1. BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G.

ENDRACA, Petitioners,
vs.
R. VILLEGAS TAXI TRANSPORT and ROMUALDO VILLEGAS, Respondents.
-that it cannot be said that the complainants were illegally dismissed, there being no
showing, in the first place, that the respondent [sic] terminated their services.(no
illegal dismissal in the case at bar)

- dismissal was not justified and that they are entitled to back wages

- separation pay should not be awarded because reinstatement is still possible and
has been offered. It is well[-]settled that separation pay is granted only in
instances where reinstatement is no longer feasible or appropriate, which is
not the case here.

- respondents denied to have ever employed or known. With the respondents’ denial,
the burden of proof shifts to Francisco to establish his regular employment

- It underscored that in a situation where doubt exists between evidence

presented by the employer and the employee, the scales of justice must be
tilted in favor of the employee. It awarded the petitioners with: (1) full backwages
from the date of their dismissal up to the finality of the decision; (2) separation
pay equivalent to one month of salary for every year of service; and (3)
attorney’s fees.

-"Well-settled is the rule that the jurisdiction of this Court in a petition for review
on certiorari under Rule 45 of the Revised Rules of Court is limited to
reviewing only errors of law, not of fact, unless the factual findings complained
of are completely devoid of support from the evidence on record, or the
assailed judgment is based on a gross misapprehension of facts."29

- J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as
a general rule, is confined only to issues of lack or excess of jurisdiction and grave
abuse of discretion on the part of the NLRC. The CA does not assess and weigh the
sufficiency of evidence upon which the LA and the NLRC based their conclusions.
The issue is limited to the determination of whether or not the NLRC acted without or
in excess of its jurisdiction, or with grave abuse of discretion in rendering the
resolution, except if the findings of the NLRC are not supported by substantial
evidence.31 (Citation omitted and emphasis ours)

It is an oft-repeated rule that in labor cases, as in other administrative and quasi-

judicial proceedings, "the quantum of proof necessary is substantial evidence, or
such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."32 "[T]he burden of proof rests upon the party who
asserts the affirmative of an issue."33

-"[I]n determining the presence or absence of an employer-employee relationship,

the Court has consistently looked for the following incidents, to wit: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee on the means
and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element."34
There is no hard and fast rule to establish the elements of employer-employee relationship. Any
competent and relevant evidence may be admitted, e.g., identification cards, cash vouchers, social
security registration, appointment letters or employment contracts, payrolls, organization charts,
personnel lists.

-[A]n illegally dismissed employee is entitled to two reliefs: backwages and

reinstatement. The two reliefs provided are separate and distinct. In instances where
1âwphi 1

reinstatement is no longer feasible because of strained relations between the

employee and the employer, separation pay is granted. In effect, an illegally
dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement

without loss of seniority rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages.41 (Emphasis
supplied)

Clearly, it is only when reinstatement is no longer feasible that the payment of

separation pay is ordered in lieu thereof. For instance, if reinstatement would only
exacerbate the tension and strained relations between the parties, or where the
relationship between the employer and the employee has been unduly strained by
reason of their irreconcilable differences, it would be more prudent to order payment
of separation pay instead of reinstatement.42

This doctrine of strained relations, however, should not be used recklessly or applied
loosely43 nor be based on impression alone. "It bears to stress that reinstatement is
the rule and, for the exception of strained relations to apply, it should be proved that
it is likely that if reinstated, an atmosphere of antipathy and antagonism would be
generated as to adversely affect the efficiency and productivity of the employee
concerned."44

Moreover, the existence of strained relations, it must be emphasized, is a question of

fact. In Golden Ace Builders v. Talde,45 the Court underscored:

Strained relations must be demonstrated as a fact, however, to be adequately

supported by evidence—substantial evidence to show that the relationship between
the employer and the employee is indeed strained as a necessary consequence of
the judicial controversy.46

47
A bare claim of strained relations by reason of termination is insufficient to
warrant the granting of separation pay. Likewise, the filing of the complaint by the
petitioners does not necessarily translate to strained relations between the parties.
As a rule, no strained relations should arise from a valid and legal act asserting one’s
right.48 Although litigation may also engender a certain degree of hostility, the
understandable strain in the parties’ relation would not necessarily rule out
reinstatement which would, otherwise, become the rule rather the exception in illegal
 dismissal cases.49 Thus, it was a prudent call for the CA to delete the award of
separation pay and order for reinstatement instead, in accordance with the general
rule stated in Article 27950 of the Labor Code.

2.)ARIEL L. DAVID, doing business under the name and style "YIELS HOG
DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.

- As defined by the Labor Code, a "field personnel" is one who performs the work away from
the office or place of work and whose regular work hours cannot be determined with reasonable
certainty.

- In this Rule 45 petition for review on certiorari of the CA’s decision rendered under a Rule
65 proceeding, this Court’s power of review is limited to resolving matters pertaining to any
perceived legal errors that the CA may have committed in issuing the assailed decision. This is in
contrast with the review for jurisdictional errors, which we undertake in an original certiorari action. In
reviewing the legal correctness of the CA decision, we examine the CA decision based on how it
determined the presence or absence of grave abuse of discretion in the NLRC decision before it and
not on the basis of whether the NLRC decision on the merits of the case was correct.32 In other
words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal,
of the NLRC decision challenged before it.33

Moreover, the Court’s power in a Rule 45 petition limits us to a review of questions of law raised
against the assailed CA decision.34

In this petition, David essentially asks the question – whether Macasio is entitled to holiday, SIL and
13th month pay. This one is a question of law. The determination of this question of law however is
intertwined with the largely factual issue of whether Macasio falls within the rule on entitlement to
these claims or within the exception. In either case, the resolution of this factual issue presupposes
another factual matter, that is, the presence of an employer-employee relationship between David
and Macasio.

