ATLANTA INDUSTRIES, INC. V. SEBOLINO Almoite allegedly entered into a compromise agreement with Atlanta.

The
agreement provided that except for Ramos, Atlanta agreed to pay the workers a
specified amount as settlement, and to acknowledge them at the same time as
G.R. No. 187320
regular employees.
On December 29, 2006,the NLRC rendered a decision, on appeal, modifying
For resolution is the petition for review on certiorari assailing the decision the ruling of the labor arbiter, as follows: (1) withdrawing the illegal dismissal
and the resolution of the Court of Appeals. finding with respect to Sagun, Mabanag, Sebolino and Pedregoza; (2) affirming the
FACTS: dismissal of the complaints of dela Cruz, Zaño, Magalang and Chiong; (3) approving
the compromise agreement entered into by Costales, Ramos, Villagomez, Almoite
and Alegria, and (4) denying all other claims.
Complainants Aprilito R. Sebolino, et al., filed several complaints for illegal
Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the
dismissal, regularization, underpayment, nonpayment of wages and other money
decision, but the NLRC denied the motion in its March 30, 2007[9] resolution. The
claims, as well as claims for moral and exemplary damages and attorney’s fees
four then sought relief from the CA through a petition for certiorari under
against the petitioners Atlanta Industries, Inc. (Atlanta) and its President and
Rule 65 of the Rules of Court. They charged that the NLRC committed grave
Chief Operating Officer Robert Chan. Atlanta is a domestic corporation engaged
abuse of discretion in: (1) failing to recognize their prior employment with
in the manufacture of steel pipes.
Atlanta; (2) declaring the second apprenticeship agreement valid; (3) holding that
The complaints were consolidated and were raffled to Labor Arbiter Daniel
the dismissal of Sagun, Mabanag, Sebolino and Melvin Pedregoza is legal; and (4)
Cajilig, but were later transferred to Labor Arbiter Dominador B. Medroso, Jr.
upholding the compromise agreement involving Costales, Ramos, Villagomez,
The complainants alleged that they had attained regular status as they were
Almoite and Alegria.
allowed to work with Atlanta for more than six (6) months from the start of a
The CA Decision
purported apprenticeship agreement between them and the company. They claimed
that they were illegally dismissed when the apprenticeship agreement expired.
In defense, Atlanta and Chan argued that the workers were not entitled to The CA granted the petition.
regularization and to their money claims because they were engaged as Atlanta and Chan moved for reconsideration, but the CA denied the motion in a
apprentices under a government-approved apprenticeship program. The company resolution rendered on March 25, 2009.[15] Hence, the present petition.
offered to hire them as regular employees in the event vacancies for regular The Petition
positions occur in the section of the plant where they had trained. They also
claimed that their names did not appear in the list of employees (Master List)prior
Atlanta seeks a reversal of the CA decision, contending that the appellate court
to their engagement as apprentices.
erred in (1) concluding that Costales, Almoite, Sebolino and Sagun were employed
The Compulsory Arbitration Rulings
by Atlanta before they were engaged as apprentices; (2) ruling that a second
apprenticeship agreement is invalid; (3) declaring that the respondents were
On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with illegally dismissed; and (4) disregarding the compromise agreement executed by
respect to dela Cruz, Magalang, Zaño and Chiong, but found the termination of Costales and Almoite
service of the remaining nine to be illegal.Consequently, the arbiter awarded the The Court’s Ruling
dismissed workers backwages, wage differentials, holiday pay and service
incentive leave pay amounting to P1,389,044.57 in the aggregate.
The merits of the case
Atlanta appealed to the National Labor Relations Commission (NLRC). In the
meantime, or on October 10, 2006, Ramos, Alegria, Villagomez, Costales and

1
 We find no merit in the petition. The CA committed no reversible error
in nullifying the NLRC decision and in affirming the labor arbiter’s ruling, as it
applies to Costales, Almoite, Sebolino and Sagun. Specifically, the CA
correctly ruled that the four were illegally dismissed because (1) they were
already employees when they were required to undergo apprenticeship and (2)
apprenticeship agreements were invalid.
The following considerations support the CA ruling.
First. Based on company operations at the time material to the case,
Costales, Almoite, Sebolino and Sagun were already rendering service to the
company as employees before they were made to undergo apprenticeship. The
company itself recognized the respondents’ status through relevant operational
records – in the case of Costales and Almoite, the CPS monthly report for
December 2003 which the NLRC relied upon and, for Sebolino and Sagun, the
production and work schedule for March 7 to 12, 2005 cited by the CA.
Under the CPS monthly report, Atlanta assigned Costales and Almoite to the
first shift (7:00 a.m. to 3:00 p.m.) of the Section’s work. The Production and Work
Schedules, in addition to the one noted by the CA, showed that Sebolino and
Sagun were scheduled on different shifts vis-à-vis the production and work of the
company’s PE/Spiral Section for the periods July 5-10, 2004; October 25-31,
2004; November 8-14, 2004; November 16-22, 2004; January 3-9, 2005;January
10-15, 2005; March 7-12, 2005 and March 17-23, 2005.
We stress that the CA correctly recognized the authenticity of
the operational documents, for the failure of Atlanta to raise a challenge
against these documents before the labor arbiter, the NLRC and the CA itself.
The appellate court, thus, found the said documents sufficient to establish
the employment of the respondents before their engagement as apprentices.
Second. The Master List (of employees) that the petitioners heavily rely
upon as proof of their position that the respondents were not Atlanta’s employees,
at the time they were engaged as apprentices, is unreliable and does not inspire
belief.
The list, consisting of several pages, is hardly legible. It requires extreme
effort to sort out the names of the employees listed, as well as the other data
contained in the list. For this reason alone, the list deserves little or no
consideration. As the respondents also pointed out, the list itself contradicts a lot
of Atlanta’s claims and allegations, thus: it lists only the names of inactive
employees; even the names of those the NLRC found to have been employed by
Atlanta, like Costales and Almoite, and those who even Atlanta claims attained
regular status on January 11, 2006, do not appear in the list when it was supposed
to account for all employees “as of May 6, 2006.” Despite the “May 6, 2006” cut
off date, the list contains no entries of employees who were hired or who resigned
in 2005 and 2006. We note that the list contains the names of employees from
1999 to 2004.
We cannot fault the CA for ignoring the Master List even if Bernardo, its
head office accountant, swore to its correctness and authenticity. Its substantive
unreliability gives it very minimal probative value. Atlanta would have been better
served, in terms of reliable evidence, if true copies of the payroll (on which the
list was based, among others, as Bernardo claimed in her affidavit) were
presented instead.
Third. The fact that Costales, Almoite, Sebolino and Sagun were already
rendering service to the company when they were made to undergo apprenticeship
(as established by the evidence) renders the apprenticeship agreements
irrelevant as far as the four are concerned. This reality is highlighted by the CA
finding that the respondents occupied positions such as machine operator,
scaleman and extruder operator – tasks that are usually necessary and desirable
in Atlanta’s usual business or trade as manufacturer of plastic building materials.
These tasks and their nature characterized the four as regular employees under
Article 280 of the Labor Code. Thus, when they were dismissed without just or
authorized cause, without notice, and without the opportunity to be heard, their
dismissal was illegal under the law.
Even if we recognize the company’s need to train its employees through
apprenticeship, we can only consider the first apprenticeship agreement for the
purpose. With the expiration of the first agreement and the retention of the
employees, Atlanta had, to all intents and purposes, recognized the completion of
their training and their acquisition of a regular employee status. To foist upon
them the second apprenticeship agreement for a second skill which was not even
mentioned in the agreement itself, is a violation of the Labor Code’s implementing
rules and is an act manifestly unfair to the employees, to say the least. This we
cannot allow.
Fourth. The compromise agreement allegedly entered into by Costales and
Almoite, together with Ramos, Villagomez and Alegria, purportedly in settlement
of the case before the NLRC, is not binding on Costales and Almoite because they
did not sign it. The company itself admitted that while Costales and Almoite were
initially intended to be a part of the agreement, it did not pursue their inclusion
“due to their regularization as early as January 11, 2006.”
2
Professional Video Inc. vs. TESDA, G.R. No. 155504, June 26, 2009,
Sovereignty, State Immunity from Suit, International Law
OCTOBER 21, 2017
FACTS:
In 1999, TESDA, an instrumentality of the government established under R.A.
No. 7796 (the TESDA Act of 1994) and attached to the DOLE to develop and
establish a national system of skills standardization, testing, and certification in
the country.
To fulfill this mandate, it sought to issue security-printed certification and/or
identification polyvinyl (PVC) cards to trainees who have passed the certification
process.
Professional Video Inc. (PROVI) signed and executed the “Contract Agreement
Project PVC ID Card issuance” for the provision of goods and services in the
printing and encoding of the PVC cards. PROVI was to provide TESDA with the
system and equipment compliant with the specifications defined in the proposal. In
return, TESDA would pay PROVI a specified sum of money after TESDA’s
acceptance of the contracted goods and services. PPOVI alleged that TESDA has
still an outstanding balance and still remains unpaid.
TESDA claims that it entered the Contract Agreement and Addendum in the
performance of its governmental function to develop and establish a national
system of skills standardization, testing, and certification; in the performance of
this governmental function, TESDA is immune from suit.
ISSUE:
Can TESDA be sued without its consent?
RULING:
TESDA, as an agency of the State, cannot be sued without its consent. The rule
that a state may not be sued without its consent is embodied in Section 3, Article
XVI of the 1987 Constitution and has been an established principle that antedates
this Constitution. It is as well a universally recognized principle of international
law that exempts a state and its organs from the jurisdiction of another state.
The principle is based on the very essence of sovereignty, and on the practical
ground that there can be no legal right as against the authority that makes the
law on which the right depends. It also rests on reasons of public policy. That
public service would be hindered, and the public endangered, if the sovereign
authority could be subjected to law suits at the instance of every citizen and,
consequently, controlled in the uses and dispositions of the means required for
the proper administration of the government.
The proscribed suit that the state immunity principle covers takes on various
forms, namely: a suit against the Republic by name; a suit against an
unincorporated government agency; a suit against a government agency covered by
a charter with respect to the agencys performance of governmental functions;
and a suit that on its face is against a government officer, but where the ultimate
liability will fall on the government. In the present case, the writ of attachment
was issued against a government agency covered by its own charter.
As discussed above, TESDA performs governmental functions, and the issuance of
certifications is a task within its function of developing and establishing a system
of skills standardization, testing, and certification in the country. From the
perspective of this function, the core reason for the existence of state immunity
applies i.e., the public policy reason that the performance of governmental
function cannot be hindered or delayed by suits, nor can these suits control the
use and disposition of the means for the performance of governmental functions.
CENTURY CANNING CORPORATION V. COURT OF APPEALS
G.R. No. 152894
3
August 17, 2007
This is a petition for review of the Decision and the Resolution of the Court of
Appeals.
The Facts
On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad
(Palad) as “fish cleaner” at petitioner’s tuna and sardines factory. Palad signed on
17 July 1997 an apprenticeship agreement with petitioner. Palad received an
apprentice allowance of P138.75 daily. On 25 July 1997, petitioner submitted its
apprenticeship program for approval to the Technical Education and Skills
Development Authority (TESDA) of the Department of Labor and Employment
(DOLE). On 26 September 1997, the TESDA approved petitioner’s apprenticeship
program.
According to petitioner, a performance evaluation was conducted on 15 November
1997, where petitioner gave Palad a rating of N.I. or “needs improvement” since
she scored only 27.75% based on a 100% performance indicator. Furthermore,
according to the performance evaluation, Palad incurred numerous tardiness and
absences. As a consequence, petitioner issued a termination notice5 dated 22
November 1997 to Palad, informing her of her termination effective at the close
of business hours of 28 November 1997.
Palad then filed a complaint for illegal dismissal, underpayment of wages, and
non-payment of pro-rated 13th month pay for the year 1997.
WHEREFORE, in view of the foregoing, the questioned decision of the NLRC
is hereby SET ASIDE and a new one entered, to wit:
(a) finding the dismissal of petitioner to be illegal;
(b) ordering private respondent to pay petitioner her underpayment in wages;
(c) ordering private respondent to reinstate petitioner to her former position
without loss of seniority rights and to pay her full backwages computed from the
time compensation was withheld from her up to the time of her reinstatement;
(d) ordering private respondent to pay petitioner attorney’s fees equivalent to ten
(10%) per cent of the monetary award herein; and
(e) ordering private respondent to pay the costs of the suit.
The Ruling of the Court of Appeals
The Court of Appeals held that the apprenticeship agreement which Palad signed
was not valid and binding because it was executed more than two months
before the TESDA approved petitioner’s apprenticeship program.
The Court of Appeals also held that petitioner illegally dismissed Palad. The Court
of Appeals ruled that petitioner failed to show that Palad was properly
apprised of the required standard of performance. The Court of Appeals
likewise held that Palad was not afforded due process because petitioner did
not comply with the twin requirements of notice and hearing.
The Issues

