JOSE EMMANUEL P. GUILLERMO VS. CRISANTO P. 9. He filed another MR but was again denied.

USON (G.R. NO. 198967, 07 MARCH 2016)

10. On May 18, 2004, the Labor Arbiter issued an
Facts: Order granting Uson's Motion for the Issuance of an
Alias Writ of Execution and rejecting Guillermo's
1. The respondent was an accounting clerk and was arguments posed in his Comment and Opposition.
eventually promoted to accounting supervisor for Royal
Class Venture owned by the family of Petitioner from 11. Guillermo elevated the matter to the NLRC which
1996 to 2000. ruled against him prompting him to elevate it further
to the CA which upheld all the findings of the NLRC.
2. Allegedly, Uson was illegally dismissed which made
him file a complaint on March 2001 with a prayers for However, the CA held that although the
reinstatement, backwages, salaries and 13th month judgment had become final and executory, it may be
pay, moral and exemplary damages and attorney's modified or altered "as when its execution becomes
fees against the said company. impossible or unjust." It also held the Guillermo as the
president of the corporation liable for the latter's
3. Despite receipt of summons, Royal Class Venture obligation to illegally dismissed employees. Finally, the
did not make an appearance while Uson filed his court dismissed Guillermo's allegation that the case is
position paper. The Labor Arbiter then ruled in his an intra-corporate controversy, stating that jurisdiction
favour. is determined by the allegations in the complaint and
the character of the relief sought.
4. Royal Class Venture did not appeal. Consequently,
Uson filed for a Writ of Execution of this decision. 12. In his petition before the SC, he asserted that he
was impleaded only more than a year after its Decision
5. Thus, two Alias Writs of Execution were issued one
had become final and executor and that he was being
after the other but remained unsatisfied. This led to
discriminated in the application of the piercing the
Uson filing a Motion for Alias Writ of Execution and to
veil doctrine when there were other directors in Royal
Hold Directors and Officers of Respondent Liable for
Class Venture and still maintained that the controversy
Satisfaction of the Decision.
was intra-corporate in nature.
A portion of the Sherrifs Return was used in
ISSUES:
the Motion stating that the Petitioner tried to evade the
receipt of writ when his present business address 1. Whether an officer of a corporation may be included
already operated under the name and style of JOEL as judgment obligor in a labor case for the first time
and SONS CORPORATION, of which he was the only after the decision of the Labor Arbiter had become
general manager and that he used the nickname final and executory.
Joey to receive the said writ, even saying that Jose
was his brother- contrary to the guard on-dutys 2. Whether the twin doctrines of "piercing the veil of
statement that they are one and the same person. corporate fiction" and personal liability of company
officers in labor cases apply.
6. The complainants counsel also attempted to garnish
the Pertitioners BPI-Dagupan account but the bank 3. Whether or not the matter is to be considered as an
said that such account does not exist. intra-corporate controversy.

7. Subsequently, the Labor Arbiter granted this motion, HELD:

ruling that the officers of a corporation are jointly and
severally liable for the obligations of the corporation to 1. YES. Liability is attached, especially to the
the employees and there is no denial of due process in responsible officers, even after final judgment and
holding them so even if the said officers were not during execution, when there was a failure to collect
parties to the case when the judgment in favor of the from the employer corporation the judgment debt
employees was rendered. Thus, piercing the veil of awarded to its workers.
corporate fiction of Royal Class Venture, making Jose
In this case, Jose Guillermo is the
Guillermo liable.
person responsible in the actual running of the
8. Petitioner then filed a Motion for Reconsideration but company and for the illegal dismissal of Uson.
was denied by the Labor Arbiter who even castigated Likewise, it was shown that he had a hand in dissolving
Guillermo for his unexplained absence in the prior the original obligor-company in a obvious sceme to
proceedings despite notice. avoid liability. In the earlier labor cases of Claparols v.
Court of Industrial Relations and A.C. Ransom Labor
Union-CCLU v. NLRC, persons who were not actively engaged in the management of the
originally impleaded in the case were, even corporation.
during execution, held to be solidarily liable with
the employer corporation for the latters unpaid Also, it was ruled that there is no hard and fast
obligations to complainant-employees. rule on when corporate fiction may be disregard;
instead, each case must be evaluated according to its
2. YES. The veil of corporate fiction can be pierced, peculiar circumstances.
and responsible corporate directors and officers or
even a separate but related corporation, may be In this case, the records of the present case
impleaded and held answerable solidarily in a labor have shown that he had a hand in dissolving the
case, even after final judgment and on execution, so original obligor company in an obvious "scheme to
long as it is established that such persons have avoid liability".
deliberately used the corporate vehicle to unjustly
It was also shown in the verified Position Paper
evade the judgment obligation, or have resorted to
of complainant (herein respondent) Crisanto P. Uson,
fraud, bad faith or malice in doing so.
where it was clearly alleged that Uson was "illegally
The key element is the presence of fraud, dismissed by the President/General Manager of
malice or bad faith. Bad faith, in this instance, does respondent corporation (herein petitioner) Jose
not connote bad judgment or negligence but imposed Emmanuel P. Guillermo when Uson exposed the
is a dishonest purpose or some moral obliquity and practice of the said President/General Manager of
conscious doing of wrong; it means breach of a known dictating and undervaluing the shares of stock of the
duty through some motive or interest or ill will; it corporation."-a proof that Guillermo was the
partakes of the nature of fraud. responsible officer in charge of running the company
as well as the one who dismissed Uson from
Further, in Pantranco Employees AssoCiation employment. This was never controverted by the
(PEA-PTGWO), et al. v. NLRC, et al. , the doctrine of company nor Guillermo- such stands as a fact of the
piercing the corporate veil is held to apply only in three case, and now functions as clear evidence of
(3) basic areas, namely: Guillermo's bad faith in his dismissal of Uson from
employment, with the motive apparently being anger
( 1) defeat of public convenience as when the at the latter's reporting of unlawful activities.
corporate fiction is used as a vehicle for the evasion of
an existing obligation; Also, without justifiable cause, Guillermo
refused to receive all notices and orders of the Labor
(2) fraud cases or when the corporate entity is used Arbiter that followed. This makes Guillermo responsible
to justify a wrong, protect fraud, or defend a crime; or for his and his company's failure to participate in the
entire proceedings before the said office. Guillermo's
(3) alter ego cases, where a corporation is merely a
knowledge of the case's filing and existence and his
farce since it is a mere alter ego or business conduit of
unexplained refusal to participate in it as the
a person, or where the corporation is so organized and
responsible official of his company, again is an indicia
controlled and its affairs are so conducted as to make
of his bad faith and malicious intent to evade the
it merely an instrumentality, agency, conduit or adjunct
judgment of the labor tribunals.
of another corporation. In the absence of malice, bad
faith, or a specific provision of law making a corporate Finally, the records likewise bear that Guillermo
officer liable, such corporate officer cannot be made dissolved Royal Class Venture and helped incorporate a
personally liable for corporate liabilities. new firm, located in the same address as the former,
wherein he is again a stockholder as borne by the
Personal Liability only attaches only when, as
Sheriffs Return. The foregoing clearly indicate a
enumerated by section 31 of the Corporation Code,
pattern or scheme to avoid the obligations to Uson and
there is a wilful and knowing assent to patently
frustrate the execution of the judgment award.
unlawful acts of the corporation, there is gross
negligence or bad faith in directing the affairs of the 3. As for Guillermo's assertion that the case is an intra-
corporation or there is a conflict of interest resulting corporate controversy, the Court sustains the finding of
damages to the corporation. the appellate court that the nature of an action and the
jurisdiction of a tribunal are determined by the
It was further held that the officers who should
allegations of the complaint at the time of its filing,
be held liable will be the responsible officers i.e.
irrespective of whether or not the plaintiff is entitled to
the person directly responsible for and who acted in
recover upon all or some of the claims asserted
bad faith in the commission of the act violative of the
therein.
labor code. In a Close Corporation, it is the one who
 Although Uson is also a stockholder and tantamount to misrepresentation which is a ground to
director of Royal Class Venture, it is settled in cancel Samahans registration.
jurisprudence that not all conflicts between a
The DOLE Regional Director ruled in favor of
stockholder and the corporation are intra-corporate;
Hanjin. It was admitted in Samahans Constitution and
an examination of the complaint must be made By-Laws that Samahans members were employees of
on whether the complainant is involved in his Hanjin when not all of them were. This admission
capacity as a stockholder or director, or as an bolstered Hanjins claim that Samahan committed
employee. If the latter is found and the dispute does misrepresentation when it failed to prove that 63 of its
not meet the test of what qualifies as an intra- members were employees of Hanjin.
corporate controversy, then the case is a labor case
Aggrieved, Samahan filed an appeal before the
cognizable by the NLRC and is not within the
Bureau of Labor Relations arguing that Hanjin had no
jurisdiction of any other tribunal. right to petition for the cancellation of its registration
on the ground that the words Hanjin Shipyard, as
In the case at bar, Uson's allegation was that used in its application for registration, referred to a
he was maliciously and illegally dismissed as an workplace in Subic, Zambales, which became known as
Accounting Supervisor by Guillermo, the Company Hanjin Shipyard. The BLR granted Samahans appeal
President and General Manager, an allegation that was and reversed the ruling of the Regional Director
not even disputed by the latter nor by RoyalClass upholding the right of all workers to self-organization,
Venture. It raised no intra-corporate relationship issues that industrial, commercial and self-employed workers
could form a workers association if they so desired
between him and the corporation or Guillermo; neither
subject to the limitation of mutual aid and protection.
did it raise any issue regarding the regulation of the
corporation. As correctly found by the appellate court, In Hanjins Motion for Reconsideration, the BLR
Uson's complaint and redress sought were centered affirmed its earlier ruling but directed Samahan to
alone on his dismissal as an employee, and not upon remove the words Hanjin Shipyard from its name.
any other relationship he had with the company or
Samahan filed a Petition for Certiorari under
with Guillermo. Thus, the matter is clearly a labor
Rule 65 before the Court of Appeals. The CA held that
dispute cognizable by the labor tribunals.
Samahans registration as a legitimate workers
association was contrary to Article 243 of the Labor
Right to Self-Organization Code. KAMI, ang mga Manggagawa sa Hanjin
Shipyard in Samahans preamble in its Constitution
Samahan ng Manggagawa Sa Hanjin Shipyard and By-Laws created an impression that all its
(Samahan) v. Bureau of Labor Relations members are employees of Hanjin Shipyard when only
G.R. 211145, October 14, 2015; October 14, 57 of its 120 members were actually working with
2015; Mendoza, J. Hanjin; therefore, misrepresentation was present
which warranted the cancellation of Samahans
FACTS: registration. Also, Hanjins industry is not located in a
rural area, and the workers were neither ambulant,
Samahan, through its President Alipio, filed intermittent or itinerant workers. At any rate, the CA
with the DOLE an application for registration of its was in the view of dropping Hanjin Shipyard from the
name Samahan ng Mga Manggagawa sa Hanjin association.
Shipyard attached with the names of the associations
120 officers and members, signatures of the attendees ISSUES:
of the February 7, 2010 meeting and the copies of
their Constitution and By-Laws. The DOLE Regional A. Whether or not Samahan can choose to form a
Office No. 3 of San Fernando, Pampanga (DOLE- workers association of employees of Hanjin,
Pampanga) issued the corresponding certificate of not a labor union, thus upholding their
registration in favor of Samahan. registration as such.
However, Hanjin filed a petition with DOLE- B. Whether or not Samahan should
Pampanga praying for the cancellation of registration remove/delete the word Hanjin in the name
of Samahans association on the ground that its of the union by reason of the companys
members did not fall under any of the types of workers property right over the company name.
enumerated in the second sentence of Article 243 (now
Article 249). Specifically, Hanjin opined that only RULING:
ambulant, intermittent, itinerant, rural worker, self-
employed, and those without definite employers may A. Right to choose whether to form or join a
form a workers association. It further posited that 1/3 union of workers association belongs to
of the members of the association had definite the workers themselves. Yes, Samahan can
employers and the continued existence and form a workers association of employees of
registration of the association would prejudice the Hanjin. The right to form a labor organization
companys good will. All these allegations were necessarily includes the right to refrain or
 exercise such right. Inherent to the right of case, they were under the direct and control and
self-organization is the right to choose to form supervision of Skycable because they were being
a union for purposes of collective bargaining or monitored regularly, given trophies and awards, and
a workers association for the purposes of evaluated in their quota production.
mutual aid and protection. The right to form a
workers association in Article 243 (now Article Skycable Corporation countered that it did not
249) is not exclusive to ambulant, intermittent terminate the services of petitioners for there was
and itinerant workers. Further nothing in never an employer-employee relationship to begin
Article 243, read together with Rule 2 of with. It further averred that it engaged petitioners as
Department Order No. 40-03, provides that independent contractors under a Sales Agency
workers, with definite employers, cannot form Agreement. In 2007, Skycable decided to streamline
or join a workers association for mutual aid
its operation and so, it engaged the services of an
and protection.
independent contractor, Armada, Inc. As a
result, petitioners' contracts were terminated but they,
B. Removal of the word Hanjin Shipyard
from the associations name, however, together with other sales account executives, were
does not infringe on Samahans right to referred for transfer to Armada. Petitioners then
self-organization. Yes, Samahan should became employees of Armada.
remove/delete the words Hanjin Shipyard
Issue: Were the Petitioners employees of
from the associations name because it gives
the wrong impression that all of its members Skycable Corporation?
are employed by Hanjin. The policy under
No. To prove the claim of an employer-employee
Section 18 of the Corporation Code against the
relationship, the following should be established by
registration of a corporate name which is
competent evidence: (1) the selection and
identical or deceptively or confusingly similar
to that of any existing corporation or which is engagement of the employee; (2) the payment of
patently deceptive or patently confusing or wages; (3) the power of dismissal; and (4) the
contrary to existing laws, is the avoidance of employer's power to control the employee with respect
fraud upon the public which would have to the means and methods by which the work is to be
occasion to deal with the entity concerned, the accomplished. Among the four, the most determinative
evasion of legal obligations and duties, and the factor in ascertaining the existence of employer-
reduction of difficulties of administration and employee relationship is the "right of control test."
supervision over corporations. Further, Section Under this control test, the person for whom the
9, Rule IV of D.O. No. 40-03, Series of 2003 services are performed reserves the right to control
explicitly states that The change of name of a not only the end to be achieved, but also the means by
labor organization shall not affect its legal which such end is reached.
personality. All the rights and obligations of a
labor organization under its old name shall Applying the test in this case, the evidence presented
continue to be exercised by the labor by petitioners did not prove their claim that they were
organization under its new name. employees of respondent. The Court found that
tasked to solicit cable subscriptions for respondent's act of regularly updating petitioners of
respondent, as evidenced by Certifications new promos, new price listings, meetings and trainings
of new account executives; imposing quotas and
ANTONIO VALEROSO AND ALLAN LEGATONA vs. penalties; and giving commendations for meritorious
SKYCABLE CORPORATION performance do not pertain to the means and
G.R. No. 202015, July 13, 2016 methods of how petitioners were to perform and
accomplish their task of soliciting cable
subscriptions. At most, these indicate that
Facts: respondent regularly monitors the result of
petitioners' work but in no way dictate upon
In 1998, Antonio Valeroso and Allan Legatona them the manner in which they should perform
alleged that they started working as accountant their duties.
executives for Skycable Corporation. They received
commissions ranging from P15,000.00 to 530,000.00 Applying also the totality of the economic
each upon reaching a specific quota every month and circumstances test, where the underlying economic
an allowance of P6,500.00 to P7,000.00 per month. In realities of the activity or relationship is determinative
2007, they were transferred to Armada, Inc. In of the relationship, this test applies only
February 2009, they were informed that their in cases where there is no written agreement to base
commissions would be reduced due to the introduction the relationship on and where the various tasks
of prepaid cards sold to cable subscribers resulting in performed by the worker brings complexity to the
lower monthly cable subscriptions. This prompted them relationship with the employer. In the present case,
to file a labor case for Unfair Labor Practice on there is a written contract, i.e., the Sales Agency
February 2009. They claimed that they were directly Agreement, which served as the primary evidence of
hired, paid and dismissed by respondent, in which the nature of the parties' relationship. In this duly
executed and signed agreement, petitioners and To establish the existence of employer-employee
respondent unequivocally agreed that petitioners' relationship the four standards must exist, namely: (a)
services were to be engaged on an agency basis as the manner of selection and engagement of the
sales account executives and that no employer- putative employee; (b) the mode of payment of
employee relationship is created but an independent wages; (c) the presence or absence of power of
contractorship. dismissal; and, (d) the presence or absence of control
of the putative employees conduct. Most determinative
Jesus Reyes vs GLAUCOMA RESEARCH among these factors is the so-called control test.
FOUNDATION, INC.
G.R. No. 189255 June 17, 2015 In the present case, the power to approve or reject the
organizational plans drawn by petitioner cannot be the
Facts: control contemplated in the "control test." It is but
Jesus Reyes was employed as an administrator in logical that one who commissions another to do a
Eye Referral Center (ERC) of the respondent in August piece of work should have the right to accept or reject
1, 2003. He worked as an administrator until April of the product. The important factor to consider in the
2005 wherein he alleged that he did not received his "control test" is still the element of control over how
salary from February and his 14 th month pay. He was the work itself is done, not just the end result thereof.
then refused entry and his office padlocked by the This was not established by the petitioner.
Center. On the part of the Respondents, they engaged Under the economic reality test, which determines
his services as a consultant or adviser in the whether an employer-employee relationship exists
formulation of an updated organizational set-up and between the parties the economic realities prevailing
employees' manual which is compatible with their within the activity or between the parties are
present condition. Based on his claim that there is a examined, taking into consideration the totality of
need for an administrator for the ERC, he later circumstances surrounding the true nature of the
designated himself as such on a trial basis. But later relationship between the parties. This is especially
on in his later on December of 2004, he stated therein appropriate when, as in this case, there is no written
that he will be on leave and advised them that they agreement or contract on which to base the
have the option of appointing his replacement during relationship. Economic dependence of the worker on
his absence. With this, he severed his relationship with his employer is essential. Pay slips may not be treated
the respondents. The respondents alleged that there is as competent evidence of petitioner's claim that he is
no employer-employee relationship. Petitioner then respondents' employee. In addition, the designation of
filed for a complaint for illegal dismissal. the payments to petitioner as salaries, is not
LA dismissed the petitioners complaint for lack of determinative of the existence of an employer-
proof in establishing that there was indeed an employee relationship. Thus the petitioner failed to
employer-employee relationship. Further, he was also establish that there is indeed an employer-employee
found undisputed to be consultant of Manila relationship in this case.
International Airport Authority and other governmental TENAZAS vs. R. VILLEGAS TAXI TRANSPORT; G.R.
agencies. NLRC reversed the LAs decision contending No. 192998 April 2, 2014
that it was necessary on the part of the respondent to
establish the fact of the dismissal. CA reinstated the FACTS
decision of LA ruling that under the control test and
the economic reality test, no employer-employee Bernard A. Tenazas (Tenazas), Jaime M. Francisco
relationship existed between respondents and (Francisco), and Isidro G. Endraca (Endraca) filed a
petitioner. complaint for illegal dismissal against R. Villegas Taxi
Transport and/or Romualdo Villegas (Romualdo) and
Hence, this petition. Andy Villegas (Andy) (respondents).