- Engagement on "pakyaw" or task basis does not characterize the relationship that may
exist between the parties, i.e., whether one of employment or independent contractorship. Article
97(6) of the Labor Code defines wages as "xxx the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered[.]"35 In relation to Article 97(6), Article 10136 of the Labor Code
speaks of workers paid by results or those whose pay is calculated in terms of the quantity or quality
of their work output which includes "pakyaw" work and other non-time work.

More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task basis
negates employer-employee relationship, David would want the Court to engage on a factual
appellate review of the entire case to determine the presence or existence of that relationship. This
approach however is not authorized under a Rule 45 petition for review of the CA decision rendered
under a Rule 65 proceeding.
-To determine the existence of an employer-employee relationship, four elements generally need to
be considered, namely: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct. These
elements or indicators comprise the so-called "four-fold" test of employment relationship

- At this point, we note that all three tribunals – the LA, the NLRC and the CA – found that Macasio
was engaged or paid on "pakyaw" or task basis. This factual finding binds the Court under the rule
that factual findings of labor tribunals when supported by the established facts and in accord with the
laws, especially when affirmed by the CA, is binding on this Court.

A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour

wage payment, is the non-consideration of the time spent in working. In a task-basis work, the
emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the
work, not in terms of the number of time spent in the completion of work.45 Once the work or task is
completed, the worker receives a fixed amount as wage, without regard to the standard
measurements of time generally used in pay computation.

In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees engaged on
task or contract basis xxx are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel."51 The Court explained that the phrase
"including those who are engaged on task or contract basis, purely commission basis" found in
Section 1(d), Rule V of Book III of the IRR should not be understood as a separate classification of
employees to which SIL shall not be granted. Rather, as with its preceding phrase - "other
employees whose performance is unsupervised by the employer" - the phrase "including those who
are engaged on task or contract basis" serves to amplify the interpretation of the Labor Code
definition of "field personnel" as those "whose actual hours of work in the field cannot be determined
with reasonable certainty."

SOUTH EAST INTERNATIONAL RATTAN

3)

INC V. JESUS J. COMING (G.R.

NO. 186621)
In order to establish the existence of an employer-employee relationship, the four-fold test is used, to wit:

In resolving the issue of whether such relationship exists in a given case, substantial evidence or that
amount of relevant evidence, which a reasonable mind might accept, as adequate to justify a conclusion
is sufficient.

The Court in Tan v. Lagrama, 436 Phil. 190, held that the fact that a worker was not reported as an
employee to the SSS is not conclusive proof of the absence of employer-employee relationship.
Otherwise, an employer would be rewarded for his failure or even neglect to perform his obligation. Nor
does the fact that respondent name does not appear in the payrolls and pay envelope records submitted
by petitioners negate the existence of employer-employee relationship.

As a regular employee, respondent enjoys the right to security of tenure under Article 279 of the Labor
Code and may only be dismissed for just or authorized causes. Otherwise, the dismissal becomes illegal.

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

However, where reinstatement is no long feasible as an option, back wages shall be computed from the
time of the illegal termination up to the finality of the decision. As an alternative to this, separation pay
equivalent to one month salary for every year of service should likewise be awarded in case
reinstatement is not possible.

4) SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.
JOY C. CABILES, Respondent.

HELD:

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.

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.

5) GEORGE A. ARRIOLA, Petitioner,

vs.
PILIPINO STAR .NGAYON, INC. and/or MIGUEL G. BELMONTE, Respondents

The Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals all ruled that
Arriola’s claims for unpaid salaries, backwages, damages, and attorney’s fees have prescribed.
They cited Article 291 of the Labor Code, which requires that money claims arising from employer-
employee relations be filed within three years from the time the cause of action accrued:

Art. 291. MONEY CLAIMS. All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall be forever barred.

Article 291 covers claims for overtime pay,43 holiday pay,44 service incentive leave
pay,45 bonuses,46 salary differentials,47 and illegal deductions by an employer.48 It also covers money
claims arising from seafarer contracts.49
The provision, however, does not cover "money claims" consequent to an illegal dismissal such as
backwages.It also does not cover claims for damages due to illegal dismissal. These claims are
governed by Article 1146 of the Civil Code of the Philippines, which provides:

This court ruled that Callanta’s complaint for illegal dismissal had not yet prescribed. Although illegal
dismissal is a violation of the Labor Code, it is not the "offense" contemplated in Article 290.56 Article
290 refers to illegal acts penalized under the Labor Code, including committing any of the prohibited
activities during strikes or lockouts, unfair labor practices, and illegal recruitment activities.57 The
three-year prescriptive period under Article 290, therefore, does not apply to complaints for illegal
dismissal.

This four-year prescriptive period applies to claims for backwages, not the three-year prescriptive
period under Article 291 of the Labor Code. A claim for backwages, according to this court, may be a
money claim "by reason of its practical effect."60 Legally, however, an award of backwages "is merely
one of the reliefs which anillegally dismissed employee prays the labor arbiter and the NLRC to
render inhis favor as a consequence of the unlawful act committed by the employer."61 Though it
results "in the enrichment of the individual [illegally dismissed], the award of backwages is not in
redress of a private right, but, rather, is in the nature of a command upon the employer to make
public reparation for his violation of the Labor Code."62

Actions for damages due to illegal dismissal are likewise actions "upon an injury to the rights of the
plaintiff." Article 1146 of the Civil Code of the Philippines, therefore, governs these actions.63

With respect to Grace’s complaint for overtime pay and holiday pay, this court ruled that the three-
year prescriptiveperiod under Article 291 of the Labor Code applied. Since Grace filed her claim one
year, one month, and 21 days from her dismissal, her claims were filed within the three-year
prescriptive period.70 With respect to Marilyn’s complaint for illegal dismissal with claims for
backwages, this court while citing Callanta as legal basis ruled that the four-year prescriptive period
under Article 1146 of the Civil Code of the Philippines applied. Since Marilyn filed her complaint
three days from her dismissal, she filed her complaint well within the four-year prescriptive
period.71 Applying these principles in this case, we agree that Arriola’s claims for unpaid salaries
have prescribed. Arriola filed his complaint three years and one day from the time he was allegedly
1âwphi1

dismissed and deprived of his salaries. Since a claim for unpaid salaries arises from employer-
employee relations, Article 291 of the Labor Code applies.72 Arriola’s claim for unpaid salaries was
filed beyond the three-year prescriptive period.

