for certiorari before the Court of Appeals.

CA’s decision on Fairland’s petition:

The CA denied Fairland’s petition and affirmed the NLRC ruling which held Fairland solidarily liable with Susan.

On MR, Fairland moved also for the voluntary inhibition of Justices Leagogo and Maambong. The CA granted the
motion for voluntary inhibition and transferred the case from the First Division to the Ninth Division. The Ninth Division
reversed the earlier denial of Fairland’s petition It held that the labor tribunals did not acquire jurisdiction over the person of
Fairland, and even assuming they did, Fairland is not liable to the workers since Weesan is not a mere labor-only contractor
but a bona fide independent contractor. The Special Ninth Division thus annulled and set aside the assailed NLRC Decision
and Resolution insofar as Fairland is concerned and excluded the latter therefrom.

Workers appealed this decision to the Supreme Court.

CA’s decision on Susan’s petition:

Susan’s petition was denied due course and dismissed for lack of merit. The CA affirmed the NLRC ruling with
respect to Susan.
31
Her MR was denied by the CA.

Before the Supreme Court:

Susan filed a petition for review on certiorari with the SC, which was dismissed by the Supreme Court on technicality
and for failure to sufficiently show any reversible error in the assailed judgment. Susan filed an appeal but before it could be
resolved, the Supreme Court consolidated Susan’s case with that the workers.

The Supreme Court granted Susan’s Motion for Reconsideration and reinstated her petition for review on certiorari.

Issues:

1. Whether or not Susan/Weesan is a labor-only contracting agent acting as an agent of Fairland?

2. Whether or not the individual private respondents (Sy, et al.) were illegal dismissed?

Held:

1. Susan is a mere labor-only contractor.

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

(a) The person supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others; and

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

The workers, majority of whom are sewers, were recruited by Susan/Weesan and that they performed activities which are
directly related to Fairland’s principal business of garments. Did Susan/Weesan have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others? The SC said that there was nothing in the records that
would show that Weesan has investment in the form of tools, equipment or machineries. The records show that Fairland has
to furnish Weesan with sewing machines for it to be able to provide the sewing needs of the former. Weesan was unable to
show that apart from the borrowed sewing machines, it owned and possessed any other tools, equipment, and machineries
necessary to its being a contractor or sub-contractor for garments. Neither was Weesan able to prove that it has substantial
capital for its business.

Further, the work premises utilized by Weesan is owned by Fairland, which significantly, was not in the business of renting
properties. They also advanced that there was no showing that Susan/Weesan paid any rentals for the use of the
premises. Instead of refuting the worker’s allegations, Susan instead claimed that Weesan rented the premises from another
entity, De Luxe. To support this, she attached to her petition two Contracts of Lease purportedly entered into by her and De
Luxe for the lease of the premises covering the periods August 1, 1997 to July 31, 2000 and January 1, 2001 to December 31,
2004 as well as TCTs and Tax declarations in De Luxe’s name but the SC found it wanting. There were no rental receipts
presented nor did the TCTs indicate with certainty that the registered property is the same one used for Weesan’s work
premises. Weesan does not have its own workplace and is only utilizing the workplace of Fairland to whom it supplied workers
for its garment business.

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

32
2. Yes, the worker’s were illegally dismissed.

Susan relies on Article 283 of the Labor Code which allows as a mode of termination of employment the closure or termination
of business, which is a management prerogative. The exercise of which requires: a) that the closure/cessation of business
is bona fide, i.e., its purpose is to advance the interest of the employer and not to defeat or circumvent the rights of employees
under the law or a valid agreement; b) that written notice was served on the employees and the DOLE at least one month
before the intended date of closure or cessation of business; and c) in case of closure/cessation of business not due to
financial losses, that the employees affected have been given separation pay equivalent to ½ month pay for every year of
service or one month pay, whichever is higher.”

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

Hence, the Court finds that Susan failed to prove that the suspension of operations of Weesan was bona fide and that it
complied with the mandatory requirement of notice under the law. Susan likewise failed to discharge her burden of proving
that the termination of the workers was for a lawful cause. Therefore, the NLRC and the CA, in CA-G.R. SP No. 93860, did not
err in their findings that the workers were illegally dismissed by Susan/Weesan.

The court also ruled that Fairland’s claim of prescription does not deserve consideration. Fairland says that they only engaged
Weesan’s services 1996 to 1997, but in January 31, 2003, Fairland wrote Weesan requesting for the sewing machines back.

33
8.

POLYFOAM-RGC INTERNATIONAL, CORP. vs EDGARDO CONCEPCION

G.R. No. 172349 June 13, 2012

Facts:

Edgardo Concepcion alleged that he was hired by the petitioner company as an “all-around” factory worker for almost
6 years. He allegedly discovered that his time card was not in the rack and was informed by the security guard that he could
no longer punch his time card. He protested to his supervisor and he told him that the management decided to dismiss him
due to infraction of company rules. Company Manager Cheng refused to face him. Respondent’s counsel wrote requesting
that respondent be re-admitted to work. Request unheeded.

Respondent filed a Complaint for illegal dismissal, non-payment of wages, premium pay for rest day, separation pay,
service incentive leave pay, 13th month pay, damages, and attorney’s fees against Polyfoam and Ms. Natividad Cheng
(Cheng).

Gramaje filed a Motion for Intervention on April 28, 2000. Polyfoam filed a Motion to Dismiss on the grounds
of: NLRC has no jurisdiction because of the absence of employer-employee relationship between Polyfoam and respondent
and that moneyclaim has already prescribed. LA issued an order granting Gramaje’s motion and denying Polyfoam and
Cheng’s motion to dismiss as the lack of ee-er relationship is only a defense. LA rendered a decision finding respondent to
have been illegally dismissed and holding Gramaje/Pages solidary liable to his money claims. Gramaje was not enrolled in as
employment agency in the registry of DOLE. Responded performed a job directly related to the main business .

NLRC modified the LA’s decision by exonerating Polyfoam from liability for respondent’s claims .Gramaje was
ordered to pay separation pay of 1 month salary for every year of service from April 21, 1996 up to the rendition of the
decision. NLRC found out that Gramaje to be an independent contractor and were assigned to Polyfoam but remained under
the supervision of Gramaje.Gramaje had it’s subtantial capital, own office, equipment, tools etc. Gramaje paid respondent’s
wages and benefits and reported the latter to SSS as covered employee .As to illegal dismissal, respondent was not notified
that he had been dismissed nor was he prevented from returning to his work.Respondent elevated case to the CA in a special
civil action for certiorari .Decision was granted and the decision of the NLRC was reversed and the decision of the LA
was reinstated.

Issue:

Whether or not Gramaje is an independent job contractor.

Held: Gramaje is a Labor-Only Contractor

Article 106 of the Labor Code explains the relations which may arise between an employer, a contractor, and the contractor’s
employees, thus:

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

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

There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited
and placed by such person are performing activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed by him.

34
The test of independent contractorship is "whether one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the employer, except only as to the results of the
work." In San Miguel Corporation v. Semillano, the Court laid down the criteria in determining the existence of an independent
and permissible contractor relationship, to wit:x x x

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

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

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

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

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

Second, Gramaje did not carry on an independent business or undertake the performance of its service contract according to
its own manner and method, free from the control and supervision of its principal, Polyfoam, its apparent role having been
merely to recruit persons to work for Polyfoam.

It is undisputed that respondent had performed his task of packing Polyfoam’s foam products in Polyfoam’s premises. As to
the recruitment of respondent, petitioners were able to establish only that respondent’s application was referred to Gramaje,
but that is all. Prior to his termination, respondent had been performing the same job in Polyfoam’s business for almost six (6)
years. He was even furnished a copy of Polyfoam’s "Mga Alituntunin at Karampatang Parusa,"which embodied Polyfoam’s
rules on attendance, the manner of performing theemployee’s duties, ethical standards, cleanliness, health, safety, peace and
order. These rules carried with them the corresponding penalties in case of violation. While it is true that petitioners submitted
the Affidavit of Polyfoam’s supervisor Victor Abadia, claiming that the latter did not exercise supervision over respondent
because the latter was not Polyfoam’s but Gramaje’s employee, said Affidavit is insufficient to prove such claim. Petitioners
should have presented the person who they claim to have exercised supervision over respondent and their alleged other
employees assigned to Polyfoam. It was never established that Gramaje took entire charge, control and supervision of the
work and service agreed upon. And as aptly observed by the CA, "it is likewise highly unusual and suspect as to the absence
of a written contract specifying the performance of a specified service, the nature and extent of the service or work to be done
and the term and duration of the relationship."

35
9.

Superior Packaging Corp. vs Balagsay et.al.,

GR No. 178909 , October 10,2012

Facts:

The petitioner Superior Packaging Corporation (principal) engaged the services of Lancer (agent) to provide reliever
services to its business, which involves the manufacture and sale of commercial and industrial corrugated boxes. According to
petitioner, the respondents were engaged for four (4) months–from February to June 1998–and their tasks included
loading,unloading and segregation of corrugated boxes.

Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of salary, the DOLE
conducted an inspection of the petitioner’s premises and found several violations, to wit: (1) non-presentation of payrolls and
daily time records; (2) non-submission of annual report of safety organization; (3) medical and accident/illness reports; (4)non-
registration of establishment under Rule 1020 of Occupational and Health Standards; and (5) no trained first aid Due to the
petitioner’s failure to appear in the summary investigations conducted by the DOLE, an Order was issued on June 18,2003
finding in favor of the respondents and adopting the computation of the claims submitted. Petitioner and Luz were ordered,
among others, to pay respondents their total claims in the amount of P 840,463.38.

Petitioner and Luz filed a motion for reconsideration on the ground that respondents are not its employees but
of Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its motion in its
Resolution dated February 16, 2004, ruling that the petitioner failed to support its claim that the respondents are not its
employees, and even assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13
of the Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to contractual
employees to the extent of the work performed when the contractor fails to pay its employees’ wages.

Their appeal to the Secretary of DOLE was dismissed per Order dated July 30, 2004 and the Order dated June
18,2003 and Resolution dated February 16, 2004 were affirmed. Their motion for reconsideration likewise having been
dismissed by the Secretary of DOLE in an Order dated January 21, 2005, petitioner and Luz filed a petition for certiorari with
the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLE’s orders, with the modification in that Luz was
absolved of any personal liability under the award. The petitioner filed a partial motion for reconsideration insofar as the finding
of solidary liability with Lancer is concerned but it was denied by the CA in a Resolution dated July 10, 2007. The petitioner is
now before the Court on petition for review under Rule 45 of the Rules of Court.

Issue:

(1) Whether the DOLE has authority to make a finding of an employer-employee relationship concomitant to its visitorial
and enforcement power

(2) Whether Superior Packaging Corporation (petitioner) may be held solidarily liable with Lancer Staffing & Services
Network, Inc. (Lancer) for respondents’ unpaid money claims.

36
Held:

The DOLE has authority to make a finding of an employer-employee relationship concomitant to its visitorial
and enforcement power.

The DOLE clearly acted within its authority when it determined the existence of an employer-employee relationship between
the petitioner and respondents as it falls within the purview of its visitorial and enforcement power under Article 128(b) of the
Labor Code.

In People’s Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment, the
Court stated that it can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such determination, however, is merely
preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provisions. Also, the
existence of an employer-employee relationship is ultimately a question of fact . The determination made in this case by the
DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the ambit of a petition for review on
certiorari.

Lancer was engaged in labor-only contracting.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but was engaged in
"labor-only contracting"; hence, the petitioner was considered an indirect employer of respondents and liable to the latter for
their unpaid money claims.

At the time of the respondents’ employment in 1998, the applicable regulation was DOLE Department Order No. 10, Series of
1997. Under said Department Order, labor-only contracting was defined as follows:

Sec. 9. Labor-only contracting– (a) Any person who undertakes to supply workers to an employer shall be deemed to be
engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other
materials; and

(2) The workers recruited and placed by such persons are performing activities which are directly related to the principal
business or operations of the employer in which workers are habitually employed.

Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were
directly employed by him.

According to the CA, the totality of the facts and surrounding circumstances of this case point to such conclusion. The Court
agrees.

The ratio of Lancer’s authorized capital stock of P 400,000.00 as against its subscribed and paid-up capital stock of
P25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-to-day operations. And while the
Court does not set an absolute figure for what it considers substantial capital for an independent job contractor, it measures
the same against the type of work which the contractor is obligated to perform for the principal. Moreover, the nature
of respondents’ work was directly related to the petitioner’s business. The marked disparity between the petitioner’s actual
capitalization (P 25,000.00) and the resources needed to maintain its business, i.e., "to establish, operate and manage a
personnel service company which will conduct and undertake services for the use of offices, stores, commercial and industrial
services of all kinds," supports the finding that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed
fact that the petitioner failed to produce any written service contract that might serve as proof of its alleged agreement with
Lancer.

37
 Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee
relationship between the principal and the employees of the supposed contractor, and the "labor only" contractor is considered
as a mere agent of the principal, the real employer.. The former becomes solidarily liable for all the rightful claims of the
employees. The petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily
liable for respondents’ unpaid money claims.

38
10.

DIGITAL TELECOMMUNICATIONS PHIL., INC. VS. DIGITEL EMPLOYEES UNION

G.R. NOS. 184903, OCT. 10, 2012

FACTS:

By virtue of a certification election, Digitel Employees Union (Union) became the exclusive bargaining agent of all rank and file
employees of Digitel in 1994. The Union and Digitel then commenced collective bargaining negotiations which resulted in bara
gaining deadlock. The Union threatened to go on strike, but then the Labor Secretary assumed jurisdiction over the dispute
and eventually directed the parties to execute a CBA.

However, no CBA was forged between Digitel and the Union. Some Union members abandoned their employment with Digitel.
The Union later became dormant. Ten (10) years thereafter or on 28 September 2004, Digitel received from Esplana, who was
President of the Union, a letter containing the list of officers, CBA proposals and ground rules.

Digitel was reluctant to negotiate with the Union and demanded that the latter Union show compliance with the provisions of
the Union’s Constitution and By-laws on union membership and election of officers. On 4 November 2004, Esplana and his
group filed a case for Preventive Mediation before the National Conciliation and Mediation Board based on Digitel’s violation of
the duty to bargain. On 25 November 2004, Esplana filed a notice of strike.

On10 March 2005, the then Labor Secretary issued an Order assuming jurisdiction over the labor dispute. During the
pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit enterprise engaged in call center servicing, filed with
the DOLE an Establishment Termination Report stating that it will cease its business operation. The closure affected at least
100 employees, 42 of whom are members of the herein respondent Union. Alleging that the affected employees are its
members and in reaction to Digiserv’s action, Esplana and his group filed another Notice of Strike for union busting, illegal
lock-out, and violation of the assumption order. On 23 May 2005, the Labor Secretary ordered the second notice of strike
subsumed by the previous Assumption Order.

Meanwhile, on 14 March 2005, Digitel iled a petition with the Bureau of Labor Relations (BLR) seeking cancellation of the
Union’s registration.

In a Decision dated 11 May 2005, the Regional Director of the DOLE dismissed the petition for cancellation of union
registration for lack of merit. The appeal filed by Digitel with the BLR was eventually dismissed for lack of merit in a Resolution
dated 9 March 2007.In an Order dated 13 July 2005, the Secretary of Labor directed Digitel to commence the CBA negotiation
with the Union and certified for compulsory arbitration before the NLRC the issue of unfair labor practice. In accordance with
the 13 July 2005 Order of the Secretary of Labor, the unfair labor practice issue was certified for compulsory arbitration before
the NLRC. On 31 January 2006, NLRC rendered a Decision dismissing the unfair labor practice charge against Digitel but
declaring the dismissal of the 13 employees of Digiserv as illegal and ordering their reinstatement.

The Union manifested that out of 42 employees, only 13 remained, as most had already accepted separation pay. In view of
this unfavorable decision, Digitel filed a petition on 9 June 2006 before the Court of Appeals, challenging the above NLRC
Decision and Resolution and arguing mainly that Digiserv employees are not employees of Digitel. On 18 June 2008, CA
partially granted the case for ULP, thus modifying the assailed NLRC dispositions. The CA likewise sustained the finding that
Digiserv is engaged in labor-only contracting and that its employees are actually employees of Digitel. Digitel filed a motion for
reconsideration but was denied in a Resolution dated 9 October 2008. Hence, this petition for review on certiorari.

ISSUES:

1) Whether Digiserv is a legitimate contractor; and

2) Whether there was a valid dismissal.

39
RULING:

Digiserv is a labor-only contractor.

Labor-only contracting is expressly prohibited by our labor laws. After an exhaustive review of the records, there is no showing
that first, Digiserv has substantial investment in the form of capital, equipment or tools. The NLRC, as echoed by the CA, did
not find substantial Digiserv’s authorized capital stock of P 1,000,000.00. It pointed out that only P 250,000.00 of the
authorized capital stock had been subscribed and only P 62,500.00 had been paid up. There was no increase in capitalization
for the last 10 years.

Moreover, in the Amended Articles of Incorporation, as well as in the General Information Sheets for the years 1994, 2001 and
2005, the primary purpose of Digiserv is to provide manpower services. In PCI Automation Center, Inc. v. National Labor
Relations Commission, the Court made the following distinction: "the legitimate job contractor provides services while the
labor-only contractor provides only manpower. The legitimate job contractor undertakes to perform a specific job for the
principal employer while the labor-only contractor merely provides the personnel to work for the principal employer. “The
services provided by employees of Digiserv are directly related to the business of Digitel. It is undisputed that as early as
March 1994, the affected employees, except for two, were already performing their job as Traffic Operator which was later
renamed as Customer Service Representative (CSR). It is equally undisputed that all throughout their employment, their
function as CSR remains the same until they were terminated effective May 30, 2005. Their long period of employment as
such is an indication that their job is directly related to the main business of DIGITEL which is telecommunications.
Furthermore, Digiserv does not exercise control over the affected employees. Digiserv shared the same Human Resources,
Accounting, Audit and Legal Departments with Digitel which manifested that it was Digitel who exercised control over the
performance of the affected employees. The NLRC also relied on the letters of commendation, plaques of appreciation and
certification issued by Digitel to the Customer Service Representatives as evidence of control. Considering that Digiserv has
been found to be engaged in labor-only contracting, the dismissed employees are deemed employees of Digitel. The affected
employees were illegally dismissed.

In addition to finding that Digiserv is a labor-only contractor, records teem with proof that its dismissed employees are in fact
employees of Digitel. The NLRC enumerated these pieces of evidence, thus:

The remaining affected employees, except for two (2), were already hired by DIGITEL even before the existence of
DIGISERV. Likewise, the remaining affected employees continuously held the position of Customer Service Representative,
which was earlier known as Traffic Operator, from the time they were appointed on March 1, 1994until they were terminated
on May 30, 2005.

Further, the Certificates issued to Customer Service Representative likewise show that they are employees of DIGITEL, Take
for example the "Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees. The "Service
Award" was signed by the officers of DIGITEL–the VP-Customer Services Division, the VP-Human Resources Division and the
Group Head-Human Resources Division. It cannot be gainsaid that it is only the employer that issues service award to its
employees.

As an alternative argument, Digitel maintains that the affected employees were validly dismissed on the grounds of closure of
Digiserv, a department within Digitel. In the recent case of Waterfront Cebu City Hotel v. Jimenez, we referred to the closure of
a department or division of a company as retrenchment. For a valid retrenchment, the following elements must be present:

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

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

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least ½
month pay for every year of service, whichever is higher;

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

40
 (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.

Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to close a
department of the company. Digitel’s decision to outsource the call center operation of the company is a valid reason to close
down the operations of a department under which the affected employees were employed. The fifth element regarding the
criteria to be observed by Digitel clearly does not apply because all employees under Digiserv were dismissed. The instant
case is all about the fourth element, that is, whether or not the affected employees were dismissed in good faith. We find that
there was no good faith in the retrenchment.Prior to the cessation of Digiserv’s operations, the Secretary of Labor had issued
the first and second assumption order. The effects of the assumption order issued by the Secretary of Labor are two-fold. It
enjoins an impending strike on the part of the employees and orders the employer to maintain the status quo. There is no
doubt that Digitel defied the assumption order by abruptly closing down Digiserv. The closure of a department is not illegal per
se. What makes it unlawful is when the closure is undertaken in bad faith. In St. John Colleges, Inc. v. St. John Academy
Faculty and Employees Union, bad faith was evidenced by the timing of and reasons for the closure and the timing of and
reasons for the subsequent opening.

41
11.

NORKIS TRADING CORPORATION VS. JOAQUIN BUENA VISTA ET. AL

[G.R. NO. 182018 | OCTOBER 10, 2012]

FACTS:

The respondents were hired by Norkis Trading Corporation and worked for the same as skilled workers assigned in the
operation of industrial and welding machines owned and used by Norkis Trading for its business. They were not treated as
regular employees by Norkis Trading Corp. Instead, they were regarded by Norkis Trading as members of PASAKA, a
cooperative, which was deemed an independent contractor that merely deployed the respondents to render services for Norkis
Trading.

The respondents, believing that they were regular employees of Norkis Trading, filed on June 9, 1999 with the DOLE a
complaint against Norkis Trading and PASAKA for labor-only contracting and non-payment of minimum wage and overtime
pay. The filing of the complaint for labor-only contracting allegedly led to the suspension of the respondents’ membership with
PASAKA.