Issue: Whether or not there was an employer- Respondents admitted that Tenazas and Endraca were
employee relationship in the case. employees of the company, the former being a regular
driver and the latter a spare driver. Respondents claim
Ruling: that Isidro Endraca was only an extra driver who
The Court affirmed the decision of the CA in reinstating stopped reporting to queue for available taxi units
the decision of LA. It held that in an illegal dismissal which he could drive. Respondents offered Tenazas and
case, the onus probandi rests on the employer to Edraco reinstatement but both refused. The
prove that its dismissal of an employee was for a valid respondents, however, denied that Francisco was an
cause. However, before a case for illegal dismissal can employee of the company or that he was able to drive
prosper, an employer-employee relationship must first one of the companys units at any point in time.
be established. And in this case, the Court relied on The Labor Arbiter held that there could be no illegal
two tests to determine if there is an employer- dismissal since there was no overt act of dismissal
employee relationship; they are the Control Test and committed by the respondents. There was no formal
the Economic Reality Test.
investigations, no show cause memos, suspension respondents. Francisco simply relied on his allegation
memos or termination memos were never issued. that he was an employee of the company without any
Otherwise stated, there is no proof of overt act of other evidence supporting his claim. Unfortunately for
dismissal committed by herein respondents. him, a mere allegation in the position paper is not
tantamount to evidence. Bereft of any evidence, the
On appeal, the NLRC reversed the ruling of the LA and CA correctly ruled that Francisco could not be
ruled that the petitioners were all employees of the considered an employee of the respondents.
company.
SOUTH EAST INTERNATIONAL RATTAN, INC. vs.
The Court of Appeals affirmed with modification the JESUS J. COMING
decision of the NLRC, holding that there was indeed an G.R. No. 186621 March 12, 2014 J.
illegal dismissal on the part of Tenazas and Endraca
but not with respect to Francisco who failed to present FACTS
substantial evidence, proving that he was an employee
of the respondents. It also deleted the NLRCs award of Petitioner South East International Rattan, Inc. (SEIRI)
separation pay and instead ordered that Tenazas and is a domestic corporation engaged in the business of
Endraca be reinstated. manufacturing and exporting furniture to various
countries.
ISSUES:
Coming was hired by petitioners as Sizing Machine
WON Tenazaz and Edraca are entitled to separation Operator sometime in 1984 and worked from 8 am to
pay. WON or not Francisco is an employee of 5 pm with fixed compensation of P150.00 per day. In
respondent. 1990, his employment was interrupted as he was told
by petitioners to resume work in two months. He did
RULING: not complain on the fear that petitioners might decide
No, they are not entitled to separation pay. An not to call him back for work. He was however
illegally dismissed employee is entitled to two reliefs: dismissed in 2002 after having been told that the
back wages and reinstatement. In instances where company is not doing well financially and that he would
reinstatement is no longer feasible because of strained be called back to work only if they need his services
relations between the employee and the employer, again. On 2003, Jesus J. Coming filed a complaint for
separation pay is granted. In effect, an illegally illegal dismissal.
dismissed employee is entitled to either reinstatement, SEIRI denied that Coming was their employee and that
if viable, or separation pay if reinstatement is no he actually worked for SEIRIs furniture suppliers and
longer viable, and back wages. Clearly, it is only when that Coming was alleging that he was employed in
reinstatement is no longer feasible that the payment of 1984 when in fact, it operated business only in 1987.
separation pay is ordered in lieu thereof. "It bears to Further, Coming was not included in the list of
stress that reinstatement is the rule and, for the employees submitted to the SSS. Coming on the other
exception of strained relations to apply, it should be hand, submitted five affidavits of his former co-
proved that it is likely that if reinstated, an atmosphere workers stating that Coming was an employee of SEIRI
of antipathy and antagonism would be generated as to for almost 20 years.
adversely affect the efficiency and productivity of the
employee concerned. Although litigation may also The Labor Arbiter, pronounced that Coming was
engender a certain degree of hostility, the SEIRIs employee and was terminated illegally which
understandable strain in the parties relation would not was reversed by the NLRC which decision was further
necessarily rule out reinstatement which would, set aside by the CA.
otherwise, become the rule rather the exception in
illegal dismissal cases. Thus, it was a prudent call for ISSUE
the CA to delete the award of separation pay and order Whether or not there exists an employer-employee
for reinstatement instead relationship between SEIRI and Coming
There was no employer-employee relationship. HELD
Francisco was claiming to be an employee of the
respondents, it is incumbent upon him to proffer There was employer-employee relationship and the
evidence to prove the existence of said relationship. decision of the CA was upheld.
Any competent and relevant evidence to prove the
relationship may be admitted. Identification cards, In ascertaining the existence of an employer-employee
cash vouchers, social security registration, relationship, the four-fold test is applied, i.e., (1) the
appointment letters or employment contracts, payrolls, selection and engagement of the employee; (2) the
organization charts, and personnel lists, serve as payment of wages; (3) the power of dismissal; and (4)
evidence of employee status.In this case, however, the power to control the employees conduct, or the
Francisco failed to present any proof substantial so-called "control test." And in resolving the issue of
enough to establish his relationship with the existence of em-em relationship, substantial evidence
is sufficient.
The fact that a worker was not reported as an Facts:
employee to the SSS is not conclusive proof of the
absence of employer-employee relationship. Nor does 1. Royale Homes is a corporation engaged in
the fact that respondents name does not appear in the marketing Real Estates. In 1994, it engaged
payrolls and pay envelope records submitted by the services of Alcantara and appointed him as
petitioners negate the existence of employer-employee its Marketing Director for a period of one year,
which was subsequently extended to the latest
relationship. For a payroll to be utilized to disprove the
January 1 to December 2003;
employment of a person, it must contain a true and
2. In December 17, 2003, Alcantara filed an
complete list of the employee. In this case, SEIRI list
Illegal Dismissal Case against Royale Homes
did not cover the entire 18-year period during which alleging that in November 2003, the Company
respondent supposedly worked for SEIRI. SEIRI gave him Php 1.2 M for the services he
suggest that respondent was employed by SEIRIs rendered to it, however, during the 1 st week of
suppliers, Mayol and Apondar but no competent proof November, the executive officers of Royale
was presented as to the latters status as independent Homes told him that they were wondering why
contractors. When SEIRI admitted that the five affiants he still had to return at work, and that the acts
in behalf of Coming were its employees although of the executive officers of Royale Homes
showing grudge feeling against the company is binding amounted to his dismissal from work without
to SEIRI and as pronounced by the CA, applying the any valid or just cause and in gross disregard
Control Test on SEIRI, (1) they required Coming to of the proper procedure for dismissing
work within the company premises; (2) they obliged employees;
Coming to report every day of the week and tasked 3. For its part, Royale homes refuted the
allegation that Alcantara is its employee. It
him to usually perform the same job; (3) they
argued that the appointment paper of
enforced the observance of definite hours of work from
Alcantara is clear that it engaged his services
8 oclock in the morning to 5 oclock in the afternoon;
as an independent sales contractor for a fixed
(4) the mode of payment of Comings salary was under term of one year only, as such, Alcantara never
their discretion, at first paying him on pakiao basis and received any salary, 13th month pay, overtime
thereafter, on daily basis; (5) they implemented pay or holiday pay from Royale Homes as he
company rules and regulations; (6) Agbay (Pres of was paid purely on commission basis. In
Company) directly paid Comings salaries and addition, it had no control on how Alcantara
controlled all aspects of his employment and (7) would accomplish his tasks and responsibilities
Coming rendered work necessary and desirable in the as he was free to solicit sales at any time and
business of the respondent company. by any manner which he deems appropriate
and necessary, in fact, Alcantara was free to
recruit his own sales personnel to assist him in
Therefore, Coming, whose employment was
pursuance of his sales target.
terminated without valid cause by petitioners, is
4. Moreover, Royale Homes averred that in its
entitled to reinstatement without loss of seniority Management Committee meeting held on
rights and other privileges and to his full back wages, October 8, 2003, Alcantara announced openly
inclusive of allowances and other benefits or their and publicly that he will leave the company by
monetary equivalent, computed from the time his the end of October 2003 on the ground that he
compensation was withheld from him up to the time of will join his wife to pursue their own brokerage
his actual reinstatement. Where reinstatement is no business.
longer viable as an option, back wages shall be
computed from the time of the illegal termination up to Sole Issue:
the finality of the decision. Separation pay equivalent Whether or not there exist an Employer-Employee
to one-month salary for every year of service should Relationship between Royale Homes and Alcantara.
likewise be awarded as an alternative in case
reinstatement in not possible. Labor Arbiter: Alcantara is an employee of Royale
Homes having a fixed-term employment contract.

ROYALE HOMES MARKETING CORPORATION VS. NLRC: Alcantara is not an employee but a mere
ALCANTARA independent contractor of Royale Homes. It based its
G.R. NO. 195190, JULY 28, 2014 ruling mainly on the contract which does not require
Alcantara to observe regular working hours. He was
Topic: Existence of Employer-Employee Relationship; also free to adopt the selling methods he deemed most
Right of Control Test. effective and can even recruit sales agents to assist
Case Doctrine: Not every form of control that a hiring him in marketing the inventories of Royale Homes. The
party imposes on the hired party is indicative of NLRC also considered the fact that Alcantara was not
employer-employee relationship. Rules and regulation receiving monthly salary, but was being paid on
that merely serve as guidelines towards the commission basis as stipulated in the contract.
achievement of mutually desired result without
dictating the means and methods of accomplishing it, Court of Appeals: It held that Alcantara is an
do not establish employer-employee relationship. employee of Royal Homes. In applying the four-fold
and economic reality tests, it held that Royale Homes terms and conditions of the sale including mode of
exercised some degree of control over Alcantara since payment which an independent contractor must follow,
his job, as observed by the CA, is subject to company allocation of inventories among the independent
rules, regulations, and periodic evaluations. He was contractors, determination on who has the priority to
also bound by the company code of ethics. Moreover, sell the real estate, grant of commission or allowance
the exclusivity clause of the contract has made based on predetermined criteria and regular monitor of
Alcantara economically dependent on Royale Homes, the results of the market and sales effort of the
supporting the theory that he is an employee of said independent contractors, the foregoing are valid acts
company. of the Company which is not indicative of control over
a hired party as to qualify him as an employee of the
Final Ruling of Supreme Court: Company.

The Supreme Court ruled in the negative. First, it AVELINO S. ALILIN vs. PETRON CORPORATION
explained that, based on the written contract of the G.R. No. 177592 June 9, 2014
parties which is the primary evidence of their FACTS:
relationship, there exist a provision thereto which
explicitly provided that both parties understood that
Petron is a domestic corporation engaged in the oil
there will be no employer-employee relationship to
business. In 1968, Romualdo D. Gindang Contractor,
exist between them, and that Alcantara was engaged
which was owned and operated by Romualdo D.
by Royale Homes as an independent sales contractor to
Gindang (Romualdo), started recruiting laborers for
be paid on commission basis.
fielding to Petrons Mandaue Bulk Plant.
Second, in applying the four-fold and economic reality
tests, to wit: (1) the selection and engagement of the On June 1, 2000, Petron and RDG entered into a
employee; (2) the payment of wages; (3) the power of Contract for Services whereby RDG undertook to
dismissal; and (4) the employers power to control the provide Petron with janitorial, maintenance, tanker
employee with respect to the means and methods by receiving, packaging and other utility services in its
which the work is to be accomplished; the fourth Mandaue Bulk Plant. This contract was extended and
element or right of control test is the most upon expiration thereof, no further renewal of the
determinative factor in determining the existence of service contract was done.
Employer-Employee relationship.
Proceedings before the Labor Arbiter
In the case, the Supreme Court disagrees with the Petitioners Alilin, Calesa, Hindang, Gindang, Sungahid,
ratiocination of the Court of Appeals that since the Lee, Morato and Gabilan filed a Complaint for illegal
performance of Alcantaras tasks is subject to company dismissal, underpayment of wages, damages and
rules, regulations, code of ethics and periodic attorneys fees against Petron and RDG. Petitioners did
evaluation, the element of control is present which not deny that RDG hired them and paid their salaries.
would make Alcantara an employee of Royal Homes. They, however, claimed that the latter is a labor-only
The Supreme Court explained that, not every form of contractor, which merely acted as an agent of Petron,
control is indicative of employer-employee relationship their true employer. RDG corroborated petitioners
because a person who performs work for another and claim that they are regular employees of Petron. RDG
is subjected to its rules, regulations, and code of ethics denied liability over petitioners claim of illegal
does not necessarily become an employee for as long dismissal and further argued that Petron cannot
as the level of control does not interfere with the capitalize on the service contract to escape liability.
means and methods of accomplishing the assigned
tasks, the rules imposed by the hiring party on the Petron, on the other hand, maintained that RDG is an
hired party do not amount to the labor law concept of independent contractor and the real employer of the
control that is indicative of employer-employee petitioners. It was RDG which hired and selected
relationship. petitioners, paid their salaries and wages, and directly
supervised their work.
In this case, the Supreme Court agrees with Royal
Homes that the company rules, regulations, code of
ethics and periodic evaluation did not control the Labor Arbiter ruled that petitioners are regular
means and methods by which Alcantara was to employees of Petron. It found that their jobs were
perform his job, in fact, he had full control over the directly related to Petrons business operations; they
means and methods of accomplishing his tasks as he worked under the supervision of Petrons foreman and
can solicit sales from prospective clients, at any time supervisor; and they were using Petrons tools and
and by any manner which he deems appropriate and equipment in the performance of their works.
necessary. In essence, Alcantara performed his tasks
on his own account free from the control and direction Proceedings before the NLRC
of Royale Homes in all matters connected therewith, Petron continued to insist that there is no employer-
except to the following acts of the Company which is employee relationship between it and petitioners. NLRC
not however indicative of control over Alcantaras ruled that petitioners are Petrons regular employees
work, to wit: Fixing the price of Real Estate, imposing because they are performing job assignments which
requirements to the prospective buyers, laying down are germane to its main business. Petrons MR denied.
Proceedings before the CA investment, tools and the like. However, where the
CA found no employer-employee relationship between principal is the one claiming that the contractor is a
the parties. According to it, the records of the case do legitimate contractor, as in the present case, said
not show that petitioners were directly hired, selected principal has the burden of proving that supposed
or employed by Petron; that their wages and other status. It is thus incumbent upon Petron, and not upon
wage related benefits were paid by the said company; petitioners as Petron insists, to prove that RDG is an
and that Petron controlled the manner by which they independent contractor.
carried out their tasks. The CA also found RDG to be
an independent labor contractor with sufficient Petron failed to discharge the burden of proving that
capitalization and investment as shown by its financial RDG is a legitimate contractor. Hence, the presumption
statement for year-end 2000. In addition, the works that RDG is a labor-only contractor stands.
for which RDG was contracted to provide were menial
which were neither directly related nor sensitive and
Here, the audited financial statements and other
critical to Petrons principal business.Petitioners filed an
financial documents of RDG for the years 1999 to 2001
MR. Motion denied.
establish that it does have sufficient working capital to
meet the requirements of its service contract. In fact,
ISSUE: the financial evaluation conducted by Petron of RDGs
financial statements for years 1998-2000 showed RDG
Whether RDG is a legitimate job contractor. Upon such to have a maximum financial capability of Php4.807
finding hinges the determination of whether an Million as of December 1998,49 and Php1.611 Million
employer-employee relationship exists between the as of December 2000.50 Petron was able to establish
parties as to make Petron liable for petitioners RDGs sufficient capitalization when it entered into the
dismissal. service contract in 2000. The Court stresses though
that this determination of RDGs status as an
RULING: Labor-only contracting, distinguished from independent contractor is only with respect to its
permissible job contracting. financial capability for the period covered by the
financial and other documents presented. In other
words, the evidence adduced merely proves that RDG
The prevailing rule on labor-only contracting at the
was financially qualified as a legitimate contractor but
time Petron and RDG entered into the Contract for
only with respect to its last service contract with
Services in June 2000 is DOLE Department Order No.
Petron in the year 2000.
10, series of 1997.