However, we find that Arriola’s claims for backwages, damages, and attorney’s fees arising from his
claim of illegal dismissal have not yet prescribed when he filed his complaint with the Regional
Arbitration Branch for the National Capital Region ofthe National Labor Relations Commission. As
discussed, the prescriptive period for filing an illegal dismissal complaint is four years from the time
the cause of action accrued. Since an award of backwages is merely consequent to a declaration of
illegal dismissal, a claim for backwages likewise prescribes in four years.

The four-year prescriptive period under Article 1146 also applies to actions for damages due to
illegal dismissal since such actions are based on an injury to the rights of the person dismissed. In
this case, Arriola filed his complaint three years and one day from his alleged illegal dismissal.He,
therefore, filed his claims for backwages, actual, moral and exemplary damages, and attorney’s fees
well within the four-year prescriptive period.

A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise
only questions of lawwhich must be distinctly set forth. (Emphasis supplied)

A question of fact exists "when the doubt arises as to the truth or falsity of the alleged facts."75 On the
other hand, there is a question of law "when there is doubt as to what the law is on a certain state of
facts."76 As this court explained in Century Iron Works, Inc. v. Bañas:77

. . . For a question to be one of law, the question must not involve an examination of the probative
value of the evidence presented by the litigants or any of them. The resolution of the issue must rest
solely on what the law provides on the given set of circumstances. Once it is clear that the issue
invites a review of the evidence presented, the question posed is one of fact.78

This court has made exceptions to this rule. We may review questions of fact in a petition for review
on certiorari if:

(1) the findings are grounded entirely on speculations, surmises, or conjectures; (2) the inference
made is manifestly mistaken, absurd, or impossible; (3) there isa grave abuse of discretion; (4) the
judgment is based on misappreciation of facts; (5) the findings of fact are conflicting; (6) in making its
findings, the same are contrary to the admissions of both appellant and appellee; (7) the findings are
contrary to those of the trial court; (8) the findings are conclusions without citation of specific
evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner’s
main and reply briefs are not disputed by the respondent; and (10) the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on record.79

. . . it is a management prerogative of private respondent [Pilipino Star Ngayon, Inc.] to decide on

what sections should and would appear in the newspaper publication taking into consideration the
business viability and profitability of each section. Respondent [Pilipino Star Ngayon, Inc.] decided to
replace the "Pamilyang OFWs"section with another which it ought would better sell to the reading
public. Every business enterprise endeavors to increase its profits. In the process, it may adopt or
devise means designed towards that goal. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. . . . The free will of management to conduct its own business affairs to achieve its
purposes cannot be denied.86

6) HON. PATRICIA A. STO.TOMAS, ROSALINDA BALDOZ and LUCITA LAZO, Petitioners,

vs.
REY SALAC, WILLIE D. ESPIRITU, MARIO MONTENEGRO, DODGIE BELONIO, LOLIT SALINEL
and BUDDY BONNEVIE,
‘The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground
that allowing the offended parties to file the criminal case in their place
of residence would negate the general rule on venue of criminal cases
which is the place where the crime or any of its essential elements were
committed. Venue, said the RTC, is jurisdictional in penal laws and,
allowing the filing of criminal actions at the place of residence of the
offended parties violates their right to due process. Section 9 provides:

SEC. 9. Venue. – A criminal action arising from illegal recruitment as

defined herein shall be filed with the Regional Trial Court of the
province or city where the offense was committed or where the offended
party actually resides at the time of the commission of the offense:
Provided, That the court where the criminal action is first filed shall
acquire jurisdiction to the exclusion of other courts: Provided, however,
That the aforestated provisions shall also apply to those criminal actions
that have already been filed in court at the time of the effectivity of this
Act.

But there is nothing arbitrary or unconstitutional in Congress fixing an

alternative venue for violations of Section 6 of R.A. 8042 that differs
from the venue established by the Rules on Criminal Procedure. Indeed,
Section 15(a), Rule 110 of the latter Rules allows exceptions provided
by laws. Thus:

SEC. 15. Place where action is to be instituted.— (a) Subject to existing

laws, the criminal action shall be instituted and tried in the court of the
municipality or territory where the offense was committed or where any
of its essential ingredients occurred. emphasis supplied)
xxxx

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal

actions is, consistent with that law’s declared policy15 of providing a
criminal justice system that protects and serves the best interests of the
victims of illegal recruitment

G.R. 167590
Issue is on the constitutionality of Sections 6 (for being vague as it fails to distinguish
licensed & non-licensed recruiters), 7 (for being sweeping in its application of
penalties), and 9 (for allowing the offended parties to file the criminal case in their
place of residence instead of filing it at the place where the crime or any of its
essential elements were committed) of R.A. 8042.
Section 6 defines the crime of “illegal recruitment” and enumerates the acts
constituting the same. Section 7 provides the penalties for prohibited acts.
For Section 6 – Illegal recruitment, as defined, is clear and
unambiguous and, contrary to the RTC’s finding, actually makes
a distinction between licensed and non-licensed recruiters.

