LABOR CASE DIGESTS (1) be promoted to Unit Manager with the right of petitioner to revert

him to agent status when warranted.

1. Insular Life Assurance Co. vs. NLRC
In the case at bar, the exclusivity of service, control of assignments
FACTS:
and removal of agents under private respondent’s unit, collection of
premiums, furnishing of company facilities and materials as well as
Panteleon Delos Reyes (private respondent) and Insular Life
capital described as Unit Development Fund are but hallmarks of
Assurance Co. Inc. (petitioner) entered into a contract of agency,
the management system in which herein private respondent
which contained a stipulation that no employer-employee
worked. This obtaining, there is no escaping the conclusion that
relationship shall be created between the parties and that the agent
private respondent was an employer of the petitioner. Hence, he is
shall be free to exercise his own judgment as to time, place and
entitled to the benefits granted by law to employees.
means of soliciting insurance. There were other stipulations
requiring Delos Reyes to submit reports, turn over sums of money
WHEREFORE, the petition of Insular Life Assurance Company,
collected, and other conditions and limitations as to how the work
Ltd., is DENIED and the Decision of the National Labor Relations
was done, including a quota that should be met.
Commission is AFFIRMED.
He was also promoted to work as a Unit Manager and was asked by
the company to participate on company programs until the
management gave him a notice that he is terminated from work.
Delos Reyes filed a complaint before the LA complaining that he
was illegally terminated and was not given separation pay.

The LA dismissed his petition on the ground that there was no

employee-employer relationship between him and insular life
having failed to meet the four-fold test. The NLRC on appeal,
however, sighted that the respondent was under the effective
control of the petitioner in the critical and most important aspects
of his work as Unit Manager.

This conclusion was derived from the provisions in the contract,

which appointed private respondent as Acting Unit Manager. Delos
Reyes was to serve exclusively the company; therefore, he was not
an independent contractor. He was required to meet certain
manpower and production quota and petitioner controlled the
assignment to and removal of soliciting agents from his unit. Thus,
he must be considered an employee of Insular Life. The NLRC
reversed the decision of the LA. Hence this appeal.

ISSUE:

WON there is an employer-employee relationship despite the fact

that there is a stipulation in the contract stating, “there shall be no
employer-employee relationship shall be created between the
parties”?

HELD: NO

The employer-employee relationship cannot be solely based from

the stipulations of contract signed by the partied. What is
important is that all the elements in the four-fold test is met
considering the actual nature of the employees work.

Four-fold test:
1. Selection and Engagement of employee
2. Payment of Wages
3. Power of Dismissal
4. Power of Control

The NLRC also took into account other circumstances showing that
petitioner exercised employers prerogatives over De los Reyes, e.g.,
(a) limiting the work of respondent De los Reyes to selling a life
insurance policy known as Salary Deduction Insurance only to
members of the Philippine National Police, public and private
school teachers and other employees of private companies; (b)
assigning private respondent to a particular place and table where
he worked whenever he has not in the field; (c) paying private
respondent during the period of twelve (12) months of his
appointment as Acting Unit Manager the amount of P1,500.00 as
Unit Development Financing of which 20% formed his salary and
the rest, i.e., 80%, as advance of his expected commissions; and (d)
promising that upon completion of certain requirements, he would