Sections 8 and 9,Rule VIII, Book III of the

"Permissible job contracting or subcontracting
implementing rules of the Labor Code, in force since
refers to an arrangement whereby a principal agrees to
1976 and prior to DOLE Department Order No. 10,
farm out with a contractor or subcontractor the
series of 1997 provide that for job contracting to be
performance of a specific job, work, or service within a
permissible, one of the conditions that has to be met is
definite or predetermined period, regardless of
that the contractor must have substantial capital or
whether such job, work or, service is to be performed
investment. Petron having failed to show that this
or completed within or outside the premises of the
condition was met by RDG, it can be concluded, on this
principal. Under this arrangement, the following
score alone, that RDG is a mere labor-only contractor.
conditions must be met: (a) the contractor carries on a
The Court also finds, as will be discussed below, that
distinct and independent business and undertakes the
the works performed by petitioners were directly
contract work on his account under his own
related to Petrons business, another factor which
responsibility according to his own manner and
negates Petrons claim that RDG is an independent
method, free from the control and direction of his
contractor.
employer or principal in all matters connected with the
performance of his work except as to the results
thereof; (b) the contractor has substantial capital or Petron therefore, being the principal employer and
investment; and (c) the agreement between the RDG, being the labor-only contractor, are solidarily
principal and contractor or subcontractor assures the liable for petitioners' illegal dismissal and monetary
contractual employees entitlement to all labor and claims.
occupational safety and health standards, free exercise
of the right to self-organization, security of tenure, and Labor Contracting
social welfare benefits." Labor-only contracting, on
the other hand, is a prohibited act, defined as MARITES R. CUSAP vs. ADIDAS G.R. No. 201494
"supplying workers to an employer who does not have July 29, 2015
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among Facts: On January 21, 2003, Marites Cusap and 27
others, and the workers recruited and placed by such other employees filed a complaint for Illegal Dismissal
person are performing activities which are directly against Adidas, Prime and JCA. They alleged that they
related to the principal business of such employer." were regular employees of Adidas, as promo girls and
Generally, the contractor is presumed to be a labor- stockman at the companys various rented outlets for
only contractor, unless such contractor overcomes the years.
burden of proving that it has the substantial capital,
Adidas is engaged in the manufacture and marketing
of different lines of shoes and other sporting goods and CA: Affirmed the denial of the NLRC establishing
apparel in the Philippines. PRIME to be a legitimate contractor applying the 4
fold employer-employee Test that it was PRIME which
It contracted JCA to be its exclusive distributor (1) hired the complainants; (2) paid their wages; (3)
nationwide for 1 year (January 1, 2002 December dismissed them upon the expiration of the contract for
31, 2002. JCA entered into a promotional contract with which they were hired; and (4) exercised control over
PRIME to meet the promotional requirements in the them with respect to the conduct of the work to be
distribution of Adidas products. performed.

December 9, 2002: Complainants were dismissed from Petitioner points out that JCA and PRIME did not carry
employment when he service contract between PRIME on an independent business or undertook the
and JCA was terminated. performance of their service contracts according to
their own manner and methods, free from the control
Arguments of Complainants: and supervision of the principal Adidas. The two
entities, she insists, were mere labor-only contractors.
1. Adidas was their real employer; PRIME, merely a
recruitment agency supplying Adidas with manpower;
Issue: Whether PRIME is a labor only contractor.
it is used to conceal actual employment relationship
between them and Adidas.
Ruling: Yes. PRIME is a labor-only contractor;
2. JCA, mere alter ego of Adidas: JCA and Adidas
Article 106 of the Labor Code provides that "There
occupied same office and that JCA was merely a
is 'labor-only' contracting where the person supplying
distributor of Adidas products.
workers to an employer does not have substantial
capital or investment in the form of tools, equipment,
3. The products they were selling remained the
machineries, work premises, among others, and the
property and under the control of Adidas; it was Adidas
workers recruited and placed by such person are
that provided the warehouse where the products were
performing activities which are directly related to the
stored, that leased the outlets from department stores,
principal business of the employer. In such cases, the
and that provided regular training to them. Also, the
person or intermediary shall be considered merely an
proceeds of the sales were directly deposited to the
agent of the employer who shall be responsible to the
bank account of Adidas. Moreover, their salaries and
workers in the same manner and extent as if the latter
other monetary benefits supposedly paid by PRIME
were directly employed by him.
were charged to the account of Adidas, as indicated in
their payslips.
Sec. 5, Department Order No. 18-02, s. of 2002,
4. JCA and PRIME were only intermediaries of Adidas; implementing Articles 106 to 109 of the Labor
Prime being not registered corporation, labor recruiter, Code, prohibits labor-only contracting and defines it as
or agency when it supposedly entered into a contract "an arrangement where the contractor or sub-
with JCA; neither with the Securities and Exchange contractor merely recruits, supplies or places workers
Commission15 nor with the Department of Trade and to perform a job, work or service for a principal, and
Industry. It was registered as a "job any of the following is present: (i) The contractor or
contractor/subcontractor" only on May 20, 2002. They subcontractor does not have substantial capital or
thus maintained that PRIME was just a labor-only investment which relates to the job, work or service to
contractor at the time it claimed it had employed them be performed and the workers recruited, supplied or
for its supposed undertaking with JCA. placed by such contractor or sub-contractor are
performing activities which are directly related to the
Adidas and JCA contends that it PRIME who was the principal business of the employer; or (ii) the
employer of the complainants. That PRIME exercised contractor does not exercise the right to control over
control and supervision over their work. That it the performance of the work of the contractual
exercised the power to select, engage and dismiss the employee. x x x 'substantial capital or investment'
complainants. refers to capital stocks and subscribed capitalization in
the case of corporations, tools, equipment,
PRIME contends that it hired complainants for its implements, machineries and work premises, actually
project with JCA to promote Adidas products. Their and directly used by the contractor or subcontractor in
employment was terminated when its contract with the performance or completion of the job, work or
JCA expired and was not renewed. Hence, service contracted out."
complainants were not illegally dismissed.
Aside from PRIME's remittances of employee
Rulings on Compulsory Arbitration: Labor Arbiter contributions to Philhealth, SSS, and Pag-ibig and the
Salinas dismissed the complaint. Prime was the payment for the complainants' and the petitioner's
employer of the complainants and that it paid their 13 th wages, we find no indication, except mostly general
month pay and service incentive leave pay. statements from Adidas, PRIME and JCA, that PRIME
possessed substantial capital or investment to operate
NLRC: Denied the appeal as a legitimate job contractor or subcontractor.
According to Adidas, not only did PRIME have LPG assistance workers in various dates from 1979 to
substantial capital or investment to run its own 1998.
business operations independent of its clients, it also
has sufficient capability to control and supervise its In 1996, Petron engaged the service of ABC
employees. Yet it offered no proof to substantiate its Contracting Services as a contractor to provide utility
claim,40 other than its recognition of PRIME' s capability and maintenance services to its Bacolod bulk tanks. In
to fulfill its obligations towards its employees. 1999, the contract between Petron and ABC was
terminated which led to the dismissal of the
The same thing is true with PRIME. It likewise offered respondents. Thus, they filed a complaint for illegal
no proof of how or in what manner its purported dismissal contending that ABC was a mere labor-only
substantial capital financed its "promotional and inter- contractor which had no substantial capital and
marketing business" with JCA, except to say that in the investment, and had no control over the manner and
pursuit of its business operations, "it has complied with method on how they accomplished their work. Thus,
all the requirements of law anent the rights, privileges Petron is their true employer. Petron countered their
and benefits of its employees."42 contention saying that ABC was an independent
contractor which supplied the needed manpower for
the maintenance and utility of its bulk plant.
For its part, JCA relied principally on its promotional
contract with PRIME to avoid liability, saying that the
The Labor Arbiter and the NLRC both decided
terms of their service agreement demonstrate the
in favour of Petron stating that ABC was a legitimate
earmarks of an employer under the four-fold
independent contractor and thus, the employer of the
employer-employee relationship test.43 It also
respondents. The CA reversed the judgment of the
presented no proof of how or in what manner PRIME
NLRC and ordered the reinstatement of the
carried out its undertaking under the contract;
respondents.
although like Adidas, it acknowledged PRIME's
payment of the petitioners' and the complainants'
Issue:
wages, and remittances to Philhealth, SSS, and Pag-
Whether or not ABC Contracting Services was a
ibig.
labor-only contractor of Petron.

While the payment of wages and workers' benefits is Ruling:

one of the determinants of an employer-employee The law presumes a contractor to be a labor-
relationship, we do not find it a reliable basis in this only contractor and the employees are not expected to
case. In fact, a closer look at the payslips of PRIME's prove the negative fact that the contractor is a labor-
supposed employees reveals that the complainants' only contractor. Thus, to overcome this presumption,
salaries and benefits were under the account of Petron has the burden of proving and must establish
Adidas,45giving credence to their claim that their that ABC is not a labor-only contractor but a legitimate
compensation was charged to Adidas. independent contractor.

Under these circumstances, we have reason to believe Under the law and jurisprudence, a contractor
that PRIME, the supposed JCA subcontractor, just is deemed to be a labor-only contractor if the following
assumed the act of paying the complainants' wages elements are present: (i) the contractor does not have
and benefits on behalf of Adidas, indicating thereby substantial capital or investment to actually perform
that it was a mere agent of Adidas or a labor-only the job, work or service under its own account and
contractor. In the light of the complete absence of responsibility; and (ii) the employees recruited,
proof that PRIME applied its "substantial capital or supplied or placed by such contractor are performing
investment" in performing the promotional job it activities which are directly related to the main
contracted with JCA, we find credence in the business of the principal.
petitioner's submission that the products she was
selling remained to be the property and under the In this case, Petron failed to show that ABC
control of Adidas; that it was Adidas who owned the had substantial capital or investment and that
warehouse where they were stored; that leased the respondents were performing activities which were not
sales outlets from department stores; and that directly related to Petrons principal business. The
provided regular training to her and to the other documentary evidence presented by Petron were not
complainants. conclusive evidence of ABCs financial capacity to
operate and perform their business independently,
Petron Corp. v. Caberte including the performance bond posted by ABC. It was
G.R. No. 182255, June 15, 2015 also shown that ABC does not own basic tools,
equipment and machineries, and work premises
Facts: needed to carry out their workers job. Moreover, the
Petron is a domestic corporation engaged in Court found that the work rendered by the
the manufacture and distribution of petroleum respondents were directly related or necessary and
products. Pursuant to the nature of its business, it desirable to the main business of Petron for they are
maintains and operates several bulk tanks all over the vital as they are in the manufacture and distribution of
country. One of which is located in Bacolod where the petroleum products. Petrons power of control over the
respondents were hired as utility, maintenance and work of the respondents was also found by the Court
through its supervision over their work in handling LPG within the ambit of Policy Instruction No.
products. 20/Department Order No. 19, hence allowing the
prevention of acquisition of tenurial security by project
Therefore, considering Petrons failure to or work pool employees who have already gained the
overcome the presumption, the Court declared ABC as status of regular employees by the employers conduct.
a mere labor-only contractor and in finding that a
contractor is a labor-only contractor, it is equivalent The test to determine whether employment is regular
that there is an employer-employee relationship or not is the reasonable connection between the
between the principal and the employees of the particular activity performed by the employee in
supposed contractor, and the labor-only contractor is relation to the usual business or trade of the employer.
considered as a mere agent of the principal, the real If the employee has been performing the job for at
employer. Accordingly in this case, Petron is declared least one year, even if the performance is not
to be the true employer of respondents who are continuous or merely intermittent, the law deems the
considered regular employees in view of the fact that repeated and continuing need for its performance as
they have been regularly performing activities which sufficient evidence of the necessity, if not
are necessary and desirable to the usual business of indispensability of that activity to the business.
Petron for a number of years.
It is clear then that there was deliberate intent on the
part of the employer to prevent the regularization of
Macarthur Malicdem & Flores v. Marulas petitioners. To begin with, there is no actual project.
Industrial Corp. & Mancilla The only stipulations in the contracts were the dates of
G.R. No. 204406, February 26, 2014 their effectivity, the duties and responsibilities of the
petitioners as extruder operators, the rights and
FACTS: obligations of the parties, and the petitioners
compensation and allowances. As there was no specific
Petitioners Malicdem and Flores were hired by project or undertaking to speak of, the respondents
respondent corporation as extruder operators in 2006 cannot invoke the exception in Article 280 of the Labor
They were responsible for the bagging of filament Code.This is a clear attempt to frustrate the
yarn, the quality of pp yarn package and the regularization of the petitioners and to circumvent the
cleanliness of the work place area. Their employment law.
contracts were for a period of one (1) year. Every year
thereafter, they would sign a Resignation/Quitclaim in Even granting that petitioners were project employees,
favor of Marulas a day after their contracts ended, and they can still be considered as regular as they were
then sign another contract for one (1) year until such continuously hired by the same employer for the same
time that they were told not to report to work position as extruder operators. Being responsible for
anymore. They were asked to sign a paper the operation of machines that produced sacks, their
acknowledging the completion of their contractual work was vital and indispensable the business of the
status. Claiming that they were illegally dismissed, the employer.
corporation countered that their contracts showed that
they were fixedterm employees for a specific The respondents cannot use the alleged expiration of
undertaking which was to work on a particular order of the employment contracts of the petitioners as a shield
a customer for a specific period. Their severance from of their illegal acts. The project employment contracts
employment then was due to the expiration of their that the petitioners were made to sign every year since
contracts. the start of their employment were only a stratagem to
violate their security of tenure in the company.
ISSUE: Whether or not petitioners were illegally
dismissed The respondents invocation ofWilliam Uy Construction
Corp. v. Trinidad22is misplaced because it is applicable
HELD: Yes. CA affirming NLRC decision annulled only in cases involving the tenure of project employees
and set aside in the construction industry. It is widely known that in
the construction industry, a project employees work
Labor Law: Effect of continuous re-hiring of a depends on the availability of projects, necessarily the
project employee for the same tasks that are duration of his employment. It is not permanent but
vital, necessary and indispensable to the usual coterminous with the work to which he is assigned.It
trade or business of the employer would be extremely burdensome for the employer, who
depends on the availability of projects, to carry him as
Once a project or work pool employee has been: (1) a permanent employee and pay him wages even if
continuously, as opposed to intermittently, rehired by there are no projects for him to work on.The rationale
the same employer for the same tasks or nature of behind this is that once the project is completed it
tasks; and (2) these tasks are vital, necessary and would be unjust to require the employer to maintain
indispensable to the usual business or trade of the these employees in their payroll.
employer, then the employee must be deemed a
regular employee, pursuant to Article 280 of the Labor Under Article 279 of the Labor Code, an employee who
Code and jurisprudence. To rule otherwise would allow is unjustly dismissed from work shall be entitled to
circumvention of labor laws in industries not falling reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of rendered their services for periods of less than a year
allowances, and to his other benefits or their monetary so they could not have attained regular employment
equivalent computed from the time his compensation status. Nevertheless, respondent asserted that where
was withheld from him up to the time of his actual a fixed period of employment was agreed upon
reinstatement. knowingly and voluntarily by the petitioners, the
duration of which was made known to them at the time
of their engagement, petitioners cannot claim
otherwise.
PROJECT EMPLOYEES, WHEN CONSIDERED AS
REGULAR 4. LA ruled in favor of petitioners and found that since
they were performing activities necessary and
desirable to the usual business of petitioner for more
While length of time is not the controlling test for than the period for regularization, petitioners are
project employment, it is vital in determining if the considered as regular employees, and thus, their
dismissal was done contrary to law in the absence of
employee was hired for a specific undertaking or just cause and prior written notice.
tasked to perform functions vital, necessary and
5. The NLRC affirmed the Labor Arbiters decision and
indispensable to the usual business of trade of the
rejected respondents contention that petitioners were
employer.Thus, in the earlier case of Maraguinot, Jr. v. merely employed for a specific project or undertaking
NLRC,it was ruled that a project or work pool the completion or termination of which has been
determined at the time of their engagement. It
employee,who has been: (1) continuously, as opposed
stressed that nowhere in the records of the case was it
to intermittently, rehired by the same employer for the shown that petitioners were hired as project or
same tasks or nature of tasks; and (2) those tasks are seasonal employees, respondent having failed to
submit any contract of project or other similar proof
vital, necessary and indispensable to the usual
thereof.
business or trade of the employer, must be deemed a
regular employee. 6. The CA ruled in favor of respondents. Petitioners
must be considered as fixed term employees whose
ROMEO BASAN vs. COCA-COLA BOTTLERS PH "seasonal employment" or employment for a "period"
G.R. Nos. 174365-66 February 4, 2015 PERALTA, have been "set down. The respondents repeated hiring
for various periods (ranging from more than six
FACTS: months for private respondent Basan to eight years in
1. Petitioners Romeo Basan, Danilo Dizon, Jaime L. the case of private respondent Dizon) would not
Tumabiao, Jr., Roberto Dela Rama,Jr., Ricky S. Nicolas, automatically categorize them as REGULAR
Crispulo D. Donor, Galo Falguera were engaged as EMPLOYEES.
temporary route helpers by Coca-cola. As route
helpers, they engaged in the service of loading and ISSUES:
unloading softdrink products of respondent company to 1. WON petitioners are regular employees
its various delivery points. Each was tasked to work for 2. WON the guidelines for a valid fixed term
months, ranging from one to eight months, employment were complied with
intermittently for a couple of years.
HELD:
2. On February 18, 1997, filed a complaint for illegal
dismissal with money claims against respondent Coca- 1. Pursuant to Article 280 of the Labor Code, regular
Cola Bottlers Philippines, alleging that respondent employees are classified into:
dismissed them without just cause and prior written i. Regular employees by nature of work or those who
notice required by law. They alleged that they were are engaged to perform activities which are usually
performing activities necessary and desirable to the necessary or desirable in the usual business or trade of
usual business of petitioner for more than the period the employer;
for regularization, hence are considered as regular ii. Regular employees by years of service or those who
employees. have rendered at least one year of service, whether
continuous or broken, with respect to the activities in
3. Respondent countered that it hired petitioners as which they are employed
temporary route helpers to act as substitutes for its
absent regular route helpers merely for a fixed period Petitioners, in this case, fall under the first kind of
in anticipation of the high volume of work in its plants regular employee. As route helpers who are engaged
or sales offices. They also knew that their assignment in the service of loading and unloading softdrink
as route helpers was temporary in duration. Also, its products of respondent company to its various delivery
usual business or trade is softdrink manufacturing and points, which is necessary or desirable in its usual
that the work assigned to respondent workers as sales business or trade, petitioners are considered as regular
route helpers so involves merely "postproduction employees.
activities," one which is not indispensable in the
manufacture of its products. Petitioners merely
 If, as so argued by petitioner company, only those any agreement at all, the contracts of employment not
whose work are directly involved in the production of having been presented.
softdrinks may be held performing functions necessary
and desirable in its usual business or trade, there ZENAIDA PAZ vs. NORTHERN TOBACCO
would have then been no need for it to even maintain REDRYING CO., INC., AND/OR ANGELO ANG
regular truck sales route helpers.