The Labor Arbiter dismissed the complaint for lack of merit but ordered
Petitioner raises the following issues:
petitioner to pay Palad her last salary and her pro-rated 13th month pay.
1. WHETHER OR NOT THE PRIVATE RESPONDENT WAS AN
On appeal, the National Labor Relations Commission (NLRC) affirmed with
APPRENTICE; and
modification the Labor Arbiter’s decision, thus:
2. WHETHER THERE WAS A VALID CAUSE IN TERMINATING THE
SERVICE OF PRIVATE RESPONDENT.
WHEREFORE, premises considered, the decision of the Arbiter dated 25 The Ruling of the Court
February 1999 is hereby MODIFIED in that, in addition, respondents are ordered
to pay complainant’s backwages for two (2) months in the amount of
The petition is without merit.
P7,176.00 (P138.75 x 26 x 2 mos.). All other dispositions of the Arbiter as
Registration and Approval by the TESDA of Apprenticeship Program Required
appearing in the dispositive portion of his decision are AFFIRMED.
Before Hiring of Apprentices
Upon denial of Palad’s motion for reconsideration, Palad filed a special civil action
for certiorari with the Court of Appeals. On 12 November 2001, the Court of
Appeals rendered a decision, the dispositive portion of which reads:

4
In the case at bench, the apprenticeship agreement between petitioner and
private respondent was executed on May 28, 1990 allegedly employing the
latter as an apprentice in the trade of “care maker/molder.” On the same date, an
apprenticeship program was prepared by petitioner and submitted to the
Department of Labor and Employment. However, the apprenticeship agreement
was filed only on June 7, 1990. Notwithstanding the absence of approval by the
Department of Labor and Employment, the apprenticeship agreement was
enforced the day it was signed.
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine qua non before an
apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of
Labor and Employment is a preliminary step towards its final approval and does
not instantaneously give rise to an employer-apprentice relationship.
Hence, since the apprenticeship agreement between petitioner and private
respondent has no force and effect in the absence of a valid apprenticeship
program duly approved by the DOLE, private respondent’s assertion that he was
hired not as an apprentice but as a delivery boy (“kargador” or “pahinante”)
deserves credence. He should rightly be considered as a regular employee of
petitioner as defined by Article 280 of the Labor Code x x x.
Republic Act No. 779615 (RA 7796), which created the TESDA, has
transferred the authority over apprenticeship programs from the Bureau of
Local Employment of the DOLE to the TESDA. RA 7796 emphasizes TESDA’s
approval of the apprenticeship program as a pre-requisite for the hiring of
apprentices.
Since Palad is not considered an apprentice because the apprenticeship agreement
was enforced before the TESDA’s approval of petitioner’s apprenticeship
program, Palad is deemed a regular employee performing the job of a “fish
cleaner.” Clearly, the job of a “fish cleaner” is necessary in petitioner’s business as
a tuna and sardines factory. Under Article 28021 of the Labor Code, an
employment is deemed regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade
of the employer.
Illegal Termination of Palad
To constitute valid dismissal from employment, two requisites must concur: (1) the
dismissal must be for a just or authorized cause; and (2) the employee must be
afforded an opportunity to be heard and to defend himself.
When the alleged valid cause for the termination of employment is not clearly
proven, as in this case, the law considers the matter a case of illegal dismissal.
Furthermore, Palad was not accorded due process. Even if petitioner did conduct
a performance evaluation on Palad, petitioner failed to warn Palad of her alleged
poor performance. In fact, Palad denies any knowledge of the performance
evaluation conducted and of the result thereof. Petitioner likewise admits that
Palad did not receive the notice of termination because Palad allegedly stopped
reporting for work. The records are bereft of evidence to show that petitioner
ever gave Palad the opportunity to explain and defend herself. Clearly, the
two requisites for a valid dismissal are lacking in this case.
WHEREFORE, we AFFIRM the Decision and the Resolution of the Court of
Appeals.
NITO ENTERPRISES VS. NLRC G.R. No. 114337 September 29, 1995
Apprenticeship
FACTS:
Petitioner Nito Enterprises hired Capili as an apprentice machinist under an
apprenticeship agreement for six months for a daily wage, which was 75% of
applicable minimum wage. However, shortly 2 months after he started work, Capili
was asked to resign for the reason that he had been causing accidents, that he
has been doing certain things beyond the scope of his duty, and that he had even
injured himself in handling one of the machines, to the financial prejudice of the
company as his medication would be shouldered by Nito Enterprises.
Capili later filed a complaint for illegal dismissal, which the Labor Arbiter
dismissed. This decision was reversed by the NLRC, holding that Capili was a
regular employee. With this, Nito came to the Supreme Court. Nito Enterprises
assails the NLRC decision on the ground that no apprenticeship program had yet
been filed and approved at the time the agreement was executed.
5
ISSUE:
Is Capili a regular employee or an apprentice?
RULING: Capili is a regular employee. Apprenticeship needs DOLE’s prior approval,
or apprentice becomes regular employee.
Petitioner did not comply with the requirements of the law. It is mandated that
apprenticeship agreements entered into by the employer and apprentice shall be
entered only in accordance with the apprenticeship program duly approved by the
Minister of Labor and Employment.
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine quo nonbefore an
apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of
Labor and Employment is a preliminary step towards its final approval and does not
instantaneously give rise to an employer-apprentice relationship
Hence, since the apprenticeship agreement between petitioner and private
respondent has no force and effect in the absence of a valid apprenticeship
program duly approved by the DOLE, private respondent’s assertion that he was
hired not as an apprentice but as a delivery boy (“kargador” or “pahinante”)
deserves credence. He should rightly be considered as a regular employee of
petitioner as defined by Article 280 of the Labor Code and pursuant to the
constitutional mandate to protect the rights of workers and promote their
welfare.
Bernardo vs NLRC DIGEST
GR 122917 07/03/99
Facts:
Petitioners numbering 43 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. Subsequently, they are dismissed.
Petitioners maintain that they should be considered regular employees, because
their task as money sorters and counters was necessary and desirable to the
business of respondent bank. They further allege that their contracts served
merely to preclude the application of Article 280 and to bar them from becoming
regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as
“special workers and should not in any way be considered as part of the regular
complement of the Bank.”[12] Rather, they were “special” workers under Article
80 of the Labor Code.
Issue: WON petitioners have become regular employees.
Held:
The uniform employment contracts of the petitioners stipulated that they shall be
trained for a period of one month, after which the employer shall determine
whether or not they should be allowed to finish the 6-month term of the
contract. Furthermore, the employer may terminate the contract at any time for
a just and reasonable cause. Unless renewed in writing by the employer, the
contract shall automatically expire at the end of the term.
Respondent bank entered into the aforesaid contract with a total of 56
handicapped workers and renewed the contracts of 37 of them. In fact, two of
them worked from 1988 to 1993. Verily, the renewal of the contracts of the
6
handicapped workers and the hiring of others lead to the conclusion that their “The primary standard, therefore, of determining regular employment is the

tasks were beneficial and necessary to the bank. More important, these facts reasonable connection between the particular activity performed by the employee

show that they were qualified to perform the responsibilities of their in relation to the usual trade or business of the employer. The test is whether

positions. In other words, their disability did not render them unqualified or unfit the former is usually necessary or desirable in the usual business or trade of the

for the tasks assigned to them. employer. The connection can be determined by considering the nature of the