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 1

2. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY,*
petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
and GRACE DE GUZMAN, respondents.
FACTS:
Petitioner Philippine Telegraph and Telephone Company
(hereafter, PT&T) invokes the alleged concealment of civil status
and defalcation of company funds as grounds to terminate the
services of an employee. That employee, herein private respondent
Grace de Guzman, contrarily argues that what really motivated
PT&T to terminate her services was her having contracted
marriage during her employment, which is prohibited by petitioner
in its company policies. She thus claims that she was discriminated
against in gross violation of law, such a proscription by an employer
being outlawed by Article 136 of the Labor Code.
Grace de Guzman was initially hired by the petitioner as a reliever
for a fixed period from November 21, 1990 until April 20, 1991 vice
one C.F. Tenorio who went on maternity leave.
Under the Reliever Agreement, which she signed with petitioner
company, her employment was to be immediately terminated upon
expiration of the agreed period. Thereafter, from June 10, 1991 to
July 1, 1991, and from July 19, 1991 to August 8, 1991, private
respondents services as reliever were again engaged by petitioner,
this time in replacement of one Erlinda F. Dizon who went on leave
during both periods. After August 8, 1991, and pursuant to their
Reliever Agreement, her services were terminated.
Private respondent was once more asked to join petitioner company
as a probationary employee, the probationary period to cover 150
days. In the job application form that was furnished her to be filled
up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a
few months earlier.
It now appears that private respondent had made the same
representation in the two successive reliever agreements. When
petitioner supposedly learned about the same later, its branch
supervisor in Baguio City, sent to private respondent a
memorandum requiring her to explain the discrepancy. In that
memorandum, she was reminded about the company’s policy of not
accepting married women for employment.
In a reply, private respondent stated that she was not aware of
PT&Ts policy regarding married women at the time, and that all
along she had not deliberately hidden her true civil status.
Petitioner nonetheless remained unconvinced by her explanations.
Private respondent was dismissed from the company that she
readily contested by initiating a complaint for illegal dismissal,
coupled with a claim for non-payment of cost of living allowances
(COLA), before the Regional Arbitration Branch of the National
Labor Relations Commission in Baguio City.
The LA then held a decision declaring that petitioner illegally
dismissed the private respondent, who had already gained the
status of a regular employee. Her reinstatement, plus payment of
the corresponding back wages and COLA, was correspondingly
ordered, the labor arbiter being of the firmly expressed view that
the ground relied upon by petitioner in dismissing private
respondent was clearly insufficient, and that it was apparent that
she had been discriminated against on account of her having
contracted marriage in violation of company rules.
On appeal, the NLRC upheld the decision of the LA wherein it
ruled that indeed the private respondent has been the subject of an
unjust and unlawful discrimination by her employer. However, the
decision of the LA was modified with the qualification that Grace de
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
Guzman deserved to be suspended for three months in view of the
dishonest nature of her acts, which should not be condoned. In all
other respects, the NLRC affirmed the decision of the LA, including
the order for the reinstatement of private respondent in her
employment with PT&T.
ISSUE:
WON the company policy of not accepting married women for
employment was discriminatory
Whether or not Grace’s act of concealment amounted to dishonesty,
leading to loss of confidence
Whether or not Grace was illegally dismissed.
HELD:
There was discrimination.
Article 136 of the Labor Code explicitly prohibits discrimination
merely by reason of the marriage of a female employee.
Petitioner’s policy of not accepting or considering as disqualified
from work any woman worker who contracts marriage runs afoul of
the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the
Constitution. Contrary to petitioner’s assertion that it dismissed
private respondent from employment on account of her dishonesty,
the record discloses clearly that her ties with the company were
dissolved principally because of the company’s policy that married
women are not qualified for employment in PT&T, and not merely
because of her supposed acts of dishonesty.
Concealment did not amount to willful dishonesty.
Verily, private respondent’s act of concealing the true nature of her
status from PT&T could not be properly characterized as willful or
in bad faith as she was moved to act the way she did mainly
because she wanted to retain a permanent job in a stable company.
In other words, she was practically forced by that very same illegal
company policy into misrepresenting her civil status for fear of
being disqualified from work. While loss of confidence is a just
cause for termination of employment, it should not be simulated. It
must rest on an actual breach of duty committed by the employee
and not on the employer’s caprices. Furthermore, it should never be
used as a subterfuge for causes which are improper, illegal, or
unjustified.
However, SC nevertheless ruled that Grace did commit an act of
dishonesty, which should be sanctioned and therefore agreed with
the NLRC’s decision that the dishonesty warranted temporary
suspension of Grace from work.
Grace attained regular status as an employee. Private respondent,
it must be observed, had gained regular status at the time of her
dismissal. When she was served her walking papers on Jan. 29,
1992, she was about to complete the probationary period of 150
days as she was contracted as a probationary employee on
September 2, 1991. That her dismissal would be effected just when
her probationary period was winding down clearly raises the
plausible conclusion that it was done in order to prevent her from
earning security of tenure.
There was illegal dismissal. As an employee who had therefore
gained regular status, and as she had been dismissed without just
cause, she is entitled to reinstatement without loss of seniority
rights and other privileges and to full back wages, inclusive of
allowances and other benefits or their monetary equivalent.
On Stipulation against Marriage, in the final reckoning, the danger
of PT&T’s policy against marriage is that it strikes at the very
essence, ideals and purpose of marriage as an inviolable social
institution and, ultimately, of the family as the foundation of the
nation.
2
3. FILIPINAS BROADCASTING NETWORK, INC., petitioner vs.
NATIONAL LABOR RELATIONS COMMISION and SIMEON
MAPA JR., respondents. (287 SCRA 349)
FACTS:
Before us is a petition for certiorari assailing the April 29, 1994
Decision of the National Labor Relations Commission, in Case No.
05-08-00348-92, entitled Simeon M. Mapa Jr., v. DZRC Radio
Station.
Petitioner and private respondent submitted different versions of
the facts. The facts as viewed by private respondent are as follows:
“The complainant (herein private respondent) began to work for the
respondent as a radio reporter starting March 11, 1990. On May 14,
1990, upon being informed by then respondents Station Manager,
Mr. Plaridel Brocales, that complainants employment with
respondent is being blocked by Ms. Brenda Bayona of DZGB,
complainants previous employer, the said complainant took a leave
of absence. In the first week of June, 1990, the respondent thru Mr.
Antonio Llarena, then an employee of the respondent, asked the
complainant to return to work even as he was assured that his
salaries will be paid to him already. Thus, the complainant
continued to work for the respondent since then. On September 5,
1991, again the complainant took a leave of absence because of his
desperation over the failure of respondent to make good its promise
of payment of salaries. He was reinstated on January 16, 1992 and
resigned on February 27, 1992 when he decided to run for an
elective office in the town of Daraga, albay. Unfortunately, the
respondent paid salary to the complainant only for the period from
January 16, 1992 up to February 27, 1992. Respondent did not pay
the complainant for all the services rendered by the latter from
March 11, 1990 up to January 16, 1992.”
As may be glened from its memorandum, petitioners version of the
facts is as follows:
1. On or before April 1990, Mapa was dismissed from his
employment with PBN-DZGB Legaspi. At the time, Mapa filed a
case for illegal dismissal against PBN-DZGB Legaspi docketed as
RAV V. Case No. 05-04-00120-90 entitled Simeon Mapa, Jr. v.
Peoples Broadcasting Network-DZGB Legaspi, Jorge Bayona and
Arturo Osia.
2. On or about May 1990, Mapa sought employment from DZRC as
a radio reporter. However, DZRC required of private respondent the
submission of a clearance from his former employer. Otherwise, his
apllication would not be acted upon;
3.On May 14, 1990, Mapa was informed by DZRC's then station
manager, Mr. Plaridel Larry Brocales, that his application for
employment was being blocked by Ms. Brenda Bayona of DZGB,
Mapas former employer. This fact is supported by Mapas position
paper before the Honorable Labor Arbiter xxx;
4. Taking pity on Mapa and pending the issuance of the
clearance from PBN-DZGB Legaspi, Mr. Larry Brocales granted the
request of Mapa to be accomodated only as a volunteer reporter of
DZRC on a part-time basis. As a volunteer reporter, Mapa was not
to be paid wages as an employee of DZRC but he was permitted to
find sponsors whose business establishments will be advertised
every time he goes on the air. Most importantly, Mapas only work
consisted of occasional newsbits or on-the spot reporting of
consisted of occasional newsbits or on-the spot reporting of
incidents or newsworthy occurances, which was very seldom.
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
On October 13, 1993, Labor Arbiter Emeterio Ranola dismissed the
complaint for lack of merit, finding that no employer-employee
relationship existed between Mapa and DZRC during the period
March 11, 1990 to February 16, 1992.
Findings of the NLRC
In holding that there was an employer-employee relationship, the
NLRC set aside the labor arbiters findings:
In his appeal, complainant insists that there was an employer-
employee relationship between him and the respondent. In support
of his contention, he cites the payroll for February 16 to 29, 1992,
the ID card issued to him as employee and regular reporter by the
respondent: [sic] the program schedules of DZRC showing the
regular program of the station indicating his name: [sic] the
affidavit of Antonio Llarena, program supervisor of DZRCM, stating
that he [was] a regular reporter underhis supervision and the list of
reporting gadgets issued to regular reporter.
The existence of employer employee relationship is determined by
the following elements, namely: 1) selection and engagement of the
employee; 2) the payment of wages; 3) the power of dismissal; and
4) the power to control employees conduct although the latter is the
most important element. (Rosario Brothers, Inc. vs. Ople, 131 SCRA
72)
Considering the totality of the evidence adduced by the parties, we
are of the opinion that the complainant is a regular reporter of the
respondent. Firstly, the work of the complainant is being
supervised by the program supervisor of the respondent; secondly,
the complainant uses the reporting gadgets of the respondent.
Thirdly, he has no reporting gadgets of his own; Fourthly, the
program schedule is prepared by the respondent; and Lastly, he
was paid salary for the period for the period from February 16 to
29, 1992 and covered under the Social Security System. There is no
showing in the record that his work from February 16, 1992 was
different from his work before the said period.
The NLRC subsequently denied petitioners motion for
reconsideration.
ISSUE:
WON the private respondent was an employee of the petitioner for
the period of March 11, 1990 to January 15, 1992.
HELD: NO
As a rule, the NLRCs findings are accorded great respect, even
finality, by this Court. This rule, however, is not without
qualification. This Court held in Jimenez v. NLRC:
The review of labor cases elevated to us on certiorari is confined to
questions of jurisdiction or grave abuse of discretion. As a rule, this
Court does not review supposed errors in the decision of the NLRC
which raise factual issues, because factual finding of agencies
exercising quasi-judicial functions are accorded not only respect but
even finality, aside from the consideration that the Court is
essentially not a trier of facts. However, in the case at bar, a review
of the records thereof with an assessment of the facts is necessary
since the factual findings of the NLRC and the labor arbiter are at
odds with each other.
In the present case, a review of the factual findings of the public
respondent is in order, for said findings differ from those of the
labor arbiter. Worse the facts alleged by the private respondent and
relied upon by the public respondent do not prove an employer-
3
employee relationship. In this light, we will review and overrule the reports; in fact, he was not required to report anything at all.
findings of the NLRC. Whether he would air anything depended entirely on him and his
convenience.
The following are generally considered in the determination of the
existence of an employer-employee relationship: (1) the manner of In sum, the evidence, which Public Respondent NLRC relies upon,
selection and engagement, (2) the payment of wages, (3) the does not justify the reversal of the labor arbiters ruling which, in
presence or absence of the power of dismissal, and (4) the presence turn, we find amply supported by the records. Clearly, private
or absence of the power of control; of these four, the last one is the respondent was not an employee during the period in question.
most important.
WHEREFORE, the petition is hereby GRANTED and the assailed
There is no indication that these two circumstances were made Decision and Resolution are hereby SET ASIDE. The Order of the
under duress. Indeed, private respondent himself did not dispute Labor Arbiter dated October 13, 1993 dismissing the case for lack of
their voluntariness or veracity. It is clear that he rendered services merit is hereby REINSTATED. No costs.
knowing that he was not an employee. Aware that he would not be
paid wages, he described himself as a volunteer reporter who was,
as evident from his letter, hoping for the chance to be recognized as
a regular reporter. In fact, petitioner acted favorably on this letter
and accepted his application as an employee effective on January
16, 1992.

Likewise, the evidence on record shows that petitioner did not

exercise the power to dismiss private respondent during the period
in question. in September 1991, Private Respondent Mapa ceased
acting as a volunteer reporter, not because he was fired , but
because he stopped sending his reports. Ignacio Casi, Office
Supervisor of DZRC, declared in his affidavit that Mapa told him
that he [was] quitting already because his sponsors were no longer
paying him of [sic] his monthly contract with them. Mapa did not
controvert this statement. In fact, his aforesaid letter of October 17,
1991 expressed his hope of being given the chance to be recognized
as a regular reporter. Private respondents attitude in said letter is
inconsistent with the notion that he had been dismissed.

Mapa was not subject to control of petitioner. The most crucial test
the control test demonstrates all too clearly the absence of an
employee-employee relationship. No one at the DZRC had the
power to regulate or control private respondents activities or inputs.
Unlike the regular reporters, he was not subject to any supervision
by petitioner or its officials. Regular reporters are required by the
petitioner to adhere to a program schedule which delineates the
time when they are to render their reports, as well as the topic to be
reported upon. The substance of their reports are [sic] oftentimes
screened by the station prior to [their] actual airing. In contrast,
volunteer reporters are never given such a program schedule but
are merely advised to inform the station of the reports they would
make from time to time.