The repeated rehiring of respondent workers and the Facts: Northern Tobacco Redrying Co., Inc. (NTRCI), a
continuing need for their services clearly attest to the flue-curing and redrying of tobacco leaves business,
necessity or desirability of their services in the regular hired Zenaida Paz, sometime in 1974 as a seasonal
conduct of the business or trade of petitioner company.
sorter, paid P185.00 daily. NTRCI regularly re-hired her
every tobacco season since then. On May 18, 2003,
That they merely rendered services for periods of less
Paz was 63 years old when NTRCI informed her that
than a year is of no moment since for as long as they
were performing activities necessary to the business of she was considered retired under company policy. Paz
respondent, they are deemed as regular employees filed a complaint Illegal Dismissal which she later
under the Labor Code, irrespective of the length of amended to a Complaint for payment of retirement
their service. benefits, damages, and attorneys fees. NTRCI
countered that no Collective Bargaining Agreement
In Pacquing, et. al. v. Coca-Cola Philippines, Inc. and (CBA) existed between NTRCI and its workers. NTRCI
also in the Magsalin case, the Court applied the ruling raised the requirement of at least six months of service
cited above under the principle of stare decisis et non a year for that year to be considered in the retirement
quieta movere (follow past precedents and do not pay computation. It claimed that Paz only worked for
disturb what has been settled). It was held therein that at least six months in 1995, 1999, and 2000 out of the
route helpers were performing functions as the 29 years she rendered service.
necessary and desirable in the usual business or trade
of Coca Cola Philippines, Inc., they are considered as Issues:
regular employees entitled to security of tenure.
Consequently, for lack of any clear, valid, and just or 1. Is Zenaida Paz considered a regular
authorized cause in terminating petitioners' employee?
employment, the Court found respondent guilty of
illegal dismissal. Article 280 of the Labor Code and jurisprudence
identified three types of employees, namely:
2. No. The Court, in a litany of cases, recognized a (1) regular employees or those who have been
fixed-term type of employment embodied in a contract engaged to perform activities which are usually
specifying that the services of the employee shall be necessary or desirable in the usual business or trade of
engaged only for a definite period, the termination of the employer;
which occurs upon the expiration of said period (2) project employees or those whose employment
irrespective of the existence of just cause and has been fixed for a specific project or undertaking,
regardless of the activity the employee is called upon the completion or termination of which has been
to perform. determined at the time of the engagement of the
employee or where the work or service to be
To avoid the possibility of abuse by employers in the performed is seasonal in nature and the employment is
utilization of fixed-term employment contracts, the for the duration of the season; and
Court laid down the following criteria to prevent the (3) casual employees or those who are neither
circumvention of the employees security of tenure: regular nor project employees.

i. The fixed period of employment was knowingly and The primary test therefore, of determining regular
voluntarily agreed upon by the parties without any employment is the reasonable connection between the
force, duress, or improper pressure being brought to particular activity performed by the employee in
bear upon the employee and absent any other relation to the usual trade or business of the
circumstances vitiating his consent (NO VICE OF employer. The test is whether the former is usually
CONSENT) necessary or desirable in the usual business or
trade of the employer.
ii. It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal In this case, the services petitioner Paz performed as a
terms with no moral dominance exercised by the sorter were necessary and indispensable to respondent
former or the latter. (NO DOMINANCE OF EMPLOYER) NTRCIs business of flue-curing and re-drying tobacco
leaves. She was also regularly rehired as a sorter
Unfortunately, however, the records of this case are during the tobacco seasons for 29 years since 1974.
bereft of any proof which will show that petitioners These considerations taken together allowed the
freely entered into agreements with respondent to conclusion that petitioner Paz was a regular seasonal
perform services for a specified length of time. In fact, employee, entitled to rights under Article 279 53 of the
there is nothing in the records to show that there was Labor Code on Security of Tenure.
 2. What are the benefits that should be Labor Arbiter dismissed Arlenes complaint and held
awarded? that Arlene was only an independent contractor. The
a. Full Back wages of P22,200.00- Since the exact NLRC reversed the Labor Arbiters decision and held
number of days petitioner Paz would have that Arlene was instead a regular employee because
worked between May 18, 2003 until she would she continuously rendered services that were deemed
turn 65 in 2005 could not be determined with necessary and desirable to Fujis business. On petition
specificity, this court thus awards full back for certiorari with the CA, Arlenes status of
employment as a regular employee and that she was
wages in the amount of P22,200.00 computed
illegally dismissed, were upheld.
by multiplying P185.00 by 20 days, then by
three months, then by two years.
ISSUES:
b. Retirement Pay of P12,487.50 based on the
three years she worked for at least six months 1. Is there an employer-employee relationship?
in 1995, 1999, and 2000.- In the absence of a 2. Is Arlene a regular employee?
retirement plan or agreement providing for 3. Was Arlene illegally dismissed?
retirement benefits of employees in the
establishment, an employee upon reaching the RULING:
age of sixty (60) years or more, but not 1. Applying the four-fold test, there is indeed an
beyond sixty-five (65) years which is hereby employer-employee relationship between
declared the compulsory retirement age, who Arlene and Fuji.
has served at least five (5) years in the said
establishment, may retire and shall be entitled Elements of the Four-Fold Test
to retirement pay equivalent to at least one- 1. Selection and engagement of the Arlene
half (1/2) month salary for every year of employee although
service, a fraction of at least six (6) 2. Payment of wages Her mon
months being considered as one whole be a su
year. be the
c. Financial Assistance of P60,356.25- The court whether
applied the following formula: one-half-month indepen
pay98 multiplied by 29 years in service and 3. Power of dismissal Fuji had
then divided by 2. This is pursuant to the paragra
principle of social and compassionate 4. Power of control Her con
justice where in special circumstances, the control
Court awards financial assistance considering required
the old age and infirmity of Paz, and the fact although
that she delivered 29 long dedicated years to instructi
her employer giving away her prime of her life mode o
to the company. function
she hav
her func
FUJI TELEVISION NETWORK, INC. vs. ARLENE S.
ESPIRITU
G.R. No. 204944-45; December 3, 2014

FACTS: In 2005, Arlene S. Espiritu was engaged by 2. Arlene is a regular employee of Fuji and not an
Fuji Television Network, Inc. as a news independent contractor. Particularly, she is a
correspondent/producer tasked to report Philippine regular employee with a fixed-term
news to Fuji through its Manila Bureau field office. The contract.
employment contract initially provided for a term of 1
year but was successively renewed on a yearly basis, The test for determining regular employment is
until May 5, 2009 where both parties signed a non- whether there is a reasonable connection between
renewal contract. This non-renewal was predicated the employees activities and the usual business of
by the fact that Arlene was diagnosed of lung cancer the employer (i.e., the nature of the work must be
sometime in January 2009 and after she informed Fuji necessary or desirable in the usual business or
of the same. The contract stipulated further, that they trade of the employer). Fuji is engaged in the
release each other from liabilities and responsibilities business of broadcasting, including news
under the employment contract. Arlene received programming. Arlene was hired for the primary
US$18,050 in consideration of the non-renewal purpose of news gathering and reporting to the
contract which represents her salary from March to television networks headquarters. Espiritu was not
May 2009, bonuses, and separation pay. She signed contracted on account of any peculiar ability or
the contract under protest. special talent and skill that she may possess which
the network desires to make use of (hence, the
Arlene then initiated a complaint for illegal ABS-CBN vs. Sonza ruling does not apply). As
dismissal a day after she signed the contract. The correctly ruled by the NLRC and affirmed by the
 CA, the successive renewals of Arlenes contract Regardless of what the contract is called,
indicated the necessity and desirability of her work applying the four-fold test would determine the nature
in the usual course of Fujis business. of the employment. The control test is the most
indicative and determinative.
Arlenes contract indicating a fixed term did not
automatically mean that she could never be a
FACTS:
regular employee. The law does not preclude the
possibility that a regular employee may opt to
Petitioners Nelson Begino and Gener del Valle
have a fixed-term contract for valid reasons. Fujis
argument that Arlene was an independent were hired as cameramen/editors for TV Broadcasting,
contractor under a fixed-term contract is while petitioners Ma. Cristina Sumayao and Monina
contradictory, because there is an employer- Avila-Llorin were hired as reporters. They were hired
employee relationship in fixed-term contracts. through manager Amalia Villafuerte of Regional
Network Group in Naga City.

3. Arlene was illegally dismissed. Their services were engaged through Talent
Contracts which provided terms ranging three months
The expiration of Arlenes contract does not
negate the finding of illegal dismissal by Fuji. The to one year (renewed regularly over the years).
manner by which Fuji informed Arlene that her They were given Project Assignment Forms
contract would no longer be renewed is which detailed, among other matters, the duration of a
tantamount to constructive dismissal. To make particular project as well as the budget and the daily
matters worse, Arlene was asked to sign a letter of technical requirements thereof.
resignation prepared by Fuji. Due process must
still be observed in the pre-termination of fixed- Despite the fact that it specifically provided
term contracts of employment.
that nothing therein shall be construed to establish an
employer-employee relationship, there were provisions
After informing her employer of her lung
cancer, she was not given the chance to present that showed rules on the how their work will be done.
medical certificates. Fuji immediately concluded Their remuneration was also called Talent fees.
that Arlene could no longer perform her duties
because of chemotherapy. It did not ask her how Their first complaint was for claims for
her condition would affect her work. Neither did it regularization, underpayment of overtime pay, holiday
suggest for her to take a leave, even though she pay, 13th month pay, service incentive leave pay,
was entitled to sick leaves. Worse, it did not damages and attorney's fees. They assumed they were
present any certificate from a competent public
regular employees by stating that they performed
health authority that the disease could not be
cured within 6 months, even with appropriate necessary and desirable functions in ABS-CBN and
treatment. That a person has a disease does not also, they were mandated to wear company IDs and
per se entitle the employer to terminate his or her were provided all the equipment they needed. They
services. (See Art. 284 of the Labor Code and also worked under the direct supervision of Villafuerte
Book VI, Rule 1, Section 8 of the Omnibus Rules and they were tasked to take the route for the news
Implementing the Labor Code). Termination is the they needed to cover the next day. They were also
last resort.
bound by respondents rule on attendance and
NELSON V. BEGINO vs. ABS-CBN CORPORATION punctuality. They were also subjected to annual
G.R. No. 199166 20 April 2015 competency assessments as a condition for continued
employment just like other ABS-CBN employees. But
SUMMARY: respondents choose to characterize them differently
from the regular employees in order NOT to pay them
Petitioners were hired as cameramen/editors regular salaries by asserting their Talent Contract
and reporters for TV Patrol Bicol. They have been and/or Project Assessment Forms.
rehired continuously over the years and subject
to policies of ABS-CBN but they are supposedly Respondents aver that petitioners were hired
covered by Talent Contracts. They filed complaints as as talents, to act as reporters and/or cameramen for
regular workers but ABS-CBN averred that they are TV Patrol Bicol for designated periods and rates. Fully
talents and not regular employees. Supreme Court aware that they were not considered or to consider
used the four-fold test and concluded that they are themselves as employees of a particular production or
indeed regular workers regardless of the nomenclature film outfit, petitioners were supposedly engaged on the
of their contract. basis of the skills, knowledge or expertise the already
possessed and, for said reason, required no further
DOCTRINE: training from ABS-CBN. Although they were subject to
general guidelines, they were meant to guide them to
uphold the standards of the company and the regarded as the most crucial and determinative
strictures of the industry. indicator of the said relationship.

During the pendency of the case, petitioners Under this test, an employer-employee
were terminated. They filed a second complaint for relationship is said to exist where the person
regularization, payment of labor standard benefits, for whom the services are performed reserves
illegal dismissal and unfair labor practice. The second the right to control not only the end result but
complaint was dismissed for violation of the rules also the manner and means utilized to achieve
against forum shopping. the same.