On October 13, 1999, the respondents were to report back to work but they were informed by PASAKA that they would be
transferred to Norkis Tradings’ sister company, Porta Coeli Industrial Corporation (Porta Coeli). The respondents opposed the
transfer as it would allegedly result in a change of employer, from Norkis Trading to Porta Coeli. The respondents also
believed that the transfer would result in a demotion since from being skilled workers in Norkis Trading; they would be reduced
to being utility workers. These circumstances made the respondents amend their complaint for illegal suspension, to include
the charges of unfair labor practice, illegal dismissal, damages and attorney’s fees.

ISSUE:

Whether or not the respondents were illegally dismissed by Norkis Trading

RULING:

YES. Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the principal
employer become regular employees of the latter. Having gained regular status, the employees are entitled to security of
tenure and can only be dismissed for just or authorized causes and after they had been afforded due process. Termination of
employment without just or authorized cause and without observing procedural due process is illegal. Considering that Porta
Coeli is an entity separate and distinct from Norkis Trading, the respondents’ employment with Norkis Trading was necessarily
severed by the change in work assignment.

42
12.

GOYA, INC. VS. GOYA, INC. EMPLOYEES UNION-FFW

[G.R. NO. 170054 | JAN. 21, 2013]

FACTS:

Petitioner Goya, Inc. (Company), a domestic corporation engaged in the manufacture, importation, and wholesale of top
quality food products, hired contractual employees from PESO Resources Development Corporation (PESO) to perform
temporary and occasional services in its factory. This prompted respondent Goya, Inc. Employees Union–FFW (Union) to
request for a grievance conference on the ground that the contractual workers do not belong to the categories of employees
stipulated in the existing Collective Bargaining Agreement (CBA). Section 4, Article I of the CBA provides for three categories
of employees: Probationary Employee, Regular Employee and Casual Employee.

The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in gross
violation of the CBA tantamount to unfair labor practice (ULP). The Company asserted that Section 4, Article I of the CBA
merely provides for the definition of the categories of employees and does not put a limitation on the Company’s right to
engage the services of job contractors or its management prerogative to address temporary/occasional needs in its operation.

The voluntary arbitrator and CA ruled that it does not constitute unfair labor practice as it (sic) not characterized under the law
as a gross violation of the CBA. Both also ruled that the Company’s engagement of PESO was indeed a management
prerogative. However, the engagement of PESO is not in keeping with the intent and spirit of the CBA provision in question. It
must, however, be stressed that the right of management to outsource parts of its operations is not totally eliminated but is
merely limited by the CBA. They directed the Company to observe and comply with its commitment as it pertains to the hiring
of casual employees when necessitated by business circumstances. Following the said categories, the Company should have
observed and complied with the provision of their CBA. Since the Company had admitted that it engaged the services of
PESO to perform temporary or occasional services which is akin to those performed by casual employees, the Company
should have tapped the services of casual employees instead of engaging PESO.

ISSUE:

Whether or not the engagement of PESO is valid.

RULING:

No. the Company kept on harping that both the VA and the CA conceded that its engagement of contractual workers from
PESO was a valid exercise of management prerogative. It is confused. To emphasize, declaring that a particular act falls
within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise
thereof. What the VA and the CA correctly ruled was that the Company’s act of contracting out/outsourcing is within the
purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof. Obviously, this is due
to the recognition that the CBA provisions agreed upon by the Company and the Union delimit the free exercise of
management prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the right of the
management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA," while the CA held
that "this management prerogative of contracting out services, however, is not without limitation. x x x These categories of
employees particularly with respect to casual employees serve as limitation to the Company’s prerogative to outsource parts of
its operations especially when hiring contractual employees." A collective bargaining agreement is the law between the parties.

43
13.

VIGILLA ET AL., VS. PHIL. COLLEGE OF CRIMINOLOGY INC.

[G.R. NO. 200094 | JUNE 10, 2013]

FACTS:

 PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and supervisor in the
Maintenance Department of PCCr under the supervision and control of Atty. Florante A. Seril (Atty. Seril), PCCr’s
Senior Vice President for Administration. The petitioners, however, were made to understand, upon application with
respondent school, that they were under MBMSI, a corporation engaged in providing janitorial services to clients.
Atty. Seril is also the President and General Manager of MBMSI.

 Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been revoked as of July 2,
2003. On March 16, 2009, PCCr, through its President, respondent Gregory Alan F. Bautista (Bautista), citing the
revocation, terminated the school’s relationship with MBMSI, resulting in the dismissal of the employees or
maintenance personnel under MBMSI, except Alfonso Bongot (Bongot) who was retired.

 In September, 2009, the dismissed employees, led by their supervisor, Benigno Vigilla (Vigilla), filed their respective
complaints for illegal dismissal, reinstatement, back wages, separation pay (for Bongot), underpayment of salaries,
overtime pay, holiday pay, service incentive leave, and 13th month pay against MBMSI, Atty. Seril, PCCr, and
Bautista.

 In their complaints, they alleged that it was the school, not MBMSI, which was their real employer because (a)
MBMSI’s certification had been revoked; (b) PCCr had direct control over MBMSI’s operations; (c) there was no
contract between MBMSI and PCCr; and (d) the selection and hiring of employees were undertaken by PCCr.

 On the other hand, PCCr and Bautista contended that (a) PCCr could not have illegally dismissed the complainants
because it was not their direct employer; (b) MBMSI was the one who had complete and direct control over the
complainants; and (c) PCCr had a contractual agreement with MBMSI, thus, making the latter their direct employer.

 On September 11, 2009, PCCr submitted several documents before LA Ronaldo Hernandez, including releases,
waivers and quitclaims in favor of MBMSI executed by the complainants to prove that they were employees of
MBMSI and not PCCr.

RULING OF THE LABOR ARBITER

 After due proceedings, the LA handed down his decision, finding that (a) PCCr was the real principal employer of the
complainants ; (b) MBMSI was a mere adjunct or alter ego/labor-only contractor; (c) the complainants were regular
employees of PCCr; and (d) PCCr/Bautista were in bad faith in dismissing the complainants.

 The LA explained that PCCr was actually the one which exercised control over the means and methods of the work of
the petitioners, thru Atty. Seril, who was acting, throughout the time in his capacity as Senior Vice President for
Administration of PCCr, not in any way or time as the supposed employer/general manager or president of MBMSI.

RULING OF THE NLRC

 Not satisfied, the respondents filed an appeal before the NLRC. In its Resolution, dated February 11, 2011, the NLRC
affirmed the LA’s findings. Nevertheless, the respondents were excused from their liability by virtue of the releases,
waivers and quitclaims executed by the petitioners.

 In their motion for reconsideration, petitioners attached as annexes their affidavits denying that they had signed the
releases, waivers, and quitclaims. They prayed for the reinstatement in toto of the July 30, 2010 Decision of the

44
 LA.8 MBMSI/Atty. Seril also filed a motion for reconsideration 9 questioning the declaration of the NLRC that he was
solidarily liable with PCCr.

 On April 28, 2011, NLRC modified its February 11, 2011 Resolution by affirming the July 30, 2010 Decision10 of the
LA only in so far as complainants Ernesto B. Ayento and Eduardo B. Salonga were concerned. As for the other 17
complainants, the NLRC ruled that their awards had been superseded by their respective releases, waivers and
quitclaims.

RULING OF THE COURT OF APPEALS

 On September 16, 2011, the CA denied the petition and affirmed the two Resolutions of the NLRC, dated February
11, 2011 and April 28, 2011. The CA pointed out that based on the principle of solidary liability and Article 1217 11 of
the New Civil Code, petitioners’ respective releases, waivers and quitclaims in favor of MBMSI and Atty. Seril
redounded to the benefit of the respondents. The CA also upheld the factual findings of the NLRC as to the
authenticity and due execution of the individual releases, waivers and quitclaims because of the failure of petitioners
to substantiate their claim of forgery and to overcome the presumption of regularity of a notarized document.
Petitioners’ motion for reconsideration was likewise denied by the CA in its January 4, 2012 Resolution.

 Hence, this petition under Rule 45 challenging the CA Decision

ISSUE:

 Whether or not their claims against the respondents were amicably settled by virtue of the releases, waivers and
quitclaims which they had executed in favor of MBMSI.

- whether or not petitioners executed the said releases, waivers and quitclaims

- whether or not a labor-only contractor is solidarily liable with the employer.

RULING:

The petition fails.

The Releases, Waivers and Quitclaims are Valid

We noted that the individual quitclaims, waivers and releases executed by the complainants showing that they received their
separation pay from MBMSI were duly notarized by a Notary Public. Such notarization gives prima facie evidence of their due
execution. Further, said releases, waivers, and quitclaims were not refuted nor disputed by complainants herein, thus, we have
no recourse but to uphold their due execution.

A Labor-only Contractor is Solidarily Liable with the Employer

The issue of whether there is solidary liability between the labor-only contractor and the employer is crucial in this case. If a
labor-only contractor is solidarily liable with the employer, then the releases, waivers and quitclaims in favor of MBMSI will
redound to the benefit of PCCr. On the other hand, if a labor-only contractor is not solidarily liable with the employer, the latter
being directly liable, then the releases, waivers and quitclaims in favor of MBMSI will not extinguish the liability of PCCr.

XXX

The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by petitioners in favor of MBMSI
redounded to the benefit of PCCr pursuant to Article 1217 of the New Civil Code. The reason is that MBMSI is solidarily liable
with the respondents for the valid claims of petitioners pursuant to Article 109 of the Labor Code.

45
As correctly pointed out by the respondents, the basis of the solidary liability of the principal with those engaged in labor-only
contracting is the last paragraph of Article 106 of the Labor Code, which in part provides: "In such cases labor-only contracting,
the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him."

XXX

Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a
contractor for the performance of work for the employer does not thereby create an employer-employees relationship between
himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his
alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the
employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees
of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's
employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job
contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them.

A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e. "the person or intermediary" -
is considered "merely as an agent of the employer." The employer is made by the statute responsible to the employees of the
"labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor-only" contracting
exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the
owner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for
purposes of this Code, to prevent any violation or circumvention of any provision of this Code." The law in effect holds both the
employer and the "labor only" contractor responsible to the latter's employees for the more effective safeguarding of the
employees' rights under the Labor Code.

46
14.

BPI Employees Union-Davao city-FUBU vs. Bank of the Phil Islands et al.,

G.R. No. 174912, July 24, 2013

Facts:

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

The Union is of the position that the outsourcing of jobs included in the existing bargaining unit to BOMC is a breach of the
union-shop agreement in the CBA. In transferring the former employees of FEBTC to BOMC instead of absorbing them in BPI
as the surviving corporation in the merger, the number of positions covered by the bargaining unit was decreased, resulting in
the reduction of the Union’s membership. For the Union, BPI’s act of arbitrarily outsourcing functions formerly performed by
the Union members and, in fact, transferring a number of its members beyond the ambit of the Union, is a violation of the CBA
and interfered with the employees’ right to self organization.

Issues:

Whether or not BOMC is labor-only contracting

Ruling:

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

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

Thus, the subject functions appear to be not in any way directly related to the core activities of banks. They are functions in a
processing center of BPI which does not handle or manage deposit transactions. Clearly, the functions outsourced are not

47
inherent banking functions, and, thus, are well within the permissible services under the circular. The Court agrees with BPI
that D.O. No. 10 is but a guide to determine what functions may be contracted out, subject to the rules and established
jurisprudence on legitimate job contracting and prohibited labor-only contracting. Even if the Court considers D.O. No. 10 only,
BPI would still be within the bounds of D.O. No. 10 when it contracted out the subject functions. This is because the subject
functions were not related or not integral to the main business or operation of the principal which is the lending of funds
obtained in the form of deposits. From the very definition

of “banks” as provided under the General Banking Law, it can easily be discerned that banks perform only two (2) main or
basic functions – deposit and loan functions. Thus, cashiering, distribution and bookkeeping are but ancillary functions whose
outsourcing is sanctioned under CBP Circular No. 1388 as well as D.O. No. 10. Even BPIitself recognizes that deposit and
loan functions cannot be legally contracted out as they are directly related or integral to the main business or operation of
banks. The CBP's Manual of Regulations has even categorically stated and emphasized on the prohibition against outsourcing
inherent banking functions, which refer to any contract between the bank and a service provider for the latter to supply, or any
act whereby _the latter supplies, the manpower to service the deposit transactions of the former.

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

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to
be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal; or

ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee

48
15.

AVELINO S. ALILIN, TEODORO CALESA, CHARLIE HINDANG, EUTIQUIO GINDANG, ALLAN SUNGAHID, MAXIMO
LEE, JOSE G. MORA TO, REX GABILAN, AND EUGEMA L. LAURENTE, vs.PETRON CORPORATION,

GR No. 177592, June 9, 2014

Facts:

Petron is a domestic corporation engaged in the oil business. It owns several bulk plants in the country for receiving, storing
and distributing its petroleum products.

In 1968, Romualdo D. Gindang Contractor, which was owned and operated by Romualdo D. Gindang (Romualdo), started
recruiting laborers for fielding to Petron’s Mandaue Bulk Plant. When Romualdo died in1989, his son Romeo D. Gindang
(Romeo), through Romeo D. Gindang Services (RDG), took over the business and continued to provide manpower services to
Petron. On June 1, 2000, Petron and RDG entered into a Contract for Services 9 for the period from June 1, 2000 to May 31,
2002, whereby RDG undertook to provide Petron with janitorial, maintenance, tanker receiving, packaging and other utility
services in its Mandaue Bulk Plant. This contract was extended on July 31, 2002 and further extended until September 30,
2002. Upon expiration thereof, no further renewal of the service contract was done.

On October 16, 2002, petitioners Alilin, Calesa, Hindang, Gindang, Sungahid, Lee, Morato and Gabilan filed a Complaint for
illegal dismissal, underpayment of wages, damages and attorney’s fees against Petron and RDG on November 12, 2002.
Petitioner Laurente filed another Complaint for illegal dismissal, underpayment of wages, non-payment of overtime pay,
holiday pay, premium pay for holiday, rest day, 13th month pay, service incentive leave pay, allowances, separation pay,
retirement benefits, damages and attorney’s fees against Petron and RDG. Petitioners did not deny that RDG hired them and
paid their salaries. They, however, claimed that the latter is a labor-only contractor, which merely acted as an agent of Petron,
their true employer. They asseverated that their jobs, which are directly related to Petron’s business, entailed them to work
inside the premises of Petron using the required equipment and tools furnished by it and that they were subject to Petron’s
supervision. Claiming to be regular employees, petitioners thus asserted that their dismissal allegedly in view of the expiration
of the service contract between Petron and RDG is illegal.

Petron, on the other hand, maintained that RDG is an independent contractor and the real employer of the petitioners. It was
RDG which hired and selected petitioners, paid their salaries and wages, and directly supervised their work. Attesting to these
were two former employees of RDG and Petron’s Mandaue Terminal Superintendent whose joint affidavit and
affidavit, respectively, were submitted by Petron.

Issues:

Whether or not RDG is an independent contractor or not

Ruling:

No, RDG is a labor-only contractor. Petitioners have rendered work for Petron for a long period of time even before the service
contract was executed in 2000. The respective dates on which petitioners claim to have started working for Petron, as well as
the fact that they have rendered continuous service to it until October 16, 2002, when they were prevented from entering the
premises of Petron’s Mandaue Bulk Plant, were not at all disputed by Petron. In fact, Petron even recognized that some of the
petitioners were initially fielded by Romualdo Gindang, the father of Romeo, through RDG’s precursor, Romualdo D.Gindang
Contractor, while the others were provided by Romeo himself when he took over the business of his father in 1989. Hence,
while Petron was able to establish that RDG was financially capable as a legitimate contractor at the time of the execution of
the service contract in 2000, it nevertheless failed to establish the financial capability of RDG at the time when petitioners
actually started to work for Petron in 1968, 1979, 1981, 1987, 1990,1992 and 1993.

Secondly, Petron’s power of control over petitioner exists. [A] finding that a contractor is a ‘labor-only’ contractor is equivalent
to declaring that there is an employer-employee relationship between the principal and the employees of the supposed

49
contractor. In this case, the employer employee relationship between Petron and petitioners becomes all the more apparent
due to the presence of the power of control on the part of the former over the latter. One manifestation of the power of control
is the power to transfer employees from one work assignment to another. Here, Petron could order petitioners to do work
outside of their regular "maintenance/utility" job. Also, petitioners were required to report for work everyday at the bulk plant,
observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed by the
safety and security measures being implemented within the bulk plant. All these imply control. In an industry where safety is of
paramount concern, control and supervision over sensitive operations, such as those performed by the petitioners, are
inevitable if not at all necessary.

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

50
16.

Ampeloquio v. Jaka Distribution Inc.,

GR. No. 196936 July 2, 2014

Facts:

Petitioner Monchito R. Ampeloquio (Ampeloquio) is a reinstated employee of respondent Jaka Distribution, Inc.
(JAKA), formerly RMI Marketing Corporation (RMI).Previously, Ampeloquio had filed a complaint for illegal dismissal against
RMI before the National Labor Relations Commission (NLRC). Subsequently, the Labor Arbiter found RMI guilty of illegal
dismissal. On 6 August 2004, Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets within
Metro Manila, Shopwise Makati and Alabang. He received a daily wage of P252.00, without meal and transportation
allowance.On 4 April 2005, Ampeloquio was transferred outside of Metro Manila, to Lucena City and subsequently to San
Pablo City. At that time, he was receiving the same daily wage of ?252.00, without meal and transportation allowance.
Ampeloquio was given a monthly cost of living allowance (COLA) of P720.00.Ampeloquio requested for salary adjustment and
benefits retroactive to the date of his reinstatement, 6 August 2004, and payment of salary differential in the total amount of
P42,196.00. Ampeloquio wrote JAKA reiterating his request for salary adjustment and payment of benefits retroactive to his
reinstatement, and an increase from his previous request of salary differential which amounted to a total of
P180,590.00.Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a complaint for underpayment of
wages, COLA, non-payment of meal and transportation allowances

Ampeloquio seeks entitlement to underpayment or wage differential of P142.00, COLA differential of P500.00 a
month, meal allowance of P60.00 per day and average transportation allowance of P100.00 per day; that he called the
attention of [JAKA’s general manager], Mr. Ariel Villasenor about his concern on 16 March 2005 but to no avail although upon
second demand his ECOLA was increased to P1,200.00 per month starting 16 July 2006.

For their part, JAKA avers that it is engaged in the business of distribution of consumer goods; that Ampeloquio is
their only regular employee as merchandiser; that at the time of the filing of this case, Ampeloquio is still working in a
supermarket with a monthly salary of P7,985.00; that their other merchandiser[s] are outsourced from manpower agencies or
are seasonal employees hired during peak season; that the salary of Ampeloquiowas based on the minimum wage of P250.00
and ECOLA of P50.00 per day; that it is in the process of computing the wage distortion in the implementation of 2005 wage
increase of P25.00; that their exemption in the implementation of wage increase expired last 25 June 2006 prior to the filing of
this complaint; that they did not act on Ampeloquio’sdemand for money claims due to the pendency of this case.In their reply,
JAKA admits that Ampeloquio was reinstated in accordance with the Labor Arbiter’s decision in the illegal dismissal case; that
he received the same rate as that of his co-employees, hence there is no basis for Ampeloquio’s money claims. On the other
hand, Ampeloquiostressed the discrepancy and discrimination in the payment of wages which he allegedly suffered as he
received lower than that of his co-workers and to substantiate his arguments he submitted the payslips of his co-employees.

Issue:

Whether or not Ampeleloquio is correct when he ascertain that he was underpaid comparing his salary to the
contractual employees and if he was illegally dismissed?

Held:

The Supreme Court held that Ampeloquio is correct in asserting that he is a senior employee compared to the other
merchandisers whom he himself designates as casual or contractual merchandisers. He is likewise senior to other regular
employees subsequently hired by JAKA, specifically two regular messenger employees which Ampeloquio claims receive
wages higher than what he is receiving from JAKA.He is not entitled to the same terms and conditions of employment as that
which was offered to the other regular employees (not merchandisers) subsequently hired by JAKA.

JAKA’s decision to grant or withhold certain benefits to other employees is part of its management prerogative as a function of
an employer’s constitutionally protected right to reasonable return on investments.Ampeloquio cannot likewise compare his
wages to that received by “casual or contractual merchandisers” or merchandisers who are admittedly outsourced from
manpower agencies or those who are considered seasonal employees hired only during peak season when JAKA is in need of
extra merchandisers.To say the least, these merchandisers are not, strictly speaking, employees of JAKA, but of a service
provider company which has a service contract with JAKA. The merchandisers in this case simply perform the work at JAKA’s
51
outlets, wearing uniforms approved by JAKA but provided by the service company who is actually their employer. There is no
employer-employee relationship between JAKA and these merchandisers.

The existence of an independent and permissible contractor relationship is generally established by considering the following
determinants: whether the contractor is carrying on an independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control
and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the mode,
manner and terms of payment.

Section 8 of DOLE Department Order No. 10, series of 1997.

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

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof; and

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

In the same vein, seasonal employees hired only for the peak season do not have the same status as regular employees and
do not receive amounts considered as part of a compensation and benefits scheme for regular employees. These seasonal
employees only receive payment for work rendered during the period for which they were hired, i.e., peak season. The wages
and other monies seasonal employees may receive for the duration of their limited employment period constitute bulk or
wholesale payment for services rendered.Seasonal employment involves work or service that is seasonal in nature or lasting
for the duration of the season. Seasonal employees differ from those classified as regular employees, in that: (1) the employee
must be performing work or services that are seasonal in nature; and (2) he had been employed for the duration of the season.