By its terms, persons who engage in “canvassing, enlisting,

contracting, transporting, utilizing, hiring, or procuring
workers” without the appropriate government license or
authority are guilty of illegal recruitment whether or not they
commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting,
etc. of OFWs, although with the appropriate government license
or authority, are guilty of illegal recruitment only if they commit
any of the wrongful acts enumerated in Section 6.

For Section 7 – Congress was within its prerogative to determine

what individual acts are equally reprehensible, consistent with
the State policy of according full protection to labor, and
deserving of the same penalties. It is not within the power of the
Court to question the wisdom of this kind of choice.

Section 9 of R.A. 8042 allowed the filing of criminal actions arising from “illegal
recruitment” before the RTC of the province or city where the offense was committed
or where the offended party actually resides at the time of the commission of the
offense.
* There is nothing arbitrary or unconstitutional in Congress fixing
an alternative venue for violations of Section 6 of R.A. 8042 that
differs from the venue established by the Rules on Criminal
Procedure. Rule 110 Sec. 15 (a) of the Rules of Court allows exceptions. Thus:
SEC. 15. Place where action is to be instituted.— (a) Subject to existing laws, the
criminal action shall be instituted and tried in the court of the municipality or territory
where the offense was committed or where any of its essential ingredients occurred.
Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is,
consistent with that law’s declared policy of providing a criminal justice system that
protects and serves the best interests of the victims of illegal recruitment.
1. G.R. 167590, G.R. 182978-79, and G.R. 184298-99
(Constitutionality of Section 10, last sentence of 2nd paragraph on the liability of the
principal/employer and the recruitment/placement agency)
The liability of corporate directors and officers is not automatic.
To make them jointly and solidarily liable with their company,
there must be a finding that they were remiss in directing the
affairs of that company, such as sponsoring or tolerating the
conduct of illegal activities (MAM Realty Development Corp. v.
National Labor Relations Commission, 314 Phil. 838, 845 (1995).

7) UNILEVER PHILIPPINES, INC., Petitioner,

vs.
MARIA RUBY M. RIVERA,

When is a dismissed employee

entitled to separation pay?
0
BY THE MANILA TIMES ON JULY 12, 2013BENCHPRESS
A company engaged in the production, manufacture, sale, and distribution of various food,
home and personal care products sought the dismissal of its Area Activation Executive in
Cotabato City and Davao City, whose primary tasks were the management of sales,
distribution and promotional activities in her area, and the supervision of a third party
service provider for the company’s activation projects.

The company conducted a random audit and discovered that there were fictitious billings
and fabricated receipts supposedly from the third party service provider amounting to P11.2
Million. Some funds were likewise diverted from their original projects. Upon further
verification, the third party service provider reported that the fund deviations were upon the
instruction of the said Area Activation Executive.
The company issued a show-cause notice to the executive, asking her to explain her
conversion and misappropriation of resources and breach of company policy. The
executive admitted the fund diversions but explained that they were all utilized for the
company’s promotional ventures. She had resorted to such measure because it was
difficult to procure funds from the head office.

The company dismissed her for serious breach of company policy. The executive asked for
a reconsideration and for the company to allow her to receive her retirement benefits,
considering that she had worked for them for fourteen (14) years.

Because her request was denied, the executive filed a complaint for illegal dismissal. The
Labor Arbiter dismissed her claim for lack of merit. On appeal, the National Labor Relations
Commission (NLRC) held that although there was a valid dismissal, she was entitled to
retirement benefits because it found the company guilty of violating the twin notice
requirement in labor cases.

The company appealed to the Court of Appeals (CA), which deleted the award for
retirement benefits. The CA pointed to the company’s retirement plan, which provides that a
validly dismissed employee is disqualified from claiming retirement benefits regardless of
length of service. But considering that there was no proof that the executive gained any
pecuniary benefit from her breach, which was actually aimed at increasing the sales
efficiency of the company, the CA awarded separation pay as a measure of social justice.

Before the Supreme Court, the company challenged the award of separation pay in view of
the fact that the executive was validly dismissed. Deciding in favor of the company, the
High Court held:

As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation pay

xxxx

In exceptional cases, however, the Court has granted separation pay to a legally dismissed
employee as an act of “social justice” or on “equitable grounds.” In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the
moral character of the employee
xxxx

In this case, [the executive]was dismissed from work because she intentionally
circumvented a strict company policy, manipulated another entity to carry out her
instructions without the company’s knowledge and approval, and directed the diversion of
funds, which she even admitted doing under the guise of shortening the laborious process
of securing funds for promotional activities from the head office. These transgressions were
serious offenses that warranted her dismissal and proved that her termination from work
was for a just cause. Hence, she is not entitled to a separation pay (Unilever Philippines v.
Rivera, G.R. No. 201701, 3 June 2013, J. Mendoza).
UNILEVER PHILIPPINES, INC. v. MARIA
RUBY M. RIVERA, G.R. No. 201701, June
03, 2013
Labor Law; Procedural rules in terminating the services of an employee. To clarify, the following
should be considered in terminating the services of employees:

1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. “Reasonable opportunity “under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.

In this case, Unilever was not direct and specific in its first notice to Rivera. The words it used were
couched in general terms and were in no way informative of the charges against her that may result
in her dismissal from employment. Evidently, there was a violation of her right to statutory due
process warranting the payment of indemnity in the form of nominal damages.

Q: What are the instances when award of separation pay is proper?

A: Under the Code, separation pay may be awarded only in cases

when the termination of employment is due to:
a) installation of labor saving devices;
b) redundancy;
c) retrenchment;
d) closing or cessation of business operations;
e) disease of an employee and his continued employment is
prejudicial to himself or his co-employees; and
f) when an employee is illegally dismissed but reinstatement is
no longer feasible.