Labor Arbiter Jesus Orlando Quinones ruled in Notwithstanding the nomenclature of

favor of petitioners on the basis of the finding that their Talent Contracts and/or Project
petitioners performed functions necessary and Assignment Forms and the terms and condition
essential to ABS-CBNs business and the exclusivity embodied therein, petitioners are regular
clause and prohibitions under their Talent employees of ABS-CBN.
Contracts/Project Assessment Forms and ordered ABS-
As cameramen, editors and reporters,
CBN to pay them 2, 440,908.00 pesos +
it appears that Petitioners were subject to the
reinstatement.
control and supervision of Respondents which
Respondents elevated case on an appeal to the provided them with the equipment essential for
NLRC. The NLRC affirmed LAs ruling on the same the discharge of their functions. The exclusivity
grounds. The petitioners filed a third complaint for clause and prohibitions in their Talent Contract
illegal dismissal, regularization, non-payment of were likewise indicative of Respondents' control
salaries and 13th month pay, unfair labor practice, over them, however indirectly worded.
damages and attorneys fees. This was raffled again
Also, the presumption is that when
to LA Quinones but he inhibited and also denied
the work done is an integral part of the
respondents motion to dismiss.
regular business of the employer and
Respondents filed a Rule 65 petition for when the worker does not furnish an
certiorari with the CA. CA reversed LA and NLRCs independent business or professional
ruling saying that there existed no employer-employee service, such work is a regular
relationship between them. Petitioners MR was also employment of such employee and not an
denied. independent contractor.

ISSUE: 2. As to the nature of ones employment is

concerned, Article 280 of the Labor Code of the
1. Whether or not petitioners are regular Philippines provides that:
employees of ABS-CBN Corporation.
ART. 280. Regular and Casual Employment.
2. What provision of the Labor Code governs The provisions of written agreement to the
the NATURE OF EMPLOYMENT? In relation contrary notwithstanding and regardless of the
to such, what are the kinds of employees oral agreement of the parties, an employment
as contemplated under said provision? shall be deemed to be regular where the
employee has been engaged to perform
3. Does the existence of a Talent Contract activities which are usually necessary or
necessarily prevent a regular employment desirable in the usual business or trade of the
status? employer, except where the employment has
been fixed for a specific project or undertaking
4. Is Sonza vs. ABS-CBN Broadcasting
the completion or termination of which has
Corporation applicable in this case?
been determined at the time of the
RULING: engagement of the employee or where the
work or service to be performed is seasonal in
1. YES. Petitioners are regular employees of ABS- nature and the employment is for the duration
CBN Corporation. of the season.

Of the criteria to determine whether An employment shall be deemed to be

there is an employer-employee relationship, casual if it is not covered by the preceding
the so-called "control test" is generally paragraph, provided that any employee who
has rendered at least one year of service,
 whether such service is continuous or broken, modestly recompensed by respondents,
shall be considered a regular employee with petitioners lay no claim to fame and/or unique
respect to the activity in which he is employed talents for which talents like actors and
and his employment shall continue while such personalities are hired and generally
actually exists. compensated in the broadcast industry.

With that, it has been ruled that the The following are the distinctions
foregoing provision contemplates four kinds of between employees like petitioners in this case
employees, namely: (a) regular employees and television or radio personalities like Sonza,
or those who have been engaged to perform to wit: [In other words, the Sonza case will not
activities which are usually necessary or apply because of the following differences]
desirable in the usual business or trade of the
employer; (b) project employees or those Firstly, in the selection and
whose employment has been fixed for a engagement of respondents, no peculiar or
specific project or undertaking, the completion unique skill, talent or celebrity status was
or termination of which has been determined required from them because they were merely
at the time of the engagement of the hired through petitioners personnel
employee; (c) seasonal employees or those department just like any ordinary employee.
who work or perform services which are
Secondly, the so-called "talent fees" of
seasonal in nature, and the employment is for
respondents correspond to wages given as a
the duration of the season; and (d) casual
result of an employer-employee relationship.
employees or those who are not regular,
Respondents did not have the power to bargain
project, or seasonal employees. To the
for huge talent fees, a circumstance negating
foregoing classification of employee,
independent contractual relationship.
jurisprudence has added that of contractual
or fixed term employee which, if not for the Thirdly, petitioner could always
fixed term, would fall under the category of discharge respondents should it find their work
regular employment in view of the nature of unsatisfactory, and respondents are highly
the employees engagement, which is to dependent on the petitioner for continued
perform activity usually necessary or desirable work.
in the employers business.
And lastly, the degree of control and
In the case, petitioners are classified supervision exercised by petitioner over
as regular employees of ABS-CBN as explained respondents through its supervisors negates
in the ruling of the SC on the first issue. the allegation that respondents are
independent contractors.
3. NO. The nature of the employment depends,
after all, on the nature of the activities to be
performed by the employee, considering the contractual
nature of the employers business, the duration
and scope to be done, and, in some cases, ARIEL L. DAVID vs. JOHN G. MACASIO
even the length of time of the performance and
its continued existence. In the same manner
that the practice of having fixed-term contracts FACTS: Macasio filed before the LA a
complaint against petitioner Ariel L. David, for
in the industry does not automatically make all
talent contracts valid and compliant with labor
non-payment of overtime pay, holiday pay and
law, it has, consequently, been ruled that the
13th month pay.
assertion that a talent contract exists does not He also claimed payment for moral and
necessarily prevent a regular employment exemplary damages and attorneys fees.
status. Macasio also claimed payment for service
incentive leave (SIL).
4. NO. As correctly pointed out by petitioners,
parallels cannot be expediently drawn between Macasio alleged that he had been working as a
this case and that of Sonza case which butcher for David since January 6, 1995. Macasio
involved a well-known television and radio claimed that David exercised effective control and
personality who was legitimately considered a supervision over his work by:
talent and amply compensated as such. While
possessed of skills for which they were
(1) setting the work day, reporting time and hogs to be not in terms of the time that he spent in the
chopped, as well as the manner by which he was to workplace, Macasio is not covered by the Labor
perform his work; Standards laws on overtime, SIL and holiday pay, and
(2) daily paid his salary of P700.00, 13th month pay under the Rules and Regulations
(3) approved and disapproved his leaves. Implementing the 13th month pay law

In his defense, David alleged that he hired Macasio as The CAs Ruling The CA partly granted Macasios
a butcher or chopper on "pakyaw" or task basis who is certiorari petition and reversed the NLRCs ruling for
not entitled to overtime pay, holiday pay and 13th having been rendered with grave abuse of discretion.
month pay pursuant to the provisions of the IRR of
the Labor Code. David pointed out that Macasio: While the CA agreed with the LA and the NLRC that
Macasio was a task basis employee, it nevertheless
(1) usually starts his work at 10:00 p.m. and ends at found Macasio entitled to his monetary claims. The CA
2:00 a.m. of the following day or earlier, depending on explained that as a task basis employee, Macasio is
the volume of the delivered hogs; excluded from the coverage of holiday, SIL and 13th
(2) received the fixed amount of P700.00 per month pay only if he is likewise a "field personnel who
engagement, regardless of the actual number of hours performs the work away from the office or place of
that he spent chopping the delivered hogs; and work and whose regular work hours cannot be
(3) was not engaged to report for work and, determined with reasonable certainty.
accordingly, did not receive any fee when no hogs were
delivered. In Macasios case, the elements that characterize a
"field personnel" are evidently lacking as he had been
Macasio disputed Davids allegations. He argued that working as a butcher at Davids "Yiels Hog Dealer"
he reported for work every day which the payroll or business in Sta. Mesa, Manila under Davids
time record could have easily proved had David supervision and control, and for a fixed working
submitted them in evidence. schedule that starts at 10:00 p.m.

Refuting Macasios submissions, David claims that Accordingly, the CA awarded Macasios claim for
Macasio was not his employee as he hired the latter on holiday, SIL and 13th month pay for three years, with
"pakyaw" or task basis. 10% attorneys fees on the total monetary award. It
however, denied Macasios claim for moral and
The LAs Ruling The LA dismissed Macasios exemplary damages for lack of basis.
complaint for lack of merit. The LA gave credence to
Davids claim that he engaged Macasio on "pakyaw" or David filed the present petition after the CA denied his
task basis. The LA noted the following facts to support motion for reconsideration.
this finding:
ISSUE:
(1) Macasio received the fixed amount of P700.00 for
every work done, regardless of the number of hours Whether Macasio is NOT entitled to holiday, SIL
that he spent in completing the task and of the volume and 13th month pay simply because he was paid
or number of hogs that he had to chop per on a pakyaw basis.
engagement;
(2) Macasio usually worked for only four hours,
RULING:
beginning from 10:00 p.m. up to 2:00 a.m. of the
following day; and
(3) the P700.00 fixed wage far exceeds the then NO. Engagement on "pakyaw" does not determine the
prevailing daily minimum wage of P382.00. parties relationship as it is simply a method of pay
The LA added that the nature of Davids business as computation. Macasio is Davids employee, albeit
hog dealer supports this "pakyaw" or task basis engaged on "pakyaw" or task basis.
arrangement.
The payment of an employee on task or pakyaw
The LA concluded that as Macasio was engaged on basis alone is insufficient to exclude one from the
"pakyaw" or task basis, he is not entitled to overtime, coverage of SIL and holiday pay. They are exempted
holiday, SIL and 13th month pay. from the coverage only if they qualify as "field
personnel or those "whose actual hours of work in
the field cannot be determined with reasonable
The NLRCs Ruling The NLRC affirmed the LA
certainty." Applying the rule on ejusdem generis
ruling. The NLRC observed that David did not require
"employees engaged on task or contract basis are not
Macasio to observe an eight hour work schedule to
automatically exempted from the grant of service
earn the fixed P700.00 wage; and that Macasio had
incentive leave, unless, they fall under the
been performing a non-time work, pointing out that
classification of field personnel."
Macasio was paid a fixed amount for the completion of
the assigned task, irrespective of the time consumed in
its performance. Since Macasio was paid by result and Provisions governing SIL and holiday pay
Under Article 94 of the Labor Code, every worker shall Since Macasio cannot be considered a "field
be paid his regular daily wage during regular holidays. personnel," then he is not exempted from the grant of
The rule shall apply to all employees except Field holiday and SIL pay even as he was engaged on
personnel and other employees whose time and "pakyaw" or task basis.
performance is unsupervised by the employer including
those who are engaged on task or contract basis, MACASIO is not entitled to 13th month pay
purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time
With respect to the payment of 13th month pay, the
consumed in the performance thereof.
CA legally erred in finding that the NLRC gravely
abused its discretion in denying this benefit to Macasio.
On the other hand, Article 95 of the Labor Code
provides that every employee who has rendered at
As with holiday and SIL pay, 13th month pay benefits
least one year of service shall be entitled to a yearly
generally cover all employees; an employee must be
service incentive leave of five days with pay. This rule
one of those expressly enumerated to be exempted.
shall apply to all employees except, among others,
Section 3(e) of the Rules and Regulations
field personnel and other employees whose
Implementing P.D. No. 851 enumerates the
performance is unsupervised by the employer including
exemptions from the coverage of 13th month pay
those who are engaged on task or contract basis,
benefits. Under Section 3(e), "employers of those who
purely commission basis, or those who are paid a fixed
are paid on xxx task basis, and those who are paid a
amount for performing work irrespective of the time
fixed amount for performing a specific work,
consumed in the performance thereof.
irrespective of the time consumed in the performance
thereof" are exempted.
Under these provisions, the general rule is that
holiday and SIL pay provisions cover all
Note that unlike the IRR of the Labor Code on
employees. To be excluded from their coverage, an
holiday and SIL pay, Section 3(e) of the Rules
employee must be one of those that these provisions
and Regulations Implementing PD No. 851
expressly exempt, strictly in accordance with the
exempts employees "paid on task basis" without
exemption.
any reference to "field personnel." This could only
mean that insofar as payment of the 13th month pay is
By dismissing Macasios complaint without considering concerned, the law did not intend to qualify the
whether Macasio was a "field personnel" or not, the exemption from its coverage with the requirement that
NLRC proceeded based on a significantly incomplete the task worker be a "field personnel" at the same
consideration of the case. This action clearly smacks of time.
grave abuse of discretion.
ALILING v FELICIANO
Macasio is entitled to holiday and SIL pay
GR No. 185829 April 25, 2012

In determining whether workers engaged on "pakyaw"

Facts:
or task basis" is entitled to holiday and SIL pay, the
Respondent Wide Wide World Express
presence (or absence) of employer supervision as
regards the workers time and performance is the key: Corporation (WWWEC) offered to employ
if the worker is simply engaged on pakyaw or task petitioner Aliling as Account Executive
basis, then the general rule is that he is entitled to a (Seafreight Sales.
holiday pay and SIL pay unless exempted from the The offer came with a 6-month probation
exceptions specifically provided under Article 94 period condition with this express caveat:
(holiday pay) and Article95 (SIL pay) of the Labor
Performance during probationary period shall
Code. However, if the worker engaged on pakyaw or
task basis also falls within the meaning of "field be made as basis for confirmation to Regular
personnel" under the law, then he is not entitled to or Permanent Status.
these monetary benefits. Training then started. However, instead of a
Seafreight Sale assignment, WWWEC asked
Based on the definition of field personnel under Article Aliling to handle Ground Express (GX), a new
82 Macasio does not fall under the definition of "field company product involving domestic cargo
personnel." The CAs finding in this regard is supported forwarding service for Luzon.
by the established facts of this case: Barely a month after, Manuel F. San Mateo III,
WWWEC Sales and Marketing Director, emailed
first, Macasio regularly performed his duties at Aliling to express dissatisfaction with the
Davids principal place of business; latters performance
second, his actual hours of work could be Thereafter, Joseph R. Lariosa, Human
determined with reasonable certainty;
Resources Manager of WWWEC, asked Aliling
and, third, David supervised his time and
to report to the Human Resources Department
performance of duties.
 to explain his absence taken without leave
from September 20, 2004. In the final analysis, one common thread runs through
Aliling responded two days later. He denied the holding of the labor arbiter, the NLRC and the CA,
being absent on the days in question, attaching i.e., petitioner Aliling, albeit hired from managements
to his reply-letter a copy of his timesheet standpoint as a probationary employee, was deemed a
which showed that he worked from September regular employee by force of the following self-
20 to 24, 2004. explanatory provisions:
In a separate letter, Aliling tendered his Article 281 of the Labor Code
resignation before San Mateo. While WWWEC Probationary employment. - Probationary
took no action on his tender, Aliling employment shall not exceed six (6) months
nonetheless demanded reinstatement and a from the date the employee started working,
written apology, claiming in a subsequent letter unless it is covered by an apprenticeship
to management that San Mateo had forced him agreement stipulating a longer period. The
to resign. services of an employee who has been
Lariosas response-letter informed Aliling that engaged on a probationary basis may be
his case was still in the process of being terminated for a just cause or when he
evaluated. Subsequently Lariosa again wrote, fails to qualify as a regular employee in
this time to advise Aliling of the termination of accordance with reasonable standards
his services effective as of that date owing to made known by the employer to the
his non-satisfactory performance during his employee at the time of his engagement.
probationary period. Records show that Aliling An employee who is allowed to work after a
was paid his outstanding salary. probationary period shall be considered a
Earlier, however, Aliling filed a Complaint for regular employee.
illegal dismissal due to forced resignation,
nonpayment of salaries as well as damages Section 6(d) of the Implementing Rules of
with the NLRC against WWWEC. Book VI, Rule VIII-A of the Labor Code
The LA declared Alilings termiantion as
Sec. 6. Probationary employment. There is
unjustified. The LA gave credence to Alilings probationary employment where the employee,
allegation about not receiving and, therefore, upon his engagement, is made to undergo a
not bound by, San Mateos purported memo trial period where the employee determines his
which supposedly apprised Aliling of the sales fitness to qualify for regular employment,
quota he was, but failed, to meet. based on reasonable standards made known to
The NLRC affirmed the LAs decision in toto.
him at the time of engagement.
Both the LA and NLRC considered Aliling a
Probationary employment shall be governed by
probationary employee.
the following rules:
The CA partly granted the petition and
xxxx
mentioned that San Mateo and Lariosa are
(d) In all cases of probationary employment,
jointly and severally liable with the company
the employer shall make known to the
for the payment of Alilings claims. The CA also
employee the standards under which he will
ruled that petitioner was a regular employee.
qualify as a regular employee at the time of his
engagement. Where no standards are made
Issues:
known to the employee at that time, he
1. Whether the petitioner can be considered a regular
shall be deemed a regular employee.
employee of the company
2. Whether the petitioner was illegally dismissed
Thus, pursuant to the explicit provision of Article 281
3. Whether the officers of WWWEC can be held jointly
of the Labor Code, Section 6(d) of the Implementing
and severally liable with the company
Rules of Book VI, Rule VIII-A of the Labor Code and
settled jurisprudence, petitioner Aliling is deemed a
Ruling:
regular employee as of June 11, 2004, the date of
1. Petitioner Aliling is considered a regular employee.
his employment contract.