Hencer, Ampeleloquiowas employed under circumstances far different from that of his other co-employees. Thus he is not
underpaid nor illegally dismissed.

52
17.

FVR Skills & Services Exponents Inc. vsSeva, et al

GR No. 200857, October 22, 2014

Facts:

The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and Services Exponents, Inc.
(petitioner), an independent contractor engaged in the business of providing janitorial and other manpower services to its
clients. As early as 1998, some of the respondents had already been under the petitioner's employ.On April 21, 2008,
the petitioner entered into a Contract of Janitorial Service (service contract) with Robinsons Land Corporation (Robinsons).
Both agreed that the petitioner shall supply janitorial, manpower and sanitation services to Robinsons Place Ermita Mall for a
period of one year -from January 1, 2008 to December 31, 2008.Pursuant to this, the respondents were deployed to
Robinsons.Halfway through the service contract, the petitioner asked the respondents to execute individual contracts which
stipulated that their respective employments shall end on December 31, 2008, unless earlier terminated.

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

The respondents responded to the termination of their employment by filing a complaint for illegal dismissal with the NLRC.
They argued that they were not project employees; they were regular employees who may only be dismissed for just or
authorized causes. The respondents also asked for payment of their unpaid wage differential, 13 th month pay differential,
service incentive leave pay, holiday pay and separation pay.

Issue:

Whether or not the petitioners are Regular Employees or Contractual Employees?

Held:

The respondents are regularemployees, not project employees.

Article 280 (now Article 294) of the Labor Code governs the determination of whether an employee is a regular or a
project employee. Under this provision, there are two kinds of regular employees, namely: (1) those who were engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who became regular after one year of service, whether continuous or broken, but only with respect to the activity
for which they have been hired.

We distinguish these two types of regular employees from a project employee, or one whose employment was fixed
for a specific project or undertaking, whose completion or termination had been determined at the time of engagement.

A careful look at the factual circumstances of this case leads us to the legal conclusion that the respondents are
regular and not project employees.
The primary standard in determining regular employment is the reasonable connection between the particular activity
performed by the employee and the employer's business or trade. This connection can be ascertained by considering the
nature of the work performed and its relation to the scheme of the particular business, or the trade in its entirety.

Guided by this test, we conclude that the respondents' work as janitors, service crews and sanitation aides,
arenecessary or desirable to the petitioner's business of providing janitorial and manpower services to its clients as an
independent contractor.

Also, the respondents had already been working for the petitioner as early as 1998. Even before the service
contract with Robinsons, the respondents were already under the petitioner's employ.They had been doing the same
type of work and occupying the same positions from the time they were hired and until they were dismissed in
January 2009. The petitioner did not present any evidence to refute the respondents' claim that from the time of their hiring

53
until the time of their dismissal, there was no gap in between the projects where they were assigned to. The petitioner
continuously availed of their services by constantly deploying them to its clients.

Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the petitioner's case, the contractor or
subcontractor is considered as the employer of the contractual employee for purposes of enforcing the provisions of the Labor
Code and other social legislation.

DO 18-02 grants contractual employees all the rights and privileges due a regular employee, including the following:
(a) safe and healthful working conditions; (b) labor standards such as service incentive leave, rest days, overtime pay,
holiday pay, 13th month pay and separation pay; (c) social security and welfare benefits; (d) self-organization, collective
bargaining and peaceful concerted action; and (e) security of tenure.29

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

54
18.

Fonterra Brand Phils. V. Largado, et al.

G.R. No. 205300, 18 March 2015

Facts:

Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of ZytronMarketing and Promotions Corp. (Zytron) for
the marketing and promotion of its milk and dairy products. Pursuant to the contract, Zytron provided Fonterra with trade
merchandising representatives (TMRs), including respondents Leonardo Largado (Largado) and Teotimo Estrellado
(Estrellado). The engagement of their services began on September 15, 2003 and May 27, 2002, respectively, and ended on
June 6, 2006.

On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract, effective June 5, 2006. Fonterra then
entered into an agreement for manpower supply with A.C. Sicat Marketing and Promotional Services (A.C. Sicat). Desirous of
continuing their work as TMRs, respondents submitted their job applications with A.C. Sicat, which hired them for a term of five
(5) months, beginning June 7, 2006 up to November 6, 2006.

When respondents' 5-month contracts with A.C. Sicat were about to expire, they allegedly sought renewal thereof, but were
allegedly refused. This prompted respondents to file complaints for illegal dismissal, regularization, non-payment of service
incentive leave and 13th month pay, and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.

Issues:

1. Whether or not Zytron and A.C.Sicat are labor-only contractors, making Fonterra the employer of herein
respondents; and

2. Whether or not respondents were illegally dismissed.

Ruling:

1. No, neither Zytron nor A.C. Sicat are labor-only contractors.

The termination of respondents' employment with Zytron was brought about by the cessation of their contracts with the
latter.By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is the
voluntary act of employees who are compelled by personal reasons to dissociate themselves from their employment, done
with the intention of relinquishing an office, accompanied by the act of abandonment.

Respondents voluntarily terminated their employment with Zytron by refusing to renew their employment contracts with the
latter, applying with A.C. Sicat, and working as the latter's employees, thereby abandoning their previous employment with
Zytron. Too, it is well to mention that for obvious reasons, resignation is inconsistent with illegal dismissal. This being the case,
Zytron cannot be said to have illegally dismissed respondents.

As regards respondents' employment with A.C. Sicat and its termination via nonrenewal of their contracts,it is proper to
dispose of the issue on A.C. Sicat's status as a job contractor first before resolving the issue on the legality of the cessation of
respondents' employment.

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

1. The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the
job, work or service on its own account and under its own responsibility according to its own manner and

55
 method, and free from the control and direction of the principal in all matters connected with the performance of
the work except as to the results thereof;

2. The contractor or subcontractor has substantial capital or investment; and

3. The agreement between the principal and contractor or subcontractor assures the contractual employees
entitlement to all labor and occupational safety and health standards, free exercise of the right to self-
organization, security of tenure, and social and welfare benefits.

On the other hand, contracting is prohibited when the contractor or subcontractor merely recruits, supplies or places workers
to perform a job, work or service for a principal and if any of the following elements are present, thus:

1. The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or
service to beperformed and the employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal; or DTAHEC

2. The contractor does not exercise the right to control over the performance of the work of the contractual
employee.

The evidence presented in the instant case sufficiently show that A.C. Sicat carries out its merchandising and promotions
business, independent of Fonterra's business. As such, A.C. Sicat is engaged in legitimate job contracting.

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

Foremost, respondents were fixed-term employees. As previously held by this Court, fixed-term employment
contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects
withpredetermined dates of completion; they also include those to which the parties by free choice have assigned a specific
date of termination. The determining factor of such contracts is not the duty of the employee but the day certainagreed upon
by the parties for the commencement and termination of theemployment relationship.

In the case at bar, it is clear that respondents were employed by A.C. Sicat asproject employees. Respondents, by accepting
the conditions of the contract with A.C. Sicat, werewell aware of and even acceded to the condition that their employment
thereatwill end on said pre-determined date of termination. They cannot now argue thatthey were illegally dismissed by the
latter when it refused to renew theircontracts after its expiration. This is so since the non-renewal of their contractsby A.C.
Sicat is a management prerogative, and failure of respondents to provethat such was done in bad faith militates against their
contention that they wereillegally dismissed.

56
19.

W.M. Manufacturing Inc. v. Dalag

G.R. No. 209418, 7 December 2015

Facts:

On January 3, 2010, petitioner, as client, and respondent Golden Rock, as contractor, executed a contract
denominated as "Service Agreement," In relation to the Service Agreement, Golden Rock, on April 26, 2010, engaged the
services of respondent Dalag as a factory worker to be assigned at petitioner's factory. For this purpose, respondents inked a
five-month Employment Contract for Contractual Employees (Employment Contract)

Notwithstanding the five-month duration stipulated in the contract, respondent Dalag would allege in his complaint for
illegal dismissal 6 that on August 7, 2010, one of WM MFG's security guards prevented him from going to his work station and,
instead, escorted him to the locker room and limited his activity to withdrawing his belongings therefrom. Having been denied
entry to his work station without so much as an explanation from management, Dalag claimed that he was illegally dismissed.
He further alleged that WM MFG and Golden Rock engaged in the illegal act of labor-only contracting based on the following
circumstances: that all the equipment, machine and tools that he needed to perform his job were furnished by WM MFG; that
the jobs are to be performed at WM MFG's workplace; and that he was under the supervision of WM MFG'steam leaders and
supervisors.

In their joint position paper, therein respondents argued that Dalag was not dismissed and that, on the contrary, it
was he who abandoned his work. They offered as proof WM MFG's memos addressed to Dalag, which ordered him to answer
within 24-hours the accusations relating to the following alleged infractions: gross negligence, qualified theft, malicious
mischief, incompetence, grave misbehavior, insubordination, dishonesty, and machine sabotageable, however, allegedly
refused to receive the memos, and instead turned his back on his superiors, informing them that he will no longer return, and
then walked away. And on that very same day, WM MFG, through a letter addressed to Golden Rock, informed the manpower
company of its intentionto exercise its right to ask for replacement employees under the Service Agreement. As per the letter,
WM MFG no longer needed Dalag's services.

The parties would later file their respective replies in support of the allegations and arguments raised in their position papers.

Issues:

1. Whether or not WM MFG and Golden Rock engaged in labor-only Contracting; and

2. Whether or not Dalag was illegally dismissed.

Ruling:

1. WM MFG and Golden Rock engaged in labor-only contracting.

There is "labor-only" contracting where the person supplying workers toan employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed
by such person are performing activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in
the same manner andextent as if the latter were directly employed by him.

Section 5 of DO 18-02 laid down the criteria in determining whether or not labor-only contracting exists between two parties,
as follows:

Section 5. Prohibition against labor-only contracting. — Labor-only contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and any of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to
be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal; or
57
ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

xxx xxx xxx

As to the presence of the confirmatory elements, Dalag draws our attention to (1) Golden Rock's lack of substantial capital,
coupled with the necessity and desirability of the job he performed in WM MFG; and (2) Golden Rock’s lack of control over the
employees it supplied WM MFG.

DO 18-02defines "substantial capital or investment" in the context of labor-only contracting as referring not only to a
contractor's financial capability, but also encompasses the tools, equipment, implements, machineries and work premises,
actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service
contracted out. Here, the Certificate of Registration may have prevented the presumption of labor-only contracting from
arising, but the evidence Dalagadduced was sufficient to overcome the disputable presumption that Golden Rock is an
independent contractor. To be sure, in performing his tasks, Dalag made use of the raw materials and equipment that WM
MFG supplied. He also operated the side-seal machine in the workplace of WM MFG, not of Golden Rock. With these
attendant circumstances, the Court rules that the first confirmatory element indubitably exists.

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

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

2. WM MFG dismissed Dalag for just cause, but did not comply with the procedural requirements.

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

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

58
Anent the conformity of Dalag's dismissal to procedural requirements,the cardinal rule in our jurisdiction is that the employer
must furnish the employee with two written notices before the termination of his employment can be effected: (1) the first
apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the
employee of the employer's decision to dismiss him. The twin notice rule is coupled with the requirement of a hearing, which is
complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.

In the case at bar, while petitioner submitted as evidence memos that it supposedly attempted to serve Dalag, there was no
proof that these were, indeed, received by the latter.

59
20.

DIAMOND FARMS, INC., vs. SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL)-WORKERS SOLIDARITY OF
DARBMUPCO/DIAMOND-SPFL, DIAMOND FARMS AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE
COOPERATIVE (DARBMUPCO), VOLTER LOPEZ, RUEL ROMERO, PATRICIO CAPRECHO, REY DIMACALI, ELESIO
EMANEL, VICTOR SINGSON, NILDA DIMACALI, PREMITIVO* DIAZ, RUDY VISTAL, ROGER MONTERO, JOSISIMO
GOMEZ and MANUEL MOSQUERA

G.R. Nos. 173254-55 & 173263, January 13, 2016

FACTS:

DFI (Diamond Farms Inc.) owned 800 hectares of Agricultural land. Due to the enactment of CARL or RA 6657, DFI was
forced to offer its land through a voluntary offer to sell to the government. Out of the 800 hectares, only about 600 hectares
was accepted by the government. Said land was then redistributed to the beneficiaries who were the very laborers who used
to work for DFI. The beneficiaries already tilling the distributed land formed a cooperative by the name of DARBMUPCO.
DARBMUPCO and DFI both entered into an agreement whereby DARBMUPCO was to produce high grade exportable
bananas and only sell them to DFI. DFI also agreed to shoulder the costs of packaging and irrigation.

Since DARBMUPCO was short on manpower, mainly because the members refused to work, DFI was forced to avail of the
services of respondent contractors. Out of this agreement, three separate cases arose and were consolidated before the CA.

The first case filed by SPFL, the contractor’s employees, was a petition for the conduct of a certification election. In this case,
the SOLE ultimately held that DFI was their employer. DFI appealed this decision up to the CA.

The second case was for underpayment of wages filed by SPFL against DARMUBPCO and DFI. Both DARMUPCO and DFI
allege that their SPFL’s true employers were the respondent contractors. This time, the NLRC adjudged both DARMUPCO
and DFI solidarily liable to pay for the unpaid wages. Both organizations jointly filed an appeal before the CA.

The third appeal stemmed out of the resolution of the SOLE in conducting the certification election. The SOLE ruled that the
election protest was premature due to the pendency of the first case filed by SPFL, because of this adverse decision, both DFI
and DARMUPCO appealed said decision.

The CA held that DFI was the statutory employer of the respondent workers. The CA observed that the respondent contractors
were supervised by DFI’s managers. Also the SOLE resolutions were consistent in finding that respondent contractors were
labor only contractors, therefore, DFI must necessarily be regarded as the statutory employers of the respondent workers. On
the second issue, the CA held that the SOLE decision on the election protest was final and executory in nature. Since the DFI
and DARBMUPCO appeal was not coupled with a motion to stay, the assailed decision had already become final and
executory.

ISSUE:

Who among the respondent contractors, DFI and DARBMUPCO were the employers of the respondent employees.

HELD:

The SC held that DFI was employer. As a general rule, a contractor is presumed to be engaged in labor – only contracting until
he proves that he has substantial capital in the form of investment, tools and the like. In this case, the SC emphasized the fact
that the party which alleges a legitimate labor contracting arrangement must substantiate such claim. DFI hardly presented
any evidence to prove that the respondent contractors had sufficient capital. To make matters worse for DFI, the respondent
contractors had already made judicial admissions that they were engaged in labor – only contracting. The respondent
contractors admitted before the SC that they did not have enough capital and that they were directly supervised by DFI’s
managers. These admissions, which were made in open court are binding on the party which makes them, therefore, the SC
held that respondent contractors were labor – only contractors.

The existence of an employer – employee relationship cannot be made subject to stipulation. Since DFI was the party that
really exercised and possessed the power of control over respondent workers, it must be regarded as the true employer. DFI
even admitted that it exercised control over the respondent contractors. With all of these facts taken together, the SC held that
the respondent contractors were merely agents of DFI and held that DFI was the true employer.

60
B.WORKER'S PREFERENCE

1.

Barayoga vs. Asset Privatization Trust

G.R. No. 160073, October 24, 2005

FACTS:

BISUDECO co farms workers union is composed of employees working in BUSIDECO, a plantation. APT (the Asset
Privatization Trust) on the other hand was created in pursuant to Proclamation Number 50 which mandated the identification of
non – performing assets of the National Government and their management and disposition.

BISUDECO had an outstanding obligation with PNB. In pursuant to Proclamation Number 50, Administrative Order 14 was
issued which authorized APT to hold the accounts of BISUDECO with PNB in trust. BISUDECO contracted the services of
Philsucor for the management of its business. Since BISUDECO was not able to pay off its debt with PNB, its mortgages were
foreclosed. APT bought these properties at public auction, being the sole bidder.

Meanwhile, the BISUDECO co farms union filed a complaint for underpayment of wages. By this time, APT had already sold
the properties to BAPCI. BAPCI operated the plantation under the tradename Pensumil. The union then filed an amended
complaint which impleaded Pensumil and APT as respondents. The amended complaint alleged that Philsucor refused to
bring on laborers from the petitioner union and that it even hired other laborers to take the place of the allegedly illegally
dismissed union workers.

The Labor Arbiter ordered APT to pay the unpaid wages and monetary benefits to the union workers. On appeal, the NLRC
ruled that APT was liable to pay for the unpaid wages and monetary benefits. The NLRC reasoned out that APT should have
treated said unpaid wages as a lien over the properties of BISUDECO before they sold the same to BAPCI. On further appeal,
the CA reversed the NLRC ruling and held that APT could not be held liable to pay for the unpaid wages and monetary
benefits since it was not the employer of the union workers, but rather, a mere mortgagee of the properties of BISUDECO.

ISSUE:

Whether or not APT may be held liable to pay for petitioner’s money claims.

HELD:

The SC emphasized that AO 14 only transferred the credit of PNB as against BISUDECO to APT. APT did not own any of the
mortgaged properties, it was merely a secured creditor. BISUDECO’s contracting arrangement with Philsucor was done prior
to APT’s purchase of the BISUDECO’s mortgaged property at public auction. So clearly, APT was really only a secured
creditor at the time the alleged illegal dismissal took place.

The SC also emphasizes that the duties and liabilities of an employer are not automatically transferred upon purchase. There
must be a stipulation which expressly stipulates that the transferee is to assume the duties and liabilities of the employer. In
the case at bar, no such provision was stipulated by and between BISUDECO and APT. This rule is largely premised on the
fact that labor contracts are obligation in personam, they are only binding between the parties.

To make matter worse for the petitioner union workers, under the principle of absorption, the purchasing company is not
obligated to absorb the separated workers of the purchased enterprise. At most, the purchasing company may only give
preference to qualified workers who in their judgment is required for the operation of its business.

In sum, the SC holds that for a transferee to assume the liabilities of the previous owner, either of the two conditions must be
present. Either the transferee or buyer unequivocally assumes them, or the sale is made in bad faith. Since neither of the two
conditions were not present in the case at bar, APT cannot be made liable for the monetary claims of the petitioners.

61
2.

Philippine Airlines, Incorporated vs. Zamora

G. R. No. 166996, February 06, 2007

FACTS:

Respondent Zamora had been in the employ of petitioner PAL since 9 February 1981 when the former was hired as a Cargo
Representative at petitioner PAL’s Import Operations Division. On 13 November 1995, respondent Zamora was dismissed
from service for having been found by petitioner PAL’s management to be liable for insubordination, neglect of customer,
disrespect for authority and absence without official leave.

On 12 March 1996, respondent Zamora filed a complaint against petitioners PAL and Francisco X. Yngente IV before the
NLRC for illegal dismissal, unfair labor practice, non-payment of wages, damages and attorney’s fees. NLRC found that the
dismissal was illegal and ordered to immediately reinstate complainant Bernardin J. Zamora to his former position as Cargo
Representative at the Import Operations Division of respondent PAL without loss of seniority rights and other privileges and to
pay him back salaries and backwages beginning December 15, 1995 until his actual reinstatement, inclusive of allowances
and other benefits and increases thereto.

Claiming that the 26 July 1999 Decision of the NLRC respecting his reinstatement and the payment of his backwages and
other monetary benefits have become final and executory, respondent Zamora, through counsel, wrote petitioner PAL
demanding the execution thereof. PAL now prayed for the reversal of said Order as well as for the suspension of the
proceedings in the subject case considering that petitioner PAL, was, at that time, undergoing rehabilitation of the Securities
and Exchange Commission (SEC) appointing a permanent rehabilitation receiver for petitioner PAL in SEC Case entitled “In
the Matter of the Petition for the Approval of Rehabilitation Plan and for Appointment of a Rehabilitation Receiver.”

ISSUE: Whether or not the proceedings in the instant case should have suspended on account of the appointment of its
permanent rehabilitation receiver.

Contentions: Petitioners PAL, et al. are of the view that the proceedings in the instant case should have been suspended on
account of the appointment of its permanent rehabilitation receiver. They posit that the suspension automatically applies on all
stages of the proceedings including enforcement of final and executory judgments. The proceedings shall remain suspended
until the receivership shall have been ordered lifted by the Securities and Exchange Commission. To date, PAL is still under
permanent Rehabilitation Receiver.

Respondent Zamora, in his Memorandum, opines that “contrary to the noble purpose of a receivership, that is, preservation of
the distressed company’s assets for ultimate distribution to all creditors and affected parties, petitioner’s Amended and
Restated Rehabilitation Plan (citation omitted) is actually for the restructuring and payment of petitioner’s debts to certain
creditors, excluding respondent and other employee-claimants.”

HELD:

Yes. The relevant law dealing with the suspension of actions for claims against corporations is Presidential Decree No. 902-A,
as amended. Particularly, Section 6(c) which reads:

62
SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following:

c) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the
Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in
order to preserve the rights of the parties-litigants and /or protect the interest of the investing public and creditors: x x x
Provided, finally, That upon appointment of a management committee, the rehabilitation receiver, board or body, pursuant to
this Decree, all actions for claims against corporations, partnerships or associations under management or receivership
pending before any court, tribunal, board or body shall be suspended accordingly.