In this light, the Magna Carta for Disabled Persons mandates that work performed and its relation to the scheme of the particular business or trade

a qualified disabled employee should be given the same terms and conditions of in its entirety. Also if the employee has been performing the job for at least one

employment as a qualified able-bodied person. Section 5 of the Magna Carta year, even if the performance is not continuous and merely intermittent, the law

provides: deems repeated and continuing need for its performance as sufficient evidence of

“Section 5. Equal Opportunity for Employment.—No disabled person shall be the necessity if not indispensability of that activity to the business. Hence, the

denied access to opportunities for suitable employment. A qualified disabled employment is considered regular, but only with respect to such activity, and while

employee shall be subject to the same terms and conditions of employment and such activity exists.”

the same compensation, privileges, benefits, fringe benefits, incentives or Respondent bank entered into the aforesaid contract with a total of 56

allowances as a qualified able bodied person.” handicapped workers and renewed the contracts of 37 of them. In fact, two of

The fact that the employees were qualified disabled persons necessarily removes them worked from 1988 to 1993. Verily, the renewal of the contracts of the

the employment contracts from the ambit of Article 80. Since the Magna Carta handicapped workers and the hiring of others lead to the conclusion that their

accords them the rights of qualified able-bodied persons, they are thus covered tasks were beneficial and necessary to the bank. More important, these facts

by Article 280 of the Labor Code, which provides: show that they were qualified to perform the responsibilities of their

“ART. 280. Regular and Casual Employment. — The provisions of written agreement positions. In other words, their disability did not render them unqualified or unfit

to the contrary notwithstanding and regardless of the oral agreement of the for the tasks assigned to them.

parties, an employment shall be deemed to be regular where the employee has Without a doubt, the task of counting and sorting bills is necessary and desirable

been engaged to perform activities which are usually necessary or desirable in the to the business of respondent bank. With the exception of sixteen of them,

usual business or trade of the employer, x x x” petitioners performed these tasks for more than six months.

Petition granted.

7
 4. ID.; ID.; ID.; MARKETING COLLECTOR, A REGULAR EMPLOYEE;
ENTITLED TO SECURITY OF TENURE. - Private respondent Anita Javier
SANDIGAN SAVINGS and LOAN BANK, INC., and SANDIGAN REALTY as marketing collector of petitioner Bank, by virtue of her employment
DEVELOPMENT CORPORATION, petitioners, vs. NATIONAL LABOR status, is, under the law entitled to security of tenure, which means that she
RELATIONS COMMISSION and ANITA M. JAVIER, respondents. has the right to continue in employment until the same is terminated under
contitions required by Article 279 of the Labor Code, as amended.
SYLLABUS
5. ID.; ID.; ID.; ID.; ENTITLED TO REINSTATEMENT AND BACKWAGES
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT;
IN CASE OF ILLEGAL DISMISSAL. - There being a finding of illegal
ELEMENTS OF EMPLOYER-EMPLOYEE RELATIONSHIP. - In determining
dismissal of private respondent Anita Javier, her reinstatemet should follow
the existence of an employer-employee relationship, the following elements
as a matter of course, unless it be shown that the same is no longer possible,
are generally considered: (1) the selection and engagement of the employee;
in which case, payment of separation pay will be ordered, in lieu thereof. In
(2) the payment of wages; (3) the power of dismissal; and (4) the employers
this case, we do not find any such showing or basis to preclude private
power to control the employee with respect to the means and methods by
respondents reinstatement. In effect, the petitioner bank is liable to private
which the work is to be accomplished.
respondent only for backwages, inclusive of allowances, and other benefits or
2. ID.; ID.; ID.; RIGHT OF CONTROL TEST, CONSTRUED. - This Court has their monetary equivalent computed from the time her compensation was
generally relied on the so-called right of control test in making such a withheld from her up to the time of her actual reinstatement, at the rate of
determination. Where the person for whom the services are performed her latest monthly salary and allowance which was in the total amount of
reserves a right to control not only the end to be achieved but also the means P2,350.00 as shown by Javiers latest Notice of Salary Adjustment.
by which such end is reached, the relationship is deemed to exists. Stated
6. ID.; ID.; ID.; ID.; ID.; EARNINGS ELSEWHERE SHOULD BE DEDUCTED
differently, it is the power of control which is the most determinative
FROM BACKWAGES. - Earnings derived elsewhere by Javier from the date
factor. It is deemed to be such an important factor that the other requisites
of dismissal up to the date of reinstatement, if there be any, should be
may even be disregarded.
deducted from said backwages. In this connection, it must be pointed out
3. ID.; ID.; ID.; REALTY SALES AGENT NOT AN EMPLOYEE; NOT that the NLRC applied the old rule, otherwise known as the Mercury Drug
ENTITLED TO SECURITY OF TENURE; REASON. - As it appears that Rule, and so, as to the rate of P2,400.00, no evidence was presented as basis.
Sandigan Realty had no control over the conduct of Javier as a realty sales The rule that should apply in this case is that provided in Article 279 of the
agent since its only concern or interest was in the result of her work and not Labor Code, as amended by Section 34, Republic Act No. 6715, as
in how it was achieved, there cannot now be any doubt that Javier was not an aforequoted, which took effect on March 21, 1989, considering that the
employee, much less a regular employee of the Sandigan Realty. Hence, she private respondents dismissal occurred thereafter, or on April 20, 1990.
cannot be entitled to the right to security of tenure nor to backwages and
separation pay as consequence of her separation therefrom. Evidently, the
PADILLA, J., concurring and dissenting opinion:
legal relation of Javier to the Sandigan Realty can be that of an independent
contractor, where the control of the contracting party is only with respect to
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; BASIS
the result of the work, as distinguished from an employment relationship
OF COMPUTATION OF BACKWAGES. - The backwages to be awarded to
where the person rendering service is under the control of the hirer with
the dismissed employee (Anita Javier) should be reckoned from the date of
respect to the details and manner of performance.
illegal dismissal to date of actual reinstatement (thereby departing from the
Mercury Drug Rule). Article 279 of the Labor Code as amended by Rep. Act

8
 No. 6715 provides for such a period as the basis in the computation of
backwages.
2. ID.; ID.; ID.; BACKWAGES; AMENDMENT BY REPUBLIC ACT NO. 6715
TO ARTICLE 279 OF THE CIVIL CODE, DOES NOT ALLOW
DEDUCTION OF INCOME OR SALARIES EARNED ELSEWHERE. - J.
Padilla do not however agree to the deduction from backwages of income or
salaries earned by the employee from elsewhere during the period of his
illegal dismissal. As J. Padilla stated in his separate opinion in Pines City
Educational Center v. NLRC, G.R. No. 96779, 10 November 1993, 227
SCRA 655: x x x. The amendment to Art. 279 of the Labor Code introduced
by Rep. Act No. 6715 inserted the qualification full to the word backwages.
The intent of the law seems to be clear. The plain words of the statute
provide that an employee who is unjustly dismissed is entitled
to FULL backwages from the time of his dismissal to actual
reinstatement. The law provides no qualification nor does it state that income
earned by the employee during the period between his unjust dismissal and
reinstatement should be deducted from such backwages. When the law does
not provide, the Court should not improvise.
3. ID.; ID.; ID.; ID.; PRINCIPLE OF UNJUST ENRICHMENT IF NO
DEDUCTION IS ALLOWED, DOES NOT APPLY. - The principle of unjust
enrichment (if no deduction is allowed from backwages) does not apply in this
case, for the following reasons: 1. The applicable provision of law should be
construed in favor of labor. 2. The Labor Code is special law which should
prevail over the Civil Code provisions on unjust enrichment. 3. The language
employed by the statute and, therefore, its intent are clear. Where the
unjust dismissal occurs after Rep. Act No 6715 took effect, backwages must
be awarded from the time the employee is unlawfully dismissed until the time
he is actually reinstated. There is no provision authorizing deduction of any
income earned by the employee during that period. Besides and this we
cannot over-stress-given the language of the law, the Court appears to have
no alternative but to award such full backwages without deduction or
qualification. Any other interpretation opens the Court to the charge of
indulging in judicial legislation.
APPEARANCES OF COUNSEL
Minerva C. Genovea for petitioner.
The Solicitor General for public respondent.
Vivar Lopez & Fuentes Law Offices for private respondent.
D E C I S I O N
HERMOSISIMA, JR., J.:
This Petition for Certiorari, with prayer for the issuance of a temporary
restraining order, seeks to review, modify and/or set aside the Resolution [1] dated
24 September 1993 and the Resolution[2] dated 19 November 1993 of public
respondent National Labor Relations Commission (NLRC) in NLRC CAS RAB-III-
05-1560-90. The former affirmed, with modification, the Decision[3] of the Labor
Arbiter of the NLRC Regional Arbitration Branch No. III while the latter denied
the motion to reconsider the former.
Private respondent Anita M. Javier (hereinafter referred to as Javier)
worked as a realty sales agent of the petitioner Sandigan Realty Development
Corporation (hereinafter called the Sandigan Realty) from November 2, 1982 (or
November 9, 1982)[4] to November 30, 1986. Their agreement was that Javier
would receive a 5% commission for every sale, or if no sale was made, she would
receive a monthly allowance of P500.00.
Subsequently, that is, on 1 December 1986, Javier was hired as a marketing
collector of petitioner Sandigan Savings and Loan Bank (hereinafter called the
Sandigan Bank) by Angel Andan, the President of both the Sandigan Bank and
Sandigan Realty. Javiers monthly salary and allowance were initially in the amount
of P788.00 and P5 85.00, respectively.
These were adjusted thereafter (the latest adjustment having been made on 1
July 1989), to P1,840.00 per month as salary and to P510.00 as monthly allowance,
per Notice of Salary Adjustment.[5]
Meanwhile, respondent Javier continued to be a realty sales agent of
Sandigan Realty on the side, and while she still received the 5% commission on her
sales, she no longer enjoyed the P5 00.00 monthly allowance.
On 20 April 1990, Javier was advised by Angel Andan not to report for work
anymore. This in effect was a notice of dismissal. The manner by which her
dismissal was effected has been correctly described by the Solicitor General,
thus:
9
On April 20, 1990, around 8:30 in the morning, while performing her duties at the
Bank, Javier saw and overheard petitioner Andan summon the Banks personnel
officer, Mrs. Liberata G. Fajardo, and instruct her to prepare her (Javier s)
termination papers. Immediately thereafter, Andan changed his mind and told
Mrs. Fajardo to prepare instead a resignation letter for Javier, saying, Ayaw ko na
siyang makita sa susunod. Turning to private respondent, he said, Huwag na ninyong
itanong kung anong dahilan, basta t gusto ko, ito ang desisyon ko. Naawa lang ako sa
iyo noon kaya kita tinanggap. Ka Anita, huwag mong isipin na may kinalaman ang mga
pan gyayari kay Ditas, wala, wala, hindi iyon, basta t si Alice, iniskandalo na naman
ako.
xxx xxx xxx
impossible by virtue of the abolition of her position as marketing collector,
grant her, in addition to backwages and other benefits, separation pay equivalent
to one (1) month for every year of service until after this decision shall have
become final and executory.[7]
On appeal, the NLRC affirmed the decision of the Labor Arbiter in its
Resolution, dated 24 September 1993, but, deleting the award of damages and
attorneys fees, provided the following monetary award of backwages and
separation pay:
Backwages: Fr: April 20, 1990-
April 20, 1993 - 36 months