The payroll from February 16, 1992 to February 27, 1992 does not
demonstrate that private respondent was an employee prior to said
period. Lest it be forgotten, the question in this case pertains to the
status of private respondent from March 11, 1990 to January 15,
1992. The said payroll may prove that private respondent was an
employee during said days in February 1992, but not for the period,
which is the subject of the present controversy.

Furthermore, neither the identification cards nor the SSS number

printed at the back thereof indicate the date of issuance. Likewise,
the SSS number does not show that he was a member during the
period in controversy; much less, that he became so by reason of his
employment with petitioner.

Similarly inapplicable is the program schedule which allegedly

showed the regular program of the station and indicated the name
of private respondent as an employee. The document is a mere
photocopy of a typewritten schedule. There is absolutely no
indicium of its authenticity.

Indeed, DZRC, the petitioners radio station , exercised no editorial

rights over his reports. He had no fixed day or time for making his

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 4

4. TRADERS ROYAL BANK, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and ROGELIO ESPAOLA,
respondent.
FACTS:
Agro-Commercial Security Services Agency Inc. (AGRO) assigned
Rogelio Espaola to work as a janitor at the Iloilo Branch of
petitioner Traders Royal Bank (TRB).
Sometime in 1982 Espaola was informed that he would be absorbed
by a new agency, Royal Protective and Janitorial Services Inc.
(ROYAL), and that he would perform the same functions. However,
since ROYAL was also managed and owned by the same people who
previously handled AGRO, it did not give him separation pay or any
other benefits. ROYAL also appointed Alberto G. Espinosa, AGROs
former Administrative Officer, as its General Manager.
TRB and ROYAL executed a new service agreement whereby
ROYAL would continue supplying janitorial services TRB for one
year. The contract also stated that if there was no notice to
terminate at the end of the one (1) year period it would remain in
force on a monthly basis. When the service agreement expired on 23
March 1989 TRB did not issue a termination notice. Instead, it
continued to avail of ROYALs services on a monthly basis as stated
in the contract. Its only after 6 years that TRB sent a letter to
ROYAL apprising the latter of its desire to terminate the service
agreement. In turn, ROYAL sent a notice to private respondent
Espaola informing him that due to TRB's decision to end their
contract his services were no longer needed. After being dismissed
ROYAL declined to give him any further assignment since his job
was allegedly coterminus with its contract with TRB.
Espaola filed a case against ROYAL, TRB and Alberto Espinosa for
illegal dismissal, illegal deduction, underpayment of wages, non-
payment of overtime pay, premium pay for rest day, service
incentive leave pay, 13th month pay and night shift differentials
with a prayer for reinstatement and back wages. He also claimed
moral and exemplary damages as well as attorney’s fees.
Labor Arbiter ruled in favor of TRB holding that Espaola had no
cause of action against it as there was no employer-employee
relationship between them. The Labor Arbiter further ruled that
Espaola was ROYALs employee but he was not entitled to any
monetary award since he did not prove his claims of underpayment
and illegal deductions against ROYAL.
On appeal, the NLRC reversed the decision of the Labor Arbiter
and ruled that Espaola was not an employee of ROYAL but of TRB.
NLRC then ordered TRB to reinstate him and to pay him the total
amount of P110, 829.78 broken down for back wages, ERA, salary
differentials, 13th month pay and for attorneys fees.
Consequently, motion for reconsideration was denied. Hence this
petition.
ISSUE:
Whether an employer-employee relationship exists between
petitioner Traders Royal Bank and private respondent Rogelio
Espaola.
HELD: YES
Who was Espaolas real employer? If Espaola was ROYALs
employee then he would have no recourse against TRB since his
dismissal was caused by the legitimate termination of a service
contract. But if he was really TRBs employee then he would be
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
entitled to reinstatement and full back wages as he was illegally
dismissed.
To prove that Espaola was not its employee TRB cites Mission
Order No. 29 signed by AGRO Administrative Officer Alberto G.
Espinosa. The order stated that Rogelio Espaola would be assigned
as janitor to TRBs Iloilo Branch. It also provided that his
employment would be from 26 January 1974 until revoked. TRB
argues that this proves that AGRO was Espaola’s employer from
1974 to 1982. And when he agreed to be absorbed by ROYAL he
became its employee from 1982 to 1994. Hence, he was never
employed by TRB.
However, the Court was not convinced. The Court has ruled that
the existence of employer-employee relationship cannot be proved
by merely showing the agreement of the parties. It is a question of
fact, which should be supported by substantial evidence. And in
determining the existence of such relationship the elements usually
considered are: (a) the selection of the employee; (b) the payment of
wages; (c) the power of dismissal; and, (d) the power to control the
employees conduct, with the "control test" generally assuming
primacy in the overall consideration.
Who then had control over Espaola's conduct? Was it ROYAL or
TRB? Between the two, we believe it was TRB. Espaola claimed in
his position paper that - Complainant, as previously stated, was
required to work as a janitor and as a driver. Moreover, he was
required to do his cleaning chores at night in order not to disturb
the transaction of business at the bank during office hours. Thus,
every night from Sunday to Thursday he was required to clean the
bank premises of respondent TRB. From Monday to Friday he was
required to drive TRBs armored car and pick up the children of
respondent TRBs manager, Mrs. Erlinda Ocampo, then drive them
to Angelicum School in Jaro, Iloilo City. Thereafter, he was
required to stay in the bank premises until 5:00 P.M., except for
lunch break, run errands and discharge other tasks and chores
assigned to him by respondent TRBs employees. After 5:00 P.M.
complainant was required to drive the above named officers of
respondent TRB home. He usually got back to the bank between
6:00 P.M. to 7:00 P.M. Upon his arrival he would start cleaning the
bank and, since the premises was big, it usually took about 2 hours
or up to 9:00 P.M. to finish his cleaning. Because he had to work
late and start working early and since his residence was in Sta.
Barbara, Iloilo, where there was no public transportation at night,
he had to sleep in the bank. His day-to-day work was monitored and
supervised by respondent TRB.
The above allegations contained in the position paper of Espaola
were never refuted. TRB could have easily presented affidavits,
written explanations or any other pleadings to defend itself and
disprove Espaolas claims. However, the only evidence it ever
presented was its service agreement with ROYAL. From the time
TRB submitted its position paper to the Labor Arbiter up to the
time it submitted its memorandum to the Supreme Court, not once
did it deny that it designated Espaola as its driver. On the other
hand, Espaola constantly reiterated in his pleadings that TRB
supervised and controlled his work as its janitor-driver. The fact
that Espaolas allegations were never controverted at any stage of
the proceedings affirms that such averments were true.
Furthermore, Rule 9, Sec. 11, of the Rules of Court, which
supplements the NLRC rules, also provides that an allegation,
which is not specifically denied, is deemed admitted.
The NLRC therefore did not abuse its discretion in ruling that
Espaola was not the employee of ROYAL. On the contrary, it was
the Labor Arbiter who came up with the erroneous conclusion. He
disregarded the uncontroverted allegations of Espaola and hastily
concluded that since ROYAL was an independent contractor, it was
Espaolas direct employer. While it may be that ROYAL could very
well be an independent contractor - although it did not establish
this fact with competent evidence to qualify it as such - and that
5
Espaolas name appeared in its payroll, nevertheless, whatever role
ROYAL had in this case, it was certainly not as the employer of
Espaola. For the fact remains that it was TRB which had control
and supervision over Espaolas work. Consequently, it should be
considered as his employer.

Since Espaola was illegally dismissed he is entitled to

reinstatement with full back wages. The NLRC erred in ruling that
he was only entitled to back wages from 16 March 1994 to 30
September 1996. An illegally dismissed employee is entitled to back
wages from the time he was dismissed to the time of his actual
reinstatement. However, the NLRCs ruling with regard to the
salary differentials and 13th month pay differentials must be
sustained.