Q: When may an employer refuse to provide separation pay?

A: Separation pay shall be allowed as a measure of social justice

only in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his
moral character. Where the reason for the valid dismissal is an
offense involving moral turpitude, the employer may not be
required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of
social justice. (Alan D. Gustilo vs. Wyeth Philippines, Inc., G.R. No.
149629, October 4, 2004)

UNILEVER PHILIPPINES, INC. vs. MARIA RUBY M. RIVERA

G.R. No. 201701, June 3, 2013, 697 SCRA 136

------------------------------------------------------------------------------------------------------------------------------------

ISSUE: Whether she is entitled for separation pay.

HELD: YES. She was granted separation pay as an act of “social

justice” or on “equitable” grounds taking into considerations two
(2) criteria that it is required that a dismissal for a just cause (1)
was not for serious misconduct and (2) did not reflect on the moral
character of the employee.
8.) ARMANDO ALILING, Petitioner,
vs.
JOSE B. FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R. LARIOSA, and WIDE WIDE
WORLD EXPRESS CORPORATION, Respondents.

assigned was a new developed service. In this regard, it is noted:

"Due process dictates that an employee be apprised beforehand of the conditions of his employment
and of the terms of advancement therein. Precisely, implicit in Article 281 of the Labor Code is the
requirement that reasonable standards be previously made known by the employer to the employee
at the time of his engagement (Ibid, citing Sameer Overseas Placement Agency, Inc. vs. NLRC,
G.R. No. 132564, October 20, 1999).28

As pointed out, respondent company did not make known the reasonable standards under which he
will qualify as a regular employee at the time of his engagement. Hence, he was deemed to have
been hired from day one as a regular employee.30 (Emphasis supplied.)

Conversely, an employer is deemed to substantially comply with the rule on notification of standards
if he apprises the employee that he will be subjected to a performance evaluation on a particular date
after his hiring.

Article 281 of the Labor Code

ART. 281. Probationary employment. - Probationary employment shall not exceed six (6) months
from the date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. 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. (Emphasis supplied.)

Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code

Sec. 6. Probationary employment. – There is probationary employment where the employee, upon
his engagement, is made to undergo a trial period where the employee determines his fitness to
qualify for regular employment, based on reasonable standards made known to him at the time of
engagement.

Probationary employment shall be governed by the following rules:

xxxx

(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where
no standards are made known to the employee at that time, he shall be deemed a regular employee.
(Emphasis supplied.)

Settled is the rule that the findings of the Labor Arbiter, when affirmed by the NLRC and the Court of
Appeals, are binding on the Supreme Court, unless patently erroneous. It is not the function of the
Supreme Court to analyze or weigh all over again the evidence already considered in the
proceedings below. The jurisdiction of this Court in a petition for review on certiorari is limited to
reviewing only errors of law, not of fact, unless the factual findings being assailed are not supported
by evidence on record or the impugned judgment is based on a misapprehension of facts.32
To justify fully the dismissal of an employee, the employer must, as a rule, prove that the dismissal
was for a just cause and that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.34

Article 282 of the Labor Code considers any of the following acts or omission on the part of the
employee as just cause or ground for terminating employment:

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

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

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

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

(e) Other causes analogous to the foregoing. (Emphasis supplied)

In Lim v. National Labor Relations Commission,35 the Court considered inefficiency as an analogous
just cause for termination of employment under Article 282 of the Labor Code:

We cannot but agree with PEPSI that "gross inefficiency" falls within the purview of "other causes
analogous to the foregoing," this constitutes, therefore, just cause to terminate an employee under
Article 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the
latter either in general or in some specific detail; or has a close relationship with the latter. "Gross
inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on the part
of the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this
Court ruled that failure to observed prescribed standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)

may be visited with a penalty even more severe than demotion. Thus,

[t]he practice of a company in laying off workers because they failed to make the work quota has
been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota
assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or
probationary status of their employment. Failure to observe prescribed standards of work, or to
fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the allotted reasonable period, or by producing unsatisfactory results. This
management prerogative of requiring standards may be availed of so long as they are exercised
in good faith for the advancement of the employer's interest. (Emphasis supplied.)

In fine, an employee’s failure to meet sales or work quotas falls under the concept of gross inefficiency,
which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article 282
of the Code. However, in order for the quota imposed to be considered a valid productivity standard
and thereby validate a dismissal, management’s prerogative of fixing the quota must be exercised in
good faith for the advancement of its interest. The duty to prove good faith, however, rests with
WWWEC as part of its burden to show that the dismissal was for a just cause.

Employees must be reminded that while probationary employees do not enjoy permanent status, they
enjoy the constitutional protection of security of tenure. They can only be terminated for cause or when
they otherwise fail to meet the reasonable standards made known to them by the employer at the time
of their engagement.37

As earlier stated, to effect a legal dismissal, the employer must show not only a valid ground
therefor, but also that procedural due process has properly been observed. When the Labor Code
speaks of procedural due process, the reference is usually to the two (2)-written notice rule
envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code,
which provides:

Section 2. Standard of due process: requirements of notice. — In all cases of termination of

employment, the following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and

(c) A written notice [of] termination served on the employee indicating that upon due
consideration of all the circumstance, grounds have been established to justify his
termination.

In case of termination, the foregoing notices shall be served on the employee’s last known address.