In the afternoon, after she received P50,000.00 from one Mr. Ben Santos as full Realty: P500.00 (allowance) x 36 P18,000.00
payment for a lot sold in Sta. Rita Village, Guiguinto, Bulacan, Andan ordered
Reynaldo Bordado, her co-employee, to withdraw her commission of P10,000.00 Savings Bank: P2,400.00 x 36 P86,400.00
from the account of the Realty, saying, Ibigay mo sa ka Anita yan para hindi na
balikan dito. [6] TOTAL P104,400.00

The advice of her termination notwithstanding, Javier reported for work at Separation Pay:
the bank on the next working day or on 23 April 1990. Though she signed the
attendance sheet, she left when she could not find her table. Realty: Nov. 2, 1982-
On 18 May 1990, Javier filed a complaint against petitioners and Angel Andan April 20, 1993 -10 years
with the NLRC Regional Arbitration Branch No. III at San Fernando, Pampanga, P500.00 (allowance) x10 P5,000.00
for illegal dismissal, seeking reinstatement and payment of backwages and moral
and exemplary damages. Savings Bank: Dec. 1, 1986-
April 20, 1993 - 6 years
On October 6, 1992, the labor arbiter rendered judgment in private P2,400.00 x 6 P14,400.00
respondents favor, the dispositive portion of which reads:
GRAND TOTAL P123,800.00
WHEREFORE, considering the foregoing considerations, and for having unjustly
dismissed Anita Javier from employment, respondents are hereby directed to The petitioners Motion for Reconsideration of the said Resolution, and that
reinstate her to her former position as marketing collector of Sandigan Savings of the private respondent, were denied by the NLRC in its Resolution, dated 19
and Loan Bank and sales agent of Sandigan Realty Development Coiporation, pay November 1993, the dispositive portion of which reads:
her full backwages from the time of her dismissal, plus 10% attorneys fee and all
her monetary award, until her actual reinstatement, and P60,000.00 moral and It appearing that the issues raised by both parties in their Motions for
exemplary damages to compensate for her mental pain and anguish, her social Reconsideration were thoroughly discussed and duly passed upon in the questioned
humiliation and besmirched reputation. Should reinstatement be rendered
10
Resolution promulgated on September 24, 1993, the same are hereby denied for
lack of merit with finality.
No further motion for reconsideration shall be entertained.
The petitioners, thus, instituted this petition for certiorari, contending that
the NLRC gravely and seriously abused its discretion in holding that:
1. Javier is a regular employee of both Sandigan Realty and Sandigan Bank and
entitled to backwages and separation pay from both;
2. Javier was receiving P2,400.00 a month from the bank and that she is entitled
to separation pay for six years. [8]
The records disclose that petitioner Sandigan Bank no longer disputes the
finding that Javier was dismissed by it and that she did not abandon her job
thereat. In fact, it would have paid private respondent the monetary award
representing backwages and separation pay adjudged against it in the assailed
NLRC resolution, if only it found the same to be in the correct amount. [9]
Consequently, the issues in this case are: (1) whether or not the respondent
NLRC abused its discretion in finding that private respondent was a regular
employee of the petitioner Sandigan Realty, entitled to backwages and separation
pay because of her alleged illegal separation therefrom; and (2) whether the
computation of the monetary award owing to the private respondent, as contained
in the assailed NLRC resolution, was attended with serious errors as to its bases
both in fact and in law.
In determining the existence of an employer-employee relationship, the
following elements are generally considered: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
employers power to control the employee with respect to the means and methods
by which the work is to be accomplished. [10] This Court has generally relied on the
so-called right of control test in making such a determination. Where the person
for whom the services are performed reserves a right to control not only the end
to be achieved but also the means by which such end is reached, [11] the
relationship is deemed to exist. Stated differently, it is the power of control
which is the most determinative factor. [12] It is deemed to be such an important
factor that the other requisites may even be disregarded. [13] Thus, in the case of
Cosmopolitan Funeral Homes, Inc. v. Maalat, it was held that to determine whether
a person who performs work for another is the latters employee or is an
independent contractor, the prevailing test is the right of control test. In the
said case, the petitioner therein failed to prove that the contract with private
respondent was that of a mere agency, an indication that subject person is free to
accomplish his work on his own terms and may engage in other means of
livelihood.[14]
Viewed in the light of the foregoing criteria, the features of the relationship
between Javier and the Sandigan Realty, as may be gleaned from the facts
described herein below by the Office of the Solicitor General, readily negate the
existence of an employer-employee relationship between them, the element of
control being noticeably absent.
Javier was hired in 1982 to sell houses or lots owned by the Realty. She was paid
5% commission for every lot or house sold. From 1982 up to 1986 when she was
hired as a marketing collector of petitioner bank, she received from the Realty
P500.00 monthly allowance if she was unable to make any sale. The P500.00
allowance ceased when she became a regular employee of the petitioner bank.
Javier sold houses or lots according to the manner or means she chose to. The
petitioner realty firm, while interested in the result of her work, had no control
with respect to the details of how the sale of a house or lot was achieved. She
was free to adopt her own selling methods or free to sell at her own time (cf
Insular Life Assurance Co., Ltd. v. NLRC, 179 SCRA 459 [1989]). Her obligation
was merely to turn over the proceeds of each sale to the Realty and, in turn, the
Realty paid her by the job, i.e., her commission, not by the hour.
Moreover, selling houses and lots was merely her sideline or extra work for a
sister company. [15]
As it appears that Sandigan Realty had no control over the conduct of Javier
as a realty sales agent since its only concern or interest was in the result of her
work and not in how it was achieved, there cannot now be any doubt that Javier
was not an employee, much less a regular employee of the Sandigan Realty. Hence,
she cannot be entitled to the right to security of tenure nor to backwages and
separation pay as a consequence of her separation therefrom.
11
 Evidently, the legal relation of Javier to the Sandigan Realty can be that of
an independent contractor, where the control of the contracting party is only with
respect to the result of the work, as distinguished from an employment
relationship where the person rendering service is under the control of the hirer
with respect to the details and manner of performance.[16]
In the case of Sara v. Agarrado, private respondent who sold palay and rice
for the petitioners under an arrangement or agreement that the former would be
paid P2.00 commission per sack of milled rice sold as well as a commission of 10%
per kilo of palay purchased,[17] and that she would spend her own money for the
undertaking, and where she was shown to have worked for petitioners at her own
pleasure, that she was not subject to definite hours or conditions of work, that
she could even delegate the task of buying and selling to others, if she so desired,
or simultaneously engaged in other means of livelihood while selling and purchasing
rice or palay, was held to be an independent contractor. [18]
By the same token, the private respondent in another case,[19] who earns on a
per head/talent commission basis and who works as she pleases, on her own
schedule, terms and conditions was also held to be an independent contractor.
Private respondent Anita Javier is clearly similarly placed as the private
respondents in the above-cited cases. Hence, she could not have been a regular
employee but an independent contractor in relation to the petitioner Sandigan
Realty.
As we hold that private respondent was not a regular employee of the
Sandigan Realty and that she could not, therefore, be entitled to backwages and
separation pay, we will necessarily have to limit our treatment of the alleged
errors committed by the NLRC in the computation of the monetary award to that
adjudged against the petitioner Sandigan Bank. But, first, we have to settle the
question as to whether reinstatement or payment of separation pay in its stead is
the proper relief to be accorded the private respondent, it appearing that neither
the labor arbiter nor the NLRC made a definitive ruling on the matter. This has
become especially more significant since private respondent, in her
Comment[20] and Memorandum,[21] presses for an order of reinstatement to her
former position, claiming that there is no sufficient basis for a grant of
separation pay in lieu thereof.
We agree with the private respondent in this respect.
Private respondent Anita Javier, by virtue of her employment status, is,
under the law entitled to security of tenure, which means that she has the right
to continue in employment until the same is terminated under conditions required
by law. Article 279 of the Labor Code, as amended, clearly provides that:
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 the 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.
There being a finding of illegal dismissal of private respondent Anita Javier,
her reinstatement should follow as a matter of course, unless it be shown that the
same is no longer possible, in which case, payment of separation pay will be
ordered, in lieu thereof.[22] In this case, we do not find any such showing or basis
to preclude private respondents reinstatement.
In effect, the petitioner bank is liable to private respondent only for
backwages, inclusive of allowances, and other benefits or their monetary
equivalent computed from the time her compensation was withheld from her up to
the time of her actual reinstatement, at the rate of her latest monthly salary and
allowance which was in the total amount of P2,350.00 as shown by Javiers latest
Notice of Salary Adjustment. However, earnings derived elsewhere by Javier
from the date of dismissal up to the date of reinstatement, if there be any,
should be deducted from said backwages. [23] In this connection, it must be pointed
out that the NLRC applied the old rule, otherwise known as the Mercury Drug
Rule, and so, as to the rate of P2,400.00, no evidence was presented as basis. The
rule that should apply in this case is that provided in Article 279 of the Labor
Code, as amended by Section 34, Republic Act No. 6715, as aforequoted, which
took effect on March 21, 1989, considering that the private respondents dismissal
occurred thereafter, or on April 20, 1990.
WHEREFORE, the petition is GRANTED. The assailed resolutions of the
National Labor Relations Commission, dated 24 September 1993 and 19 November
1993, are hereby modified to conform both to our finding that private respondent
was not a regular employee of Sandigan Realty Development Corporation but of
the Sandigan Savings and Loan Bank, Inc. and to our determination respecting the
12
monetary award to which the private respondent is entitled. The petitioner o CA (certiorari): affimed NLRC. However, found that SMART failed to comply
Sandigan Savings and Loan Bank, Inc. is hereby ordered to reinstate private with the mandatory 1-month notice prior to the intended termination and imposed
respondent Anita Javier and to pay her backwages from April 20, 1990 up to the a penalty of 1-month salary for this non-compliance. Set aside NLRC’s order for
date of her actual reinstatement, less earnings derived elsewhere, if any. the return of the vehicle as it is civil in nature within the competence of the
regular court to decide
SO ORDERED.