5. VICENTE SY, TRINIDAD PAULINO, 6B’S TRUCKING

CORPORATION, and SBT1 TRUCKING CORPORATION,
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 6
petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, The NLRC, through the LA ruled that there was no illegal
respondents. dismissal in Sahot’s case. Private respondent had failed to report to
work. Moreover, said the Labor Arbiter, petitioners and private
respondent were industrial partners before January 1994. The
FACTS:
Labor Arbiter concluded by ordering petitioners to pay "financial
assistance" of P15,000 to Sahot for having served the company as a
Private respondent Jaime Sahot5 started working as a truck helper regular employee since January 1994 only.
for petitioners’ family-owned trucking business named Vicente Sy
Trucking. He became a truck driver of the same family business,
On appeal, the NLRC modified the decision of the LA wherein it
renamed T. Paulino Trucking Service, later 6B’s Trucking
declared that private respondent was an employee, not an
Corporation in 1985, and thereafter known as SBT Trucking
industrial partner since the start. Private respondent Sahot did not
Corporation since 1994. Throughout all these changes in names and
abandon his job but his employment was terminated on account of
for 36 years, private respondent continuously served the trucking
his illness, pursuant to Article 284 of the Labor Code. Accordingly,
business of petitioners.
the NLRC ordered petitioners to pay private respondent separation
pay.
Sahot was already 59 years old. He had been incurring absences as
he was suffering from various ailments. Particularly causing him
Petitioners assailed the decision of the NLRC before the CA. The
pain was his left thigh, which greatly affected the performance of
CA, however, affirmed with modification the judgment of the
his task as a driver. He inquired about his medical and retirement
NLRC. It held that private respondent was indeed an employee of
benefits with the Social Security System (SSS), but discovered that
petitioners since 1958. It also increased the amount of separation
his employer had not remitted his premium payments.
pay awarded to private respondent.

Sahot had filed a week-long leave sometime in May 1994. He was

ISSUE:
medically examined and treated for EOR, presleyopia, hypertensive
retinopathy G II, HPM, UTI, Osteoarthritis and heart
enlargement. On said grounds, Belen Paulino of the SBT Trucking WON an employer-employee relationship existed between
Service management told him to file a formal request for extension petitioners and respondent Sahot.
of his leave. At the end of his week-long absence, Sahot applied for WON there was a valid dismissal.
extension of his leave for the whole month of June, 1994. It was at WON Sahot is entitled to separation pay.
this time when petitioners allegedly threatened to terminate his
employment should he refuse to go back to work.
HELD:

At this point, Sahot found himself in a dilemma. He was facing

1. YES
dismissal if he refused to work, But he could not retire on pension
because petitioners never paid his correct SSS premiums. The fact
remained he could no longer work as his left thigh hurt abominably. The elements to determine the existence of an employment
Petitioners ended his dilemma. They carried out their threat and relationship are: (a) the selection and engagement of the employee;
dismissed him from work, effective June 30, 1994. He ended up (b) the payment of wages; (c) the power of dismissal; and (d) the
sick, jobless and penniless. employer’s power to control the employee’s conduct. The most
important element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be done, but also as
Sahot filed with the NLRC a complaint for illegal dismissal. He
to the means and methods to accomplish it.
prayed for the recovery of separation pay and attorneys fees against
Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy
Trucking, T. Paulino Trucking Service, 6B’s Trucking and SBT As found by the appellate court, petitioners owned and operated a
Trucking, herein petitioners. trucking business since the 1950s and by their own allegations,
they determined private respondent’s wages and rest day. Records
of the case show that private respondent actually engaged in work
For their part, petitioners admitted they had a trucking business in
as an employee. During the entire course of his employment he did
the 1950s but denied employing helpers and drivers. They contend
not have the freedom to determine where he would go, what he
that private respondent was not illegally dismissed as a driver
would do, and how he would do it. He merely followed instructions
because he was in fact petitioner’s industrial partner. They add that
of petitioners and was content to do so, as long as he was paid his
it was not until the year 1994, when SBT Trucking Corporation was
wages. Indeed, said the CA, private respondent had worked as a
established, and only then did respondent Sahot become an
truck helper and driver of petitioners not for his own pleasure but
employee of the company, with a monthly salary that reached
under the latter’s control.
P4,160.00 at the time of his separation.

Private respondent Jaime Sahot was not an industrial partner but

Petitioners further claimed that sometime prior to June 1, 1994,
an employee of petitioners from 1958 to 1994. The existence of an
Sahot went on leave and was not able to report for work for almost
employer-employee relationship is ultimately a question of fact and
seven days. On June 1, 1994, Sahot asked permission to extend his
the findings thereon by the NLRC, as affirmed by the Court of
leave of absence until June 30, 1994. It appeared that from the
Appeals; deserve not only respect but also finality when supported
expiration of his leave, private respondent never reported back to
by substantial evidence. Substantial evidence is such amount of
work nor did he file an extension of his leave. Instead, he filed the
relevant evidence, which a reasonable mind might accept as
complaint for illegal dismissal against the trucking company and its
adequate to justify a conclusion.
owners.

Time and again the Court has said "if doubt exists between the
Petitioners add that due to Sahot’s refusal to work after the
evidence presented by the employer and the employee, the scales of
expiration of his authorized leave of absence, he should be deemed
justice must be tilted in favor of the latter." Here, we entertain no
to have voluntarily resigned from his work. They contended that
doubt. Private respondent since the beginning was an employee of,
Sahot had all the time to extend his leave or at least inform
not an industrial partner in, the trucking business.
petitioners of his health condition.

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 7

2. YES further delay in the payment due the separated worker, whose
claim was filed way back in 1994, this decision is immediately
executory. Otherwise, six percent (6%) interest per annum should
Petitioners contend that it was private respondent who refused to
be charged thereon, for any delay, pursuant to provisions of the
go back to work. The decision of the Labor Arbiter pointed out that
Civil Code.
during the conciliation proceedings, petitioners requested
respondent Sahot to report back for work. However, in the same
proceedings, Sahot stated that he was no longer fit to continue
working, and instead he demanded separation pay. Petitioners then
retorted that if Sahot did not like to work as a driver anymore, then
he could be given a job that was less strenuous, such as working as
a checker. However, Sahot declined that suggestion. Based on the
foregoing recitals, petitioners assert that it is clear that Sahot was
not dismissed but it was of his own volition that he did not report
for work anymore.

In the present case, while it was very obvious that complainant did
not have any intention to report back to work due to his illness,
which incapacitated him to perform his job, such intention cannot
be construed to be an abandonment. Instead, the same should have
been considered as one of those falling under the just causes of
terminating an employment. The insistence of respondent in
making complainant work did not change the scenario.

It is worthy to note that respondent is engaged in the trucking

business where physical strength is of utmost requirement.
Complainant started working with respondent as truck helper at
age twenty-three (23), then as truck driver since 1965. Complainant
was already fifty-nine (59) when the complaint was filed and
suffering from various illness triggered by his work and age.

In termination cases, the burden is upon the employer to show by

substantial evidence that the termination was for lawful cause and
validly made. Article 277(b) of the Labor Code puts the burden of
proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether the
employer admits or does not admit the dismissal. For an employee’s
dismissal to be valid, (a) the dismissal must be for a valid cause and
(b) the employee must be afforded due process.

In addition, the Court must likewise determine if the employer had

complied with the procedural aspect of due process.

From the records, it clearly appears that procedural due process

was not observed in the separation of private respondent by the
management of the trucking company. The employer is required to
furnish an employee with two written notices before the latter is
dismissed: (1) the notice to apprise the employee of the particular
acts or omissions for which his dismissal is sought, which is the
equivalent of a charge; and (2) the notice informing the employee of
his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense.
These, the petitioners failed to do, even only for record purposes.
What management did was to threaten the employee with
dismissal, then actually implement the threat when the occasion
presented itself because of private respondents painful left thigh.

3. YES

Respondent Jaime Sahot is entitled to separation pay. The law is

clear on the matter. An employee who is terminated because of
disease is entitled to "separation pay equivalent to at least one
month salary or to one-half month salary for every year of service,
whichever is greater xxx."34 Following the formula set in Art. 284 of
the Labor Code, his separation pay was computed by the appellate
court at P2,080 times 36 years (1958 to 1994) or P74,880. We agree
with the computation, after noting that his last monthly salary was
P4,160.00 so that one-half thereof is P2,080.00. Finding no
reversible error nor grave abuse of discretion on the part of 6. PLACIDO O. URBANES, JR., doing business under the name & style
appellate court, we are constrained to sustain its decision. To avoid of CATALINA SECURITY AGENCY, petitioner, vs. THE