The term “claim,” as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers “to debts or demands of a pecuniary
nature. It means ‘the assertion of a right to have money paid.’” The reason for suspending actions for claims against the
corporation is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from
any judicial or extra-judicial interference that might unduly hinder or prevent the “rescue” of the debtor company. To allow
such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose
time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its
restructuring and rehabilitation.

The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for
actions “shall be suspended accordingly.” No exception in favor of labor claims is mentioned in the law. Since the law makes
no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. In Rubberworld
(Phils.), Inc. v. NLRC, we held that worker’s claims before the NLRC and labor arbiters are included among the actions
suspended upon the placing under receivership of the employer-corporations.

Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension – what
are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the
execution stage after the case had become final and executory.

The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces
all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are
suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage,
labor cases, collection suits or any other claims of a pecuniary nature.

63
3.

Phil. Airlines vs Phil. Airlines Employees Association 525 scra 29 (2007) citing Rubber World vs NLRC

305 scra 721 (1999)

PHILIPPINE AIRLINES vs. PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION

[525 SCRA 29 June 19, 2007]

Facts:

The present petition arose from a labor complaint filed by respondent PALEA against petitioners PAL and one Mary Anne del
Rosario, Director of Personnel of petitioner PAL, on 1 March 1989. The labor complaint charged both petitioners with unfair
labor practice for the alleged non-payment of the 13th month pay of petitioner PAL’s employees who had not been regularized
as of the 30 of April 1988, allegedly in contravention of the Collective Bargaining Agreement (CBA) entered into by petitioner
PAL and respondent PALEA.

On 6 February 1987, petitioner PAL and respondent PALEA entered into a CBA covering the period of 1986-1989.

Respondent PALEA assailed the implementation of the guideline on the ground that all employees of PAL, regular or non-
regular, must be paid their 13th month pay. In fact, in a letter dated 16 December 1988, respondent PALEA, through Herbert
C. Baldovino informed petitioner PAL that there were several employees who failed to receive their 13th Month Pay as of the
date of the correspondence.

In response thereto, petitioner PAL informed respondent PALEA that rank and file employees who were regularized after 30
April 1988 were not entitled to the 13th month pay as they were already given their Christmas bonuses on 9 December 1988
per the Implementing Rules of Presidential Decree No. 851.

Disagreeing with petitioner PAL, respondent PALEA filed a labor complaint for unfair labor practice against petitioner PAL
before the NLRC on 1 March 1989. The complaint interposed that “the cut-off period for regularization should not be used as
the parameter for granting 13th month pay considering that the law does not distinguish the status of employment instead the
law covers all employees.”

In its Position Paper submitted before the Labor Arbiter, petitioner PAL countered that those rank and file employees who were
not regularized by 30 April of a particular year are, in principle, not denied their 13th month pay considering they receive said
mandatory bonus in the form of the Christmas Bonus; that the Christmas Bonus given to all its employees is deemed a
compliance with Presidential Decree No. 851 and the latter’s implementing rules; and that the foregoing has been the practice
formally adopted in previous CBAs’ as early as 1970.

Issue:

Whether or not the Court of Appeals committed reversible error in affirming the order of the NLRC for the payment of the 13th
month pay or mid-year bonus to its employees regularized after 30 April 1988.

64
SC Ruling:

In a Resolution dated 19 June 2007, We resolved to suspend the proceedings of the case at bar in view of the on-going
rehabilitation of petitioner PAL as mandated by the Securities and Exchange Commission. On 28 September 2007, however,
the SEC issued an Order granting petitioner PAL’s request to exit from rehabilitation after successfully stabilizing its financial
operations. Hence, the suspension earlier issued by this Court is hereby lifted, making the present Petition ripe for resolution.

A cursory reading of the 1986-1989 CBA of the parties herein will instantly reveal that Art. I, Sec. 3 of said agreement made its
provision applicable to all employees in the bargaining unit. The particular section specifically defined the scope of application
of the CBA, thus:

Section 3 – Application. All the terms and conditions of employment of employees within the bargaining unit are embodied in
this Agreement, and the same shall govern the relationship between the Company and such employees. On the other hand, all
such benefits and/or privileges as are not expressly provided for in this Agreement but which are now being accorded in
accordance with the PAL Personnel Policies and Procedures Manual, shall be deemed also part and parcel of the terms and
conditions of employment, or of this Agreement.

Without distinguishing between regular and non-regular employees. As succinctly put by respondent PALEA in its
Memorandum: All employees in PAL are entitled to the same benefit as they are within the same collective bargaining unit and
the entitlement to such benefit spills over to even non-union members.

It is a well-settled doctrine that the benefits of a CBA extend to the laborers and employees in the collective bargaining unit,
including those who do not belong to the chosen bargaining labor organization. Otherwise, it would be a clear case of
discrimination.

Hence, to be entitled to the benefits under the CBA, the employees must be members of the bargaining unit, but not
necessarily of the labor organization designated as the bargaining agent. A “bargaining unit” has been defined as a group of
employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest
of all the employees, consistent with equity to the employer, indicates to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law. There is no showing that the non-regular status of
the concerned employees by said cut-off date sufficiently distinguishes their interests from those of the regular employees so
as to exclude them from the collective bargaining unit and the benefits of the CBA.

Having ruled that the benefits provided by the subject CBA are applicable even to non-regular employees who belong to the
bargaining unit concerned, the next and crucial query to be addressed is whether the 13th month pay or mid- year bonus can
be equated to the Christmas bonus.

As far as non-regular employees are concerned, petitioner PAL alleges that their 13th month pay shall be the same as their
Christmas bonus and will be paid according to the terms governing the latter.

We do not agree. From the facts of the present Petition, it is crystal clear that petitioner PAL is claiming an exemption from
payment of the 13th month pay or mid-year bonus provided in the CBA under the guise of paying the Christmas bonus which it
claims to be the equivalent of the 13th month pay under Presidential Decree No. 851.

65
Presidential Decree No. 851 mandates that all employers must pay all their employees receiving a basic salary of not more
than P1,000.00 a month, regardless of the nature of the employment, a 13th month pay not later than 24 December of every
year.

While employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of
the issuance of Presidential Decree No. 851 are already exempted from the mandatory coverage of said law, petitioner PAL
cannot escape liability in this case by virtue thereof.

It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its employees 1) the 13th month pay or the mid-
year bonus, and 2) the Christmas bonus. The 13th month pay, guaranteed by Presidential Decree No. 851, is explicitly
covered or provided for as the mid-year bonus in the CBA, while the Christmas bonus is evidently and distinctly a separate
benefit. Petitioner PAL may not be allowed to brush off said distinction, and unilaterally and arbitrarily declare that for non-
regular employees, their Christmas bonus is the same as or equivalent to the 13th month pay.

Presidential Decree No. 851 mandates the payment of the 13th month pay to uniformly provide the low-paid employees with
additional income. It but sets a minimum requirement that employers must comply with. It does not intend, however, to
preclude the employers from voluntarily granting additional bonuses that will benefit their employees. A bonus is an amount
granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's business and
made possible the realization of profits. It is an act of generosity of the employer for which the employee ought to be thankful
and grateful. It is also granted by an enlightened employer to spur the employee to greater efforts for the success of the
business and realization of bigger profits. We deem that the Christmas bonus in this case is of this nature, although, by virtue
of its incorporation into the CBA, it has become more than just an act of generosity on the part of petitioner PAL, but a
contractual obligation it has undertaken.

The inclusion of a provision for the continued payment of the Christmas bonus in the 1986-1989 CBA between respondent
PALEA and petitioner PAL contradicts the company’s claim that the grant of such benefit was intended to be credited as
compliance with the statutory mandate to give the 13th month pay. Memorandum Order No. 28, extending Presidential Decree
No. 851 to all employees regardless of the amount of their monthly salaries, was issued on 13 August 1986. As early as said
date, therefore, petitioner PAL was already fully aware that it was lawfully compelled to accord all its employees a 13th month
pay. Accordingly, if petitioner PAL truly intended that the Christmas bonus be treated as the “equivalent” of the 13th month pay
required by law, then said intention should have been expressly declared in their 1986-1989 CBA, or the separate provision
therein on the Christmas bonus should have been removed because it would only be superfluous.

In the case under consideration, the provision for the payment of the Christmas bonus, apart from the 13th month pay, was
incorporated into the 1986-1989 CBA between respondent PALEA and petitioner PAL without any condition. The Christmas
bonus, payable in December of every year, is distinguished from the 13th month pay, due yearly in

May, for which reason it was denominated as the mid-year bonus. Such being the case, the only logical inference that could
be derived therefrom is that petitioner PAL intended to give the members of the bargaining unit, represented by respondent
PALEA, a Christmas bonus over and above its legally mandated obligation to grant the 13th month pay.

The non-regular rank and file employees of petitioner PAL as of 30 April 1988, are not actually seeking more benefits than
what the other member-employees of the same bargaining unit are already enjoying. They are only requesting that all
members of the bargaining unit be treated equally and afforded the same privileges and benefits as agreed upon between
respondent PALEA and petitioner PAL in the CBA.

66
A collective bargaining agreement refers to a negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all other
contracts, the parties to a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties, and compliance therewith is mandated by the express policy of the law.

67
4.

Garcia vs Phil. Airlines

GR No. 164856,January 20, 2009

FACTS:

Philippine Airlines filed a case against its employees –herein petitioners for allegedly caught in the act of sniffing shabu when a
team of company security personnel and law enforcers raided the PAL Technical Center’s Toolroom Section.

After due notice, PAL dismissed petitioner for transgressing company’s Code of Discipline prompting them to file a Complaint
for illegal dismissal which the Labor Arbiter (LA) in its decision ruled on their favor ordering PAL to immediately comply with
the reinstatement aspect of the decision.

Prior to the judgment, SEC placed PAL under Interim Rehabilitation Receiver who subsequently replaced by Permanent
Rehabilitation Receiver. On appeal, NLRC reversed said decision and dismissed petitioner’s complaint for lack of merit.
Subsequently, LA issued a Writ of Execution respecting the reinstatement aspect of his decision. Respondent filed an Urgent
Petition for Injunction with the NLRC. The NLRC affirmed the validity of the Writ and the Notice issued by LA but suspended
and referred the action to the Rehabilitation Receiver for appropriate action.

On appeal, the appellate court partially granted the petition and effectively reinstated the NLRC resolution insofar as it
suspended the proceedings. By manifestation, respondent informed the Court that SEC issued an Order granting its request
to exit from rehabilitation proceedings.

ISSUE:

Whether or not petitioner may collect their wages during the period between the LA’s Order of reinstatement pending appeal
and the NLRC decision overturning that of the LA, now that PAL has exited from rehabilitation proceedings.

HELD:

A dismissed employee whose case was favorably decided by the LA is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial upon the LA to implement
the order of reinstatement and it is mandatory on the employer to comply therewith.

The Court reaffirms the prevailing principle that even if the order of reinstatement of the LA is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court. It settles the view that the LA’s order of reinstatement is immediately executory and the
employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to
reinstate them in the payroll, and that filing to exercise the options in the alternative, employer must pay the employee’s
salaries.

When reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the
dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a
judicially monitored state of being resuscitated in order to survive.

68
C. ATTORNEY'S FEES & APPEARANCE OF LAWYERS

1.

VIRGILIO SAPIO vs. UNDALOC CONSTRUCTION

G.R. No. 155034, May 22, 2008

FACTS:

The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for
illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single
proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City. Petitioner had been employed
as watchman from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was assigned to
was already finished, he being allegedly a project employee. But petitioner asserted that he was a regular employee having
been engaged to perform works which are "usually necessary or desirable" in respondents' business.

ISSUES:

(1) Whether or not the petitioner is a project employee and

(2) whether or not he is entitled to salary differential apart from attorney’s fees.

HELD:

That petitioner was a project employee became a non-issue beginning with the decision of the Labor Arbiter. Contested still is
his entitlement to salary differential, apart from attorney's fees. With regards to this issue, the court said that the conclusion of
the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. The claim that
the December 1995 payroll sheet was written in pencil and was thus rendered it prone to alterations or erasures is clearly non
sequitur. The same is true with respect to the typewritten payroll sheets. In fact, neither the Labor Arbiter nor the NLRC found
any alteration or erasure or traces thereat, whether on the pencil-written or typewritten payroll sheets. Indeed, the most minute
examination will not reveal any tampering. Furthermore, if there is any adverse conclusion as regards the December 1995
payroll sheet, it must be confined only to it and cannot be applied to the typewritten payroll sheets.

Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll, being entries
in the course of business, enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. Hence, while
as a general rule, the burden of proving payment of monetary claims rests on the employer, when fraud is alleged in the
preparation of the payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and
convincing evidence in support of his claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to overcome the
disputable presumption of regularity.

While we adhere to the position of the appellate court that the "tendency" to alter the entries in the payrolls was not
substantiated, we cannot however subscribe to the total deletion of the award of salary differential and attorney's fees, as it so
ruled. The award of attorney's fees is warranted under the circumstances of this case. Thus, the petition is partially granted.
Petitioner is awarded the salary differential in the reduced amount of P13,156.00 and respondents are directed to pay the
same, as well as ten percent (10%) of the award as attorney's fees.

69
2.

Atty. Ortiz v San Miguel Corp.

G.R. No. 151983-84, July 31, 2008

FACTS:

Petitioner is a member of the Philippine Bar who represented the complainants in NLRC Cases No. V-0255-94 and No. V-
0068-95 instituted against herein private respondent San Miguel Corporation sometime in 1992 and 1993.

Private respondent, on the other hand, is a corporation duly organized and existing under and by virtue of the laws of the
Republic of the Philippines. It is primarily engaged in the manufacture and sale of food and beverage particularly beer
products. The complainants in NLRC Cases No. V-0255-94 and No. V-0068-95 were employees at private respondent’s Sales
Offices in the provinces.

In, NLRC Case No. V-0255-94 (Aguirre Cases), the NLRC awarded attorney’s fees equivalent to 10% of the monetary award
or in the amount of P619,795.28. Also, in NLRC Case No. V-0068-95 (Toquero Case), the NLRC also awarded attorney’s fees
of 10% of the total monetary award or P198,296.95.

While the private respondent’s Petitions for Certiorari were pending before the Court of Appeals, all but one of the remaining
complainants in the Aguirre and Toquero Cases appeared on various dates before Labor Arbiters Gulmatico and Drilon, and in
the presence of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim in favor of private respondent. Based
on the Deeds they executed, the complainants agreed to settle their claims against private respondent for amounts less than
what the NLRC actually awarded. Private respondent withheld 10% of the total amount agreed upon by the parties in the said
Deeds as attorney’s fees and handed it over to petitioner.

Petitioner filed this present Petition for Review on his own behalf, docketed as G.R. No. 151983-84, praying that this Court
grant him attorney’s fees equivalent to those awarded by the NLRC in the Aguirre and Toquero Cases.

Petitioner alleges that the Decision of the appellate court was prejudicial only insofar as it failed to grant 10% attorney’s fees
based on the monetary and economic awards adjudged by the NLRC in its Decisions in the Aguirre and Toquero Cases.

ISSUE/S:

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

(2) Whether or not petitioner is a real party in interest in the case

RULING:

(1) Petitioner is entitled to the 10% of the amounts actually paid to his clients, the complainants who signed the Deeds of
Release, Waiver and Quitclaim.

Article 111 of the Labor Code, as amended, specifically provides:

ART. 111. ATTORNEY’S FEES. - (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney’s
fees equivalent to ten percent of the amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the
wages, attorney’s fees which exceed ten percent of the amount of wages recovered. (Emphasis supplied.)

Based on the foregoing, the attorney’s fees awarded by the NLRC in its Decisions in the Aguirre and Toquero Cases pertain to
the complainants, petitioner’s clients, as indemnity for damages; and not to petitioner as compensation for his legal services.

70
Records show that the petitioner neither alleged nor proved that his clients, the complainants, willingly agreed that the award
of attorney’s fees would accrue to him as an additional compensation or part thereof.

What the complainants explicitly agreed to in their individual Deeds of Release, Waiver, and Quitclaim was that the 10%
attorney’s fees of the petitioner shall be deducted from the amount of the gross settlement.

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

(2) No, petitioner is not a real party in interest.

It is elementary that it is only in the name of a real party in interest that a civil suit may be prosecuted.

In the case at bar, it is beyond cavil that the petitioner is not the real party in interest; hence, he cannot file this Petition to
recover the attorney’s fees as adjudged by the NLRC in its Decisions dated 21 July 1995 and 25 July 1995 in
the Aguirre and Toquero Cases, respectively. To reiterate, the award of attorney’s fees pertain to the prevailing parties in the
NLRC cases, namely, the complainants, all but one of whom no longer pursued their complaints against private respondent
after executing Deeds of Release, Waiver and Quitclaim. Not being the party to whom the NLRC awarded the attorney’s fees,
neither is the petitioner the proper party to question the non-awarding of the same by the appellate court.

If petitioner earnestly believes that the amounts he already received are grossly deficient, considering the substantial time and
efforts he and his assistant lawyers invested, as well as the personal money he expended for the prosecution of complainants’
cases for more than seven or eight years, then petitioner’s remedy is not against the private respondent, but against his own
clients, the complainants.

71
3.

Masmud v National Labor Relations Commission (NLRC)

G.R. No. 183385, February 13, 2009

FACTS:

On July 9, 2003, Evangelina Masmud’s (Evangelina) husband, the late Alexander J. Masmud (Alexander), filed a
complaintagainst First Victory Shipping Services and Angelakos (Hellas) S.A. for non-payment of permanent disability
benefits, medical expenses, sickness allowance, moral and exemplary damages, and attorney’s fees. Alexander engaged the
services of Atty. Rolando B. Go, Jr. (Atty. Go) as his counsel.

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

On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary claims of Alexander. Alexander’s
employer filed an appeal before the National Labor Relations Commission (NLRC). During the pendency of the proceedings
before the NLRC, Alexander died. After explaining the terms of the lawyer’s fees to Evangelina, Atty. Go caused her
substitution as complainant. On April 30, 2004, the NLRC rendered a Decision dismissing the appeal of Alexander’s employer.

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

On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20 to Evangelina. Out
of the said amount, Evangelina paid Atty. Go the sum ofP680,000.00.

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

ISSUE:

Whether Atty. Go’s claim for attorney’s fees of 40% of the total monetary award was null and void based on Article 111 of the
Labor Code.

RULING: No, Atty. Go’s claim for attorney’s fees is valid.

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

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

The retainer contract between Atty. Go and Evangelina provides for a contingent fee. The contract shall control in the
determination of the amount to be paid, unless found by the court to be unconscionable or unreasonable.

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

72
4.

KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA MWC-EAST ZONE UNION and EDUARDO
BORELA vs. MANILA WATER COMPANY, INC.

G.R. No. 174179. November 16, 2011

Facts:

The Union is the duly-recognized bargaining agent of the rank-and-9le employees of the respondent Manila Water
Company, Inc. (Company) while Borela is the Union President. On February 21, 1997, the Metropolitan Waterworks and
Sewerage System (MWSS) entered into a Concession Agreement (Agreement) with the Company to privatize the operations
of the MWSS. Article 6.1.3 of the Agreement provides that "the Concessionaire shall grant its employees benefits no less
favorable than those granted to MWSS employees at the time of [their] separation from MWSS." Among the benefits enjoyed
by the employees of the MWSS were the amelioration allowance (AA) and the cost-of-living allowance (COLA).

The payment of the AA and the COLA was discontinued pursuant to Republic Act No. 6758, otherwise known as the
"Salary Standardization Law," which integrated the allowances into the standardized salary. 9 Nonetheless, in 2001, the Union
demanded from the Company the payment of the AA and the COLA during the renegotiation of the parties' Collective
Bargaining Agreement (CBA). The Company initially turned down this demand, however, it subsequently agreed to an
amendment of the CBA on the matter.

Thereafter, the Company integrated the AA into the monthly payroll of all its employees. The Company, however, did
not subsequently include the COLA since the Commission on Audit disapproved its payment because the Company had no
funds to cover this benefit. As a result, the Union and Borela filed a complaint against the Company for payment of the AA,
COLA, moral and exemplary damages, legal interest, and attorney's fees before the National Labor Relations Commission
(NLRC).

The NLRC awarded 10% attorney’s fees among others to petitioners. However, the Company pointed out that the
award of ten percent (10%) attorney's fees to the petitioners is already provided for in their December 19, 2003 Memorandum
of Agreement (MOA) which mandated that attorney's fees shall be deducted from the AA and CBA receivables.

The CA reversed the decision.

Issue:

Whether or not the award of attorney’s fees is already covered under the MOA.

Ruling: No.

The award cannot be taken to mean an additional grant of attorney's fees, in violation of the ten percent (10%) limit
under Article 111 of the Labor Code since it rests on an entirely different legal obligation than the one contracted under the
MOA. Simply stated, the attorney's fees contracted under the MOA do not refer to the amount of attorney's fees awarded by
the NLRC; the MOA provision on attorney's fees does not have any bearing at all to the attorney's fees awarded by the NLRC
under Article 111 of the Labor Code.

There are two commonly accepted concepts of attorney's fees — the ordinary and extraordinary.

In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal
services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be
assessed.

In its extraordinary concept, attorney's fees are deemed indemnity for damages ordered by the court to be paid by the
losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the Civil Code,
specifically in its paragraph on actions for recovery of wages, and is payable not to the lawyer but to the client, unless the
client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of compensation.