o HELD (petitions for review): granted; Smart’s replevin granted

o Replevin is an action whereby the owner or person entitled to repossession of
goods or chattels may recover those goods or chattels from one who has
SMART vs ASTORGA wrongfully distrained or taken, or who wrongfully detains such goods or chattels.
It is designed to permit one having right to possession to recover property in
specie from one who has wrongfully taken or detained the property. The term may
Facts:
refer either to the action itself, for the recovery of personalty, or to the
o May 8, 1997: Regina M. Astorga (Astorga) was employed by SMART as District
provisional remedy traditionally associated with it, by which possession of the
Sales Manager of the Corporate Sales Marketing Group/ Fixed Services Division
property may be obtained by the plaintiff and retained during the pendency of the
(CSMG/FSD) with P33,650 monthly salary and annual performance incentive (30%
action
of her annual gross salary), group life and hospitalization insurance coverage, and a
o Relationship of DR-CR rather than EE-ER
car plan of P455K.
o Replevin is a possessory action, the gist of which is the right of possession in
o February 1998: SMART launched an organizational realignment to achieve
the plaintiff. The primary relief sought therein is the return of the property in
more efficient operations where SNMI was formed to do the sales and marketing
specie wrongfully detained by another person. It is an ordinary statutory
work so CSMG/FSD was abolished. SNMI agreed to absorb the CSMG personnel
proceeding to adjudicate rights to the title or possession of personal property.
who would be recommended by SMART which excluded Astorga for being last on
The question of whether or not a party has the right of possession over the
the performance evaluation. SMART offered her a supervisory position in the
property involved and if so, whether or not the adverse party has wrongfully taken
Customer Care Department with lower rank and rate so she refused. And, she
and detained said property as to require its return to plaintiff, is outside the pale
continued going to work.
of competence of a labor tribunal and beyond the field of specialization of Labor
o March 3, 1998: SMART issued a memorandum advising Astorga of the
Arbiters.
termination of her employment on ground of redundancy, effective April 3, 1998.
o The labor dispute involved is not intertwined with the issue in the Replevin
o Pending the Labor Case on Illegal dismissal, SMART sent a letter to Astorga
Case
demanding that she pay the current market value of the Honda Civic Sedan which
o acknowledge the prerogative of the employer to adopt such measures as will
was given to her under the company’s car plan program, or to surrender the same
promote greater efficiency, reduce overhead costs and enhance prospects of
to the company for proper disposition which she refused
economic gains, albeit always within the framework of existing laws
o RTC (replevin filed by SMART and MTD by Astorga): favored SMART; The car
o procedural infirmity would not render the termination of Astorga’s
is registered in the name of SMART. Recovery thereof via replevin suit is allowed
employment illegal
by Rule 60 of the 1997 Rules of Civil Procedure within the jurisdiction of RTC; MR
denied
o Pending Astorga’s MTD, LA: illegal dismissal ANGELINA FRANCISCO, Petitioner, versus NATIONAL LABOR RELATIONS
o CA (certiorari): reversed the RTC; LA has jurisdiction as it is intertwined with COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
illegal dismissal TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA
o NLRC: valid dismissal; MR denied and RAMON ESCUETA, Respondents., G.R. No. 170087, 2006 Aug 31.
13
FACTS:
1995, Petitioner was hired by Kasei Corporation during its incorporation
stage. She was designated as Accountant and Corporate Secretary and was
assigned to handle all the accounting needs of the company. She was also
designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with
the corporate documents; neither did she attend any board meeting nor required
to do so. She never prepared any legal document and never represented the
company as its Corporate Secretary. 1996, petitioner was designated Acting
Manager. Petitioner was assigned to handle recruitment of all employees and
perform management administration functions; represent the company in all
dealings with government agencies, especially with the BIR, SSS and in the city
government of Makati; and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated by Kasei Corporation.
January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager.
Kasei Corporation reduced her salary, she was not paid her mid-year bonus
allegedly because the company was not earning well. On October 2001, petitioner
did not receive her salary from the company. She made repeated follow-ups with
the company cashier but she was advised that the company was not earning well.
Eventually she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter. Private
respondents averred that petitioner is not an employee of Kasei
Corporation. They alleged that petitioner was hired in 1995 as one of its technical
consultants on accounting matters and act concurrently as Corporate
Secretary. As technical consultant, petitioner performed her work at her own
discretion without control and supervision of Kasei Corporation. Petitioner had no
daily time record and she came to the office any time she wanted and that her
services were only temporary in nature and dependent on the needs of the
corporation.
The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed
with modification the Decision of the Labor Arbiter. On appeal, CA reversed the
NLRC decision. CA denied petitioner’s MR, hence, the present recourse.
ISSUES:
1. WON there was an employer-employee relationship between petitioner and
private respondent; and if in the affirmative,
2. Whether petitioner was illegally dismissed.
RULING:
1. Generally, courts have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such
end. In addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in
the payrolls, can help in determining the existence of an employer-employee
relationship.
There are instances when, aside from the employer’s power to control the
employee, economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.
It is better, therefore, to adopt a two-tiered test involving: (1) the employer’s
power to control; and (2) the economic realities of the activity or relationship.
The control test means that there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control not
only the end achieved but also the manner and means used to achieve that end.
There has to be analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity, such as: (1) the
extent to which the services performed are an integral part of the employer’s
business; (2) the extent of the worker’s investment in equipment and facilities; (3)
the nature and degree of control exercised by the employer; (4) the worker’s
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or
foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the
employer; and (7) the degree of dependency of the worker upon the employer for
his continued employment in that line of business. The proper standard of
economic dependence is whether the worker is dependent on the alleged employer
for his continued employment in that line of business
By applying the control test, it can be said that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji
Kamura, the corporation’s Technical Consultant. She reported for work regularly
14
and served in various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with substantially the same
job functions, that is, rendering accounting and tax services to the company and
performing functions necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses over an
indefinite period of engagement. Respondent corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.
Under the economic reality test, the petitioner can also be said to be an employee
of respondent corporation because she had served the company for 6 yrs. before
her dismissal, receiving check vouchers indicating her salaries/wages, benefits,
13th month pay, bonuses and allowances, as well as deductions and Social Security
contributions from. When petitioner was designated General Manager, respondent
corporation made a report to the SSS. Petitioner’s membership in the SSS
evinces the existence of an employer-employee relationship between petitioner
and respondent corporation. The coverage of Social Security Law is predicated on
the existence of an employer-employee relationship.
2. The corporation constructively dismissed petitioner when it reduced
her. This amounts to an illegal termination of employment, where the
petitioner is entitled to full backwages
A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal. Constructive dismissal is an involuntary resignation resulting in
cessation of work resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee. Petition is GRANTED.
ABS-CBN vs NAZARENO Case Digest
ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO et al.
G.R. No. 164156
September 26, 2006
Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in
the broadcasting business and owns a network of television and radio stations,
whose operations revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise utilizes the airtime it
generates from its radio and television operations. It has a franchise as a
broadcasting company, and was likewise issued a license and authority to operate
by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different dates. They were assigned at the news
and public affairs, for various radio programs in the Cebu Broadcasting Station.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees
executed a Collective Bargaining Agreement (CBA) to be effective during the
period from December 11, 1996 to December 11, 1999. However, since petitioner
refused to recognize PAs as part of the bargaining unit, respondents were not
included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular
Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay,
Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against
the petitioner before the NLRC. The Labor Arbiter rendered judgment in favor of
the respondents, and declared that they were regular employees of petitioner as
such, they were awarded monetary benefits. NLRC affirmed the decision of the
Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.
Issue: Whether or not the respondents were considered regular employees of
ABS-CBN.
Ruling: The respondents are regular employees of ABS-CBN. It was held that
where a person has rendered at least one year of service, regardless of the
nature of the activity performed, or where the work is continuous or intermittent,
the employment is considered regular as long as the activity exists, the reason
being that a customary appointment is not indispensable before one may be
formally declared as having attained regular status.
In Universal Robina Corporation v. Catapang, the Court states that the primary
standard, therefore, of determining regular employment is the reasonable
15
connection between the particular activity performed by the employee in relation
to the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of work performed and
its relation to the scheme of the particular business or trade in its entirety. Also,
if the employee has been performing the job for at least a 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 activity and while such activity
exists.
Additionally, respondents cannot be considered as project or program employees
because no evidence was presented to show that the duration and scope of the
project were determined or specified at the time of their engagement. In the
case at bar, however, the employer-employee relationship between petitioner and
respondents has been proven. In the selection and engagement of respondents, no
peculiar or unique skill, talent or celebrity status was required from them because
they were merely hired through petitioner’s personnel department just like any
ordinary employee. Respondents did not have the power to bargain for huge talent
fees, a circumstance negating independent contractual relationship. Respondents
are highly dependent on the petitioner for continued work. The degree of control
and supervision exercised by petitioner over respondents through its supervisors
negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does not
furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor. As regular
employees, respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA . Besides, only talent-artists were
excluded from the CBA and not production assistants who are regular employees
of the respondents. Moreover, under Article 1702 of the New Civil Code: “In case
of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living of the laborer.”
G.R. No. L-80680 January 26, 1989
DANILO B. TABAS, EDUARDO BONDOC, RAMON M. BRIONES, EDUARDO
R. ERISPE, JOEL MADRIAGA, ARTHUR M. ESPINO, AMARO BONA,
FERDINAND CRUZ, FEDERICO A. BELITA, ROBERTO P. ISLES, ELMER
ARMADA, EDUARDO UDOG, PETER TIANSING, MIGUELITA QUIAMBOA,
NOMER MATAGA, VIOLY ESTEBAN and LYDIA ORTEGA, petitioners,
vs.
CALIFORNIA MANUFACTURING COMPANY, INC., LILY-VICTORIA A.
AZARCON, NATIONAL LABOR RELATIONS COMMISSION, and HON.
EMERSON C. TUMANON, respondents.
V.E. Del Rosario & Associates for respondent CMC.
The Solicitor General for public respondent.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio and Associates for petitioners.
Mildred A. Ramos for respondent Lily Victoria A. Azarcon.
SARMIENTO, J.:
On July 21, 1986, July 23, 1986, and July 28, 1986, the petitioners petitioned the