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:

Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. (Emphasis supplied)
In Golden Ace Builders v. Talde,41 the Court ruled:

The basis for the payment of backwages is different from that for the award of separation
pay. Separation pay is granted where reinstatement is no longer advisable because of strained
1âwphi1

relations between the employee and the employer. Backwages represent compensation that should
have been earned but were not collected because of the unjust dismissal. The basis for computing
backwages is usually the length of the employee's service while that for separation pay is the actual
period when the employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines
instructs:

[T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for
under Article 279 of the Labor Code and as held in a catena of cases, an employee who is
dismissed without just cause and without due process is entitled to backwages and reinstatement or
payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The
two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay
if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up
to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation
pay equivalent to one (1) month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment of backwages. x x x

Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no
longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated. (emphasis in the original; italics
supplied)

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand,
such payment liberates the employee from what could be a highly oppressive work environment. On
the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be adequately supported by

evidence — substantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy.
9) MANTLE TRADING SERVICES, INCORPORATED AND/OR BOBBY DEL
ROSARIO, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PABLO S. MADRIAGA, Respondents.

An employee should be compensated for the work he has rendered in accordance with the minimum
wage, and must be appropriately remunerated when he was suffered to work on a regular holiday
during the time he was employed by the petitioner company. As regards the 13th month pay, an
employee who was terminated at any time before the time for payment of the 13th month pay is
entitled to this monetary benefit in proportion to the length of time he worked during the year,
reckoned from the time he started working during the calendar year up to the time of his termination
from the service.26

As a general rule, one who pleads payment has the burden of proving it. Even where the employee
must allege nonpayment, the general rule is that the burden rests on the employer to prove
payment, rather than on the employee to prove nonpayment. The reason for the rule is that the
pertinent personnel files, payrolls, records, remittances and other similar documents — which will
show that overtime, differentials, service incentive leave and other claims of workers have been paid
— are not in the possession of the employee but in the custody and absolute control of the
employer. 27 Since in the case at bar petitioner company has not shown any proof of payment of the
correct amount of salary, holiday pay and 13th month pay, we affirm the award of Madriaga’s
monetary claims.

10) WILGEN LOON, JERRY ARCILLA, ALBERTPEREYE, ARNOLD PEREYE, EDGARDO

OBOSE, ARNEL MALARAS, PATROCINO TOETIN, EVELYN LEONARDO, ELMER GLOCENDA,
RUFO CUNAMAY, ROLANDOSAJOL, ROLANDO ABUCAYON, JENNIFER NATIVIDAD,
MARITESS TORION, ARMANDO LONZAGA, RIZAL GELLIDO, EVIRDE HAQUE,1 MYRNA
VINAS, RODELITO AYALA, WINELITO OJEL, RENATO RODREGO, NENA ABINA, EMALYN
OLIVEROS, LOUIE ILAGAN, JOEL ENTIG, ARNEL ARANETA, BENJAMIN COSE, WELITO
LOON and WILLIAM ALIPAO, Petitioners,
vs.
POWER MASTER, INC., TRI-C GENERAL SERVICES, and SPOUSES HOMER and CARINA
ALUMISIN,Respondents.

WILGEN LOON, ET AL. v. POWER

MASTER, INC., ET AL., G.R. NO. 189404,
December 11, 2013
Labor Law; Issue of the appeal bond’s validity may be raised for the first time on appeal since its
proper filing is a jurisdictional requirement. The requirement that the appeal bond should be issued
by an accredited bonding company is mandatory and jurisdictional. The rationale of requiring an
appeal bond is to discourage the employers from using an appeal to delay or evade the employees’
just and lawful claims. It is intended to assure the workers that they will receive the money judgment
in their favor upon the dismissal of the employer’s appeal.

Labor law; A party may only adduce evidence for the first time on appeal if he adequately explains
his delay in the submission of evidence and he sufficiently proves the allegations sought to be
proven. In labor cases, strict adherence to the technical rules of procedure is not required. However,
this liberal policy should still be subject to rules of reason and fair play. The liberality of procedural
rules is qualified by two requirements: (1) a party should adequately explain any delay in the
submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven.
The reason for these requirements is that the liberal application of the rules before quasi-judicial
agencies cannot be used to perpetuate injustice and hamper the just resolution of the case. Neither
is the rule on liberal construction a license to disregard the rules of procedure.

Labor Law; December 2013 Philippine

Supreme Court Decisions on Labor Law
| LEXOTERICA: A PHILIPPINE BLAWG
See- December 2013 Philippine Supreme Court Decisions on Labor Law | LEXOTERICA: A PHILIPPINE
BLAWG

"x x x.

Appeal; NLRC; accredited bonding company; revocation of authority is prospective in

application. The respondents filed a surety bond issued by Security Pacific
Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security
Pacific was still an accredited bonding company. However, the NLRC revoked its
accreditation on February 16, 2003. This subsequent revocation should not
prejudice the respondents who relied in good faith on the then subsisting
accreditation of Security Pacific. In Del Rosario v. Philippine Journalists, Inc.
(G.R. No. 181516, August 19, 2009), it was held that a bonding company’s
revocation of authority is prospective in application. Nonetheless, the
respondents should post a new bond issued by an accredited bonding company
in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of
Procedure, which states that “[a] cash or surety bond shall be valid and effective
from the date of deposit or posting, until the case is finally decided, resolved or
terminated or the award satisfied.” Wilgen Loon, et al. v. Power Master, Inc., et
al., G.R. No. 189404, December 11, 2013.
Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code
provides that “[i]n case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the NLRC in the
amount equivalent to the monetary award in the judgment appealed
from.” Contrary to the respondents’ claim, the issue of the appeal bond’s validity
may be raised for the first time on appeal since its proper filing is a jurisdictional
requirement. The requirement that the appeal bond should be issued by an
accredited bonding company is mandatory and jurisdictional. The rationale of
requiring an appeal bond is to discourage the employers from using an appeal to
delay or evade the employees’ just and lawful claims. It is intended to assure the
workers that they will receive the money judgment in their favor if the employer’s
appeal is dismissed. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404,
December 11, 2013.
Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor
the rules require the verification of the supplemental appeal. Furthermore,
verification is a formal, not a jurisdictional, requirement. It is mainly intended to
give assurance that the matters alleged in the pleading are true and correct and
not of mere speculation. Also, a supplemental appeal is merely an addendum to
the verified memorandum on appeal that was earlier filed in the case; hence, the
requirement for verification has been substantially complied. Wilgen Loon, et al. v.
Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.