Article 111 is an exception to the declared policy of strict construction in the award of attorney's fees. Although an
express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the
employer acted maliciously or in bad faith when it withheld the wages.

73
5.

CZARINA T. MALVAR vs. KRAFT FOOD PHILS., INC.

G.R. No. 183952. September 9, 2013.

Facts:

The case initially concerned the execution of a final decision of the Court of Appeals (CA) in a labor litigation, but has
mutated into a dispute over attorney's fees between the winning employee and her attorney after she entered into a
compromise agreement with her employer under circumstances that the attorney has bewailed as designed to prevent the
recovery of just professional fees.

Malvar filed a complaint for illegal suspension and illegal dismissal against KFPI and Bautista in the National Labor
Relations Commission (NLRC). The Labor Arbiter found and declared her suspension and dismissal illegal, and ordered her
reinstatement, and the payment of her full backwages, inclusive of allowances and other benefits, plus attorney’s fees.

NLRC and CA affirmed the decision of the Labor Arbiter. After the judgment in her favor became final and executory
on March 14, 2006, Malvar moved for the issuance of a writ of execution but the execution failed due to questionable
computation of the award. Malvar requested for the 2nd issuance of the writ of execution and was partially complied with but
with protest on the part of Kraft by filing a TRO for further execution since the computation is incorrect. CA ruled in favor of
Kraft. Thus, Malvar appealed. While her appeal was pending in this Court, Malvar and the respondents entered into a
compromise agreement.

Thereafter, Malvar filed an undated Motion to Dismiss/Withdraw Case,16 praying that the appeal be immediately
dismissed/withdrawn in view of the compromise agreement, and that the case be considered closed and terminated.

Before the Court could act on Malvar’s Motion to Dismiss/Withdraw Case, the Court received on February 15, 2011 a
so-called Motion for Intervention to Protect Attorney’s Rights.

The Intervenor indicated that Malvar’s precipitate action had baffled, shocked and even embarrassed the Intervenor,
because it had done everything legally possible to serve and protect her interest. It added that it could not recall any instance
of conflict or misunderstanding with her, for, on the contrary, she had even commended it for its dedication and devotion to her
case. According to the Intervenor, it was certain that the compromise agreement was authored by the respondents to evade a
possible loss of P182,000,000.00 or more as a result of the labor litigation, but considering the Intervenor’s interest in the case
as well as its resolve in pursuing Malvar’s interest, they saw the Intervenor as a major stumbling block to the compromise
agreement that it was then brewing with her. Obviously, the only way to remove the Intervenor was to have her terminate its
services as her legal counsel. This prompted the Intervenor to bring the matter to the attention of the Court to enable it to
recover in full its compensation based on its written agreement with her.

Opposing the Motion for Intervention,28 Malvar stresses that there was no truth to the Intervenor’s claim to defraud it
of its professional fees; that the Intervenor lacked the legal capacity to intervene because it had ceased to exist after Atty.
Marwil N. Llasos resigned from the Intervenor and Atty. Richard B. Dasal became barred from private practice upon his
appointment as head of the Legal Department of the Small Business Guarantee and Finance Corporation, a government
subsidiary; and that Atty. Llasos and Atty. Dasal had personally handled her case.

Malvar adds that even assuming, arguendo, that the Intervenor still existed as a law firm, it was still not entitled to
intervene for the following reasons, namely: firstly, it failed to attend to her multiple pleas and inquiries regarding the case, as
when communications to the Intervenor through text messages were left unanswered; secondly, maintaining that this was a
justifiable cause to dismiss its services, the Intervenor only heeded her repeated demands to withdraw from the case when
Atty. Dasal was confronted about his appointment to the government subsidiary; thirdly, it was misleading and grossly
erroneous for the Intervenor to claim that it had rendered to her full and satisfactory services when the truth was that its
participation was strictly limited to the preparation, finalization and submission of the petition for review with the Supreme
Court; and finally, while the Intervenor withdrew its services on October 5, 2009, the compromise agreement was executed
with the respondents on December 9, 2010 and notarized on December 14, 2010, after more than a year and two months,
dispelling any badge of bad faith on their end.

74
Issue:

Whether or not the Motion for Intervention to protect attorney’s rights can prosper, and, if so, how much could it
recover as attorney’s fees.

Ruling: Yes.

A compromise agreement is a contract, whereby the parties undertake reciprocal obligations to avoid litigation, or put
an end to one already commenced. The client may enter into a compromise agreement with the adverse party to terminate the
litigation before a judgment is rendered therein. If the compromise agreement is found to be in order and not contrary to law,
morals, good customs and public policy, its judicial approval is in order.33 A compromise agreement, once approved by final
order of the court, has the force of res judicata between the parties and will not be disturbed except for vices of consent or
forgery.

A client has an undoubted right to settle her litigation without the intervention of the attorney, for the former is
generally conceded to have exclusive control over the subject matter of the litigation and may at any time, if acting in good
faith, settle and adjust the cause of action out of court before judgment, even without the attorney’s intervention.

It is important for the client to show, however, that the compromise agreement does not adversely affect third persons
who are not parties to the agreement.

By the same token, a client has the absolute right to terminate the attorney-client relationship at any time with or
without cause. But this right of the client is not unlimited because good faith is required in terminating the relationship. The
limitation is based on Article 19 of the Civil Code, which mandates that “[e]very person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.” The right is also
subject to the right of the attorney to be compensated.

This is clear from Section 26, Rule 138 of the Rules of Court, which provides:

Section 26. Change of attorneys.

An attorney may retire at any time from any action or special proceeding, by the written consent of his client
filed in court. He may also retire at any time from an action or special proceeding, without the consent of his client,
should the court, on notice to the client and attorney, and on hearing, determine that he ought to be allowed to retire.
In case of substitution, the name of the attorney newly employed shall be entered on the docket of the court in place
of the former one, and written notice of the change shall be given to the adverse party.

A client may at any time dismiss his attorney or substitute another in his place, but if the contract between
client and attorney has been reduced to writing and the dismissal of the attorney was without justifiable cause, he
shall be entitled to recover from the client the full compensation stipulated in the contract. However, the attorney may,
in the discretion of the court, intervene in the case to protect his rights. For the payment of his compensation the
attorney shall have a lien upon all judgments for the payment of money, and executions issued in pursuance of such
judgment, rendered in the case wherein his services had been retained by the client. (Bold emphasis supplied)

In fine, it is basic that an attorney is entitled to have and to receive a just and reasonable compensation for services performed
at the special instance and request of his client. The attorney who has acted in good faith and honesty in representing and
serving the interests of the client should be reasonably compensated for his service.

Note: Compromise agreement is to be approved despite favorable action on the Intervenor’s Motion for Intervention.

75
6.

T&H Shopfitters Corp., vs. T&H Shopfitters Corp Workers Union

GR No. 191714, February 26, 2014

FACTS:

T&H Shopfitters Corporation/Gin Queen Corporation workers union (THS-GQ Union) and the officers and/or members of THS-
GQ union, filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and Illegal Lockout against T&H
Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation (Gin Queen) (collectively referred to as "petitioners"),
before the Labor Arbiter (LA).

Respondents treated T&H Shopfitters and Gin Queen as a single entity and their sole employer. In their desire to improve their
working conditions, respondents on November 23, 2003 discussed for the formation of a union. The following day, seventeen
(17) employees were barred from entering petitioner’s factory premises located in Castillejos, Zambales, and ordered to
transfer to T&H

Shopfitters' warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said
seventeen (17) employees were repeatedly ordered to go on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work assignments, while subcontractors were
continuously hired to perform their functions. This development prompted respondents to seek the assistance of the National
Conciliation and Mediation Board (NCMB). Subsequently, an agreement between petitioners and THS-GQ Union was
reached, where petitioner Corporation agreed to give priority to regular employees in the distribution of work assignments.
However, petitioners never complied with its commitment but instead hired contractual workers.

Meanwhile, through a memorandum dated August 17, 2004, the Director for Gin Queen informed its employees of the
expiration of the lease contract between Gin Queen and its lessor in Castillejos, Zambales and announced the relocation of its
office and workers to Cabangan, Zambales. The said union officers and members were made to work as grass cutters in
Cabangan. Due to these circumstances, the employees assigned in Cabangan did not report for work. The employees who
likewise failed to report in Cabangan were meted out with suspension as a consequence. Likewise, petitioners campaigned
against the union in the forthcoming certification election. Due to the heavy pressure exerted by petitioners, the votes for "no
union" prevailed. THS-GQ Union averred that the following week after the certification elections were held, petitioners
retrenched THG-GQ Union officers and members assigned at the Zambales plant.

In its defense, Gin Queen claimed that due to the decrease in orders from its customers, they had to resort to cost cutting
measures to avoid anticipated financial losses. In addition, Gin Queen explained that its transfer from Castillejos, Zambales to
Cabangan, Zambales was a result of the expiration of its lease agreement with its lessor. The LA, however, dismissed
respondents' complaint. Aggrieved, respondents appealed to the NLRC. The NLRC reversed the LA decision and ruled in
favor of respondents. The NLRC reasoned that, the respondents [herein petitioners] committed unfair labor practice acts
consisting in interfering with the exercise of the employees' right to self-organization.

ISSUE:

Whether or not petitioner Corporation herein committed Unfair Labor Practices (ULP) acts against respondent Union in the
case at bench.

HELD:

Yes. The petition is given merit.

In the case at bench, petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article
248) of the Labor Code, to wit:

Article 257. Unfair labor practices of employers.— It shall be unlawful for an employer to commit any of the following unfair
labor practices:

76
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

xxx xxx xxx

(c) To contract out services or functions being performed by union members when such will interfere with, restrain, or coerce
employees in the exercise of their right to self-organization;

xxx xxx xxx

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or
discourage membership in any labor organization. . .

The concept of ULP is embodied in Article 256 (formerly Article 247) of the Labor Code, which provides:

Article 256. Concept of unfair labor practice and procedure for prosecution thereof. — Unfair labor practices violate the
constitutionalright of workers and employees to self-organization, are inimical to thelegitimate interests of both labor and
management, including their right tobargain collectively and otherwise deal with each other in an atmosphereof freedom and
mutual respect, disrupt industrial peace and hinder thepromotion of healthy and stable labor-management relations.

xxx xxx xxx

In essence, ULP relates to the commission of acts that transgress the workers' right to organize. As specified in Articles 248
[now Article 257] and 249 [now Article 258] of the Labor Code, the prohibited acts must necessarily relate to the workers' right
to self-organization.

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

In fine, the Court finds that the NLRC as correctly sustained by the CA, had sufficient factual and legal bases to support its
finding of ULP.

77
TOPIC 14: MISCELLANEOUS PROVISIONS
A.SPECIAL TYPES OF WORKERS

1.

Bernardo vs. NLRC

310 SCRA 186 [1999]

FACTS:

Complainants (who are 43 in all), are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far
East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called 'Employment Contract
for Handicapped Workers'.

Respondent Far East Bank and Trust Company maintained that complainants who are a special class of workers — the
hearing impaired employees were hired temporarily under a special employment arrangement which was a result of overtures
made by some civic and political personalities to the respondent Bank; that complainants were hired due to 'pakiusap'; that the
tellers themselves already did the sorting and counting chore as a regular feature and integral part of their duties; that through
the 'pakiusap' of Arturo Borjal, the tellers were relieved of this task of counting and sorting bills in favor of deaf-mutes without
creating new positions as there is no position either in the respondent or in any other bank in the Philippines which deals with
purely counting and sorting of bills in banking operations.

As earlier noted, the Labor Arbiter and, on appeal, the NLRC ruled against herein petitioners.

Hence, this recourse to this Court.

ISSUE:

Whether petitioners have become regular employees.

HELD:

The petition is meritorious.

However, the Court held that only the employees who worked for more than six months and whose contracts were renewed
are deemed regular. Hence, their dismissal from employment was illegal.

The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners,
except sixteen of them, should be deemed regular employees. In this light, the Magna Carta for Disabled Persons mandates
that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied
person. Section 5 of the Magna Carta provides:

SECTION 5. Equal Opportunity for Employment. — No disabled person shall be denied access to opportunities for suitable
employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person."

The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of
Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article
280 of the Labor Code, which provides that, "the determination of whether employment is casual or regular does not depend
on the will or word of the employer, and the procedure of hiring . . . but on the nature of the activities performed by the
employee, and to some extent, the length of performance and its continued existence." Likewise, if the employee has been
performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to
the business. Hence, the employment is considered regular, but only with respect to such as the task of counting and sorting
bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them, petitioners
performed these tasks for more than six months. Thus, the following twenty-seven petitioners should be deemed regular
employees.

78
Article 280 was emplaced in our statute books to prevent the circumvention of the employee's right to be secure in his tenure
by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular
employment defined therein. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or
accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In the present case, the handicap
of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of
their employment contracts.

As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated
only for a just or authorized cause. Because respondent failed to show such cause, these twenty-seven petitioners are
deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other
privileges. Clearly, the agreement of the parties regarding the period of employment cannot prevail over the provisions of the
Magna Carta for Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied employees.

79
B.EMPLOYMENT OF WOMEN
1.

Philippine Telegraph &Telephone Co vs NLRC (1997)

G.R.118978

Facts:

Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone Company
(hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company funds as grounds to
terminate the services of an employee. That employee, herein private respondent Grace de Guzman, contrarily
argues that what really motivated PT&T to terminate her services was her having contracted marriage during her employment,
which is prohibited by petitioner in its company policies. She thus claims that she was discriminated against in
gross violation of law, such a proscription by an employer being outlawed by Article 136 of the Labor Code. Issue: WON the
policy of not accepting or considering as disqualified from work any woman worker who contracts marriage is valid?

Held:

Petitioner’s policy of not accepting or considering as disqualified from work any woman worker who contracts
marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no
less than the Constitution. The Constitution, cognizant of the disparity in rights between men and women in almost all phases
of social and political life, provides a gamut of protective provisions. Acknowledged as paramount in the due
process scheme is the constitutional guarantee of protection to labor and security of tenure. Thus, an employer is required,
as a condition sine qua non prior to severance of the employment ties of an individual under his employ, to convincingly
establish, through substantial evidence, the existence of a valid and just cause in dispensing with the services of such
employee, one’s labor being regarded as constitutionally protected property. The government, to repeat, abhors any stipulation
or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:

Art. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment
or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of marriage.

In the case at bar, it can easily be seen from the memorandum sent to private respondent by the branch supervisor of the
company, with the reminder, that fully aware that the company is not accepting married women employee (sic), as it was
verbally instructed to you. Again, in the termination notice sent to her by the same branch supervisor, private respondent was
made to understand that her severance from the service was not only by reason of her concealment of her married
status but, over and on top of that, was her violation of the company’s policy against marriage ( and even told you that married
women employees are not applicable [sic] or accepted in our company.

Petitioner’s policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be
free from any kind of stipulation against marriage in connection with her employment, b ut it likewise assaults good
morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all
accounts inheres in the individual as an intangible and inalienable right.

Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that
they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public
policy. Carried to its logical consequences, it may even be said that petitioner’s policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of marriage.

80
2.

Del Monte Phils vs Velasco (2007)

G.R.153447

Facts

Velasco started working with Del Monte Philippines (petitioner) on October 21, 1976 as a seasonal employee and was
regularized on May 1, 1977. Her latest assignment was as Field Laborer. On June 16, 1987, respondent was warned in
writing due to her absences. On May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her
absences without permission and a forfeiture of her vacation leave entitlement for the year 1990 -1991 was imposed against
her.

On September 14, 1992, another warning letter was sent to respondent regarding her absences without permission during the
year 1991-1992. Her vacation entitlement for the said employment year affected was consequently forfeited. In view of the
said alleged absences without permission, on September 17, 1994, a notice of hearing was sentto respondent notifying her of
the charges filed against her for violating the Absence Without Official Leave rule: that is for excessive absence without
permission on August 15-18, 29-31 and September 1-10, 1994.

Respondent having failed toappear on September 23, 1994 hearing, another notice ofhearing was sent to her resetting the
investigation on September 30, 1994. It was again reset to October 5, 1994. After hearing, the petitioner terminated the
services of respondent effective January 16, 1994 due to excessive absences without permission. Issue: WON the
employment of respondent had been terminated on account of her pregnancy, and therefore violates the Labor Code which
prohibits an employer to discharge an employee on account of the latter's pregnancy.

Held:

Respondent's sickness was pregnancy-related and, therefore, the petitioner cannot terminate respondent's services
because in doing so, petitioner will, in effect, be violating the Labor Code which prohibits an employer to discharge
an employee on account of the latter's pregnancy.

Article 137 of the Labor Code provides: that it shall be unlawful for any employer: (1) To deny any woman
employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of
preventing her from enjoying any of the benefits provided under this Code; (2) To discharge such woman on account
of her pregnancy, while on leave or in confinement due to her pregnancy; or (3) To discharge or refuse the admission
of such woman upon returning to her work for fear that she may again be pregnant. Respondent was able to subsequently
justify her absences in accordance with company rules and policy; that the respondent was pregnant at the time she
incurred the absences; that this fact of preg nancy and its related illnesses had been duly proven through substantial
evidence; that the respondent attempted to file leaves of absence but thepetitioner's supervisor refused to receive
them; that she could not have filed prior leaves due to her continuing condition; and that the petitioner, in the last analysis,
dismissed the respondent on account of her pregnancy, a prohibited act.

Petitioner terminated the services of respondent on account of her pregnancy which justified her absences and,
thus, committed a prohibited act rendering the dismissal illegal.

81
F. EMPLOYMENT OF DOMESTIC HELPERS

1.

Remington Industrial Sales Corp. v. Erlinda Castaneda

G.R. Nos. 169295-96 (2006)

Facts:

The present controversy began when private respondent, Erlinda Castaneda instituted on March 2, 1998 a complaint for
illegal dismissal, underpayment of wages, non-payment of overtime services, non-payment of service incentive leave pay and
non-payment of 13th month pay against Remington before the NLRC, National Capital Region, Quezon City. The complaint
impleaded Mr. Antonio Tan in his capacity as the Managing Director of Remington.

Erlinda alleged that she started working in August 1983 as company cook with a salary of Php 4,000.00 for Remington, a
corporation engaged in the trading business; that she worked for six (6) days a week, starting as early as 6:00 a.m. because
she had to do the marketing and would end at around 5:30 p.m., or even later, after most of the employees, if not all, had left
the company premises; that she continuously worked with Remington until she was unceremoniously prevented from reporting
for work when Remington transferred to a new site in Edsa, Caloocan City.

She averred that she reported for work at the new site in Caloocan City on January 15, 1998, only to be informed that
Remington no longer needed her services. Erlinda believed that her dismissal was illegal because she was not given the
notices required by law; hence, she filed her complaint for reinstatement without loss of seniority rights, salary differentials,
service incentive leave pay, 13th month pay and 10% attorney's fees.

Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper, not a regular employee;
Erlinda worked as a cook and this job had nothing to do with Remington's business of trading in construction or hardware
materials, steel plates and wire rope products. It also contended that contrary to Erlinda's allegations that the (sic) she worked
for eight (8) hours a day, Erlinda's duty was merely to cook lunch and "merienda", after which her time was hers to spend as
she pleased. Remington also maintained that it did not exercise any degree of control and/or supervision over Erlinda's work
as her only concern was to ensure that the employees' lunch and "merienda" were available and served at the designated
time. Remington likewise belied Erlinda's assertion that her work extended beyond 5:00 p.m. as she could only leave after all
the employees had gone.

The truth, according to Remington, is that Erlinda did not have to punch any time card in the way that other employees of
Remington did; she was free to roam around the company premises, read magazines, and to even nap when not doing her
assigned chores. Remington averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was
Erlinda who refused to report for work when Remington moved to a new location in Caloocan City.

Labor Arbiter

Decision of the Labor Arbiter on January 19, 1999, the labor arbiter dismissed the complaint and ruled that the respondent
was a domestic helper under the personal service of Antonio Tan, finding that her work as a cook was not usually necessary
and desirable in the ordinary course of trade and business of the petitioner corporation, which operated as a trading company,
and that the latter did not exercise control over her functions. On the issue of illegal dismissal, the labor arbiter found that it
was the respondent who refused to go with the family of Antonio Tan when the corporation transferred office and that,
therefore, respondent could not have been illegally dismissed.

Respondent appealed the decision to the NLRC.

Issues:

1) Whether or not, respondent is a domestic helper or a regular employee of the company

2) Whether or not, respondent was illegally dismissed.

82
Held:

1) Respondent is a regular employee of the company. There was no allegation by respondent that complainant had
ever worked in the residence of Mr. Tan. What is clear from the facts narrated by the parties is that complainant
continuously did her job as a cook in the office of respondent serving the needed food for lunch and merienda of the
employees. Thus, her work as cook inured not for the benefit of the family members of Mr. Tan but solely for the
individual employees of respondent.

Complainant's work schedule and being paid a monthly salary of P4,000.00 are clear indication that she is a company
employee who had been employed to cater to the food needed by the employees which were being provided by respondent to
form part of the benefit granted them.

In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the staff houses of an industrial company
was a regular employee of the said firm. We ratiocinated that:

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

"The term 'househelper' as used herein is synonymous to the term 'domestic servant' and shall refer to any person, whether
male or female, who renders services in and about the employer's home and which services are usually necessary or
desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the
employer's family."

The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer's home
to minister exclusively to the personal comfort and enjoyment of the employer's family. Such definition covers family drivers,
domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps.