The letter-offer itself states that the regularization 2. Petitioner was illegally dismissed.
standards or the performance norms to be used are
still to be agreed upon by Aliling and his supervisor. To justify fully the dismissal of an employee, the
WWWEC has failed to prove that an agreement as employer must, as a rule, prove that the dismissal was
regards thereto has been reached. Clearly then, there for a just cause and that the employee was afforded
were actually no performance standards to speak of. due process prior to dismissal. As a complementary
principle, the employer has the onus of proving with contemplation of "disgraceful or immoral conduct" and
clear, accurate, consistent, and convincing evidence "serious misconduct" of the Manual of Regulations for
the validity of the dismissal. Private Schools and the Labor Code of the Philippines.

WWWEC had failed to discharge its twin burden in the Issue: Whether or not the dismissal is a valid exercise
of management prerogative on the ground of serious
instant case.
misconduct

3. The officers of WWWEC cannot be held jointly and

Rulings:
severally liable with the company. Ruling of the labor arbiter: The LA found that there
was a valid ground for the petitioners dismissal; that
A review of the facts of the case does not reveal ample her pregnancy out of wedlock is considered as a
and satisfactory proof that respondent officers of "disgraceful and immoral conduct." The LA pointed out
WWEC acted in bad faith or with malice in effecting the that, as an employee of a Catholic educational
termination of petitioner Aliling. Even assuming institution, the petitioner is expected to live up to the
Catholic values taught by SSCW to its students.
arguendo that the actions of WWWEC are ill-conceived
and erroneous, respondent officers cannot be held
Ruling of the NLRC: The NLRC affirmed the decision
jointly and solidarily with it. Hence, the ruling on the
of the LA; pointing that the termination of the
joint and solidary liability of individual respondents
employment of the personnel of private schools is
must be recalled.
governed by the 1992 MRPS; that Section 94(e)
thereof cites "disgraceful or immoral conduct" as a just
CHERYLL SANTOS LEUS vs. ST. SCHOLASTICA'S
cause for dismissal, in addition to the grounds for
COLLEGE WESTGROVE
termination of employment provided for under Article
FACTS:Cheryll Santos Leus (petitioner) was hired by 282 of the Labor Code. The NLRC held that the
St. Scholastica's College Westgrove (SSCW), a Catholic petitioners pregnancy out of wedlock is a "disgraceful
educational institution, as a non-teaching personnel, or immoral conduct" within the contemplation of
engaged in pre-marital sexual relations, got pregnant Section 94(e) of the 1992 MRPS and, thus, SSCW had
out of wedlock, married the father of her child, and a valid reason to terminate her employment.
was dismissed by SSCW.
The Ruling of the CA: The CA affirmed the decision
of the NLRC, which denied the petition for certiorari
SSCW is a catholic and sectarian educational
filed by the petitioner. The CA held that it is the
institution in Silang, Cavite. In May 2001, SSCW hired
the petitioner as an Assistant to SSCWs Director of the provisions of the 1992 MRPS and not the Labor Code
Lay Apostolate and Community Outreach Directorate. which governs the termination of employment of
teaching and non-teaching personnel of private
Sometime in 2003, the petitioner and her schools, explaining that: It is a principle of statutory
boyfriend conceived a child out of wedlock. When construction that where there are two statutes that
SSCW learned of the petitioners pregnancy, Sr. Edna apply to a particular case, that which was specially
Quiambao (Sr. Quiambao), SSCWs Directress, advised intended for the said case must prevail. Petitioner was
her to file a resignation letter effective June 1, 2003. employed by respondent private Catholic institution
In response, the petitioner informed Sr. Quiambao that
which undeniably follows the precepts or norms of
she would not resign from her employment just
because she got pregnant without the benefit of conduct set forth by the Catholic Church. Accordingly,
marriage. the Manual of Regulations for Private Schools followed
by it must prevail over the Labor Code, a general
On May 28, 2003, Sr. Quiambao formally statute.
directed the petitioner to explain in writing why she
should not be dismissed for engaging in pre-marital The CA affirmed the decision of the NLRC, the
sexual relations and getting pregnant as a result CA further held that the petitioners dismissal was a
thereof, which amounts to serious misconduct and valid exercise of SSCWs management prerogative to
conduct unbecoming of an employee of a Catholic discipline and impose penalties on erring employees
school. pursuant toits policies, rules and regulations. The CA
upheld the NLRCs conclusion that the petitioners
pregnancy out of wedlock is considered as a
On June 4, 2003, the petitioner, through counsel, sent
Sr. Quiambao a letter, which, in part, reads: "disgraceful and immoral conduct" and, thus, a ground
for dismissal under Section 94(e) of the 1992 MRPS.
To us, pre-marital sex between two consenting adults The CA likewise opined that the petitioners pregnancy
without legal impediment to marry each other who out of wedlock is scandalous per segiven the work
later on married each other does not fall within the environment and social milieu that she was in.
Ruling of the Supreme Court: cause complications for both mother and child but it
does not give cause for administrative sanction. There
The SC reverse the ruling of the CA pointing is no law which penalizes an unmarried mother under
that the petitioners dismissal is not a valid exercise of those circumstances by reason of her sexual conduct
SSCWs management prerogative. or proscribes the consensual sexual activity between
two unmarried persons. Neither does the situation
The Court has held that "management is free
contravene any fundamental state policy as expressed
to regulate, according to its own discretion and
in the Constitution, a document that accommodates
judgment, all aspects of employment, including hiring,
various belief systems irrespective of dogmatic origins.
work assignments, working methods, time, place and
manner of work, processes to be followed, supervision (2) if the father of the child born out of
of workers, working regulations, transfer of employees, wedlock is himself married to a woman other thanthe
work supervision, lay off of workers and discipline, mother, then there is a cause for administrative
dismissal and recall of workers. The exercise of sanction against either the father or the mother. In
management prerogative, however, is not absolute as sucha case, the "disgraceful and immoral conduct"
it must beexercised in good faith and with due regard consists of having extramarital relations with a married
to the rights of labor." Management cannot exercise its person. The sanctity of marriage is constitutionally
prerogative in a cruel, repressive, or despotic recognized and likewise affirmed by our statutes as a
manner.53 special contract of permanent union. Accordingly,
judicial employees have been sanctioned for their
SSCW, as employer, undeniably has the right to
dalliances with married persons or for their own
discipline its employees and, if need be, dismiss themif
betrayals of the marital vow of fidelity.
there is a valid cause to do so. However, as already
explained, there is no cause to dismiss the petitioner. In this case, it was not disputed that, like
Her conduct is not considered by law as disgraceful or respondent, the father of her child was unmarried.
immoral. Further, the respondents themselves have Therefore, respondent cannot be held liable for
admitted that SSCW, at the time of the controversy, disgraceful and immoral conduct simply because she
does not have any policy or rule against an employee gave birth to the child Christian Jeon out of wedlock.
who engages in pre-marital sexual relations and
conceives a child as a result thereof. There being no CHRISTINE JOY CAPIN-CADIZ vs. BRENT
valid basis in law or even in SSCWs policy and rules, HOSPITAL AND COLLEGES, INC.
SSCWs dismissal of the petitioner is despotic and
FACTS:
arbitrary and, thus, not a valid exercise of
management prerogative. Christine Joy Cadiz was the Human Resource
Officer of respondent Brent Hospital and Colleges, Inc.
In sum, the Court finds that the petitioner was (Brent) at the time of her indefinite suspension from
illegally dismissed as there was no just cause for the employment in 2006. The cause of suspension was
termination of her employment. SSCW failed to adduce Cadiz's Unprofessionalism and Unethical Behavior
substantial evidence to establish that the petitioners Resulting to Unwed Pregnancy. It appears that Cadiz
conduct, i.e., engaging in pre-marital sexual relations became pregnant out of wedlock, and Brent imposed
and conceiving a child out of wedlock, assessed in light the suspension until such time that she marries her
boyfriend in accordance with law.
of the prevailing norms of conduct, is considered
disgraceful or immoral. The labor tribunals gravely Cadiz then filed with the Labor Arbiter (LA) a
abused their discretion in upholding the validity of the complaint for Unfair Labor Practice, Constructive
petitioners dismissal as the charge against the Dismissal, Non-Payment of Wages and Damages with
petitioner lay not on substantial evidence, but on the prayer for Reinstatement. The LA found that Cadiz's
bare allegations of SSCW. In turn, the CA committed indefinite suspension amounted to a constructive
reversible error in upholding the validity of the dismissal; nevertheless, the LA ruled that Cadiz was
not illegally dismissed as there was just cause for her
petitioners dismissal, failing torecognize that the labor
dismissal, that is, she engaged in premarital sexual
tribunals gravely abused their discretion in ruling for relations with her boyfriend resulting in a pregnancy
the respondents. out of wedlock. The LA deemed said act to be immoral,
which was punishable by dismissal under Brent's rules
Under these tests, two things may be and which likewise constituted serious misconduct
concluded from the fact that an unmarried woman under Article 282(a) of the Labor Code.
gives birth out of wedlock:(1) if the father of the child
is himself unmarried, the woman is not ordinarily Cadiz appealed to the National Labor Relations
Commission (NLRC), which affirmed the LA decision in
administratively liable for disgraceful and immoral
its Resolution dated December 10, 2007. Her motion
conduct.It may be a not-so-ideal situation and may for reconsideration having been denied by the NLRC.
 acts fell under such classification, thus constituting
She elevated the case to the Court of Appeals. immorality.
The CA, however, dismissed her petition outright due
to technical defects in the petition: (1) incomplete Jurisprudence has already set the standard of
statement of material dates; (2) failure to attach morality with which an act should be gauged - it is
registry receipts; and (3) failure to indicate the place public and secular, not religious. Whether a conduct is
of issue of counsel's PTR and IBP official receipts. Cadiz considered disgraceful or immoral should be made in
sought reconsideration but it was denied. (However, accordance with the prevailing norms of conduct,
when it comes to these technical defects, the Supreme which, as stated in Leus, refer to those conducts which
Court ruled that despite these defects, the Court finds are proscribed because they are detrimental to
that the ends of substantial justice would be better conditions upon which depend the existence and
served by relaxing the application of technical rules of progress of human society. The fact that a particular
procedure. These are mere tools to expedite the act does not conform to the traditional moral views of
decision or resolution of cases and if their strict and a certain sectarian institution is not sufficient reason to
rigid application would frustrate rather than promote qualify such act as immoral unless it, likewise, does
substantial justice, then it must be avoided). not conform to public and secular standards. More
importantly, there must be substantial evidence to
Hence, the present petition before the establish that premarital sexual relations and
Supreme Court. pregnancy out of wedlock is considered disgraceful or
immoral. The labor tribunals' respective conclusion that
ISSUES: Cadiz's "indiscretion" "scandalized the Brent
community" is speculative, at most, and there is no
1. Whether or not Christine Joy Cadiz premarital proof adduced by Brent to support such sweeping
relations with her boyfriend and the resulting conclusion.
pregnancy out of wedlock constitute
immorality, hence a valid ground for dismissal? Hence, "premarital sexual relations between
two consenting adults who have no impediment to
2. Whether or not the stipulation that marriage as marry each other, and, consequently, conceiving a
a condition for reinstatement is valid? child out of wedlock, gauged from a purely public and
RULING: secular view of morality, does not amount to a
1. disgraceful or immoral conduct under Section 94(e) of
No. To resolve this, the Court makes reference the 1992 MRPS." (Cheryll Santos Lens v. St.
to the recently promulgated case of Cheryll Santos Scholasticas College Westgrove and/or Sr. Edna
Leus v. St. Scholastica's College Westgrove and/or Sr. Quiambao, OSB).
Edna Quiambao, OSB. The Court ruled in Leus that the
determination of whether a conduct is disgraceful or 2.
immoral involves a two-step process: first, a No. The doctrine of management prerogative
consideration of the totality of the circumstances gives an employer the right to "regulate, according to
surrounding the conduct; and second, an assessment his own discretion and judgment, all aspects of
of the said circumstances vis-a-vis the prevailing employment, including hiring, work assignments,
norms of conduct, i.e., what the society generally working methods, the time, place and manner of work,
considers moral and respectable. work supervision, transfer of employees, lay-off of
workers, and discipline, dismissal, and recall of
In the present case, the surrounding facts employees."
leading to Cadiz's dismissal are straightforward - she
was employed as a human resources officer in an However, Statutory law is replete with
educational and medical institution of the Episcopal legislation protecting labor and promoting equal
Church of the Philippines; she and her boyfriend at opportunity in employment. No less than the 1987
that time were both single; they engaged in premarital Constitution mandates that the "State shall afford full
sexual relations, which resulted into pregnancy. The protection to labor, local and overseas, organized and
labor tribunals characterized these as constituting unorganized, and promote full employment and
disgraceful or immoral conduct. They also sweepingly equality of employment opportunities for all." The
concluded that as Human Resource Officer, Cadiz Labor Code of the Philippines, meanwhile, provides:
should have been the epitome of proper conduct and
her indiscretion "surely scandalized the Brent Art. 136. Stipulation against marriage.
community." It shall be unlawful for an employer to require
as a condition of employment or continuation
The foregoing circumstances, however, do not of employment that a woman employee shall
readily equate to disgraceful and immoral conduct. not get married, or to stipulate expressly or
Brents Policy Manual and Employees Manual of tacitly that upon getting married, a woman
Policies do not define what constitutes immorality; it employee shall be deemed resigned or
simply stated immorality as a ground for disciplinary separated, or to actually dismiss, discharge,
action. Instead, Brent erroneously relied on the discriminate or otherwise prejudice a woman
standard dictionary definition of fornication as a form employee merely by reason of her marriage.
of illicit relation and proceeded to conclude that Cadiz
 Also, Republic Act No. 9710 or the Magna will no longer pay the bonuses until the issue is
Carta of Women protects women against discrimination resolved through compulsory arbitration.
in all matters relating to marriage and family relations,
including the right to choose freely a spouse and to 4. Thus, on April 26, 2004, the union filed a Notice of
enter into marriage only with their free and full Strike on the ground of unfair labor practice for failure
consent.
of ETPI to pay the bonuses in gross violation of the
Therefore, Brent's condition is coercive, economic provision of the existing CBA.
oppressive and discriminatory. There is no rhyme or
reason for it. It forces Cadiz to marry for economic 5. On May 19, 2004, the Secretary of Labor and
reasons and deprives her of the freedom to choose her Employment, finding that the company is engaged in
status, which is a privilege that inheres in her as an an industry considered vital to the economy and any
intangible and inalienable right. While a marriage or work disruption thereat will adversely affect not only
no-marriage qualification may be justified as a "bona its operation but also that of the other business relying
fide occupational qualification," Brent must prove two
on its services, certified the labor dispute for
factors necessitating its imposition, viz:
compulsory arbitration. Acting on the certified labor
(1) that the employment qualification dispute, a hearing was called on July 16, 2004 wherein
is reasonably related to the the parties have submitted that the issues for
essential operation of the job resolution. Thereafter, they were directed to submit
involved; and their respective position papers and evidence in
(2) that there is a factual basis for support thereof after which submission, they agreed to
believing that all or substantially all
have the case considered submitted for decision.
persons meeting the qualification
would be unable to properly
6. On April 28, 2005, the NLRC issued its Resolution
perform the duties of the job.
dismissing ETEU's complaint and held that ETPI could
Brent Hospital and Colleges, Inc. has not not be forced to pay the union members the bonuses
shown the presence of these factors. Perforce, the for the year 2003 and the 14th month bonus for the
Court cannot uphold the validity of said condition. year 2004 inasmuch as the payment of these
additional benefits was basically a management
prerogative, being an act of generosity and
EASTERN TELECOM PHILIPPINES, INC. VS
munificence on the part of the company and
EASTERN TELECOM EMPLOYEES UNION
contingent upon the realization of profits.
Topic: GRANT OF BONUSES
7. The CA, however, declared that the Side
Facts Ganern:
Agreements of the 1998 and 2001 CBA created a
1. Eastern Telecom Philippines, Inc. (ETPI) planned to contractual obligation on ETPI to confer the subject
defer payment of the 2003 14th, 15th and 16th month bonuses to its employees without qualification or
bonuses sometime in April 2004 due to alleged condition. It also found that the grant of said bonuses
continuing deterioration of company's financial position has already ripened into a company practice and their
which started in the year 2000. However, ETPI said denial would amount to diminution of the employees'
that while postponing payment of bonuses sometime in benefits.
April 2004, such payment would also be subject to
Issue: Whether or not ETPI is liable to pay 14th, 15th
availability of funds.
and 16th month bonuses for the year 2003 and 14th
2. The union vehemently opposed the deferment in month bonus for the year 2004 to the members of
payment of the bonuses by filing a preventive respondent union.
mediation complaint with the NCMB on July 3, 2003, to
Stated otherwise: whether the subject bonuses are
determine the date when the bonus should be paid. In
demandable or not i.e. can these bonuses be
the NCMB conference, ETPI reiterated its stand that
considered part of the wage, salary or compensation
payment of the bonuses would only be made in April
making them enforceable obligations?
2004 to which date of payment, the union agreed.
Ruling: YES.
3. Subsequently, the company, thru a letter from Mr.
Sonny Javier, Vice-President for Human Resources and A bonus is a gratuity or act of liberality of the giver
Administration, made a sudden turnaround in its which the recipient cannot demand as a matter of
position by declaring that the deferred release of right. The grant of a bonus is basically a
bonuses had been superseded and voided due to the management prerogative which cannot be forced
unions filing of the issue to the NCMB and that they upon the employer who may not be obliged to
assume the onerous burden of granting bonuses.
However, a bonus becomes a demandable or The records show that ETPI, aside from
enforceable obligation if the additional complying with the regular 13th month bonus, has
compensation is granted without any conditions been further giving its employees 14th month bonus
imposed for its payment. In such case, the bonus every April as well as 15th and 16th month bonuses
is treated as part of the wage, salary or every December of the year, without fail, from 1975 to
compensation of the employee. 2002 or for 27 years whether it earned profits or not.
The considerable length of time ETPI has been giving
In the case at bench, it is indubitable that ETPI and the special grants to its employees indicates a
ETEU agreed on the inclusion of a provision for the unilateral and voluntary act on its part to continue
grant of 14th, 15th and 16th month bonuses in the giving said benefits knowing that such act was not
1998-2001 CBA Side Agreement, as well as in the required by law.
2001-2004 CBA Side Agreement, which was signed on
September 3, 2001. The rule is settled that any benefit and
supplement being enjoyed by the employees cannot be
Such statement in the CBA was never qualified. Thus, reduced, diminished, discontinued or eliminated by the
there is no room for interpreting it. Terse and clear, the employer. The principle of non-diminution of
said provision does not state that the subject bonuses benefits is founded on the constitutional mandate to
shall be made to depend on the ETPIs financial protect the rights of workers and to promote their
standing or that their payment was contingent upon welfare and to afford labor full protection.
the realization of profits. Neither does it state that if
the company derives no profits, no bonuses are to be CRISPIN B. LOPEZ vs. IRVINE CONSTRUCTION
given to the employees. In fine, the payment of these CORP and TOMAS SY SANTOS
bonuses was not related to the profitability of business
operations. FACTS:

Verily, by virtue of its incorporation in the CBA Irvine Construction Corp. (Irvine) is a construction firm
Side Agreements, the grant of 14th, 15th and who initially hired Lopez as laborer in November 1994
16th month bonuses has become more than just and, thereafter, designated him as a guard at its
an act of generosity on the part of ETPI but a warehouse in Dasmarinas, Cavite in the year 2000. On
contractual obligation it has undertaken. December 18, 2005, Lopez was purportedly terminated
Moreover, the continuous conferment of bonuses by from his employment, whereupon he was told "Ikaw ay
ETPI to the union members from 1998 to 2002 by lay-off muna." Thus, on January 10, 2006, he filed a
virtue of the Side Agreements evidently negates its complaint for illegal dismissal with prayer for the
argument that the giving of the subject bonuses is a payment of separation benefits against Irvine.
management prerogative. It is manifestly clear that
For its part, Irvine denied Lopez's claims, alleging that
although it incurred business losses of
he was employed only as a laborer who, however,
149,068,063.00 in the year 2000, it continued to
sometimes doubled as a guard. As laborer, Lopez's
distribute 14th, 15th and 16th month bonuses for said
duty was to bring construction materials from the
year.
suppliers' vehicles to the company warehouse when
The Court finds that its act of granting the same has there is a construction project in Cavite. As evidenced
become an established company practice such that it by an Establishment Termination Report which Irvine
has virtually become part of the employees salary or previously submitted before the Department of Labor
wage. A bonus may be granted on equitable and Employment (DOLE), Lopez was, however,
consideration when the giving of such bonus has been temporarily laid-off on December 27, 2005 after the
the companys long and regular practice. In Philippine Cavite project was finished. Eventually, Lopez was
Appliance Corporation v. Court of Appeals, it was asked to return to work through a letter (return to
pronounced: work order), allegedly sent to him within the six (6)
month period under Article 286 of the Labor Code. As
To be considered a regular practice, such, Irvine argued that Lopez's filing of the complaint
however, the giving of the bonus should have for illegal dismissal was premature.
been done over a long period of time, and must
be shown to have been consistent and deliberate. ISSUES:
The test or rationale of this rule on long practice
1. What makes an employee a project or regular
requires an indubitable showing that the
employee?
employer agreed to continue giving the benefits
2. Whether the temporary lay-off of Crispin Lopez
knowing fully well that said employees are not
is valid.
covered by the law requiring payment thereof.
HELD: compliance, the resulting legal conclusion is
that Lopez had been constructively dismissed
1. Case law states that the principal test for
determining whether particular employees are
properly characterized as "project employees" TOPIC: Management prerogative in relation to
as distinguished from "regular employees," is termination based on redundancy
whether or not the "project employees" were
EUGENE S. ARABIT et. al. vs. JARDINE PACIFIC
assigned to carry out a "specific project or FINANCE, INC.
undertaking," the duration and scope of which G.R. No. 181719 April 21, 2014
were specified at the time the employees were
engaged for that project. The project could FACTS:
either be (1) a particular job or undertaking Petitioners were former regular employees of
that is within the regular or usual business of respondent Jardine Pacific Finance, Inc. (Jardine) and
were also officers and members of MB Finance
the employer company, but which is distinct
Employees Association-FFW Chapter (the Union), a
and separate, and identifiable as such, from legitimate labor union and the sole exclusive
the other undertakings of the company; or (2) bargaining agent of the employees of Jardine.
a particular job or undertaking that is not On the claim of financial losses, Jardine
within the regular business of the corporation. decided to reorganize and implement a redundancy
In order to safeguard the rights of workers program among its employees. The petitioners were
against the arbitrary use of the word "project" among those affected by the redundancy program.
Jardine thereafter hired contractual employees to
to prevent employees from attaining the status
undertake the functions these employees used to
of regular employees, employers claiming that perform.
their workers are project employees should not The Union filed a notice of strike with the
only prove that the duration and scope of the National Conciliation and Mediation Board (NCMB),
employment was specified at the time they questioning the termination of employment of the
were engaged, but also that there was indeed petitioners alleging unfair labor practice on the part of
a project. Jardine, as well as discrimination in the dismissal of its
In this case, there was no substantial evidence officers and members.
Negotiations ensued between the Union and
presented by Irvine to show that Lopez had
Jardine under the auspices of the NCMB, and both
been assigned to carry out a "specific project parties eventually reached an amicable settlement. On
or undertaking," with its duration and scope June 1, 1999, the petitioners and the Union filed a
specified at the time of engagement. In view of complaint against Jardine with the NLRC for illegal
the weight accorded by the courts to factual dismissal and unfair labor practice.
findings of labor tribunals such as the NLRC,
the Court, absent any cogent reason to hold ISSUE:
Whether or not the termination of the
otherwise, concurs with its ruling that Lopez
employees based on redundancy was a valid exercise
was not a project but a regular employee. This of management prerogative?
conclusion is bolstered by the undisputed fact
that Lopez had been employed by Irvine since HELD:
November 1994, which is more than 10 years NO. Redundancy exists where the services of
from the time he was laid off on December 27, an employee are in excess of what is reasonably
demanded by the actual requirements of the
2005.
enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions
2. In this case as no evidence was submitted by
may be the outcome of a number of factors, such as
Irvine to show any dire exigency which
over hiring of workers, decreased volume of business,
rendered it incapable of assigning Lopez to any or dropping of a particular product line or service
of its projects. Add to this the fact that Irvine activity previously manufactured or undertaken by the
did not proffer any sufficient justification for enterprise.
singling out Lopez for lay-off among its other Retrenchment, on the other hand, is the
three hundred employees, thereby casting a termination of employment initiated by the employer
through no fault of the employees and without
cloud of doubt on Irvine's good faith in
prejudice to the latter, resorted to by management
pursuing this course of action. Verily, Irvine
during periods of business recession, industrial
cannot conveniently suspend the work of any depression, or seasonal fluctuations, or during lulls
of its employees in the guise of a temporary occasioned by lack of orders, shortage of materials,
lay-off when it has not shown compliance with conversion of the plant for a new production program
the legal parameters under Article 286 of the or the introduction of new methods or more efficient
Labor Code. With Irvine failing to prove such machinery, or of automation.
 From this, it is illogical for Jardine to terminate did not materialized. Mapua saw the new table of
the petitioners employment and replace them with organization which showed that Mapua was
contractual employees. The replacement effectively downgraded because a new manager would be hired
belies Jardines claim that the petitioners positions between her position and Rainas
were abolished due to superfluity. Redundancy could On March 21, 20017, Raina informed Mapua
have been justified if the functions of the petitioners over the phone that her position was considered
were transferred to other existing employees of the redundant and that she is terminated from
company. To dismiss the petitioners and hire new employment effective immediately. Villanueva
contractual employees as replacements necessarily notified Mapua that she should cease reporting for
give rise to the sound conclusion that the petitioners work the next day. Her laptop computer and company
services have not really become in excess of what mobile phone were taken right away and her office
Jardines business requires. To replace the petitioners phone ceased to function. This prompted Mapua to call
who were all regular employees with contractual ones her lawyer (which told SPI that it violated the 30-day
would amount to a violation of their right to security of notice) and file a complaint for illegal dismissal.
tenure. Afterwards, she was given a second termination letter
in a meeting with SPI. A third termination letter was
Management has the prerogative to received by her through mail which changed the
characterize an employees services as no longer termination date to April 21, 2007 with a notation
necessary or sustainable, and therefore properly inscribed, "refused to sign and acknowledge" with
terminable. The exercise of management prerogative, unintelligible signatures of witnesses.
however, is subject to the limitation that it should not A recruitment advertisement of SPI was
performed in violation of any law and that it is not published to the Inquirer including the previous
tainted by any arbitrary or malicious motive on the position of Mapua. SPI demanded Mapua to pay the
part of the employer. remaining car value of her car due to the SPIs car plan
policy.
The employer must use fair and reasonable Mapua alleges that Prime Manpower advertised
criteria in the selection of employees who will be on Jobstreet for SPIs Corporate Development Manager.
dismissed from employment due to redundancy such Mapua even applied under the alias Jeanne Tesoro to
as but are not limited to: (a) less preferred status (e.g. confirm it and affirmed by Prime Manpowers
temporary employee); (b) efficiency; and (c) seniority. consultant Dimatulac. Hence, she was convinced that
The presence of these criteria used by the employer her position is not redundant. Because of this, she
shows good faith on its part and is evidence that the incurred medical expenses and psychiatric counseling
implementation of redundancy was painstakingly done due to being jobless.
by the employer in order to properly justify the While SPI alleges that the termination was
termination from the service of its employees. valid because it underwent reorganization of its
structure with the objective of streamlining its
For the implementation of a redundancy operation. Also, on March 21, 2007, Mapua refused to
program to be valid, the employer must comply with receive the notice thus the notation was made and it
the following requisites: (1) written notice served on made report to DOLE of Mapuas termination. It denied
both the employees and the Department of Labor and Dimatulacs revelation as it is hearsay because she did
Employment at least one month prior to the intended not execute and affidavit but it affirmed the Inquirer
date of retrenchment; (2) payment of separation pay advertisement.
equivalent to at least one month pay or at least one
month pay for every year of service, whichever is Labor Arbiter: termination is illegal because of want
higher; (3) good faith in abolishing the redundant of factual basis. Award P2.9M and car assigned to her.
positions; and (4) fair and reasonable criteria in NLRC: reverse LAs decision. The determination of
ascertaining what positions are to be declared whether a position is redundant does not lie to Mapua.
redundant and accordingly abolished. It lies within the sound business management.
CA: initially dismissed Mapuas petition due to
SPI Technologies v. Victoria Mapua technicalities but upon MR, CA granted.
G.R. No. 191154 April 7, 2014
Issue:
Facts: Whether or not Mapua was validly dismissed on the
Mapua was hired as Corporate Developments ground of redundancy
Research/Business Intelligence Unit Head and Manager.
Elizabeth Nolan was hired, by Vice Pres. Maqueram, as Ruling:
Mapuas supervisor. No. Requisites for valid implementation of
One day, the hard drive of Mapuas laptop redundancy:
crashed, causing her to lose files and data. Such lost 1. Written notice served on both the
caused her failure to meet a deadline. Hence, she was employee and the DOLE at least one
realigned to be a subordinate of co-manager Raina. month prior to the intended date of
She noticed that she was avoided because Nolan and termination;
Raina gave majority of her duties to the rank-and-file Not Complied. The 2 termination letters
staff. She asked the Human Resource Director provided that the termination was effective
Villanueva for transfer of department within SPI but it immediately (March 21, 2007). After realizing it, it
 was only upon the third termination where the
effectivity was changed to April 21, 2007. Facts:
2. Payment of separation pay equivalent to -STI is an educational institution duly incorporated and
at least one month pay or at least one organize and existing under the Philippine laws, while
month pay for every year of service, Jacob and Fernandez are officers of STI the former
whichever is higher; being the President and Chief Executive Officer (CEO)
Complied. SPI offered Mapua separation pay. and the latter Senior Vice-President.
3. Good faith in abolishing the redundant
position; and -Girly G. Ico on one hand degree holder with doctorate
Not complied. It is insignificant that the units earned was hired as Faculty Member by STI
amount offered to Mapua is higher than what the College Makati a wholly-owned subsidiary of STI. She
law requires because the Court has previously was later promoted as Dean and later COO of STI-
noted that a job is more than the salary that it Makati.
carries. There is a psychological effect or a stigma
in immediately finding ones self laid off from work. -Sometime in July 2003 during the stint of Ico as COO
4. Fair and reasonable criteria in of STI-Makati a plan of merger was executed between
ascertaining what positions are to be STI and STI-Makati, whereby the latter will be
declared redundant. absorbed to STI, which was later approved by SEC. As
Not complied. The companys memorandum a result STI College Makati ceased to exist, and STI-
did not mention that the position of the Corporate Makati was placed under STIs Education Management
Development Manager or any other position would Division.
be abolished or deemed redundant. The Court held
that the presentation of the new table of the -In a 2004 Memorandum. Petitioner was re-appointed
organization and the certification of the Human as COO of STI-Makati, and reporting directly to the
Resources Supervisor that the positions occupied Head thereof, herein respondent Fernandez.
by the retrenched employees are redundant are
inadequate as evidence to support the colleges -2 months after, another memorandum from STI HR
redundancy program. It is grossly inadequate and Department was issued wherein the COO position of
self-serving. More compelling evidence would have the petitioner was to be abolished, and Ico was
been a comparison of the old and new staffing appointed as Compliance Manager According to STI,
patterns, a description of the abolished and newly the "organizational re-structuring" was undertaken "in
created positions, and proof of the set business order to streamline operations. In the process, the
targets and failure to attain the same which positions of Chief Executive Officer and Chief Operating
necessitated the reorganization or streamlining. Officer of STI Makati were abolished.
Regarding Prime Manpowers recruitment
advertisement, failure of Mapua to present a sworn -Thereafter, Fernandez summons Ico accusing her of
statement of Dimatulac renders the formers disobedience. An investigation then was made and she
statements hearsay. Yet, SPI admitted that it was place under Preventive Suspension. Afterwards the
caused the Inquirer advertisement for a Marketing investigating committee found out that Ico committed
Communications Manager position. grave abuse of authority, falsification, gross
The primordial consideration is not the dishonesty, maligning and causing intrigues,
nomenclature or title given to the employee, commission of acts tending to cast negativity upon
but the nature of his functions. It is not the Fernandez person , and other charges, which resulted
job title but the actual work that the to her dismissal.
employee performs. Also, change in the job -Petitioner then file a case for Constructive illegal
title is not synonymous to a change in the dismissal to Labor Arbiter She contends that her
functions. A position cannot be abolished by a transfer was illegal for it constituted a demotion
mere change of job title. because there was no prior notice of her transfer,
which places her in an embarrassing situation.
Vehicle under the car plan is not within the Secondly, the basis of her dismissal is without basis
jurisdiction of LA but with the regular courts. Moral and that it was not proven by adequate evidence.
damages and exemplary damages were awarded
the employee had been harassed and arbitrarily -On one hand respondent contend that the transfer of
terminated by the employer. Moral damages may position is a result of the merger which requires the
be awarded to compensate one for diverse injuries abolition of Icos position as COO in order to streamline
such as mental anguish, besmirched reputation, its operation thus they are in good faith. It further
wounded feelings, and social humiliation argued that there was no demotion because the
occasioned by the employers unreasonable position of COO and compliance manager is of the
dismissal of the employee. Attorneys fees were same rank.
also awarded.
-LABOR ARBITER: ruled that there was an illegally
GIRLY G. ICO, Petitioner, constructively and in bad faith dismissal by
vs. respondents in Petioles legally acquired status as
SYSTEMS TECHNOLOGY INSTITUTE regular employee. It held that petitioners transfer
July 9, 2014 which STI claimed was the result of STIs restructuring
was irregular, because at the time of such transfer, the appear as if it were not, constructive dismissal may,
reorganization and restructuring of STI-Makati had likewise, exist if an act of clear discrimination,
already been affected, and the 2004 Memorandum that insensibility, or disdain by an employer becomes so
was issued confirms petitioners appointment as COO. unbearable on the part of the employee that it could
Moreover, petitioner was appointed to the position of foreclose any choice by him except to forego his
Compliance Manager which did not actually exist for continued employment.
under STI Corporate structure there are only two
compliance manager which are already occupied. As a In cases of a transfer of an employee, the rule
result Ico was appointed to Compliance officer who in is settled that the employer is charged with the burden
effect demoted her rank. of proving that its conduct and action are for valid and
-NLRC: reversed Labor Arbiter Decision. It held that legitimate grounds such as genuine business necessity
that any action taken by STI after the merger can be and that the transfer is not unreasonable, inconvenient
reasonably concluded as one of the valid consequences or prejudicial to the employee. If the employer cannot
thereof for the regulation of manpower is a overcome this burden of proof, the employees transfer
management prerogative enjoyed by STI, and it was shall be tantamount to unlawful constructive
free to regulate according to its own discretion and dismissal.59
judgment all aspects of petitioners employment. In
this light, and since no concrete evidence was
Thus, because STI failed to show that the
presented by petitioner to show that respondents
transfer is unreasonable and it likewise failed to prove
acted with malice or bad faith, the NLRC held that it
that the transfer of petitioner for valid and legitimate
may not be said that the abolition of the position of
grounds, the transfer of petitioner can therefore be
STI-Makati COO was done to unduly ease her out of
concluded as constructive dismissal and that it is not
STI.
valid managerial prerogative.
-CA; Upheld decision of NLRC