Attorney’s fees; when entitled. An employee is entitled to

an award of attorney’s fees equivalent to ten percent
(10%) of the amount of the wages in actions for
unlawful withholding of wages pursuant to Article 111
of the Labor Code. Wilgen Loon, et al. v. Power Master,
Inc., et al., G.R. No. 189404, December 11, 2013.
Backwages; when entitled. In termination cases, the
burden of proving just and valid cause for dismissing
an employee from his employment rests upon the
employer. The employer’s failure to discharge this
burden in the instant case arising from their non-
submission of evidence at the proceedings before the
labor arbiter resulted in the finding that the dismissal
is unjustified. Thus, the employees are entitled to the
payment of backwages. Wilgen Loon, et al. v. Power
Master, Inc., et al., G.R. No. 189404, December 11, 2013
Failing to prove just and valid cause for the dismissal, the Court held that the
petitioners are entitled to salary differential, service incentive, holiday, and
thirteenth month pays. As in illegal dismissal cases, the general rule is that the
burden rests on the defendant to prove payment rather than on the plaintiff to
prove non-payment of these money claims. However, the Court decided that
they are not entitled to overtime and premium pays. The burden of proving
entitlement to overtime pay and premium pay for holidays and rest days rests on
the employee because these are not incurred in the normal course of
business. In the present case, the petitioners failed to adduce any evidence that
would show that they actually rendered service in excess of the regular eight
working hours a day, and that they in fact worked on holidays and rest
days. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013

Labor cases; strict adherence to the technical rules of

procedure is not required; when liberality allowed. In labor
cases, strict adherence to the technical rules of
procedure is not required. Time and again, the Court
has allowed evidence to be submitted for the first time
on appeal with the NLRC in the interest of substantial
justice. Thus, it has consistently supported the rule
that labor officials should use all reasonable means to
ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or
procedure, in the interest of due process. However,
this liberal policy should still be subject to rules of
reason and fairplay. The liberality of procedural rules
is qualified by two requirements: (1) a party should
adequately explain any delay in the submission of
evidence; and (2) a party should sufficiently prove the
allegations sought to be proven. The reason for these
requirements is that the liberal application of the rules
before quasi-judicial agencies cannot be used to
perpetuate injustice and hamper the just resolution of
the case. Neither is the rule on liberal construction a
license to disregard the rules of procedure. In the
present case, the Court held that the respondents
failed to adequately explain their delay in the
submission of evidence and prove the allegations
sought to be proven. Wilgen Loon, et al. v. Power Master,
Inc., et al., G.R. No. 189404, December 11, 2013.
10) SAN MIGUEL CORPORATION, petitioner
vs.
PROSPERO A. ABALLA

HELD:
The test to determine the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do the work according to his
own methods and without being subject to the control of the employer, except only as to
the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a

limited purpose, i.e., to ensure that the employees are paid their wages. The principal
employer becomes jointly and severally liable with the job contractor, only for the
payment of the employees’ wages whenever the contractor fails to pay the same. Other
than that, the principal employer is not responsible for any claim made by the employees.

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 directly employed
by the principal employer.

The Contract of Services between SMC and Sunflower shows that the parties clearly
disavowed the existence of an employer-employee relationship between SMC and private
respondents. The language of a contract is not, however, determinative of the parties’
relationship; rather it is the totality of the facts and surrounding circumstances of the
case. A party cannot dictate, by the mere expedient of a unilateral declaration in a
contract, the character of its business, i.e., whether as labor-only contractor or
job contractor, it being crucial that its character be measured in terms of and determined
by the criteria set by statute.

What appears is that Sunflower does not have substantial capitalization or investment in
the form of tools, equipment, machineries, work premises and other materials to qualify
it as an independent contractor. On the other hand, it is gathered that the lot, building,
machineries and all other working tools utilized by Aballa et al. in carrying out their tasks
were owned and provided by SMC.

And from the job description provided by SMC itself, the work assigned to Aballa et al.
was directly related to the aquaculture operations of SMC. As for janitorial and
messengerial services, that they are considered directly related to the principal business
of the employer has been jurisprudentially recognized.

Furthermore, Sunflower 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, SMC, its apparent role having been merely to
recruit persons to work for SMC.

All the foregoing considerations affirm by more than substantial evidence the existence
of an employer-employee relationship between SMC and Aballa et al. Since Aballa et al.
who were engaged in shrimp processing performed tasks usually necessary or desirable
in the aquaculture business of SMC, they should be deemed regular employees of the
latter and as such are entitled to all the benefits and rights appurtenant to regular
employment. They should thus be awarded differential pay corresponding to the
difference between the wages and benefits given them and those accorded SMC’s other
regular employees.

ISSUE:
Is Sunflower an independent contractor?

HELD:NO.

The following considerations affirm by more than substantial evidence

the existence of an employer-employee relationship between SMC
and respondents:

The Contract of Services between SMC and Sunflower shows that the
parties clearly disavowed the existenceof an employer-employee
relationship between SMC and respondents. The language of a contract
is not, however,

determinative of the parties’ relationsh

ip; rather it is the totality of the facts and surrounding circumstances of

thecase. A party cannot dictate, by the mere expedient of a unilateral de
claration in a contract, the character of itsbusiness,

i.e.