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

2)

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

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

83
2.

FERNANDO CO (formerly doing business under the name Nathaniel Mami House), v LINA B. VARGAS

G.R. No. 195167, November 16, 2011

FACTS:

On 22 April 2003, respondent, Lina B. Vargas, filed against Nathaniel Bakeshop and its owner, Fernando Co, a complaint for
underpayment or non-payment of wages and holiday pay. The complaint was later amended to include illegal dismissal as a
cause of action and the non-payment of service incentive leave.

Respondent alleged that she started working at the bakeshop in October 1994 as a baker and worked from 8:00am to 8:30pm,
Monday to Saturday. Aside from baking, respondent also serve the customers and supervised the other workers in the
absence of the owner. Furthermore, respondent claimed that she sometimes cooked and did the chores of the housemaid
whenever the latter was not available. Respondent has a salary of P202/day, which she received every Saturday afternoon.
During the period of her employment, respondent was not given a pay slip and she was never asked to sign a payroll.

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

ISSUE:

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

2. Whether of not respondent was illegally dismissed.

RULING:

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

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

2. Yes, the respondent was illegally dismissed.

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

84
J. EMPLOYMENT OF ACADEMIC/NON-ACADEMIC PERSONNEL IN PRIVATE EDUCATIONAL INSTITUTION

1.

UNIVERSITY OF THE EAST, DEAN ELEANOR JAVIER, RONNIE GILLEGO and DR. JOSE C BENEDICTIO v ANALIZA PEPANIO and
MARITI BUENO

GR NO. 193897, January 23, 2013

FACTS:

In 1992, DECS issued the Revised Manual for Regulations for Private Schools. Article XI, Section 44, par 1a, of which
requires college faculty members to have a master’s degree as a minimum educational qualification for acquiring regular
status. In 1994, petitioner University of the East (UE) and the UE Faculty Association executed a five-year CBA with effect up
to 1999 which provided, that UE shall extend only semester-to-semester appointments to college faculty staffs who did not
possess the minimum qualifications. Those with such qualifications shall be given probationary appointments and their
performance on a full-time or full-load basis shall be reviewed for every semester.

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

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

ISSUE:

Whether of not UE illegally dismissed Bueno and Pepanio.

RULING:

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

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

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The operation of educational
institutions involves public interest. The government has a right to ensure that only qualified persons, in possession of
sufficient academic knowledge and teaching skills, are allowed to teach in such institutions. Government regulation in this field
of human activity is desirable for protecting, not only the students, but the public as we;; from ill-prepared teachers, who are
lacking the required scientific or technical knowledge. They may be required to take an examination or to possess
postgraduate degrees as prerequisite to employment.

Respondents were each given only semester-to-semester appointments from the beginning of their employment with UE
precisely because they lacked the required master’s degree. It was only when UE and the faculty union signed their 2001 CBA
that the school extended petitioners a conditional probationary status subject to their obtaining a master’s degree within their
probationary period. It is clear therefore, that the parties intended to subject respondents’ permanent status appointments to
the standards set by the law and the university.

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

85
2.

Colegio Del Santisimo Rosario et al., vs. Rojo

G.R. No. 170388, Sept. 4, 2013

citing Mercado et al., vs. AMA Computer College-Paranaque City

GR No. 183572, April 13, 2010

Facts:

Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary basis for the school
years 1992-1993, 1993-1994 and 1994-1995. On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada),
decided not to renew respondent's services.

Thus, on July 13, 1995, respondent filed a Complaint for illegal dismissal. He alleged that since he had served three
consecutive school years which is the maximum number of terms allowed for probationary employment, he should be
extended permanent employment. Citing paragraph 75 of the 1970 Manual of Regulations for Private Schools (1970 Manual).

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

Issue:

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

Ruling:

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

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

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

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

86
. . . The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered
a regular employee.

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

Sec. 93. Regular or Permanent Status. — Those who have served the probationary period shall be made regular or
permanent. Full-time teachers who have satisfactorily completed their probationary period shall be considered regular or
permanent.

The above provision clearly provides that full-time teachers become regular or permanent employees once they have
satisfactorily completed the probationary period of three school years. The use of the term satisfactorily necessarily connotes
the requirement for schools to set reasonable standards to be followed by teachers on probationary employment. For how else
can one determine if probationary teachers have satisfactorily completed the probationary period if standards therefor are not
provided? As such, "no vested right to a permanent appointment shall accrue until the employee has completed the
prerequisite three-year period necessary for the acquisition of a permanent status. However, mere rendition of service for
three consecutive years does not automatically ripen into a permanent appointment. It is also necessary that the employee be
a full-time teacher, and that the services he rendered are satisfactory."

However, for teachers on probationary employment, in which case a fixed term contract is not specifically used for the fixed
term it offers , it is incumbent upon the school to have not only set reasonable standards to be followed by said teachers in
determining qualification for regular employment, the same must have also been communicated to the teachers at the start of
the probationary period, or at the very least, at the start of the period when they were to be applied. These terms, in addition to
those expressly provided by the Labor Code, would serve as the just cause for the termination of the probationary contract.
The specific details of this finding of just cause must be communicated to the affected teachers as a matter of due process.
Corollarily, should the teachers not have been apprised of such reasonable standards at the time specified, they shall be
deemed regular employees.

3.

87
 Herrera-Manaois vs. St. Scholasticas College

GR No. 188914, December 11, 2013

Facts:

SSC, is a private educational institution offering elementary, secondary, and tertiary education. Manaois graduated from SSC
in October 1992 with a degree in Bachelor of Arts in English. In 1994, she returned to her alma mater as a part time English
teacher. After taking a leave of absence for one year, she was again rehired by SSC for the same position. Four years into the
service, she was later on recommended by her Department Chairperson to become a full-time faculty member of the English
Department.

Manaois applied for a position as full-time instructor for school year 2000-2001. She mentioned in her application letter that
she had been taking the course Master of Arts in English Studies, Major in Creative Writing, at the University of the
Philippines, Diliman (UP); that she was completing her master's thesis; and that her oral defense was scheduled for June
2000. In a reply letter dated 17 April 2000, the Dean of Arts and Sciences informed her of the SSC Administrative Council's
approval of her application. She was then advised to maintain the good performance that she had shown for the past years
and to submit the necessary papers pertaining to her master's degree. Accordingly, SSC hired her as a probationary full-time
faculty member with the assigned rank of instructor for the school year 2000-2001. Her probationary employment continued for
a total of three consecutive years. Throughout her service as a probationary full-time faculty member with no derogatory
record, she was given above satisfactory ratings by both the Department Chairperson and the Dean of Arts and Sciences.

Because of the forthcoming completion of her third year of probationary employment, Manaois wrote the Dean of Arts and
Sciences requesting an extension of her teaching load for the school year 2003-2004. She again mentioned in her letter that
she was a candidate for a master's degree in English Studies; that the schedule of her oral defense may actually materialize
anytime within the first academic semester of 2003; and that she intended to fully earn her degree that year. She also
furnished the school with a Certification from UP, stating that she had already finished her coursework in her master's studies.
Furthermore, she indicated that it was her long-term goal to apply for a return to full-time faculty status by then and for SSC to
consider the aforesaid matters. Manaois eventually received a letter from the Dean of College and Chairperson of the
Promotions and Permanency Board officially informing her of the board's decision not to renew her contract.

Manaois sought clarification and reconsideration of the decision of SSC to terminate her services. SSC denied her request in a
letter dated 11 July 2003. Consequently, she filed a complaint for illegal dismissal, payment of 13th month pay, damages, and
attorney's fees against SSC.

SSC explained that upon consideration of the written application of Manaois, the Dean of Arts and Sciences wrote the
following notation at the bottom of her letter of application — "APPROVED: on the basis that she finishes her MA." The college
clarified that the application for full-time faculty status of Manaois was accepted with the specific qualification that she would
submit the necessary papers pertaining to her master's degree. It stressed that permanency may only be extended to full-time
faculty members if they had fulfilled the criteria provided in the SSC Faculty Manual. According to SSC, the Chair of the
English Department did not endorse the application for permanency of Manaois, since the latter had not finished her master's
degree within the three-year probationary period. SSC then refuted the supposed performance ratings of Manaois and instead
pointed out that she had merely received an average rating from her students. Finally, it asserted that her specialization was
the subject of writing and not English Literature, which was the subject area that they needed a faculty member for.

88
Issue:

Whether or not the completion of a master's degree is required in order for a tertiary level educator to earn the status of
permanency in a private educational institution.

Ruling:

Upheld decision of CA in setting aside the NLRC Decision and in ruling that the requirement to obtain a master's degree was
made known to Manaois. The contract she signed clearly incorporates the rules, regulations, and employment conditions
contained in the SSC Faculty Manual. Viewed next to the statements and actions of Manaois — i.e., the references to
obtaining a master's degree in her application letter, in the subsequent correspondences between her and SSC, and in the
letter seeking the extension of a teaching load for the school year 2003-2004; and her submission of certifications from UP and
from her thesis adviser — we find that there is indeed substantial evidence proving that she knew about the necessary
academic qualifications to obtain the status of permanency. We also agree with the CA that the labor arbiter and the NLRC
gravely misinterpreted the section in the SSC Faculty Manual, which purportedly provided for a lower academic requirement
for full-time faculty members with the rank of instructor, regardless of whether they have attained permanency or are still on
probation. The minimum requirements provided for the rank of instructor merely refer to how instructors are ranked, and not to
the academic qualifications required to attain permanency. It must be noted that the section in the SSC Faculty Manual on the
ranking of instructors cover those who are still on probationary employment and those who have already attained permanency.
It would therefore be erroneous to simply read the section on the ranking of instructors — without taking into consideration the
previously quoted section on permanency — in order to determine the academic qualifications for the position of permanent
full-time faculty member with the rank of instructor. Thus, to properly arrive at the criteria, the sections on both the permanency
and the ranking of an instructor, as provided in the SSC Manual, must be read in conjunction with each another.

Reiterating the rule that mere completion of the three-year probation, even with an above-average performance, does not
guarantee that the employee will automatically acquire a permanent employment status. It is settled jurisprudence that the
probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment as a member of the
teaching personnel. In line with academic freedom and constitutional autonomy, an institution of higher learning has the
discretion and prerogative to impose standards on its teachers and determine whether these have been met. Upon conclusion
of the probation period, the college or university, being the employer, has the sole prerogative to make a decision on whether
or not to re-hire the probationer. The probationer cannot automatically assert the acquisition of security of tenure and force the
employer to renew the employment contract. In the case at bar Manaois failed to comply with the stated academic
qualifications required for the position of a permanent full-time faculty member.

There is no legal obligation on the part of SSC to reappoint Manaois after the lapse of her temporary appointment.

89
L. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY

1.

Tolosa vs. NLRC

G.R. No. 149578, April 10, 2003

Facts:

Petitioner was the widow of Capt. Virgilio Tolosa who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk, to be
the master of the Vessel named M/V Lady Dona. His contract officially began on November 1, 1992, as supported by his
contract of employment when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach
California, passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT. TOLOSA was allegedly shown to
be in good health.

During 'channeling activities' upon the vessel's departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA
was drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in the succeeding twelve (12)
days, his health rapidly deteriorated resulting in his death on November 18, 1992.

When petitioner filed a complaint with the POEA, transferred to the DOLE, NLRC, the Labor Arbiter ruled in her favor. The
NLRC, affirmed by the Court of Appeals, however, ruled that the labor commission had no jurisdiction over the subject matter
filed by petitioner. Hence, this appeal.

Issues:

1. Whether or not the Labor Arbiter and the NLRC had jurisdiction over petitioner’s action.

2. Whether or not the monetary award granted by the Labor arbiter has already reached finality.

Ruling:

1. The Court affirmed that the claim for damages was filed not for claiming damages under the Labor Code but under
the Civil Code. The Court was convinced that the allegations were based on a quasi-delict or tort. Also, she had
claimed for actual damages for loss of earning capacity based on a life expectancy of 65 years, which is cognizable
under the Civil Code and can be recovered in an action based on a quasi-delict. Though damages under a quasi-
delict may be recoverable under the jurisdiction of labor arbiters and the NLRC, the relief must be based on an action
that has reasonable casual connection with the Labor Code, labor statutes or CBA’s. It must be noted that a worker’s
loss of earning capacity and backlisting are not to be equated with wages, overtime compensation or separation pay,
and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim
resulting from a quasi-delict or a similar cause within the realm of Civil Law. In the present case, Evelyn Tolosa’s
claim for damages is not related to any other claim under Article 217, other labor statutes, or CBA’s. She cannot
anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This
provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor
standard rests with the labor secretary. It is not the NLRC but the regular courts that have jurisdiction over action for
damages, in which the employer-employee relation is merely incidental, and in which the cause of action proceeds
from a different source of obligation such as a tort.

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

90
2.

U-Bix Corp. vs Bandiola

525 SCRA 556 2007

Facts:

Sometime in April 1995, Bandiola was employed by U-BIX to install furniture for its customers. On 13 April 1997, Bandiola and
two other U-BIX employees were involved in a vehicular accident on their way to Baguio, where they were assigned by U-BIX
to install furniture for an exhibit. As a result of the accident, Bandiola sustained a fracture on his left leg.

Bandiola and his co-employees were initially brought to the Rosario District Hospital. The next day, 14 April 1997, they were
transferred to the Philippine Orthopedic Hospital (Orthopedic). After his broken leg was cemented, Bandiola was advised to go
back for further medical treatment. U-BIX paid for the medical expenses incurred in both hospitals.

Bandiola claims that he asked U-BIX for financial assistance but that the latter refused. He attached the receipts, issued by
Medical Center Parañaque (MCP) and Dr. Celestino Musngi, for medical expenses with a total amount of P7,742.50. He also
attached a copy of the Roentgenological Report by a Radiologist in MCP. Bandiola added that he paid for other medical
expenses for which no receipts were issued.

Issue:

Whether or not U-Bix should reimburse Bandiola for the alleged medical expenses?

Ruling:Yes, U-Bix should reimburse Bandiola for the alleged medical expenses.

Contrary to the arguments put forward by U-BIX, it is liable to reimburse Bandiola the amount of P7,742.50 for medical
expenses because its failure to comply with its duty to record and report Bandiola's injury to the SSS precluded Bandiola from
making any claims. Moreover, U-BIX, by its own admission, reimbursed its other employees who were involved in the same
accident for their medical expenses.

Clearly, the reimbursement of medical expenses for injuries incurred in the course of employment is part of the benefits
enjoyed by U-BIX's employees. The only justification for its refusal to reimburse Bandiola was that he intended to defraud the
company by presenting spurious receipts amounting to P7,742.50 that were allegedly issued four months before their
presentation.

In the present case, there is no dispute that Bandiola's leg injury was sustained in the course of his employment with U-BIX. At
the time of the accident, Bandiola was on the way to Baguio, where he was ordered by U-BIX to install furniture for an exhibit.
Moreover, U-BIX was aware that Bandiola, as well as his other co-employees, were injured during the accident. U-BIX
admitted to providing Bandiola and his co-employees with medical assistance and it even sent its representative, Rey Reynes,
to Rosario District Hospital, where they were confined, and had them transferred to the Orthopedic. U-BIX was also aware that
the Orthopedic instructed Bandiola to return for further medical treatment. It is implicit that Bandiola needed further treatment
for his broken leg and was, thus, incapacitated to work.

Given the foregoing circumstances, U-BIX had the legal obligation to record pertinent information in connection with the
injuries sustained by Bandiola in its logbook within five days after it had known about the injuries; and to report the same to the

91
SSS within five days after it was recorded in the logbook, in accordance with Articles 205 and 206 of the Labor Code. Had U-
BIX performed its lawful duties, the SSS, or the ECC on appeal, could have properly considered whether or not Bandiola was
entitled to reimbursement for his medical expenses, as well as disability benefits while he was unable to work. However, U-BIX
did not present any evidence showing that it had complied with these legal requirements. It had not even replied to Bandiola's
allegations in his Position Paper, dated 13 April 1998, that its employees were not even members of the SSS.

By failing to report Bandiola's injury to the SSS, U-BIX disregarded the law and its purpose; that is, to provide a proper and
prompt settlement of his claims. Instead, U-BIX arrogated upon itself the duty of determining which medical expenses are
proper for reimbursement. In doing so, it could unnecessarily delay and unjustifiably refuse to reimburse Bandiola for medical
expenses even if they were adequately supported by receipts, as was done in this instance. The expense and delay
undergone by Bandiola since 1997 in obtaining reimbursement for his medical expenses of P7,742.50 very clearly defeat the
purpose of the law.

92
3.

Ocean Builders Construction Corporation vs. Spouses Cubacub

G.R. No. 150898. April 13, 2011

Principle: Duty of any employer to provide all the necessary assistance to ensure the adequate and immediate medical and
dental attendance and treatment to an injured or sick employee in case of emergency.

Facts:

Bladimir Cubacub was employed as maintenance man by petitioner company Ocean Builders Construction
Corporation at its office in Caloocan City. On April 9, 1995, Bladimir was afflicted with chicken pox. He was thus advised by
petitioner Dennis Hao, the company’s general manager, to rest for three days which he did at the company’s barrack’s where
he lives free of charge.

Later in the afternoon, however, he asked a co-worker, Ignacio Silangga, to accompany him to his house in Capas,
Tarlac, so he could rest. Informed by Silangga of Bladimir’s intention, Hao gave Bladimir P1,000.00 and ordered Silangga to
bring Bladimir to the nearest hospital.

Bladimir was brought to the Caybiga Community Hospital, a primary-care hospital around one kilometer away from
the office of the company. At about 8 oclock in the evening of the same day, April 13, 1995, Bladimirs parents-respondent
spouses Cubacub, with their friend Dr. Hermes Frias, arrived at the Caybiga Hospital and transferred Bladimir to the Quezon
City General Hospital where he was placed in the intensive care unit and died the following day.

The death certificate issued by the QCGH recorded Bladimir’s immediate cause of death as cardio-respiratory arrest
and the antecedent cause as pneumonia.

Bladimir’s parents-herein respondents later filed on August 17, 1995 before the Tarlac Regional Trial Court a
complaint for damages against petitioners Hao. They alleged that Hao is guilty of negligence which resulted in the
deterioration of Bladimir’s condition leading to his death.

Issue: Whether or not the petitioner is guilty of negligence and hence liable for torts based on Article 161 of the Labor Code?

Ruling: No. Petitioner Hao is not guilty of negligence for not bringing his employee, who later died, to a better hospital.

Article 161. Assistance of employer. – It shall be the duty of any employer to provide all the necessary assistance to ensure
the adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of
emergency.

The Implementing Rules of the Code do not enlighten what the phrase adequate and immediate medical attendance means in
relation to an emergency. It would thus appear that the determination of what it means is left to the employer, except when a
full-time registered nurse or physician are available on-site as required, also under the Labor Code, specifically Art. 157 which
provides:

Article 157. Emergency Medical and Dental Services. ─ It shall be the duty of every employer to furnish his employees in any
locality with free medical and dental attendance and facilities consisting of:

93
(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two
hundred (200) except when the employer does not maintain hazardous workplaces, in which case, the services of a graduate
first-aider shall be provided for the protection of workers, where no registered nurse is available. The Secretary of Labor and
Employment shall provide by appropriate regulations, the services that shall be required where the number of employees does
not exceed fifty (50) and shall determine by appropriate order, hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number
of employees exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and a full-time registered nurse as well as a dental clinic and an infirmary or
emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds
three hundred (300).

In the present case, there is no allegation that the company premises are hazardous. Neither is there any allegation on the
number of employees the company has. If Hao’s testimony would be believed, the company had only seven regular
employees and 20 contractual employees ─ still short of the minimum 50 workers that an establishment must have for it to be
required to have a full-time registered nurse.

The Court can thus only determine whether the actions taken by petitioners when Bladimir became ill amounted to the
necessary assistance to ensure adequate and immediate medical attendance to Bladimir as required under Art. 161 of the
Labor Code.

Hao’s advice for Bladimir to take a 3-day rest and to later have him brought to the nearest hospital constituted “adequate and
immediate medical” attendance that he is mandated, under Art. 161, to provide to a sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical background. He may not be thus expected to have
known that Bladimir needed to be brought to a hospital with better facilities than the Caybiga Hospital.

At all events, the alleged negligence of Hao cannot be considered as the proximate cause of the death of Bladimir. An injury or
damage is proximately caused by an act or failure to act, whenever it appears from the evidence in the case that the act or
omission played a substantial part in bringing about or actually causing the injury or damage, and that the injury or damage
was either a direct result or a reasonably probable consequence of the act or omission.

WHEREFORE, the petition is GRANTED. The challenged Decision of the Court of Appeals is REVERSED, and the complaint
is hereby DISMISSED.

94
MIGRANT WORKER'S ACT & OVERSEAS FILIPINO ACT OF 1995 &

RECRUITMENT AND PLACEMENT

1.

ATCI Overseas Corp. et al., vs. Echin

G.R. No. 178551. October 11, 2010

Principle: R.A. 8042, Sec.10. If the recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the
aforesaid claims and damages

Facts:

Respondent Josefina Echin was hired by petitioner ATCI Overseas Corporation in behalf of its principal-co-petitioner,
the Ministry of Public Health of Kuwait, for the position of medical technologist under a two-year contract, denominated as a
Memorandum of Agreement (MOA), with a monthly salary of US$1,200.00. Under the MOA, all newly-hired employees
undergo a probationary period of one (1) year and are covered by Kuwaits Civil Service Board Employment Contract No. 2.