National Labor Relations Commission for reinstatement and payment of various
benefits, including minimum wage, overtime pay, holiday pay, thirteen-month pay,
and emergency cost of living allowance pay, against the respondent, the California
Manufacturing Company. 1
On October 7, 1986, after the cases had been consolidated, the California
Manufacturing Company (California) filed a motion to dismiss as well as a position
paper denying the existence of an employer-employee relation between the
petitioners and the company and, consequently, any liability for payment of money
16
claims. 2 On motion of the petitioners, Livi Manpower Services, Inc. was impleaded
as a party-respondent.
It appears that the petitioners were, prior to their stint with California,
employees of Livi Manpower Services, Inc. (Livi), which subsequently assigned
them to work as "promotional merchandisers" 3 for the former firm pursuant to a
manpower supply agreement. Among other things, the agreement provided that
California "has no control or supervisions whatsoever over [Livi's] workers with
respect to how they accomplish their work or perform [Californias]
obligation"; 4 the Livi "is an independent contractor and nothing herein contained
shall be construed as creating between [California] and [Livi] . . . the relationship
of principal[-]agent or employer[-]employee'; 5 that "it is hereby agreed that it is
the sole responsibility of [Livi] to comply with all existing as well as future laws,
rules and regulations pertinent to employment of labor" 6 and that "[California] is
free and harmless from any liability arising from such laws or from any accident
that may befall workers and employees of [Livi] while in the performance of their
duties for [California].7
It was further expressly stipulated that the assignment of workers to California
shall be on a "seasonal and contractual basis"; that "[c]ost of living allowance and
the 10 legal holidays will be charged directly to [California] at cost "; and that
"[p]ayroll for the preceeding [sic] week [shall] be delivered by [Livi] at
[California's] premises." 8
The petitioners were then made to sign employment contracts with durations of
six months, upon the expiration of which they signed new agreements with the
same period, and so on. Unlike regular California employees, who received not less
than P2,823.00 a month in addition to a host of fringe benefits and bonuses, they
received P38.56 plus P15.00 in allowance daily.
The petitioners now allege that they had become regular California employees and
demand, as a consequence whereof, similar benefits. They likewise claim that
pending further proceedings below, they were notified by California that they
would not be rehired. As a result, they filed an amended complaint charging
California with illegal dismissal.
California admits having refused to accept the petitioners back to work but deny
liability therefor for the reason that it is not, to begin with, the petitioners'
employer and that the "retrenchment" had been forced by business losses as well
as expiration of contracts.9 It appears that thereafter, Livi re-absorbed them
into its labor pool on a "wait-in or standby" status. 10
Amid these factual antecedents, the Court finds the single most important issue
to be: Whether the petitioners are California's or Livi's employees.
The labor arbiter's decision, 11 a decision affirmed on appeal, 12 ruled against the
existence of any employer-employee relation between the petitioners and
California ostensibly in the light of the manpower supply contract, supra, and
consequently, against the latter's liability as and for the money claims demanded.
In the same breath, however, the labor arbiter absolved Livi from any obligation
because the "retrenchment" in question was allegedly "beyond its control ." 13 He
assessed against the firm, nevertheless, separation pay and attorney's fees.
We reverse.
The existence of an employer-employees relation is a question of law and being
such, it cannot be made the subject of agreement. Hence, the fact that the
manpower supply agreement between Livi and California had specifically
designated the former as the petitioners' employer and had absolved the latter
from any liability as an employer, will not erase either party's obligations as an
employer, if an employer-employee relation otherwise exists between the workers
and either firm. At any rate, since the agreement was between Livi and California,
they alone are bound by it, and the petitioners cannot be made to suffer from its
adverse consequences.
This Court has consistently ruled that the determination of whether or not there
is an employer-employee relation depends upon four standards: (1) the manner of
selection and engagement of the putative employee; (2) the mode of payment of
wages; (3) the presence or absence of a power of dismissal; and (4) the presence
or absence of a power to control the putative employee's conduct. 14 Of the four,
the right-of-control test has been held to be the decisive factor. 15
On the other hand, we have likewise held, based on Article 106 of the Labor Code,
hereinbelow reproduced:
17
 ART. 106. Contractor or sub-contractor. — Whenever an employee
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 sub-contractor, if any, shall be paid in accordance with
the provisions of this Code.
In the event that the contractor or sub-contractor fails to pay
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor
or sub-contractor 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
provisions of this Code.
There is 'labor-only' contracting where the person supplying
workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related
to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
that notwithstanding the absence of a direct employer-employee relationship
between the employer in whose favor work had been contracted out by a "labor-
only" contractor, and the employees, the former has the responsibility, together
with the "labor-only" contractor, for any valid labor claims, 16 by operation of law.
The reason, so we held, is that the "labor-only" contractor is considered "merely
an agent of the employer,"17 and liability must be shouldered by either one or
shared by both. 18
There is no doubt that in the case at bar, Livi performs "manpower
services", 19 meaning to say, it contracts out labor in favor of clients. We hold that
it is one notwithstanding its vehement claims to the contrary, and notwithstanding
the provision of the contract that it is "an independent contractor." 20 The nature
of one's business is not determined by self-serving appellations one attaches
thereto but by the tests provided by statute and prevailing case law. 21 The bare
fact that Livi maintains a separate line of business does not extinguish the equal
fact that it has provided California with workers to pursue the latter's own
business. In this connection, we do not agree that the petitioners had been made
to perform activities 'which are not directly related to the general business of
manufacturing," 22 California's purported "principal operation activity. " 23 The
petitioner's had been charged with "merchandizing [sic] promotion or sale of the
products of [California] in the different sales outlets in Metro Manila including
task and occational [sic] price tagging," 24 an activity that is doubtless, an integral
part of the manufacturing business. It is not, then, as if Livi had served as its
(California's) promotions or sales arm or agent, or otherwise, rendered a piece of
work it (California) could not have itself done; Livi, as a placement agency, had
simply supplied it with the manpower necessary to carry out its (California's)
merchandising activities, using its (California's) premises and equipment. 25
Neither Livi nor California can therefore escape liability, that is, assuming one
exists.
The fact that the petitioners have allegedly admitted being Livi's "direct
employees" 26 in their complaints is nothing conclusive. For one thing, the fact that
the petitioners were (are), will not absolve California since liability has been
imposed by legal operation. For another, and as we indicated, the relations of
parties must be judged from case to case and the decree of law, and not by
declarations of parties.
The fact that the petitioners have been hired on a "temporary or seasonal" basis
merely is no argument either. As we held in Philippine Bank of Communications v.
NLRC, 27 a temporary or casual employee, under Article 218 of the Labor Code,
becomes regular after service of one year, unless he has been contracted for a
specific project. And we cannot say that merchandising is a specific project for
18
the obvious reason that it is an activity related to the day-to-day operations of
California.
It would have been different, we believe, had Livi been discretely a promotions
firm, and that California had hired it to perform the latter's merchandising
activities. For then, Livi would have been truly the employer of its employees, and
California, its client. The client, in that case, would have been a mere patron, and
not an employer. The employees would not in that event be unlike waiters, who,
although at the service of customers, are not the latter's employees, but of the
restaurant. As we pointed out in the Philippine Bank of Communications case:
xxx xxx xxx
... The undertaking given by CESI in favor of the bank was not the
performance of a specific job for instance, the carriage and
delivery of documents and parcels to the addresses thereof.
There appear to be many companies today which perform this
discrete service, companies with their own personnel who pick up
documents and packages from the offices of a client or customer,
and who deliver such materials utilizing their own delivery vans or
motorcycles to the addressees. In the present case, the
undertaking of CESI was to provide its client the bank with a
certain number of persons able to carry out the work of
messengers. Such undertaking of CESI was complied with when
the requisite number of persons were assigned or seconded to the
petitioner bank. Orpiada utilized the premises and office
equipment of the bank and not those of CESI. Messengerial work
the delivery of documents to designated persons whether within
or without the bank premises-is of course directly related to the
day-to-day operations of the bank. Section 9(2) quoted above
does not require for its applicability that the petitioner must be
engaged in the delivery of items as a distinct and separate line of
business.
Succinctly put, CESI is not a parcel delivery company: as its name
indicates, it is a recruitment and placement corporation placing
bodies, as it were, in different client companies for longer or
shorter periods of time, ... 28
In the case at bar, Livi is admittedly an "independent contractor providing
temporary services of manpower to its client. " 29 When it thus provided California
with manpower, it supplied California with personnel, as if such personnel had been
directly hired by California. Hence, Article 106 of the Code applies.
The Court need not therefore consider whether it is Livi or California which
exercises control over the petitioner vis-a-vis the four barometers referred to
earlier, since by fiction of law, either or both shoulder responsibility.
It is not that by dismissing the terms and conditions of the manpower supply
agreement, we have, hence, considered it illegal. Under the Labor Code, genuine
job contracts are permissible, provided they are genuine job contracts. But, as we
held in Philippine Bank of Communications, supra, when such arrangements are
resorted to "in anticipation of, and for the very purpose of making possible, the
secondment" 30 of the employees from the true employer, the Court will be
justified in expressing its concern. For then that would compromise the rights of
the workers, especially their right to security of tenure.
This brings us to the question: What is the liability of either Livi or California?
The records show that the petitioners bad been given an initial six-month
contract, renewed for another six months. Accordingly, under Article 281 of the
Code, they had become regular employees-of-California-and had acquired a secure
tenure. Hence, they cannot be separated without due process of law.
California resists reinstatement on the ground, first, and as we Id, that the
petitioners are not its employees, and second, by reason of financial distress
brought about by "unfavorable political and economic atmosphere" 31"coupled by
the February Revolution." 32 As to the first objection, we reiterate that the
petitioners are its employees and who, by virtue of the required one-year length-
of-service, have acquired a regular status. As to the second, we are not convinced
that California has shown enough evidence, other than its bare say so, that it had
in fact suffered serious business reverses as a result alone of the prevailing
political and economic climate. We further find the attribution to the February
Revolution as a cause for its alleged losses to be gratuitous and without basis in
fact.
19
California should be warned that retrenchment of workers, unless clearly
BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or ANDRES C.
warranted, has serious consequences not only on the State's initiatives to maintain
a stable employment record for the country, but more so, on the workingman TORRES-YAP, respondents.
himself, amid an environment that is desperately scarce in jobs. And, the National
Respondent Bodega City (Bodega City) is a corporation duly registered and
Labor Relations Commission should have known better than to fall for such
unwarranted excuses and nebulous claims. existing under and by virtue of the laws of the Republic of the Philippines, while