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 8

HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and
SOCIAL SECURITY SYSTEM, respondents
FACTS:
Petitioner Placido O. Urbanes, Jr., doing business under the name and style of
Catalina Security Agency, entered into an agreement to provide security
services to respondent Social Security System (SSS).
During the effectivity of the agreement, petitioner, by letter of May 16, 1994,
requested the SSS for the upward adjustment of their contract rate in view of
Wage Order No. NCR-03 which was issued by the Regional Tripartite Wages
and Productivity Board-NCR pursuant to Republic Act 6727 otherwise known
as the Wage Rationalization Act, the pertinent provision of which wage order
reads:
Section 9. In the case of contracts for construction projects and for security,
janitorial and similar services, the prescribed amount set forth herein for
covered workers shall be borne by the principals or the clients of the
construction/service contractors and the contract shall be deemed amended
accordingly. In the event, however, that the principal or client failed to
pay the prescribed increase, the construction/service contractors shall be
jointly and severally liable with the principal or client.
At first, the letter to the SSS remained unheeded so the petitioner sent another
letter reiterating the request. Petitioner pulled out his agency services from the
premises of the SSS and another security agency, Jaguar, took over.
With that being said, petitioner filed a complaint with the DOLE-NCR against
the SSS seeking the implementation of Wage Order no. NCR-03.
The SSS prayed for the dismissal of the complaint on the ground that
petitioner is not the real party in interest and has no legal capacity to file the
same. In any event, it argued that if it had any obligation, it was to the security
guards. On the other hand, petitioner, citing Eagle Security Agency, Inc. v.
NLRC, contended that the security guards assigned to the SSS do not have any
legal basis to file a complaint against it for lack of contractual privity.
With all the foregoing, the DOLE-NCR ruled in favor of the petitioner
wherein it ordered the respondent to pay the complainant the total of
P1,600.858.46 representing the wage differentials under Wage Order no.
NCR-03.
The SSS moved to reconsider the order praying that the
computation be revised. It was granted wherein the prior order was
modified by reducing the amount payable by the SSS to petitioner.
(P1,237,740.00)
On appeal to the Secretary of Labor, the SSS raised the following
errors – the regional director has no jurisdiction of the case at bar;
that it erred in finding that the complainant is the real party in
interest and has legal capacity to file the case and that it erred in
adopting complainants computation for wage adjustment under
wage order as basis of respondents liability.
The Secretary of Labor then ruled in favor of the respondents and
set aside the order of the Regional Director and remanded the
records of the case for recomputation of the wage differentials. Also,
the secretary held petitioners security agency jointly and severally
liable for wage differentials, the amount of which should be paid
directly to the security guards concerned.
Petitioners filed a motion for reconsideration, however, it was
denied. Hence this petition.
ISSUE:
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
WON the Secretary of Labor does not have jurisdiction to review
appeals from the decisions of the Regional Directors in complaints
filed under Article 129 of the Labor Code.
WON Article 128 and not Article 129 of the Labor code is
applicable.
WON the SSS has the liability to reimburse the petitioner.
HELD: NO
The present petition is hereby DISMISSED, and petitioners complaint before
the Regional Director is dismissed for lack of jurisdiction and cause of action.
ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND
OTHER BENEFITS. Upon complaint of any interested party, the regional
director of the Department of Labor and Employment or any duly authorized
hearing officers of the Department is empowered, through summary
proceeding and after due notice, to hear and decide any matter involving the
recovery of wages and other monetary claims and benefits, including legal
interest, owing to an employee or person employed in domestic or household
service or househelper under this Code, arising from employer-employee
relations: Provided, That such complaint does not include a claim for
reinstatement; Provided, further, That the aggregate money claim of each
employee or househelper does not exceed Five Thousand pesos (P5,000.00).
The regional director or hearing officer shall decide or resolve the complaint
within thirty (30) calendar days from the date of the filing of the same. Any
sum thus recovered on behalf of any employee or househelper pursuant to this
Article shall be held in a special deposit account by, and shall be paid on order
of, the Secretary of Labor and Employment or the regional director directly to
the employee or househelper concerned. Any such sum not paid to the
employee or househelper, because he cannot be located after diligent and
reasonable effort to locate him within a period of three (3) years, shall be held
as a special fund of the Department of Labor and Employment to be used
exclusively for the amelioration and benefit of workers.
Any decision or resolution of the regional director or officer pursuant to
this provision may be appealed on the same grounds provided in Article 223
of this Code, within five (5) calendar days from receipt of a copy of said
decision or resolution, to the National Labor Relations Commission which
shall resolve the appeal within ten (10) calendar days from submission of the
last pleading required or allowed under its rules.
ART. 128. VISITORIAL AND ENFORCEMENT POWERS
b) Notwithstanding the provisions of Article 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give
effect to labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of
inspection.
An order issued by the duly authorized representative of the Secretary of
Labor and Employment under this article may be appealed to the latter.
However, Neither the petitioners contention nor the SSSs is impressed with
merit.
Lapanday Agricultural Development Corporation v. Court of Appeals - the
security agency filed a complaint before the Regional Trial Court (RTC)
against the principal or client Lapanday for the upward adjustment of the
contract rate in accordance with Wage Order Nos. 5 and 6. Lapanday argued
that it is the National Labor Relations Commission, not the civil courts, which
has jurisdiction to resolve the issue in the case, it involving the enforcement of
wage adjustment and other benefits due the agencys security guards as
mandated by several wage orders. Holding that the RTC has jurisdiction over
the controversy, this Court ruled: We agree with the respondent that the RTC
has jurisdiction over the subject matter of the present case. It is well settled in
law and jurisprudence that where no employer-employee relationship
9
exists between the parties and no issue is involved which may be resolved
by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction.
In its complaint, private respondent is not seeking any relief under the
Labor Code but seeks payment of a sum of money and damages on
account of petitioner's alleged breach of its obligation under their Guard
Service Contract. The action is within the realm of civil law hence
jurisdiction over the case belongs to the regular courts. While the
resolution of the issue involves the application of labor laws, reference to
the labor code was only for the determination of the solidary liability of
the petitioner to the respondent where no employer-employee relation
exists.
It is clear also from the foregoing that it is only when [the] contractor pays the
increases mandated that it can claim an adjustment from the principal to cover
the increases payable to the security guards. The conclusion that the right of
the contractor (as principal debtor) to recover from the principal (as
solidary co-debtor) arises only if he has paid the amounts for which both
of them are jointly and severally liable is in line with Article 1217 of the
Civil Code.
He who made payment make claim from his co-debtors only the share which
corresponds to each, with interest for the payment already made. If the
payment is made before the debt is due, no interest for the intervening period
may be demanded.

In the case at bar, even if petitioner filed the complaint on his and also on
In fine, the liability of the SSS to reimburse petitioner arises only if and when
behalf of the security guards, 1 [22] the relief sought has to do with the
petitioner pays his employee-security guards the increases mandated by Wage
enforcement of the contract between him and the SSS which was deemed
Order No. NCR-03.
amended by virtue of Wage Order No. NCR-03. The controversy subject of
the case at bar is thus a civil dispute, the proper forum for the resolution of
which is the civil courts. The records do not show that petitioner has paid the mandated increases to the
security guards. The security guards in fact have filed a complaint with the
NLRC against petitioner relative to, among other things, underpayment of
But even assuming arguendo that petitioners complaint were filed with the
wages.
proper forum, for lack of cause of action it must be dismissed.

ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an

employer enters into contract with another person for the performance of the
formers work, the employees of the contractor and of the latters subcontractor,
if any, shall be paid in accordance with the provisions of this Code.

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

ART. 107 INDIRECT EMPLOYER. The provisions of the immediately

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

ART. 109. SOLIDARY LIABILTY. The provisions of existing laws to the

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

In the case of Eagle Security Agency, Inc. v. NLRC, the Wage Orders are
explicit that payment of the increases are "to be borne" by the principal
or client. "To be borne", however, does not mean that the principal, PTSI in
this case, would directly pay the security guards the wage and allowance
increases because there is no privity of contract between them. The security
guards' contractual relationship is with their immediate employer, EAGLE. As
an employer, EAGLE is tasked, among others, with the payment of their
wages. Premises considered, the security guards' immediate recourse for
the payment of the increases is with their direct employer, EAGLE.
However, in order for the security agency to comply with the new wage and
allowance rates it has to pay the security guards, the Wage Orders made
specific provision to amend existing contracts for security services by
allowing the adjustment of the consideration paid by the principal to the
security agency concerned. What the Wage Orders require, therefore, is the
amendment of the contract as to the consideration to cover the service
contractor's payment of the increases mandated. In the end, therefore,
ultimate liability for the payment of the increases rests with the principal.

In view of the foregoing, the security guards should claim the amount of
the increases from EAGLE. Under the Labor Code, in case the agency
fails to pay them the amounts claimed, PTSI should be held solidarily
liable with EAGLE [Articles 106, 107 and 109]. Should EAGLE pay, it
can claim an adjustment from PTSI for an increase in consideration to
cover the increases payable to the security guards.

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 10

 7. BAGUIO COUNTRY CLUB CORPORATION, Petitioner, v.
NATIONAL LABOR RELATIONS COMMISSION (THIRD
DIVISION) AND LOLITA GENOVE, Respondents.