Within a year, Respondent was terminated for allegedly not passing the probationary period. As the Ministry denied
respondents request for reconsideration, she returned to the Philippines shouldering her own air fare.

Respondent then filed with the NLRC a complaint for illegal dismissal against petitioner ATCI as the local recruitment
agency. Labor Arbiter rendered judgment in favor of respondent and ordered ATCI to pay her$3,600, her salary for the three
months unexpired portion of the contract.

ATCI appealed Labor Arbiter‘s decision, however, NLRC affirmed the latter‘s decision and denied petitioner ATCI‘s
motion for reconsideration. Petitioner appealed to the CA contending that their principal being a foreign government agency is
immune from suit, and as such, immunity extended to them.

Appellate Court affirmed NLRC‘s decision. It noted that under the law, a private employment agency shall assume all
responsibilities for the implementation of the contract of employment of an overseas worker; hence, it can be sued jointly and
severally with the foreign principal for any violation of the recruitment agreement or contract of employment.

Petitioner‘s motion for reconsideration was denied. Hence, this present petition.

Issue:

Whether or not petitioners shall be held liable considering that the contract specifically stipulates thatrespondent‘s
employment shall be governed by the Civil Service Law and Regulations of Kuwait?

Ruling: Yes.

Petitioner ATCI, as a private recruitment agency, cannot evade responsibility for the money claims of OFW’s which it
deploys abroad by the mere expediency of claiming that its foreign principal is a government agency clothed with immunity
from suit, or that such foreign principals liability must first be established before it, as agent, can be held jointly and solidarily
liable.

The imposition of joint and solidary liability is in line with the policy of the state to protect and alleviate the plight of the
working class. Verily, to allow petitioners to simply invoke the immunity from suit of its foreign principal or to wait for the judicial
determination of the foreign principals liability before petitioner can be held liable renders the law on joint and solidary liability
inutile.

Indeed, a contract freely entered into is considered the law between the parties who can establish stipulations,
clauses, terms and conditions as they may deem convenient, including the laws which they wish to govern their respective
obligations, as long as they are not contrary to law, morals, good customs, public order or public policy.

95
 It is hornbook principle, however, that the party invoking the application of a foreign law has the burden of proving the
law, under the doctrine of processual presumption which, in this case, petitioners failed to discharge. Instead of submitting a
copy of the pertinent Kuwaiti labor laws duly authenticated and translated by Embassy officials thereat, as required under the
Rules, what petitioners submitted were mere certifications attesting only to the correctness of the translations of the MOA and
the termination letter which does not prove at all that Kuwaiti civil service laws differ from Philippine laws and that under such
Kuwaiti laws, respondent was validly terminated.

Respecting Ikdals joint and solidary liability as a corporate officer, the express provision of R.A. 8042 on money claims
provides:

Section. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for actual moral, exemplary and other forms of
damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be
joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall
be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency
is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly
and solidarily liable with the corporation or partnership for the aforesaid claims and damages.

The petition is DENIED.

96
2.

Yap vs. Thenamaris Ship Management et al.

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

Principle: RA 8042, Sec. 10 "or for three months for every year of the unexpired term, whichever is less" is unconstitutional

Facts:

Petitioner was employed as an electrician of the vessel, M/T SEASCOUT by Intermare Maritime Agencies, Inc. in behalf of its
principal, Vulture Shipping Limited.The contract was for 12 months. On 23 August 2001,Yapboarded M/T SEASCOUT and
commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold.

Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus. However, he insisted that he
was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. He
alleged that he opted for immediate transfer but none was made.

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

The Court affirmed the lower courts’ decisions that the dismissal of the petitioner was illegal and that the unanimous finding
that the respondents acted in bad faith.

Issues:

1. Whether Section 10 of R.A. 8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit
of – "salaries for [the] unexpired portion of his employment contract for three (3) months for every year of the
unexpired term, whichever is less" – is constitutional;

2. Assuming that it is, whether or not the petitioner should be granted only three (3) months backwages, when his
unexpired term of 9 months is far short of the "every year of the unexpired term" threshold.

Ruling:

1. We have previously declared in Serrano that the clause "or for three months for every year of the unexpired term,
whichever is less" is unconstitutional for being violative of the rights of (OFWs) to equal protection. Moreover, the
subject clause does not state any definitive governmental purpose, hence, it also violates petitioner's right to
substantive due process. The petitioner therein was accorded his salaries for the entire unexpired period of nine
months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No.
8042. Thus, this case should not be different from Serrano.

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

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

97
3.

Skippers United Pacific vs. Doza et al

G.R. No. 175558, February 8, 2012

Principle: If the illegal termination happened before passing of RA 10022, the Serrano ruling will apply: RA 8042, Sec. 10 "or
for three months for every year of the unexpired term, whichever is less" is unconstitutional

Facts: Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata, and Aprosta to work on board the vessel
MV Wisdom Star for 10 months, 12 months and 12 months respectively. Paragraph 2 of all the employment contracts stated
that: "The terms and conditions of the Revised Employment Contract governing the Employment of All Seafarers shall be
strictly and faithfully observed." No employment contract was submitted for Nathaniel Doza.

De Gracia, et al. claimed that Skippers failed to remit their respective allotments for almost five months, compelling them to air
their grievances with the Romanian Seafarers Free Union. The ITF Inspector of the Romanian Seafarers Union sent Captain
Savvas of Cosmos Shipping a fax letter, relaying the complaints of his crew. To date, Skippers only failed to remit the home
allotment for the month of December 1998.

On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated.
Upon arrival in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter and prayed for
payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their contracts, moral
damages, exemplary damages, and attorney’s fees.

Skippers claims that De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, Master of MV Wisdom
Stars, and was rude, shouting noisily to the master. De Gracia left the master’s cabin after a few minutes and was heard
shouting very loudly somewhere down the corridors.

Further, Skippers also claims that four Filipino seafarers, namely Aprosta, De Gracia, Lata and Doza, arrived in the master’s
cabin and demanded immediate repatriation because they were not satisfied with the ship. De Gracia, et al. threatened that
they may become crazy any moment and demanded for all outstanding payments due to them. The incident was evidenced by
a telex of Cosmoship MV Wisdom to skippers but had conflicting dates.

Since De Gracia, et al. pre-terminated their contracts, Skippers claims they are liable for their repatriation expenses in
accordance with Section 19(G) of Philippine Overseas Employment Administration (POEA) Memorandum Circular No. 55.

Issues:

1. Whether or not the respondents voluntarily requested to be repatriated based on the telex message sent

2. Whether or not the petitioners are liable to pay the repatriation expenses

Ruling:

Illegal Dismissal

For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality
of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive
due process.

Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish
the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee
of the employer's decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be
complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted.

98
Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause
under Articles 282 to 284 of the Labor Code.

In this case, there was no written notice furnished to De Gracia, et al., regarding the cause of their dismissal. The telex
message is "a biased and self-serving document that does not satisfy the requirement of substantial evidence." If, indeed, De
Gracia, et al., voluntarily pre-terminated their contracts, then De Gracia, et al., should have submitted their written
resignations.

Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice
on the employer at least one (1) month in advance." Given that provision, the law contemplates the requirement of a written
notice of resignation. In the absence of a written resignation, it is safe to presume that the employer terminated the seafarers.
In addition, the telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22
January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al., were not
even employed yet by the foreign principal. For these reasons, the dismissal of De Gracia, et al., was illegal.

Repatriation Expenses

Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of
employment contracts:

In case of termination of overseas employment without just, valid or authorized cause as denied 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.

The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three (3) months for
every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal
dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc. (G.R. No.
167614), the Court, in an En Banc Decision, declared unconstitutional the clause “or for three months for every year of the
unexpired term, whichever is less” and awarded the entire unexpired portion of the employment contract to the overseas
Filipino worker.

On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act,
and once again reiterated the provision of awarding the unexpired portion of the employment contract or three (3) months for
every year of the unexpired term, whichever is less.

Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, the
Supreme Court applied RA 8042, without touching on the constitutionality of Section 7 of RA 10022.

The declaration in March 2009 of the unconstitutionality of the clause “or for three months for every year of the unexpired term,
whichever is less” in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an
unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional
provision is inoperative, as if it was not passed into law at all.

Given the above computation, we modify the CA's imposition of award, and grant to De Gracia, et al., salaries representing
the unexpired portion of their contracts, instead of salaries for three (3) months.

99
4.

INTERNATIONAL MANAGEMENT SERVICES/MARILYN C. PASCUALvs. ROEL P. LOGARTA

G.R. No. 163657. April 18, 2012.

Facts:

Petitioner recruitment agency, International Management Services (IMS), a single proprietorship owned and operated by
Pascual, deployed respondent Logarta to work for Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia,
in connection with general engineering services of Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent
was employed for a period of two (2) years, commencing on October 2, 1997, with a monthly salary of eight hundred US
Dollars (US$800.00). In October 1997, respondent started to work for Petrocon as Piping Designer for works on the projects of
Saudi Aramco.

Thereafter, in a letter, Saudi Aramco informed Petrocon that for the year 1998, the former is allotting to the latter a total work
load level of 170,850 man-hours, of which 100,000 man-hours will be allotted for cross-country pipeline projects.

However later Saudi Aramco notified Petrocon that due to changes in the general engineering services work forecast for 1998,
the man-hours that were formerly allotted to Petrocon is going to be reduced by 40%. DTAcIa

Consequently, due to the considerable decrease in the work requirements of Saudi Aramco, Petrocon was constrained to
reduce its personnel that were employed as piping designers, instrument engineers, inside plant engineers, etc., one of whom
was respondent.

Thus, on June 1, 1998, Petrocon gave respondent a written notice 5 informing the latter that due to the lack of project works
related to his expertise, he is given a 30-day notice of termination, and that his last day of work with Petrocon will be on July 1,
1998. Petrocon also informed respondent that all due benefits in accordance with the terms and conditions of his employment
contract will be paid to respondent, including his ticket back to the Philippines.

Respondent requested Petrocon to issue them a letter of Intent stating that the latter will issue them a No Objection Certificate
once they find another employer before they leave Saudi Arabia. On June 27, 1998, Petrocon granted the request and issued
a letter of intent to respondent.

Before his departure from Saudi Arabia, respondent received his final paycheck from Petrocon. Upon his return, respondent
filed a complaint with the Regional NLRC, Cebu City, against petitioner as the recruitment agency. In filing the complaint,
respondent sought to recover his unearned salaries covering the unexpired portion of his employment contract with Petrocon
on the ground that he was illegally dismissed.

Labor Arbiter Decision: In favor of the respondent

Petitioner filed an appeal to the NLRC

NLRC Decision: Affirmed the decision of the Labor Arbiter, but reduced the amount to be paid by the petitioner

Not satisfied, petitioner sought recourse before the CA

CA Decision: Petition Dismissed

100
In ruling in favor of the respondent, the CA states that although there was a valid ground for retrenchment, the same was
implemented without complying with the requisites of a valid retrenchment. Also, the CA concluded that although the
respondent was given a 30-day notice of his termination, there was no showing that the DOLE was also sent a copy of the
said notice as required by law. Moreover, the CA found that a perusal of the check payroll details would readily show that
respondent was not paid his separation pay.

Hence, this petition

Issue: W/O Retrenchment was valid

Ruling:

Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation
particularly on salaries and wages. It is one of the economic grounds to dismiss employees and is resorted by an employer
primarily to avoid or minimize business losses.

Retrenchment programs are purely business decisions within the purview of a valid and reasonable exercise of management
prerogative. It is one way of downsizing an employer's workforce and is often resorted to by the employer during periods of
business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient
machinery or automation. It is a valid management prerogative, provided it is done in good faith and the employer faithfully
complies with the substantive and procedural requirements laid down by law and jurisprudence.

In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and
his employer are subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all
Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations.

Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under
Article 283 of the Labor Code.

Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence:

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

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

(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least 1/2 month pay
for every year of service, whichever is higher;

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

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

Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth
requirements were complied with by respondent's employer. HOWEVER, the second and third requisites were absent when
Petrocon terminated the services of respondent.

Petrocon exercised its prerogative to retrench its employees in good faith and the considerable reduction of work allotments of
Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel.

101
As to complying with the fifth requirement, the CA was correct when it ruled that:

As to the fifth requirement, the NLRC considered the following criteria fair and reasonable in ascertaining who would be
dismissed and who would be retained among the employees; (i) less preferred status; (ii) efficiency rating; (iii) seniority; and
(iv) proof of claimed financial losses.

As for the notice requirement, however, contrary to petitioner's contention, proper notice to the DOLE within 30 days prior to
the intended date of retrenchment is NECESSARY and must be complied with despite the fact that respondent is an overseas
Filipino worker. In the present case, although respondent was duly notified of his termination by Petrocon 30 days before its
effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days
before the respondent was terminated. Thus, this requirement of the law was not complied with.

Also, petitioner's contention that respondent freely consented to his dismissal is unsupported by substantial evidence.
Respondent's recourse of finding a new employer during the 30-day period prior to the effectivity of his dismissal and eventual
return to the Philippines is but logical and reasonable under the circumstances. Faced with the eventuality of his termination
from employment, it is understandable for respondent to seize the opportunity to seek for other employment and continue
working in Saudi Arabia.

Moreover, petitioner's insistence that the case of Jariol v. IMS should be applied in the present case is untenable. Being a
mere decision of the NLRC, it could not be considered as a precedent warranting its application in the case at bar. Suffice it to
state that although Article 8 of the Civil Code recognizes judicial decisions, applying or interpreting statutes as part of the legal
system of the country, such level of recognition is not afforded to administrative decisions.

Concerning the proper amount of separation pay to be paid to respondent, a perusal of his Payroll Check Details clearly
reveals that what he received was his compensation for the month prior to his departure, and hence, was justly due to him as
his salary. Furthermore, the amounts which he received as his "End of Contract Benefit" and "Other Earning/Allowances: for
July 1998" form part of his wages/salary, as such, cannot be considered as constituting his separation pay.

Verily, respondent is entitled to the payment of his separation pay. However, this Court disagrees with the conclusion of the
Labor Arbiter, the NLRC and the CA, that respondent should be paid his separation pay in accordance with the provision of
Section 10 of R.A. No. 8042. A plain reading of the said provision clearly reveals that it applies only to an illegally dismissed
overseas contract worker or a worker dismissed from overseas employment without just, valid or authorized cause

In the case at bar, despite the employer's failure to comply with the one-month notice to the DOLE prior to respondent's
termination, it is only a procedural infirmity which does not render the retrenchment illegal.

Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that is controlling. Thus, respondent is
entitled to payment of separation pay equivalent to one (1) month pay, or at least one-half (1/2) month pay for every year of
service, whichever is higher. Considering that respondent was employed by Petrocon for a period of eight (8) months, he is
entitled to receive one (1) month pay as separation pay. In addition, pursuant to current jurisprudence, for failure to fully
comply with the statutory due process of sufficient notice, respondent is entitled to nominal damages in the amount
P50,000.00.

Petition is DENIED. Petitioner is ORDERED to pay Roel P. Logarta one (1) month salary as separation pay and P50,000.00 as
nominal damages.

102
5.

PERT/CPM MANPOWER EXPONENT CO., INC. vs. ARMANDO A. VINUYA, LOUIE M. ORDOVEZ, ARSENIO S.
LUMANTA, JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY O. ENJAMBRE and NOEL
T. LADEA

G.R. No. 197528. September 5, 2012.

Facts:

Respondents, 8 in total, filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co.,
Inc. (agency), and its President Romeo P. Nacino.

Respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work as aluminum
fabricator/installer for the agency's principal, Modern Metal in Dubai, United Arab Emirates.

Respondents' employment contracts, which were approved by the Philippine Overseas Employment Administration (POEA),
provided for a two-year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free and
suitable housing (four to a room), free transportation, free laundry, and free medical and dental services. They each paid a
P15,000.00 processing fee.

However, on April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters with terms different from
those in the employment contracts which they signed at the agency's office in the Philippines. Under the letters of
appointment, their employment was increased to three years at 1,000 to 1,200 AED and food allowance of 200 AED.

Respondents claimed that they were shocked to find out what their working and living conditions were in Dubai. They were
required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When they rendered
overtime work, they were most of the time either underpaid or not paid at all. Their housing accommodations were cramped
and were shared with 27 other occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving
them only three to four hours of sleep a day because of the long hours of travel to and from their place of work; there was no
potable water and the air was polluted.

When the respondents received their first salaries (at the rates provided in their appointment letters and with deductions for
placement fees) and because of their difficult living and working conditions, they called up the agency and complained about
their predicament. The agency assured them that their concerns would be promptly addressed, but nothing happened.

On May 5, 2007, Modern Metal required the respondents to sign new employment contracts. The contracts reflected the terms
of their appointment letters. Burdened by all the expenses and financial obligations they incurred for their deployment, they
were left with no choice but to sign the contracts. They raised the matter with the agency, which again took no action.

On August 5, 2007, despondent over their unbearable living and working conditions and by the agency's inaction, the
respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that Modern Metal would not give
them their salaries and release papers, the respondents, except Era, cited personal/family problems for their resignation. Era
mentioned the real reason — "because I dont (sic) want the company policy" — for his resignation.

103
It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to Manila in September
2007. Except for Ordovez and Enjambre, all the respondents shouldered their own airfare.

For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned. Respondents
even voluntarily signed affidavits of quitclaim and release after they resigned. It thus argued that their claim for benefits, under
Section 10 of Republic Act No. (R.A.) 8042, damages and attorney's fees is unfounded.

Compulsory Arbitration Decision: Labor Arbiter dismissed the complaint, finding that the respondents voluntarily resigned
from their jobs. He also found that four of them even executed a compromise agreement (with quitclaim and release) before
the POEA.

The respondents appealed to the NLRC

NLRC Decision: Ruled that the respondents had been illegally dismissed. It stressed that it is illegal for an employer to require
its employees to execute new employment papers, especially those which provide benefits that are inferior to the POEA-
approved contracts. Further, it pointed out that the POEA case involved pre-deployment issues; whereas, the complaint before
the NLRC is one for illegal dismissal and money claims arising from employment.

The agency moved for reconsideration. The respondents, on the other hand, moved for partial reconsideration, maintaining
that their salaries should have covered the unexpired portion of their employment contracts.

NLRC Decision: Denied the agency's motion for reconsideration, but granted the respondents' motion. It sustained the
respondents' argument that the award needed to be adjusted, particularly in relation to the payment of their salaries,
consistent with the Court's ruling in Serrano. The ruling declared unconstitutional the clause, "or for three (3) months for every
year of the unexpired term, whichever is less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of illegally
dismissed overseas Filipino workers to their salaries for the unexpired term of their contract or three months, whichever is less.

Again, the agency moved for reconsideration

CA Decision: Dismissed the petition for lack of merit. It upheld the NLRC ruling that the respondents were illegally dismissed

The agency is now before the Court seeking a reversal of the CA

Issue:

1. W/O are the agaency are guilty of contract substitution and breach of contract

2. W/O the Serrano Ruling is applicable to this case

Ruling:

The court finds no merit in the petition. The CA committed no reversible error and neither did it commit grave abuse
of discretion in affirming the NLRC's illegal dismissal ruling.

First.

The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-approved
two-year employment contract, with Modern Metal providing among others, as earlier discussed, for a monthly salary of 1350
AED. On April 2, 2007, Modern Metal issued to them appointment letters whereby the respondents were hired for a longer
three-year period and a reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they
were required to sign new employment contracts reflecting the same terms contained in their appointment letters, except that
this time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents complained with the
agency about the contract substitution, but the agency refused or failed to act on the matter.

104
Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment under the law. Article
34 of the Labor Code provides:

Art. 34. Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or holder of authority: cAaETS

xxx xxx xxx

(i) To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual
signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of
Labor[.]

Further, Article 38 of the Labor Code, as amended by R.A. 8042, 35 defined "illegal recruitment" to include the following act:

(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of
Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of
the same without the approval of the Department of Labor and Employment[.]

Second.

The agency and Modern Metal committed breach of contract. The respondents were made to suffer substandard
(shocking, as they put it) working and living arrangements. Both the original contracts the respondents signed in the
Philippines and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and transportation
to and from the jobsite. The original contract mentioned free and suitable housing. 36 Although no description of the housing
was made in the letters of appointment except: "Accommodation: Provided by the company," it is but reasonable to think that
the housing or accommodation would be "suitable."

Third.

With their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved,
the respondents' decision to resign is not surprising. They were compelled by the dismal state of their employment to give up
their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is "a quitting because
continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a
diminution in pay." Without doubt, the respondents' continued employment with Modern Metal had become unreasonable.

We thus cannot accept the agency's insistence that the respondents voluntarily resigned since they personally prepared their
resignation letters in their own handwriting We find the resignation letters "dubious," not only for having been lopsidedly
worded to ensure that the employer is rendered free from any liability, but also for the odd coincidence that all the respondents
had, at the same time, been confronted with urgent family problems so that they had to give up their employment and go
home. The truth, as the respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would
not give them their salaries and their release papers. Only Era was bold enough to say the real reason for his resignation — to
protest company policy.

We likewise find the affidavits of quitclaim and release which the respondents executed suspectUnlike the resignation letters,
the respondents had no hand in the preparation of the affidavits. They must have been prepared by a representative of
Modern Metal as they appear to come from a standard form and were apparently introduced for only one purpose — to lend
credence to the resignation letters. The respondents' position is well-founded. The NLRC itself had the same impression.