Issue: Whether or not the transfer of petitioner is a G.J.T. REBUILDERS MACHINE SHOP vs. RICARDO
valid managerial prerogative and not it does not result AMBOS et al
to a illegal constructive dismissal
Topic: Closure of Business; Payment of Separation Pay;
Held:
Case Doctrine: To prove serious business losses,
employers must present in evidence financial
The Supreme Court ruled in favor of the Petitioner due
statements showing the net losses suffered by
to the following reasons:
the business within a sufficient period of time.
Generally, it cannot be based on a single financial
First the position of STI-Makati COO was statement showing losses. Absent this proof,
actually never abolished. As a matter of fact, soon employers closing their businesses must pay the
after petitioner was removed from the position, dismissed employees separation pay equivalent
Fernandez was appointed to take her place as STI- to one-month pay or to at least one-half-month
Makati COO; his appointment was even publicly pay for every year of service, whichever is
announced via an official communication disseminated higher.
company-wide. Whatever the reason could be for
Fernandezs appointment as STI-Makati COO, the fact Facts:
still remains that such position continued to exist.
1. Petitioner G.J.T. Rebuilders is a single
Second, petitioners appointment as proprietorship owned by Spouses Trillana and
Compliance Manager appears to be contrived as well. engaged in steel works and metal fabrication
At the time of petitioners appointment, there are only employing respondents Ricardo Ambos, Russell
two Compliance Manager Positions within STIs Ambos and Benjamin Putian;
compliance department which were already filled up 2. Petitioner rented a space in Far East Asia Building
The only positions within the department that were at which served as the site of its machine shop,
the time vacant were those of Compliance Officers, however in 1996 , a fire partially destroyed the
which are of lower rank. In other words, petitioner building so the owner thereof notified their
could not have been validly appointed as Compliance tenants, including Petitioner to vacate their units
Manager, a position within STI that was then very by the end of September to avoid any unforeseen
much occupied; if ever, petitioner took the position of a accidents;
mere Compliance Officer, the only vacant position 3. Petitioner refused that it continued its business
within the department. until 1997 but the owner of the building later on
refused to accommodate them so petitioner left the
Constructive dismissal exists where there is rented space and closed the machine shop. It then
cessation of work because continued employment is filed an Affidavit of Closure before the DOLE and a
rendered impossible, unreasonable or unlikely, as an sworn application to retire its business operations
offer involving a demotion in rank or a diminution in before the Mandaluyong City Treasurers Office;
pay and other benefits. Aptly called a dismissal in 4. Respondents then later on filed a complaint against
disguise or an act amounting to dismissal but made to Petitioner for the payment of their allowance,
 Separation Pay and Attorneys fees. Petitioner on Moreover, the Court held that petitioner is liable to pay
the other hand countered that it is not liable for nominal damages to the respondents for its failure to
the payment of the respondents money claim comply with the procedural requirements for closing its
because it suffered serious business losses and business, the court held that notice of the eventual
financial reverses forcing it to close its machine closure of establishment is a personal right of the
shop. employee to be personally informed of his or her
5. The Labor Arbiter ruled that Petitioner is liable proposed dismissal as well as the reasons therefore.
because G.J.T. Rebuilders failed to show convincing The reason for the said requirement is to give the
proof that it suffered serious business losses, and employee some time to prepare for the eventual loss
even if it suffered such losses, respondents are of his or her job, and failure of the employer to comply
entitled to Separation Pay based on Social Justice with said requirement would make the employer liable
and Equity; for nominal damages, as in this case.
6. NLRC on appeal ruled that petitioner suffered
business losses because of the fire in 1996 which is RODOLFO LABORTE vs. PAGSANJAN TOURISM
the proximate cause of the business loss of CONSUMERS COOPERATIVE PELAGIO et al
petitioner such that in the 1997 financial statement
of G.J.T, it was shown that it suffered a net loss of FACTS:
P316, 210.00, as a result the NLRC ruled that 1. Petitioner Philippine Tourism Authority (PTA) is
petitioner is not liable to pay separation pay of a government-owned and controlled corporation
respondents; that administers tourism zones.
7. The Court of Appeals upon appeal reversed the 2. Respondent Pagsanjan Tourism Consumers
decision of NLRC and affirmed the decision of the Cooperative (PTCC) is a cooperative organized
labor Arbiter that Petitioner failed to prove its since 1988 under Republic Act No. 6938, or the
alleged serious business losses. Moreover, the CA "Cooperative Code of the Philippines." The other
refused to admit the financial statement of individual respondents are PTCC employees,
petitioner on the ground that it was not subscribed consisting of restaurant staff and boatmen at the
under oath by the Certified Public Accountant who PTA Complex.
prepared the same. 3. In 1989, in order to help the PTCC as a
cooperative, the PTA allowed it to operate a
Issue: restaurant business located at the main building of
the PTA Complex and the boat ride services to
Whether or not Petitioner sufficiently proved that it ferry guests and tourists to and from the
suffered business losses, and whether or not petitioner Pagsanjan Falls, paying a certain percentage of its
is not liable to pay separation pay of respondents. earnings to the PTA.
4. In 1993, the PTA implemented reorganization
Held: and reshuffling in its top level management.
Herein petitioner Rodolfo Laborte (Laborte) was
The Supreme Court ruled in the negative. It explained designated as Area Manager. 5. On October 22,
that while the closure of business is a management 1993, Laborte served a written notice upon the
prerogative that courts cannot interfere with, respondents to cease the operations of the latters
employers must sufficiently prove that it really suffered restaurant business and boat ride services in view
serious business losses to justify the closure of the of the rehabilitation, face lifting and upgrading
business and for it to be excused from the payment of project of the PTA Complex.
separation pay of its employees. 6. Consequently, on November 9, 1993, the PTCC
filed with the RTC, Branch 28, Santa Cruz,
It is explained that the burden of proving serious Laguna a Complaint for Prohibition, Injunction and
business losses is with the employer. It must show Damages with Temporary Restraining Order (TRO)
losses on the basis of financial statements covering a and Preliminary Injunction7 against Laborte,
sufficient period of time. In the case, the financial docketed as Civil Case No. 3150.
statement provided by the petitioner covering the 7. The PTCC also sought from the court the
period of 1996 to 1997 showed that petitioner earned award of moral and exemplary damages,
a net income of 61,157.00 in 1996 and incurred a net attorneys fees and costs of suit. It also prayed for
loss of 316,210.00 in 1997. On the basis thereof the the issuance of a TRO or writ of preliminary
Court stated that the two year period covered by the injunction to prohibit Laborte from causing the
financial statement is insufficient for the petitioner to PTCC to cease the operations of the restaurant
have objectively perceived that the business would not and boat ride services and from evicting the PTCCs
recover from the loss, hence as a conclusion petitioner restaurant from the main building of the PTA Complex.
only closed its business not for serious business losses 8. The trial court issued the TRO prayed for,
but only to prevent losses. prohibiting Laborte from (a) causing the PTCC to
cease operations; (b) doing the threatened act of
Considering that the Court found that petitioner failed closing the operation of the PTCCs restaurant and
to prove that it really suffered serious business losses, other activities; (c) evicting the PTCCs restaurant
it is therefore liable to pay the separation pay of the from the main building of the PTA Complex; and
respondents. (d) demolishing the said building. In the same
Order, the trial court set the hearing on the Writ strategy; and (4) the action had become moot
of Preliminary Injunction on November 25, 1993. and academic in view of the actual closure of the
9. Laborte averred that the PTCC does not own PTCCs restaurant and boat service businesses.
the restaurant facility as it was only tolerated to 15. On May 29, 2002, the RTC rendered a
operate the same by the PTA as a matter of decision in favour of plaintiffs. 16. On appeal the
lending support and assistance to the cooperative CA promulgated its Decision, affirming the RTC
in its formative years. It has neither been granted Decision dated May 29, 2002.
any franchise nor concession to operate the
restaurant nor any exclusive franchise to handle ISSUE: Whether the closure of PTCC's restaurant
the boating operations in the complex. Since the and boat ride business was a valid and lawful
PTCC had no contract, concession, or exclusive exercise of PTA's management prerogative?
franchise to operate the restaurant business and
the boating services in the PTA Complex, no RULING:
existing right has been allegedly violated by the YES. The PTA is a government owned and
petitioners. The respondents, therefore, had no controlled corporation which was mandated to
right for the injunctive relief prayed for. administer tourism zones. Based on this mandate,
10. On December 7, 1993, the PTCC filed with it was the PTAs obligation to adopt a
the trial court a Petition for Contempt with Motion comprehensive program and project to rehabilitate
for Early Resolution. It alleged that Laborte and and upgrade the facilities of the PTA Complex as
his lawyers defied the TRO and proceeded to shown in Annexes "H-2" to "H-4" of the petition.
close the restaurant on December 2, 1993. The The Court finds that there was indeed a
PTCC also alleged that Laborte prohibited its own renovation of the Pagsanjan Administration
boatmen from ferrying tourists and allowed another Complex which was sanctioned by the PTA main
association of boatmen to operate. office; and such renovation was done in good faith
11. On December 13, 1993, Laborte filed his in performance of its mandated duties as tourism
Answer with Counter-Claim. It denied the PTCCs administrator. In the exercise of its management
allegations of harassment, threat and retaliation. prerogative to determine what is best for the said
He claimed (a) that his actions were upon the agency, the PTA had the right to terminate at
mandate of his superiors and the PTAs any moment the PTCCs operations of the
rehabilitation programs in the area;13 (b) that the restaurant and the boat ride services since the
PTA only tolerated the PTCCs operations;14 and PTCC has no contract, concession or franchise
(c) that the issuance of a permanent injunction from the PTA to operate the above-mentioned
will violate the PTAs constitutional freedom to businesses.
operate a legitimate business enterprise and the As shown by the records, the operation of
legal requirement of a publicbidding for the the restaurant and the boat ride services was
operation of revenue-generating projects of merely tolerated, in order to extend financial
government entities involving private third parties assistance to its PTA employee-members who are
12. On March 14, 1994, the individual members of the then fledging PTCC. Except for
respondents, Fabricio et al., who are employees receipts for rents paid by the PTCC to the PTA,
and boatmen of the PTCC, filed a Complaint-in- the respondents failed to show any contract,
Intervention against Laborte as they were concession agreement or franchise to operate the
rendered jobless and were deprived of their restaurant and boat ride services.
livelihood because Laborte failed to heed the trial In fact, the PTCC initially did not implead
courts TRO. Thus, they prayed that the trial court the PTA in its Complaint since it was well aware
order Laborte to pay their unearned salaries, that there was no contract executed between the
among others. PTCC and the PTA. While the PTCC has been
13. On April 4, 1994, the PTCC filed an operating the restaurant and boat ride services for
Amended Complaint to include petitioner PTA as almost ten (10) years until its closure, the same
defendant and the additional prayer for payment of was by mere tolerance of the PTA.67 In the
Thirty Thousand Pesos (P30,000.00) a month, consolidated case of Phil. Ports Authority v. Pier 8
representing the PTCCs unrealized profits from Arrastre & Stevedoring Services, Inc.,68 the Court
November 1993 up to the actual resumption of upheld the authority of government agencies to
its restaurant and boat ride businesses. terminate at any time hold-over permits.69 Thus,
14. PTA filed its Answer with Counterclaim, considering that the PTCCs operation of the
alleging, among others, that (1) the PTCC has no restaurant and the boat ride services was by
cause of action against it since the PTA owned mere tolerance, the PTA can, at any time,
the restaurant and the boat ride facilities within terminate such operation.
the Complex and that it never formally entered The CA ruled that "the closure of the
into a contract with the PTCC to operate the restaurant and boat ride business within the PTA
same; (2) the PTA did not violate the trial courts Complex was tainted with bad faith on the part of
TRO and Writ of Preliminary Injunction since the [the] defendants-appellants."70 It referred to the
PTA was not yet impleaded as defendant at that Sheriffs Report dated January 19, 1994, which
time; (3) the physical rehabilitation of the PTA stated that no such repairs and rehabilitation were
Complex, including the restaurant and boat actually undertaken. Further, the petitioners
facilities therein, was part of its new marketing engaged the services of a new restaurant operator
(the New Selecta Restaurant) after the closure of consequences of his acts, if acted for and in
therestaurant per official receipts showing that the behalf of the corporation, within the scope of his
new operator of the restaurant paid PTA authority and in good faith.73 Furthermore, the
commissions for its catering services from March Court also notes that the charges against
1994 to April 1994. petitioners Laborte and the PTA for grave coercion
The Court disagrees. The records disclose and for the violation of R.A. 671374 have all been
that sufficient notice was given by the PTA for dismissed.75 Thus, the Court finds no basis to
the respondents to vacate the area. The Sheriffs hold petitioner Laborte liable. Likewise, the award
Report dated January 19, 1994, alleging that of damages to the respondents and respondents-
there were, in fact, no repairs and rehabilitation intervenors is without basis. Absent a contract
undertaken in the area at the time of inspection between the PTCC and the PTA, and considering
cannot be given weight. It must be noted that further that the respondents were adequately
the RTC had issued on November 11, 1993 a TRO notified to properly vacate the PTA Complex, the
enjoining the petitioners from pursuing its actions. Court finds no justifiable reason to award any
Thus, the absence of any business activity in the damages. Neither may the respondents-intervenors
premises is even proof of the petitioners claim damages since the act directed against the
compliance to the order of the trial court. PTCC was a lawful exercise of the PTA's
Furthermore, the Sheriffs Report was executed management prerogative. While it is true that the
only about a month after the announced exercise of management prerogative is a
construction or development; thus, it cannot be recognized right of a corporate entity, it cannot
expected that the petitioners would immediately be gainsaid that the exercise of such right must
go full-blast in the implementation of the repair be tempered with justice, honesty, good faith76
and renovation. and a careful regard of other party's rights. In the
As to the alleged engagement of the instant case, there is ample evidence to show that
services of a new restaurant operator, the Court the petitioners were able to observe the same.
agrees with the petitioners that the engagement of
New Selecta Restaurant was temporary and due
only to the requests of the guests who needed
catering services for the duration of their stay.
The evidence offered by the respondents which
were receipts issued to New Selecta Restaurant on
different dates even emphasize this point.72 From
the foregoing, the Court concludes that the
engagement of New Selecta Restaurant is not
continuous but on contingency basis only. With
respect to Laborte's liability in his official and
personal capacity, the Court finds that Laborte
was simply implementing the lawful order of the
PTA Management. As a general rule the officer
cannot be held personally liable with the
corporation, whether civilly or otherwise, for the