FACTS:

Respondent Lolita Genove was employed by petitioner Baguio

Country Club Corporation on September 1, 1973 as Office Clerk.
She was promoted to higher positions until she was appointed in
February, 1981 to the position of Personnel Manager and at the
same time as Chief Security Officer.

Respondent Genove received the amount of P6,000.00 as cash

advance for the expenses she will incur as a witness in a civil case
pending with the Regional Trial Court of Manila involving
petitioner club as the defendant. Upon her return, respondent
Genove however failed to make an accounting for the cash advance
she received.
Respondent Genove was placed on preventive suspension due to
various offenses, ranging from unliquidated cash advances,
unauthorized expenses to tampering of documents in support of the
liquidation of cash advances and at the same time, she was asked to
explain.

Petitioner’s general manager informed respondent Genove that the

expenses which she had incurred could not be rightfully charged
against petitioner club; that there is a clear attempt on the part of
Genove to defraud the club; and that since respondent had violated
the trust required of her as Personnel Manager, respondent’s
employment with the petitioner club is terminated.

Respondent Genove filed a complaint for illegal dismissal with the

Labor Arbiter. However, it ruled in favor of the petitioner. On
appeal with the NLRC, it reversed the LA decision.

Hence this petition was filed with the petitioner club alleging grave
abuse of discretion on the part of respondent Commission in ruling
that the dismissal of respondent Genove is not valid.

Petitioner argues that respondent Genove committed willful breach

of trust reposed upon her when she disbursed the cash advances
she received from petitioner for the purpose of satisfying her
personal whims and caprices, which are not in any way related to
her official trip. Petitioner also submits that respondent Genove
deliberately falsified the amount of a sales invoice issued by Red

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 11

Ribbon Bakeshop from P85.00 to P185.00 for a cake she purchased
so that she could claim a bigger amount to the prejudice of
petitioners club; and that contrary to the ruling of respondent
Commission, the anomalous acts of respondent Genove are not
minor shortcomings of respondent Genove but involve dishonesty
and the commission of fraud by petitioner which justify the former’s
dismissal.
other cash advances.chanrobles.com : virtual law library To top all
these acts of indiscretion resulting in lost of trust and confidence is
the falsification of the amount stated in the sales invoice issued by
Red Ribbon Bakeshop from P85.00 to P185.00, which is clearly
indefensible. Respondent submitted this falsified receipt to
petitioner club as one of her supporting documents to the
liquidation she made of the cash advances.

The Solicitor General agrees with the decision of the labor arbiter
that the dismissal of private respondent was for cause. He contends
that the submission by respondent Genove of a falsified invoice of
the Red Ribbon Bakeshop to justify one of her expenses constituted
sufficient basis for the employer’s loss of confidence; and that when
petitioner club introduced in evidence a certified copy of the
falsified invoice, this constituted substantial evidence to support
the conclusion that private respondent violated the trust of
petitioner.chanrobles vir
ISSUE:
WON the dismissal of the respondent was for lawful cause.
HELD: YES
The rule is settled that if there is sufficient evidence to show that
the employee has been guilty of breach of trust or that his employer
has ample reason to distrust him, the labor tribunal cannot justly
deny to the employer the authority to dismiss such employee. The
mere fact that respondent Genove committed falsification of a
document which she submitted to petitioner club as part of
company requirement is sufficient basis for the employer’s loss of
confidence in her. The rule is clear that employers are allowed a
wider latitude of discretion in terminating the employment of
managerial personnel when the latter has committed acts inimical
to the employer’s interests. A managerial employee who performs
an act which tends to show a questionable moral character and a
taint in the latter’s sense of honesty can no longer be expected by
the employer to promote its interests. Based on all the foregoing,
the petitioner club cannot be compelled to continue in employment
respondent Genove. The Court find that the dismissal of respondent
Genove is justified.cralawnad

The law allows an employer to dismiss an employee on account of

loss of confidence, provided that the loss of confidence arises from
particular proven facts. Loss of confidence is a valid ground for the
dismissal of an employee. The law does not require proof beyond
reasonable doubt of the employee’s misconduct to invoke such
justification. It is sufficient that there is some basis for the loss of
trust or that the employer has reasonable grounds to believe that
the employee is responsible for the misconduct, which renders him
unworthy of the trust and confidence, demanded of his position.
As to the propriety of the award of separation pay or financial
assistance to respondent, it is settled that where it comes to valid
but not iniquitous causes for dismissal such as failure to comply
with work standards, the grant of separation pay to the dismissed
employee may be both just and compassionate, particularly if he
has worked for some time with the company. But where the reason
for the valid dismissal in an offense involving moral turpitude and
dishonesty, as in the case at bar, the grant of separation pay is not
justified.

Jurisprudence abounds with cases recognizing the employer’s right

to dismiss an employee on loss of confidence. More so in the case of
personnel occupying positions of responsibility, loss of trust justifies
termination. It is only fair and just to uphold the employer’s right to
dismiss an employee as a measure of self-protection against acts
inimical to its interest.

In the instant case, respondent’s dismissal from the service was

based on the unliquidated cash advances, unauthorized expenses
and falsification of receipt in support of liquidation of cash advances
which were discovered when respondent finally made her
liquidation. The first ground refers to the failure of respondent
Genove to liquidate her cash advances on time inspite of repeated
reminders by the auditor and comptroller of the petitioner, in
violation of the petitioner’s policy that liquidation should be done
immediately after completion of the mission. The second ground
alleged by petitioner in dismissing respondent refers to the act of
the latter in using the cash advances given to her by petitioner for
purely personal purposes and not for official purposes related to her
trip.

The Labor Arbiter correctly held that it is incomprehensible how

lipstick, powder and slippers could have redounded to the benefit of
petitioner in connection with the testimony she gave in a civil case
in Manila. The explanation that the repair done on October 30,
1987 of a personal camera purportedly for the taking of the pictures
of some caddies done late in November, 1987 cannot be likewise be
accepted as a justification to charge the petitioner the amount of
the repair. The attempt to include the P300.00 allegedly paid for
the transcript of stenographic notes which was earlier paid with a
separate amount is likewise reprehensible considering that she
could not account for the other P300.00 when asked to explain.
Beside the foregoing, respondent Genove failed to liquidate her

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 12

 8. LOLITA LOPEZ, petitioner, vs. BODEGA CITY (Video-Disco
Kitchen of the Philippines) and/or ANDRES C. TORRES-YAP,
respondents.

FACTS:

Respondent Bodega City (Bodega City) is a corporation duly

registered and 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 "lady keeper" of
Bodega City tasked with manning its ladies' comfort room.

Petitioner was made to explain why the concessionaire agreement

between her and respondents should not be terminated or
suspended in view of an incident that happened, wherein petitioner
was seen to have acted in a hostile manner against a lady customer
of Bodega City who informed the management that she saw
petitioner sleeping while on duty. Yap informed petitioner that
because of the incident that happened, respondents had decided to
terminate the concessionaire agreement between them.

Petitioner filed with the Arbitration Branch of the NLRC, a

complaint for illegal dismissal against respondents contending that
she was dismissed from her employment without cause and due
process.

In their answer, respondents contended that no employer-employee

relationship 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 she entered into with
respondents.

The LA dismissed the complaint for lack of merit. On appeal, the

NLRC set aside the order of dismissal and remanded the case for
further proceedings.

After the conduction of several hearings and submission of

memoranda and other supporting documents, the LA found that the
petitioner was an employee of respondent and that she was illegally
dismissed.

The respondents filed an appeal with the NLRC wherein it set aside
the decision of the LA for lack of merit. Petitioner filed a MR but
the NLRC denied the same. The CA likewise dismissed the petition
for certiorari.