Fourth.

The compromise agreements (with quitclaim and release) between the respondents and the agency before the POEA
did not foreclose their employer-employee relationship claims before the NLRC.

105
Under the heading "Post-Deployment," the agency agreed to pay Era and Alcantara P12,000.00 each, purportedly in
satisfaction of the respondents' claims arising from overseas employment, consisting of unpaid salaries, salary differentials
and other benefits, including money claims with the NLRC.

The compromise agreement, apparently, was intended by the agency as a settlement with the respondents and others with
similar claims, which explains the inclusion of the two (Nangolinola and Gatchalian) who were not involved in the case with the
NLRC. Under the circumstances, we cannot see how the compromise agreements can be considered to have fully settled the
respondents' claims before the NLRC — illegal dismissal and monetary benefits arising from employment. We thus find no
reversible error nor grave abuse of discretion in the rejection by the NLRC and the CA of said agreements.

Fifth.

The agency's objection to the application of the Serrano ruling in the present case is of no moment. Its argument that
the ruling cannot be given retroactive effect has been resolved in Yap v. Thenamaris Ship's Management, where the Court
sustained the retroactive application of the Serrano ruling which declared unconstitutional the subject clause in Section 10,
paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas Filipino Workers.

Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An Act
Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As
Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and
Overseas Filipinos in Distress, and for Other Purposes." It argues that R.A. 10022, which lapsed into law (without the
Signature of the President) on March 8, 2010, restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042. The
amendment, contained in Section 7 of R.A. 10022, reads as follows:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any
unauthorized deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement "of" his
placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever
is less. (emphasis ours)

This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is provided. By its very nature,
the amendment introduced by R.A. 10022 — restoring a provision of R.A. 8042 declared unconstitutional — cannot be given
retroactive effect, not only because there is no express declaration of retroactivity in the law, but because retroactive
application will result in an impairment of a right that had accrued to the respondents by virtue of the Serrano ruling —
entitlement to their salaries for the unexpired portion of their employment contracts.

All statutes are to be construed as having only a prospective application, unless the purpose and intention of the legislature to
give them a retrospective effect are expressly declared or are necessarily implied from the language used. We thus see no
reason to nullify the application of the Serrano ruling in the present case. Whether or not R.A. 10022 is constitutional is not for
us to rule upon in the present case as this is an issue that is not squarely before us. In other words, this is an issue that awaits
its proper day in court; in the meanwhile, we make no pronouncement on it.

WHEREFORE, petition is DENIED.

106
6.

HON. PATRICIA STO. TOMAS V SALAC, ET AL.

G.R. NO. 152642, 13 NOV 2012

FACTS:

Several cases were filed and consolidated questioning the constitutionality of certain provisions of R.A 8042 otherwise known
as the Migrant Workers and Overseas Filipinos Act of 1995 whose purpose is to set the Government’s policies on overseas
employment and establishes a higher standard of protection and promotion of the welfare of migrant workers, their families,
and overseas Filipinos in distress.

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

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

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

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

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

7.
107
 SAMEER OVERSEAS PLACEMENT AGENCY, INC., vs. JOY C. CABILES

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

FACTS:

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.

Respondent Joy Cabiles was hired thus signed a one-year employment contract for a monthly salary of
NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She alleged that in her
employment contract, she agreed to work as quality control for one year. In Taiwan, she was asked to work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior notice, that she
was terminated and that “she should immediately report to their office to get her salary and passport.” She was asked to
“prepare for immediate repatriation.” Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against petitioner and Wacoal. LA
dismissed the complaint. NLRC reversed LA’s decision. CA affirmed the ruling of the National Labor Relations Commission
finding respondent illegally dismissed and awarding her three months’ worth of salary, the reimbursement of the cost of her
repatriation, and attorney’s fees

ISSUE:

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

RULING:

YES. The Court held that the award of the three-month equivalent of respondent’s salary should be increased to the
amount equivalent to the unexpired term of the employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this court ruled that the clause “or for
three (3) months for every year of the unexpired term, whichever is less” is unconstitutional for violating the equal protection
clause and substantive due process.

A statute or provision which was declared unconstitutional is not a law. It “confers no rights; it imposes no duties; it
affords no protection; it creates no office; it is inoperative as if it has not been passed at all.”

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

Ruling on the constitutional issue

In the hierarchy of laws, the Constitution is supreme. No branch or office of the government may exercise its powers
in any manner inconsistent with the Constitution, regardless of the existence of any law that supports such exercise. The
Constitution cannot be trumped by any other law. All laws must be read in light of the Constitution. Any law that is inconsistent
with it is a nullity.

108
 Thus, when a law or a provision of law is null because it is inconsistent with the Constitution, the nullity cannot be
cured by reincorporation or reenactment of the same or a similar law or provision. A law or provision of law that was already
declared unconstitutional remains as such unless circumstances have so changed as to warrant a reverse conclusion.

The Court observed that the reinstated clause, this time as provided in Republic Act. No. 10022, violates the
constitutional rights to equal protection and due process.96 Petitioner as well as the Solicitor General have failed to show any
compelling change in the circumstances that would warrant us to revisit the precedent.

The Court declared, once again, the clause, “or for three (3) months for every year of the unexpired term, whichever
is less” in Section 7 of Republic Act No. 10022 amending Section 10 of Republic Act No. 8042 is declared unconstitutional
and, therefore, null and void.

109
8.

Racelis vs. United Philippine Lines Inc.

GR No. 198408, November 12, 2014

FACTS:

On January 15, 2008, Rodolfo L. Racelis (Rodolfo) was recruited and hired by respondent United Philippine Lines, Inc. (UPL)
for its principal, respondent Holland America Lines, Inc. (HAL) to serve as "Demi Chef De Partie" on board the vessel MS
Prinsendam, with a basic monthly salary of US$799.55. The Contract of Employment was for a term of four (4) months,
extendible for another two (2) months upon mutual consent. After complying with the required pre-employment medical
examination where he was declared fit to work, Rodolfo joined the vessel on January 25, 2008. Prior thereto, Rodolfo was
repeatedly contracted by said respondents and was deployed under various contracts since December 17, 1985.

In the course of his last employment contract, Rodolfo experienced severe pain in his ears and high blood pressure causing
him to collapse while in the performance of his duties. He consulted a doctor in Argentina and was medically repatriated on
February 20, 2008 for further medical treatment. Upon arrival in Manila, he was immediately brought to Medical City, Pasig
City, where he was seen by a company-designated physician, Dr. Gerardo Legaspi, M.D. (Dr. Legaspi), and was diagnosed to
be suffering from Brainstem (pontine) Cavernous 10 Malformation. He underwent surgery twice for the said ailment but
developed complications 12 and died on March 2, 2008. Through an electronic mail (e-mail) dated July 22, 2008, a certain Dr.
Antonio "Toby" Abaya (Dr. Abaya) informed Atty. Florencio L. Aquino, Managing Associate of the law firm of Del Rosario and
Del Rosario, counsel for UPL, HAL, and its officer, Fernando T. Lising (respondents), that Rodolfo's illness was congenital and
that there may be familial strains in his case, hence, his death was not work-related.

Rodolfo's surviving spouse, Conchita, sought to claim death benefits pursuant to the International Transport Workers'
Federation-Collective Bargaining Agreement , of which her husband was a member, but to no avail. Consequently, she filed a
Complaint or death benefits, burial assistance, moral and exemplary damages, and attorney's fees against herein respondents
before the NLRC.

Issue:

Whether or not the CA erred in annulling the NLRC's grant of death benefits to Conchita on certiorari.

Ruling:

No. Conchita should be able to obtain death benefits from the death of Rodolfo.

Deemed incorporated in every seafarer's employment contract, denominated as the POEA-SEC or the Philippine Overseas
Employment Administration-Standard Employment Contract, is a set of standard provisions determined and implemented by
the POEA, called the "Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean
Going Vessels," which are considered to be the minimum requirements acceptable to the government for the employment of
Filipino seafarers on board foreign ocean-going vessels.

Among other basic provisions, the POEA-SEC — specifically, its 2000 version — stipulates that the beneficiaries of a
deceased seafarer may be able to claim death benefits for as long as they are able to establish that (a) the seafarer's death is
work-related, and (b) such death had occurred during the term of his employment contract. These requirements are
explicitly stated in Section 20 (A) (1) thereof, which reads:

SECTION 20. COMPENSATION AND BENEFITS. —

A. COMPENSATION AND BENEFITS FOR DEATH

1. In the case of work-related death of the seafarer, during the term of his contract the employer shall pay his beneficiaries the
Philippine Currency equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of Seven
Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four (4) children, at the
exchange rate prevailing during the time of payment. (Emphases supplied)
110
After an assiduous examination of the records, and as will be expounded on below, the Court, similar to both the LA and the
NLRC, finds that the above-stated requirements positively attend petitioner's claim for death benefits.

Moreso, under the 2000 POEA-SEC, the terms "work-related injury" and "work-related illness" are, in turn, defined as follows:

Definition of Terms:

For purposes of this contract, the following terms are defined as follows:

xxx xxx xxx

11. Work-Related Injury — injury(ies) resulting in disability or death arising out of and in the course of employment.

12. Work-Related Illness — any sickness resulting to disability or death as a result of an occupational disease listed under
Section 32-A of this contract with the conditions set therein satisfied. (Emphases supplied)

Case law explains that "[t]he words 'arising out of' refer to the origin or cause of the accident, and are descriptive of its
character, while the words 'in the course of' refer to the time, place, and circumstances under which the accident takes place.
As a matter of general proposition, an injury or accident is said to arise 'in the course of employment' when it takes place
within the period of the employment, at a place where the employee reasonably may be, and while he is fulfilling his duties or
is engaged in doing something incidental thereto."

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

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

111
9.

Pentagon International Shipping Services vs. Court of Appeals

GR No. 169158, July 1, 2015

Facts:

Pentagon International Shipping Services, Inc. a domestic corporation, was a private manning agency licensed by the
Philippine Overseas Employment Administration. They are engaged in the recruitment of seafarers to service the crewing and
personnel management needs of shipping companies accredited to it.

On March 27, 1998, Pentagon hired respondents Madrio and Rubiano as chief officer and second engineer, respectively, in
behalf of its foreign principal, Baleen Marine, a corporation based in Singapore. When their 10-month contract expired, they
were repatriated to the Philippines. Alleging non-payment and underpayment of wages, and claiming damages and attorney's
fees, they separately brought claims against

Pentagon and the owners and managers of Baleen Marine on January 13, 2000 and January 31, 2000,5 stating that Pentagon
and Baleen Marine had reduced their monthly gross salary by 20% without the prior approval by the POEA; and that Pentagon
and Baleen Marine had not paid their salaries from November 1, 1998 until their repatriation on March 24, 1999.

Pentagon denied liability, countering that it had ceased to be the manning agency of Baleen Marine effective October 1, 1998;
that on June 25, 1998, its Executive Vice-President, Meynardo Bugia, Jr., had met with Baleen Marine in Singapore to notify
the latter that it had been meanwhile appointed by Neptank Bunkering Services Pte., Ltd. as its exclusive local manning
agency;

IDA Inter-Phil insisted that although it had applied with the POEA for the transfer and accreditation of Baleen Marine's vessels
in its favor, it withdrew the application and did not execute an affidavit of assumption and responsibility as required; that,
consequently, Pentagon continued to be jointly and severally liable with Baleen Marine for the money claims of Madrio and
Rubiano

Issue/s:

Whether or not there was a valid substitution of the manning agent from Pentagon to IDA Inter-Phil.

Ruling:

No. It was not a valid substitution. There was no effective transfer of agency from Pentagon to JDA Inter-Phil. Even assuming
arguendo that JDA Inter -Phil did not withdraw its application for accreditation with the POEA, there was still no valid transfer
of agency to speak of in the first place because JDA Inter-Phil did not submit the required authenticated special power of
attorney and manning agreement. The minutes of the October 9, 1998 meeting could not, by any stretch of the imagination,
supplant this mandatory requirement.

It is relevant to observe that Pentagon cannot feign ignorance of Section 10, paragraph 2, of the Migrant Workers' Act of 1995
to the effect that its liabilities would continue during the entire period or duration of the employment contract, and would not be
affected by any substitution, amendment or modification of the contract made either locally or in a foreign country. The
provisions of the POEA Rules and Regulations to the effect that the manning agreement extends up to and until the expiration
of the employment contracts of the employees recruited and employed pursuant to the recruitment agreement are also clear
enough. As such, Pentagon is not exempt from its liabilities and responsibilities towards Madrio and Rubiano.

Although JDA Inter-Phil undertook in the meeting of October 1, 1998 to assume the responsibility as the local agent to Baleen
Marine, the actual transfer of the accreditation would not be completed without JDA Inter -Phil's compliance with the
requirements under the aforementioned rules. What actually happened between the time the meeting took place and the
eventual withdrawal of the application by the JDA Inter-Phil remained to be mere conjecture.

Nevertheless, Madrio and Rubiano should not be prejudiced by any purported transfer of accreditation or agreement that they
were not privy to. For sure, Pentagon remained under the law the only recognized manning agent of Baleen Marine.

112
10.

ALBERT C. AUSTRIA, petitioner, vs. CRYSTAL SHIPPING, INC., and/or LARVIK SHIPPING A/S, and EMILY MYLA A.
CRISOSTOMO, respondents.

[G.R. No. 206256. February 24, 2016.]

Facts:

Petitioner was hired by Crystal Shipping thru its manning agent, Larvik Shipping as Chief Cook. His employment was
to run for a period of eight months and he was to receive, inter alia, a basic monthly salary of US$758.00 with an overtime pay
of US$422.00 each month as evidenced by his Contract of Employment. 3 Under his contract, petitioner was covered by the
Norwegian International Ship Register (NIS)-CBA. Prior to the execution of his contract, petitioner underwent a thorough
medical examination and was declared “Fit to Work” by the company’s designated physician.

During the pendency of his employment, the petitioner started suffering from chronic cough with excessive phlegm
and experienced difficulty breathing. He immediately reported his condition to the medical officer on board. Upon the arrival of
the vessel in Hamburg, Germany, petitioner was referred for medical examination and it was found that he was suffering from
"Bronchial Catarrh/Bronchitis; Pharnx Irritation." After giving him proper medication, the examining physician declared him "fit
for duty" and so he resumed his work in the vessel. In January 2009, petitioner again complained of similar symptoms,
excessive cough with phlegm and difficulty breathing, and, was again referred for further medical examination in the
Netherlands. This time he was confined at ZorgSaam Hospital from 20 January 2009 to 12 February 2009 where he was
diagnosed with "Dilated Cardiomyopathy secondary to Viral Myocarditis," a condition which would require further medical
treatment and management. Considering the seriousness of his ailment, petitioner's repatriation back to the Philippines was
recommended by doctors. Escorted by a physician, petitioner arrived in the Philippines on 14 February 2009 and was
immediately confined at the Metropolitan Medical Center. After a series of tests, it was found that petitioner was suffering from
"Dilated Cardiomyopathy, Bicuspid Aortic Stenosis," rendering him unfit for any sea duty.

The petitioner then claimed that his employment with the respondent company caused him to be totally unfit for sea
work. He sought payment of permanent disability benefits amounting US$110,000.00 under their CBA but was not
acknowledged by the respondent company. For their part, respondents disavowed liability for the illness of petitioner citing the
medical report of the company designated physician that "Dilated Cardiomyopathy, Bicuspid Aortic Stenosis" is a condition
that is congenital in nature and is not caused or aggravated by his work as a Chief Cook.

The Labor Arbiter rendered a judgment in favor of the petitioner and was upheld by the NLRC with modifications to the
judgment award. The CA, however, reversed the judgment and ruled in favor of the respondent on the grounds of that the
petitioner’s ailment was congenital. Undaunted, the petitioner elevated his course to the Supreme Court.

Issues:

 Whether or not petitioner was rendered totally unfit as a seafarer due to aggravated illness.

Ruling:

For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must concur: (1) the
injury or illness must be work-related; and (2) the work-related injury or illness must have existed during the term of the
seafarer's employment contract. In other words, to be entitled to compensation and benefits under this provision, it is not
sufficient to establish that the seafarer's illness or injury has rendered him permanently or partially disabled; it must also be
shown that there is a causal connection between the seafarer's illness or injury and the work for which he had been
contracted. For an occupational disease and the resulting disability or death to be compensable, all of the following conditions
must be satisfied:

1. The seafarer's work must involve the risks described herein;

2. The disease was contracted as a result of the seafarer's exposure to the describe[d] risks;

3. The disease was contacted within a period of exposure and under such other factors necessary to contract it; [and]

113
4. There was no notorious negligence on the part of the seafarer.

The ultimate question that needs to be addressed in the case at bar is whether or not the illness which caused the repatriation
of petitioner is an occupational disease and thus compensable as permanent total disability under the circumstances. The
Court rules in the affirmative. Even if it were shown that petitioner's condition is congenital in nature, it does automatically
take his ailment away from purview of compensability. Pre-existence of an illness does not irrevocably bar compensability
because disability laws still grant the same provided seafarer's working conditions bear causal connection with his illness.
Compensability of an ailment does not depend on whether the injury or disease was pre-existing at the time of the employment
but rather if the disease or injury is work-related or aggravated his condition.

114
11.

Asian International Manpower Services, Inc. vs. DOLE

GR No. 210308, April 6, 2016

Facts:

On November 8, 2006, the Anti-Illegal Recruitment Branch of the POEA conducted a surveillance of Asian International
Manpower Services, Inc. to determine whether it was operating as a recruitment agency despite the cancellation of its license
on August 28, 2006. The operatives reported that their surveillance did not reveal the information needed.

On February 20, 2007, another surveillance was conducted on the premises of AIMS' office pursuant to Surveillance Order No.
011. In said surveillance they learned from a flyer containing information that AIMS was hiring hotel workers for deployment to
Macau and grape pickers for California. The POEA operatives later confirmed through the POEA Verification System that
AIMS had regained its license and good standing on December 6, 2006, but that it had no existing approved job orders yet at
that time.

POEA issued a Show Cause Order directing AIMS and its covering surety, Country Bankers Insurance Corporation, to submit
their answer or explanation to the Surveillance Report dated November 8, 2006 of the POEA operatives. However, no copy of
the Surveillance Report dated February 21, 2007 was attached.

In compliance thereto, Pelagio, AIMS President, wrote to the POEA on April 3, 2007 maintaining that AIMS was not liable for
any recruitment misrepresentation. Invoking the Surveillance Report dated November 8, 2006.

During the hearing on May 9, 2007, AIMS representative, Lugatiman, appeared, and averring that it had already filed its
answer, he then moved for the resolution of the complaint.

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

AIMS filed a motion for reconsideration before the DOLE alleging that its right to due process was violated because the POEA
did not furnish it with a copy of the Surveillance Report dated February 21, 2007, which was the basis of the POEA
Administrator's factual findings. The DOLE affirmed the order of the POEA, asserting that due process was observed. AIMS
then moved for reconsideration from the DOLE ruling, which the DOLE denied.

Subsequently, AIMS filed a petition for certiorari in the CA which was dismissed thereafter as the finding that AIMS
misrepresented itself with regard to the recruitment of workers for non-existent overseas jobs was supported by substantial
evidence.

Issue:

Whether or not AIMS right to due process was violated because it was never furnished with a copy of the POEA
Surveillance Report which was the basis of the finding that it misrepresented to job applicants that it had existing job
orders.

Ruling:

AIMS right to due process was violated.

Since AIMS was provided with only the Surveillance Report dated November 8, 2006, it could only have been expected to
respond to the charge contained in the Show Cause Order. Thus, in its answer, it needed only to point to the POEA
operatives' own admission in their Surveillance Report dated November 8, 2006 that when they came posing as job
applicants, the staff of AIMS advised them that it had no job vacancies for waiters and that its license had been cancelled. As
POEA now also admits, AIMS's license to recruit was restored on December 6, 2006.

Considering that AIMS was not furnished with the Surveillance Report dated February 21, 2007, it cannot be expected to
second-guess what charges and issues it needed to clarify or rebut in order to clear itself. Needless to say, its right to due
process consisting of being informed of the charges against it has been grossly violated.
115
Moreover, AIMS also points out that the flyer advertising the jobs in Macau and California was never presented or made part
of the record, and neither was the AIMS lady clerk who allegedly distributed the same even identified, as AIMS demanded.
Besides, granting that AIMS did advertise with flyers for hotel workers or grape pickers, for which it allegedly had no existing
approved job orders, it is provided in Sections I and 2 of Rule VII (Advertisement for Overseas Jobs), Part II of the 2002 POEA
Rules28 that the said activity is permitted for manpower pooling purposes, without need of prior approval from the POEA, upon
the following conditions: (1) it is done by a licensed agency; (2) the advertisement indicates in bold letters that it is for
manpower pooling only; (3) no fees are collected from the applicants; and (4) the name, address and POEA license number of
the agency, name and worksite of the prospective registered/accredited principal and the skill categories and qualification
standards are indicated.

It is true that in administrative proceedings, only substantial evidence is needed, or such relevant evidence as a reasonable
mind may accept as adequate to support a conclusion. Unfortunately, there is no evidence against AIMS to speak of, much
less substantial evidence. Clearly, AIMS 's right to be informed of the charges against it, and its right to be held liable only
upon substantial evidence, have both been gravely violated.

116