, whether as labor-only contractor or job contractor, it being crucial that

its character be measured interms of and determined by the criteria
set by statute. What appears is that Sunflower does not have substantial
capitalization or investment in the form of tools,equipment, machineries,
work premises and other materials to qualify it as an independent
contractor. And from the job description provided by SMC itself, the
work assigned to private respondents was directlyrelated to the
aquaculture operations of SMC. Undoubtedly, the nature of the work
performed by respondents inshrimp harvesting, receiving and packing
formed an integral part of the shrimp processing operations of SMC.
As forjanitorial and messengerial services, that they are considered
directly related to the principal business of the employer has
been jurisprudentially recognized.Furthermore, Sunflower did not carry
on an independent business or undertake the performance of itsservice
contract according to its own manner and method, free from the control
and supervision of its principal, SMC,its apparent role having been
merely to recruit persons to work for SMC. Thus, it is gathered from the
evidence adduced by respondents before the LA that their daily
time records were signed by SMC supervisors which fact shows that
SMC exercised the power of control and supervision over
itsemployees. And control of the premises in which private respondents
worked was by SMC. These tend to disprovethe independence of the
contractor.

Issue: WON the Court of Appeals erred in sustaining the findings of the labor arbiter
and the NLRC and in dismissing SMC’s claims that respondent was terminated from
service with just cause.

Held:

Proof beyond reasonable doubt is not required as a basis for judgment on the legality
of an employer’s dismissal of an employee, nor even preponderance of evidence for
that matter, substantial evidence being sufficient. In the instant case, while there may
be no denying that respondent’s medical card had falsified entries in it, SMC was
unable to prove, by substantial evidence, that it was respondent who made the
unauthorized entries. Besides, SMC’s (Your) Guide on Employee Conduct punishes
the act of falsification of company records or documents; it does not punish mere
possession of a falsified document.

Respondent cannot feign surprise nor ignorance of the earlier AWOPs he had
incurred. He was given a warning for his 2, 4, and 11 January and 26, 28, and 29 April
1997 AWOPs. In the same warning, he was informed that he already had six AWOPs
for 1997. He admitted that he was absent on 7 and 8 May 1997. He was also given
notices to explain his AWOPs for the period 26 May to 2 June 1997, which he
received but refused to acknowledge. It does not take a genius to figure out that as
early as June 1997, he had more than nine AWOPs.

In any case, when SMC imposed the penalty of dismissal for the 12th and 13th
AWOPs, it was acting well within its rights as an employer. An employer has the
prerogative to prescribe reasonable rules and regulations necessary for the proper
conduct of its business, to provide certain disciplinary measures in order to implement
said rules and to assure that the same would be complied with. An employer enjoys a
wide latitude of discretion in the promulgation of policies, rules and regulations on
work-related activities of the employees.

It is axiomatic that appropriate disciplinary sanction is within the purview of

management imposition. Thus, in the implementation of its rules and policies, the
employer has the choice to do so strictly or not, since this is inherent in its right to
control and manage its business effectively. Consequently, management has the
prerogative to impose sanctions lighter than those specifically prescribed by its rules,
or to condone completely the violations of its erring employees. Of course, this
prerogative must be exercised free of grave abuse of discretion, bearing in mind the
requirements of justice and fair play.
All told, we find that SMC acted well within its rights when it dismissed respondent
for his numerous absences. Respondent was afforded due process and was validly
dismissed for cause.
11) GARDEN OF MEMORIES PARK and LIFE PLAN, INC. and PAULINA T.
REQUIÑO, Petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION

At the outset, it must be stressed that the jurisdiction of this Court in a petition for review
on certiorari under Rule 45 of the Rules of Court is limited to reviewing errors of law, not of fact. This
is in line with the well-entrenched doctrine that the Court is not a trier of facts, and this is strictly
adhered to in labor cases.12 Factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdictions, are generally accorded not only respect but
even finality, and bind the Court when supported by substantial evidence. Particularly when passed
upon and upheld by the CA, they are binding and conclusive upon the Court and will not normally be
disturbed.13 This is because it is not the function of this Court to analyze or weigh all over again the
evidence already considered in the proceedings below; or reevaluate the credibility of witnesses; or
substitute the findings of fact of an administrative tribunal which has expertise in its special field.14

Section 106 of the Labor Code on contracting and subcontracting provides:

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

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

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

In the same vein, Sections 8 and 9, DOLE Department Order No. 10, Series of 1997, state that:

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

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

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

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

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

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

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

(c) For cases not falling under this Article, the Secretary of Labor shall determine
through appropriate orders whether or not the contracting out of labor is permissible
in the light of the circumstances of each case and after considering the operating
 needs of the employer and the rights of the workers involved. In such case, he may
prescribe conditions and restrictions to insure the protection and welfare of the
workers."

On the matter of labor-only contracting, Section 5 of Rule VIII-A of the Omnibus Rules Implementing
the Labor Code, provides:

Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared

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

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

Xxxx

Thus, in determining the existence of an independent contractor relationship, several factors

may be considered, such as, but not necessarily confined to, whether or not the contractor is
carrying on an independent business; the nature and extent of the work; the skill required;
the term and duration of the relationship; the right to assign the performance of specified
pieces 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 premises, tools, appliances, materials and labor; and the mode,
manner and terms of payment.15

On the other hand, there is labor-only contracting where: (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 requirement of the law in determining the existence of independent contractorship is that the
contractor should undertake the work on his own account, under his own responsibility, according to
his own manner and method, free from the control and direction of the employer except as to the
results thereof.21 In this case, however, the Service Contract Agreement clearly indicates that
Requiño has no discretion to determine the means and manner by which the work is performed.
Rather, the work should be in strict compliance with, and subject to, all requirements and standards
of Garden of Memories.
12) ISABELO VIOLETA and JOVITO BALTAZAR, petitioners,
vs.

NATIONAL LABOR RELATIONS COMMISSION-