Petitioner’s contention:
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 13
Petitioner contends that it was wrong for the CA to conclude that
even if she did not sign the document evidencing the concessionaire
agreement, she impliedly accepted and thus bound herself to the
terms and conditions contained in the said agreement when she
continued to perform the task which was allegedly specified therein
for a considerable length of time. Petitioner claims that the
concessionaire agreement was only offered to her during her tenth
year of service and after she organized a union and filed a
complaint against respondents. Prior to all these, petitioner asserts
that her job as a "lady keeper" was a task assigned to her as an
employee of respondents. Petitioner further argues that her receipt
of a special allowance from respondents is a clear evidence that she
was an employee of the latter, as the amount she received was
equivalent to the minimum wage at that time. Petitioner also
contends that her identification card clearly shows that she was not
a concessionaire but an employee of respondents; that if
respondents really intended the ID card issued to her to be used
simply for having access to the premises of Bodega City, then
respondents could have clearly indicated such intent on the said ID
card.
Moreover, petitioner submits that the fact that she was required to
follow rules and regulations prescribing appropriate conduct while
she was in the premises of Bodega City is clear evidence of the
existence of an employer-employee relationship between her and
petitioners.
Respondent’s contention:
Respondents contend that the present petition was filed for the sole
purpose of delaying the proceedings of the case; the grounds relied
upon in the instant petition are matters that have been
exhaustively discussed by the NLRC and the CA; the present
petition raises questions of fact which are not proper in a petition
for review on certiorari under Rule 45 of the Rules of Court; the
respective decisions of the NLRC and the CA are based on evidence
presented by both parties; petitioner's compliance with the terms
and conditions of the proposed concessionaire contract for a period
of three years is evidence of her implied acceptance of such
proposal; petitioner failed to present evidence to prove her
allegation that the subject concessionaire agreement was only
proposed to her in her 10th year of employment with respondent
company and after she organized a union and filed a labor
complaint against respondents; petitioner failed to present
competent documentary and testimonial evidence to prove her
contention that she was an employee of respondents since 1985.
ISSUE:
WON the petitioner is an employee of respondents.
WON an employer-employee relationship exists.
HELD: NO
In an illegal dismissal case, the onus probandi rests on the
employer to prove that its dismissal of an employee was for a valid
cause. However, before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established. In filing
a complaint before the Labor Arbiter for illegal dismissal based on
the premise that she was an employee of respondent, it is
incumbent upon petitioner to prove the employee-employer
relationship by substantial evidence. The NLRC and the CA found
that petitioner failed to discharge this burden, and the Court finds
no cogent reason to depart from their findings.
To ascertain the existence of an employer-employee relationship,
jurisprudence has invariably applied the four-fold test, namely: (1)
the manner of selection and engagement; (2) the payment of wages;
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
(3) the presence or absence of the power of dismissal; and (4) the
presence or absence of the power of control. Of these four, the last
one is the most important. The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under
the control test, an employer-employee relationship exists where
the person for whom the services are performed reserves the right
to control not only the end achieved, but also the manner and
means to be used in reaching that end.
To prove the element of payment of wages, petitioner presented a
petty cash voucher showing that she received an allowance for five
(5) days. The CA did not err when it held that a solitary petty cash
voucher did not prove that petitioner had been receiving salary
from respondents or that she had been respondents' employee for 10
years.
Indeed, if petitioner was really an employee of respondents for that
length of time, she should have been able to present salary vouchers
or pay slips and not just a single petty cash voucher. The Court
agrees with respondents that petitioner could have easily shown
other pieces of evidence such as a contract of employment, SSS or
Medicare forms, or certificates of withholding tax on compensation
income; or she could have presented witnesses to prove her
contention that she was an employee of respondents. Petitioner
failed to do so.
Anent the element of control, petitioner's contention that she was
an employee of respondents because she was subject to their control
does not hold water.
Petitioner failed to cite a single instance to prove that she was
subject to the control of respondents insofar as the manner in which
she should perform her job as a "lady keeper" was concerned.
Petitioner does not dispute the existence of the letter; neither does
she deny that respondents offered her the subject concessionaire
agreement. However, she contends that she could not have entered
into the said agreement with respondents because she did not sign
the document evidencing the same.
Settled is the rule that contracts are perfected by mere consent,
upon the acceptance by the offeree of the offer made by the offeror.
For a contract, to arise, the acceptance must be made known to the
offeror. Moreover, the acceptance of the thing and the cause, which
are to constitute a contract, may be express or implied as can be
inferred from the contemporaneous and subsequent acts of the
contracting parties. A contract will be upheld as long as there is
proof of consent, subject matter and cause; it is generally obligatory
in whatever form it may have been entered into.
In the present case, the Court finds no cogent reason to disregard
the findings of both the CA and the NLRC that while petitioner did
not affix her signature to the document evidencing the subject
concessionaire agreement, the fact that she performed the tasks
indicated in the said agreement for a period of three years without
any complaint or question only goes to show that she has given her
implied acceptance of or consent to the said agreement.
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.
With respect to the petty cash voucher, petitioner failed to refute
respondent's claim that it was not given to her for services rendered
14
or on a regular basis, but simply granted as financial assistance to
help her temporarily meet her family's needs.
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.
Respondents did not indicate the manner in which she should go
about in maintaining the cleanliness of the ladies' comfort room.
Neither did respondents determine the means and methods by
which petitioner could ensure the satisfaction of respondent
company's customers. In other words, petitioner was given a free
hand as to how she would perform her job as a "lady keeper." In
fact, the last paragraph of the concessionaire agreement even
allowed petitioner to engage persons to work with or assist her in
the discharge of her functions.
Moreover, petitioner was not subjected to definite hours or
conditions of work. The fact that she was expected to maintain the
cleanliness of respondent company's ladies' comfort room during
Bodega City's operating hours does not indicate that her
performance of her job was subject to the control of respondents as
to make her an employee of the latter. Instead, the requirement
that she had to render her services while Bodega City was open for
business was dictated simply by the very nature of her undertaking,
which was to give assistance to the users of the ladies' comfort
room.
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, 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.
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
9. PEOPLES BROADCASTING SERVICE (BOMBO
RADYO PHILS., INC.), Petitioner, - versus -THE
SECRETARY OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE
REGION VII, and JANDELEON JUEZAN, Respondents.
FACTS:
Private respondent Jandeleon Juezan filed a complaint against
petitioner with the Department of Labor and Employment (DOLE),
for illegal deduction, nonpayment of service incentive leave, 13th
month pay, premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and noncoverage
of SSS, PAG-IBIG and Philhealth.
DOLE found that private respondent was an employee of petitioner,
and was entitled to his money claims. 1 [2] Petitioner sought
reconsideration of the Directors Order, but failed. The Acting DOLE
Secretary dismissed petitioners appeal on the ground that
petitioner submitted a Deed of Assignment of Bank Deposit instead
of posting a cash or surety bond. When the matter was brought
before the CA, where petitioner claimed that it had been denied due
process, it was held that petitioner was accorded due process as it
had been given the opportunity to be heard, and that the DOLE
Secretary had jurisdiction over the matter, as the jurisdictional
limitation imposed by Article 129 of the Labor Code on the power of
the DOLE Secretary under Art. 128(b) of the Code had been
repealed by Republic Act No. 7730.
The Court found that there was no employer-employee relationship
between petitioner and private respondent. It was held that while
the DOLE may make a determination of the existence of an
employer-employee relationship, this function could not be co-
extensive with the visitorial and enforcement power provided in
Art. 128(b) of the Labor Code, as amended by RA 7730. The
National Labor Relations Commission (NLRC) was held to be the
primary agency in determining the existence of an employer-
employee relationship. This was the interpretation of the Court of
the clause in cases where the relationship of employer-employee
still exists in Art. 128(b).
PAO filed a Motion for Clarification of the decision as regard to
when the visitorial and enforcement power of the DOLE be not
considered as co-extensive with the power to determinate the
existence of an employer-employee relationship.
Under Art. 129 of the Labor Code, the power of the DOLE and its
duly authorized hearing officers to hear and decide any matter
involving the recovery of wages and other monetary claims and
benefits was qualified by the proviso that the complaint not include
a claim for reinstatement, or that the aggregate money claims not
15
exceed PhP 5,000. RA 7730, or an Act Further Strengthening the
Visitorial and Enforcement Powers of the Secretary of Labor, did
away with the PhP 5,000 limitation, allowing the DOLE Secretary
to exercise its visitorial and enforcement power for claims beyond
PhP 5,000. The only qualification to this expanded power of the
DOLE was only that there still be an existing employer-employee
relationship.
It is conceded that if there is no employer-employee relationship,
whether it has been terminated or it has not existed from the start,
the DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code,
as amended by RA 7730, the first sentence reads, Notwithstanding
the provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers
made in the course of inspection. It is clear and beyond debate that
an employer-employee relationship must exist for the exercise of the
visitorial and enforcement power of the DOLE.
ISSUE:
WON the DOLE can make a determination of WON an employer-
employee relationship exists.
HELD: YES
No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No
procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the
NLRC. The law did not say that the DOLE would first seek the
NLRCs determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee
relationship be disputed, the DOLE would refer the matter to the
NLRC. The DOLE must have the power to determine whether or
not an employer-employee relationship exists, and from there to
decide whether or not to issue compliance orders in accordance with
Art. 128(b) of the Labor Code, as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee
relationship, has a ready set of guidelines to follow, the same guide
the courts themselves use. The elements to determine the existence
of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; (4) the employers power to control the
employees conduct.1[9] The use of this test is not solely limited to
the NLRC. The DOLE Secretary, or his or her representatives, can
utilize the same test, even in the course of inspection, making use of
the same evidence that would have been presented before the
NLRC.
The determination of the existence of an employer-employee
relationship by the DOLE must be respected. The expanded
visitorial and enforcement power of the DOLE granted by RA 7730
would be rendered nugatory if the alleged employer could, by the
simple expedient of disputing the employer-employee relationship,
force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an
employer-employee relationship be made to oust the DOLE of
jurisdiction. But it is precisely the DOLE that will be faced with
that evidence, and it is the DOLE that will weigh it, to see if the
same does successfully refute the existence of an employer-
employee relationship.
If the DOLE makes a finding that there is an existing employer-
employee relationship, it takes cognizance of the matter, to the
exclusion of the NLRC. The DOLE would have no jurisdiction only
if the employer-employee relationship has already been terminated,
LABOR 1 CASE DIGESTS|ATTY. CACHO|MV
or it appears, upon review, that no employer-employee relationship
existed in the first place.
The Court, in limiting the power of the DOLE, gave the rationale
that such limitation would eliminate the prospect of competing
conclusions between the DOLE and the NLRC. The prospect of
competing conclusions could just as well have been eliminated by
according respect to the DOLE findings, to the exclusion of the
NLRC, and this We believe is the more prudent course of action to
take.
It must also be remembered that the power of the DOLE to
determine the existence of an employer-employee relationship need
not necessarily result in an affirmative finding. The DOLE may
well make the determination that no employer-employee
relationship exists, thus divesting itself of jurisdiction over the case.
It must not be precluded from being able to reach its own
conclusions, not by the parties, and certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the
DOLE is fully empowered to make a determination as to the
existence of an employer-employee relationship in the exercise of its
visitorial and enforcement power, subject to judicial review, not
review by the NLRC.
To recapitulate, if a complaint is brought before the DOLE to give
effect to the labor standards provisions of the Labor Code or other
labor legislation, and there is a finding by the DOLE that there is
an existing employer-employee relationship, the DOLE exercises
jurisdiction to the exclusion of the NLRC. If the DOLE finds that
there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and
it is accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the Labor
Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay,
hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed
with the NLRC, and there is still an existing employer-employee
relationship, the jurisdiction is properly with the DOLE. The
findings of the DOLE, however, may still be questioned through a
petition for certiorari under Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional
Director that there was an employer-employee relationship has
been subjected to review by this Court, with the finding being that
there was no employer-employee relationship between petitioner
and private respondent, based on the evidence presented. Private
respondent presented self-serving allegations as well as self-
defeating evidence.1[10] The findings of the Regional Director were
not based on substantial evidence, and private respondent failed to
prove the existence of an employer-employee relationship. The
DOLE had no jurisdiction over the case, as there was no employer-
employee relationship present. Thus, the dismissal of the complaint
against petitioner is proper.
16
 10. GREGORIO V. TONGKO, Petitioner, - versus - THE
MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and
RENATO A. VERGEL DE DIOS, Respondents.