respondent Andres C. Torres-Yap (Yap) is its owner/ manager. Petitioner was the
WHEREFORE, the petition is GRANTED. Judgment is hereby RENDERED: (1):
SETTING ASIDE the decision, dated March 20, 1987, and the resolution, dated “lady keeper” of Bodega City tasked with manning its ladies’ comfort room.
August 19, 1987; (2) ORDERING the respondent, the California Manufacturing
Company, to REINSTATE the petitioners with full status and rights of regular In a letter signed by Yap dated February 10, 1995, petitioner was made to explain
employees; and (3) ORDERING the respondent, the California Manufacturing why the concessionaire agreement between her and respondents should not be
Company, and the respondents, Livi Manpower Service, Inc. and/or Lily-Victoria
Azarcon, to PAY, jointly and severally, unto the petitioners: (a) backwages and terminated or suspended in view of an incident that happened on February 3,
differential pays effective as and from the time they had acquired a regular 1995, wherein petitioner was seen to have acted in a hostile manner against a lady
status under the second paragraph, of Section 281, of the Labor Code, but not to
exceed three (3) years, and (b) all such other and further benefits as may be customer of Bodega City who informed the management that she saw petitioner
provided by existing collective bargaining agreement(s) or other relations, or by
sleeping while on duty.
law, beginning such time; and (4) ORDERING the private respondents to PAY unto
the petitioners attorney's fees equivalent to ten (10%) percent of all money Yap informed petitioner that because of the incident that happened respondents
claims hereby awarded, in addition to those money claims. The private respondents
had decided to terminate the concessionaire agreement between them.
are likewise ORDERED to PAY the costs of this suit.
Petitioner filed a complaint for illegal dismissal against respondents contending
IT IS SO ORDERED.
that she was dismissed from her employment without cause and due process.

In their answer, respondents contended that no employer-employee relationship

LOPEZ vs. BODEGA CITY DIGEST ever existed between them and petitioner; that the latter’s services rendered

within the premises of Bodega City was by virtue of a concessionaire agreement

DECEMBER 21, 2016 ~ VBDIAZ
she entered into with respondents.

G.R. No. 155731 September 3, 2007 Labor Arbiter rendered judgment finding that petitioner was an employee of

respondents and that the latter illegally dismissed her.3

LOLITA LOPEZ, petitioner, NLRC SET ASIDE AND VACATED LA Decision.

vs. ISSUE:

20
Whether or not petitioner is an employee of respondents. To prove the element of payment of wages, petitioner presented a petty cash

RULING: voucher showing that she received an allowance for five (5) days.18 The CA did

In an illegal dismissal case, the onus probandi rests on the employer to prove that not err when it held that a solitary petty cash voucher did not prove that

its dismissal of an employee was for a valid cause.13 However, before a case for petitioner had been receiving salary from respondents or that she had been

illegal dismissal can prosper, an employer-employee relationship must first be respondents’ employee for 10 years.

established.14 Indeed, if petitioner was really an employee of respondents for that length of

In filing a complaint before the Labor Arbiter for illegal dismissal based on the time, she should have been able to present salary vouchers or pay slips and not

premise that she was an employee of respondent, it is incumbent upon petitioner just a single petty cash voucher. The Court agrees with respondents that

to prove the employee-employer relationship by substantial evidence.15 petitioner could have easily shown other pieces of evidence such as a contract of

The NLRC and the CA found that petitioner failed to discharge this burden, and employment, SSS or Medicare forms, or certificates of withholding tax on

the Court finds no cogent reason to depart from their findings. compensation income; or she could have presented witnesses to prove her

The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing contention that she was an employee of respondents. Petitioner failed to do so.

and Parts Corp.,16 to wit: Anent the element of control, petitioner’s contention that she was an employee of

To ascertain the existence of an employer-employee relationship, jurisprudence respondents because she was subject to their control does not hold water.

has invariably applied the four-fold test, namely: (1) the manner of selection and Petitioner failed to cite a single instance to prove that she was subject to the

engagement; (2) the payment of wages; (3) the presence or absence of the power control of respondents insofar as the manner in which she should perform her job

of dismissal; and (4) the presence or absence of the power of control. Of these as a “lady keeper” was concerned.

four, the last one is the most important. The so-called “control test” is commonly It is true that petitioner was required to follow rules and regulations prescribing

regarded as the most crucial and determinative indicator of the presence or appropriate conduct while within the premises of Bodega City. However, this was

absence of an employer-employee relationship. Under the control test, an imposed upon petitioner as part of the terms and conditions in the concessionaire

employer-employee relationship exists where the person for whom the services agreement embodied in a 1992 letter of Yap addressed to petitioner.

areperformed reserves the right to control not only the end achieved, but also Petitioner does not dispute the existence of the letter; neither does she deny

the manner and means to be used in reaching that end.17 that respondents offered her the subject concessionaire agreement. However,