FACTS:

The contractual relationship between Tongko and Manulife had two

basic phases.

The first or initial phase began on July 1, 1977, under a Career

Agents Agreement. Tongko additionally agreed (1) to comply with
all regulations and requirements of Manulife, and (2) to maintain a
standard of knowledge and competency in the sale of Manulifes
products, satisfactory to Manulife and sufficient to meet the volume
of the new business, required by his Production Club membership.

The second phase started in 1983 when Tongko was named Unit
Manager in Manulifes Sales Agency Organization. In 1990, he
became a Branch Manager. Six years later (or in 1996), Tongko
became a Regional Sales Manager.

Tongkos gross earnings consisted of commissions, persistency

income, and management overrides. Since the beginning, Tongko
consistently declared himself self-employed in his income tax
returns. Thus, under oath, he declared his gross business income
and deducted his business expenses to arrive at his taxable
business income. Manulife withheld the corresponding 10% tax on
Tongkos earnings.

Manulife instituted manpower development programs at the

regional sales management level. Respondent Renato Vergel de
Dios wrote Tongko a letter concerns that were brought up during in
the Metro North Sales Managers Meeting. Subsequently, de Dios
wrote Tongko another letter, dated December 18, 2001, terminating
Tongkos services.

Tongko responded by filing an illegal dismissal complaint with the

National Labor Relations Commission ( NLRC) Arbitration Branch.
He essentially alleged despite the clear terms of the letter
terminating his Agency Agreement that he was Manulifes employee
before he was illegally dismissed.

Petitioner’s contention:

Tongko asserted that as Unit Manager, he was paid an annual

over-rider not exceeding P50,000.00, regardless of production levels
attained and exclusive of commissions and bonuses. He also claimed
that as Regional Sales Manager, he was given a travel and
entertainment allowance of P36,000.00 per year in addition to his
overriding commissions; he was tasked with numerous
administrative functions and supervisory authority over Manulifes
employees, aside from merely selling policies and recruiting agents
for Manulife; and he recommended and recruited insurance agents

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 17

subject to vetting and approval by Manulife. He further alleges that
he was assigned a definite place in the Manulife offices when he
was not in the field at the 3rd Floor, Manulife Center, 108
Tordesillas corner Gallardo Sts., Salcedo Village, Makati City for
which he never paid any rental. Manulife provided the office
equipment he used, including tables, chairs, computers and printers
(and even office stationery), and paid for the electricity, water and
telephone bills. As Regional Sales Manager, Tongko additionally
asserts that he was required to follow at least three codes of
conduct.
employment relationship by the quantum of evidence the Labor
code requires.
Tongko’s failure to comply with the guidelines of de Dios’ letter, as a
ground for termination of Tongko’s agency, is a matter that the
labor tribunals cannot rule upon in the absence of an employer-
employee relationship. Jurisdiction over the matter belongs to the
court applying the laws of insurance, agency and contracts.

Respondent’s contention:

Manulife argues that Tongko had no fixed wage or salary. Under

the Agreement, Tongko was paid commissions of varying amounts,
computed based on the premium paid in full and actually received
by Manulife on policies obtained through an agent. As sales
manager, Tongko was paid overriding sales commission derived
from sales made by agents under his unit/structure/branch/region.
Manulife also points out that it deducted and withheld a 10% tax
from all commissions Tongko received; Tongko even declared
himself to be self-employed and consistently paid taxes as suchi.e.,
he availed of tax deductions such as ordinary and necessary trade,
business and professional expenses to which a business is entitled.

Manulife asserts that the labor tribunals have no

jurisdiction over Tongkos claim as he was not its employee as
characterized in the four-fold test and our ruling in Carungcong v.
National Labor Relations Commission.

The LA decreed that no employer-employee relationship existed

between the parties. The NLRC, however, reversed the LA’s
decision on appeal, and found the existence of an employer-
employee relationship and concluded that Tongko had been illegally
dismissed. The CA, however, found that NLRC gravely abuse its
discretion in its ruling and reverted to the LA’s decision that no
employer-employee relationship.

ISSUE:

WON there is the existence of an employment relationship.

HELD: NO.

In the determination of whether an employer-employee relationship

exists between the two parties, the Court applies the four-fold test
to determine the existence of the elements of such relationship.

Jurisprudence is firmly settled that whenever the existence of an

employment relationship is in dispute, four elements constitute the
reliable yardstick – a. selection and engagement of the employee; b.
payment of wages; c. power of dismissal; and d. the employer’s
power to control the conduct of the employee. It is the so-called
“control test” which constitutes the most important index of
existence of the employer-employee relationship that is, whether
the employer controls or has reserved the right to control the
employee not only as to the result of the work to be done but also to
the means and methods by which the same is to be accomplished.

Stated otherwise, an employer-employee relationship exists where

the person for whom the services are performed reserves the right
to control not only the end to be achieved but also the means to be
used in reaching such end.

In the case at bar, the absence of evidence showing Manulife’s

control over Tongko’s contractual duties points to the absence of
any employer-employee relationship between Tongko and Manulife.
In the context of the established evidence, Tongko remained an
agent all along; although his subsequent duties made him a lead
agent with leadership role, he was nevertheless only an agent
whose basic contract yields no evidence of means and manner of
control. Claimant clearly failed to substantiate his claim of

LABOR 1 CASE DIGESTS|ATTY. CACHO|MV 18