21
she contends that she could not have entered into the said agreement with
respondents because she did not sign the document evidencing the same.
Petitioner is likewise estopped from denying the existence of the subject
concessionaire agreement. She should not, after enjoying the benefits of the
concessionaire agreement with respondents, be allowed to later disown the same
through her allegation that she was an employee of the respondents when the said
agreement was terminated by reason of her violation of the terms and conditions
thereof.
The principle of estoppel in pais applies wherein — by one’s acts, representations
or admissions, or silence when one ought to speak out — intentionally or through
culpable negligence, induces another to believe certain facts to exist and to
rightfully rely and act on such belief, so as to be prejudiced if the former is
permitted to deny the existence of those facts.24
Hence, going back to the element of control, the concessionaire agreement merely
stated that petitioner shall maintain the cleanliness of the ladies’ comfort room
and observe courtesy guidelines that would help her obtain the results they
wanted to achieve. There is nothing in the agreement which specifies the methods
by which petitioner should achieve these results.
Lastly, the Court finds that the elements of selection and engagement as well as
the power of dismissal are not present in the instant case.
It has been established that there has been no employer-employee relationship
between respondents and petitioner. Their contractual relationship was governed
by the concessionaire agreement embodied in the 1992 letter. Thus, petitioner
was not dismissed by respondents. Instead, as shown by the letter of Yap to her
dated February 15, 1995,37 their contractual relationship was terminated by
reason of respondents’ termination of the subject concessionaire agreement,
which was in accordance with the provisions of the agreement in case of violation
of its terms and conditions.
In fine, the CA did not err in dismissing the petition for certiorari filed before it
by petitioner.
WHEREFORE, the instant petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.
Victory Liner v. Race | Chico-Nazario, J.
Keywords: Injured bus driver illegally dismissed; Prescription: 4 years from the
accrual of the cause of action
FACTS:
 Pablo M. Race was employed by Victory Liner, Inc. as a bus driver for the
Alaiminos, Pangasinan – Cubao, Quezon City evening route.
 24 August 1994: Race’s bus figured in an accident, wherein Race suffered
a fractured leg, for which he was confined in the hospital until 10 October
1994.
 10 November 1994: Race was confined again for further treatment for
another month.
 Victory Liner shouldered all of Race’s medical expenses for both
instances.
 January 1998: Race reported for work, but was informed that he was
considered resigned, and was offered consideration of P50,000.00, which
he rejected.
 Before Christmas 1998: Victory Liner reiterated that he was regarded as
22
 resigned, this time, offering him P100,000.00, which he again rejected.
 30 June 1999: Race sent a letter to Victory Liner demanding employment-
related money claims; no response from Victory Liner.
 1 September 1999: Race filed a complaint before the Labor Arbiter for:
o Unfair labor practice;
o Illegal dismissal;
o Underpayment of wages;
o Nonpayment of overtime and holiday premium, service incentive
leave pay, vacation and sick leave benefits, 13th month pay;
o Excessive deduction of withholding tax and SSS premium; and
o Moral and exemplary damages and attorney’s fees.
 LABOR ARBITER: Dismissed; stating that the prescriptive period for
filing a case for illegal dismissal had elapsed—considered dismissed on 24
November 1994.
 NLRC: Reversed Labor Arbiter; cause of action accrued in January 1998,
when Race reported for work but was rejected; Also stated that Victory
Liner failed to accord Race due process in terminating his employment.
ISSUE/HELD:
[1] WoN the cause of action for illegal dismissal had prescribed.—NO. Cause
of action accrued January 1998.
[2] WoN Race was illegally dismissed, thus entitled to reinstatement with full
back wages and other benefits.—YES. But separation pay in lieu of
reinstatement.
RATIO:
[1] Prescription
 Victory Liner insists that Race already abandoned his work and ceased to
be its employee since November 1994.
o Among other arguments, under the 4-fold test of employer-
employee relationship: Victory claimed that it no longer paid Race
wages nor exercised control over him since November 1994.
o If reckoning period is counted from when the written demand was
made by Race, the 4-year prescriptive period would be
indeterminate, contrary to the spirit of the law.
 In illegal dismissal cases, the employee concerned is given a period of
four years from the time of his dismissal within which to institute a
complaint.
o Art. 1146 [CC] Actions based upon an injury to the rights of
the plaintiff must be brought within four years.
o Employment is a “property right”—within the protection of a
constitutional guarantee of dues process of law.
o Therefore, when one is arbitrarily and unjustly deprived of his job
or means of livelihood, the action instituted to contest the
legality of one’s dismissal from employment constitutes, an action
predicated "upon an injury to the rights of the plaintiff."
 The four-year prescriptive period shall commence to run only upon the
accrual of a cause of action of the worker—the time the employment
of the worker was unjustly terminated.
 Race was not unjustly terminated on 10 November 1994
o At that time, still confined for further treatment of his
fractured left leg.
o He must be considered as merely on sick leave
 Neither could be deemed as illegally dismissed from work upon his release
in December 1994 up to December 1997.
o Race still reported for work to the petitioner and was granted
sick and disability leave by Victory Liner for that period.
 Race must be considered as unjustly terminated in January 1998 since
this was the first time he was informed by the Victory Liner that he was
deemed resigned from his work.
 Consequently, Race’s filing of complaint for illegal dismissal on 1
September 1999 was well within the four-year prescriptive period.
 It must also be noted that from 10 November 1994 up to December 1997,
Victory Liner never formally informed the respondent of the fact of his
dismissal
 Moveover, Race did not abandon his work for lack of the 2 factors that
constitute abandonment:
o Failure to report for work or absence without valid or justifiable
reason; and
o A clear intention to sever employer-employee relationship.
 Similarly, the employer-employee relationship between the petitioner and
23
 respondent cannot be deemed to have been extinguished on 10 November
1994,.
o Race reported for work to the petitioner after his release from
the hospital in December 1994.
o He was also granted a 120-day sick leave and disability leave
o And also availed himself of the services of the Victory Liner’s
physician on two occasions after his release
o Victory Liner failed to establish the fact that Race ceased to be
its employee on 10 November 1994, except for its flimsy reason
that the sick leave, disability leave and physician consultations
were given to the respondent as mere accommodations for a
former employee.
[2.a.] Illegal dismissal
 The Labor Code mandates that before an employer may legally dismiss an
employee from the service, the requirement of substantial and
procedural due process must be complied with.
 Substantial due process—the grounds for termination of employment must
be based on just or authorized causes.
o Although abandonment of work is within the scope of the just
causes for termination (under gross and habitual neglect by the
emlployee of his duties), the court found that there was not
abandonment on the part of Race.
 The records also failed to show that the said charges were proven and
that respondent was duly informed and heard with regard to the
accusations.
 And as Victory Liner is the employer, it is its burdened to prove just
cause for terminating the employment of respondent with clear and
convincing evidence, and that Victory Liner failed to discharge this
burden, we hold that respondent was dismissed without just cause by the
petitioner.
[2.b.] Reinstatement
 Race was willing to be hired as a dispatcher or conductor, and was no
longer requesting to be reinstated as a driver since he cannot drive
anymore due to his leg injury.
 Even assuming that Race was willing, reinstatement would still be
unwarranted.
o Since Victory Liner is a common carrier, and is obliged to exercise
extra-ordinary diligence in transporting its passengers, it would
be a violation of this diligence to reinstate an incapacitated
driver.
o An employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be
inimical to his interests.
 Therefore, in lieu of reinstatement, payment to respondent of separation
pay equivalent to one month pay for every year of service.
Goma vs. Pamplona Plantation DIGEST
DECEMBER 19, 2016 ~ VBDIAZ
Goma vs. Pamplona Plantation
Facts:
Petitioner commenced the instant suit by filing a complaint for illegal dismissal,
underpayment of wages, non-payment of premium pay for holiday and rest day,
five (5) days incentive leave pay, damages and attorney’s fees, against the
respondent. The case was filed with the Sub-Regional Arbitration Branch No. VII
of Dumaguete City. Petitioner claimed that he worked as a carpenter at the
Hacienda Pamplona since 1995; that he worked from 7:30 a.m. to 12:00 noon and
from 1:00 p.m. to 5:00 p.m. daily with a salary rate of P90.00 a day paid weekly;
and that he worked continuously until 1997 when he was not given any work
24
assignment. On a claim that he was a regular employee, petitioner alleged to have

been illegally dismissed when the respondent refused without just cause to give

him work assignment. Thus, he prayed for backwages, salary differential, service If the law has been performing the job for at least a year, even if the

incentive leave pay, damages and attorney’s fees. performance is not continuous or merely intermittent, the law deems the repeated

and continuing need for its performance as sufficient evidence of the necessity, if

On the other hand, respondent denied having hired the petitioner as its regular not indispensability, of that activity to the business.

employee. It instead argued that petitioner was hired by a certain Antoy Petitioner was engaged to perform carpentry work. His services were needed for a

Cañaveral, the manager of the hacienda at the time it was owned by Mr. Bower and period of 2 years until such time that respondent decided not to give him work

leased by Manuel Gonzales, a jai-alai pelotari known as “Ybarra.” Respondent added assignment anymore. Owing to his length of service, petitioner became a regular

that it was not obliged to absorb the employees of the former owner. employee, by operation of law.

Issue: WON petitioner is a regular employee. The principal test used to determine whether employees are PROJECT

Held: EMPLOYEES as distinguished from REGULAR EMPLOYEES, is whether or not the

employees were assigned to carry out a specific project or undertaking, the

Article 280 of the Labor Code provides that there are two kinds of REGULAR duration or scope of which was specified at the time the employees were engaged

EMPLOYEES, namely: for that project. In this case, apart from the respondent’s bare allegation that

petitioner was a project employee, it had not shown that petitioner was informed

Regular employees by nature of work – Those who are engaged to perform that he would be assigned to a specific project or undertaking. Neither was it

activities which are usually necessary or desirable in the usual business or trade established that he was informed of the duration and scope of such project or

of the employer (regardless of length of service); and undertaking at the time of his engagement.s

Petition granted.

 Regular employees by years of service – Those who have rendered at least

one year of service, whether continuous or broken, with respect to the

activity in which they are employed (regardless of nature of work).

25