LABOR LAW REVIEW

CASE DOCTRINES FOR LABOR STANDARDS

2019 SYLLABUS

RA 8042

1. PEOPLE OF THE PHILIPPINES vs. MELISSA CHUA a.k.a. Clarita Ng Chua

G.R. No. 187052, September 13, 2012

Illegal Recruitment. The following elements of illegal recruitment must concur: (1) the offender
undertakes any of the activities within the meaning of "recruitment and placement" under Article
13(b) of LC, or any of the prohibited practices enumerated under Art. 34 of the LC (now Sec. 6 of
RA 8042) and (2) the offender has no valid license or authority required by law to enable him to
lawfully engage in recruitment and placement of workers. In the case of illegal recruitment in large
scale, a third element is added: that the offender commits any of the acts of recruitment and
placement against three or more persons, individually or as a group. Chua engaged in recruitment
when she represented to complainants that she could send them to Taiwan as factory workers
upon submission of the required documents and payment of the placement fee. The four
complainants positively identified her as the person who promised them employment as factory
workers in Taiwan for a fee of ₱ 80k. POEA presented a Certification to the effect that Chua is not
licensed by the POEA to recruit workers for overseas employment. Appellant cannot escape
liability by conveniently limiting her participation as a cashier of Golden Gate. The provisions of
Article 13(b) of the Labor Code and Section 6 of RA 8042 are unequivocal that illegal recruitment
may or may not be for profit. It is immaterial whether appellant remitted the placement fees to "the
agency’s treasurer" or appropriated them. The same provision likewise provides that the persons
criminally liable for illegal recruitment are the principals, accomplices and accessories. Just the
same, therefore, appellant can be held liable as a principal by direct participation since she
personally undertook the recruitment of private complainants without a license or authority to do
so. Worth stressing, the RA 8042 is a special law, a violation of which is malum prohibitum, not
mala in se. Intent is immaterial and mere commission of the prohibited act is punishable.

Estafa. A person may be charged and convicted for both illegal recruitment and estafa. The
reason is not hard to discern: illegal recruitment is malum prohibitum, while estafa is mala in se.
In the first, the criminal intent of the accused is not necessary for conviction. In the second, such
intent is imperative. Estafa under Article 315, paragraph 2(a) of the RPC is committed by any
person who defrauds another by using fictitious name, or falsely pretends to possess power,
influence, qualifications, property, credit, agency, business or imaginary transactions, or by means
of similar deceits executed prior to or simultaneously with the commission of fraud. The elements
of estafa by means of deceit are the following: (a) that there must be a false pretense or fraudulent
representation as to his power, influence, qualifications, property, credit, agency, business or
imaginary transactions; (b) that such false pretense or fraudulent representation was made or
executed prior to or simultaneously with the commission of the fraud; (c) that the offended party
relied on the false pretense, fraudulent act, or fraudulent means and was induced to part with his
money or property; and (d) that, as a result thereof, the offended party suffered damage. In this
case, the prosecution has established that appellant defrauded the complaining witnesses by
leading them to believe that she has the capacity to send them to Taiwan for work, even as she
does not have a license or authority for the purpose. Such misrepresentation came before private
complainants delivered ₱ 80k as placement fee to appellant. Private complainants would not have
parted with their money were it not for such enticement by appellant. As a consequence of

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appellant’s false pretenses, the private complainants suffered damages as the promised
employment abroad never materialized and the money they paid were never recovered.

2. PEOPLE vs. RODOLFO GALLO y GADOT

G.R. No. 187730, June 29, 2010

Active involvement of a non-employee in illegal recruitment. The evidence readily reveals

that MPM Agency was never licensed by the POEA to recruit workers for overseas employment.
Even with a license, however, illegal recruitment could still be committed under Section 6 of RA
8042, as in this case. In consideration of a promise of foreign employment, accused-appellant
received the amount of Php 45k from Dela Caza. When accused-appellant made
misrepresentations concerning the agency’s purported power and authority to recruit for overseas
employment, and in the process, collected money in the guise of placement fees, the former
clearly committed acts constitutive of illegal recruitment. Essentially, Dela Caza appeared very
firm and consistent in positively identifying accused-appellant as one of those who induced him
and the other applicants to part with their money. He personally talked to accused-appellant and
gave him the money and saw him sign and issue an official receipt as proof of his payment. Without
a doubt, accused-appellants’ actions constituted illegal recruitment, even if he alleged that he was
not ‘employed’. Accused-appellant, together with Mardeolyn and the rest of the officers and
employees of MPM Agency participated in a network of deception. Verily, the active involvement
of each in the recruitment scam was directed at one single purpose – to divest complainants with
their money on the pretext of guaranteed employment abroad. The prosecution evidence shows
that complainants were briefed by Mardeolyn about the processing of their papers for a possible
job opportunity in Korea, as well as their possible salary. Likewise, Yeo Sin Ung gave a briefing
about the business and what to expect from the company. Then, here comes accused-appellant
who introduced himself as Mardeolyn’s relative and specifically told Dela Caza of the fact that the
agency was able to send many workers abroad. Dela Caza was even showed several workers
visas who were already allegedly deployed abroad. Later on, accused-appellant signed and
issued an official receipt acknowledging the down payment of Dela Caza. Without a doubt, the
nature and extent of the actions of accused-appellant, as well as with the other persons in MPM
Agency clearly show unity of action towards a common undertaking. Hence, conspiracy is
evidently present. Likewise, paragraph 2(a), Article 315 of the RPC is thus applicable.

3. CLAUDIO S. YAP vs. THENAMARIS SHIP'S MANAGEMENT

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

Serrano v. Gallant Maritime. This court previously declared as unconstitutional the clause "or for
three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph
of Section 10 of RA 8042. The subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in
their contracts, but none on the claims of other OFWs or local workers with fixed-term employment.
The subject clause singles out one classification of OFWs and burdens it with a peculiar
disadvantage. Moreover, the subject clause does not state or imply any definitive governmental
purpose; hence, the same violates not just therein petitioner’s right to equal protection, but also
his right to substantive due process under Section 1, Article III of the Constitution.

Doctrine of Operative Fact. As a general rule, an unconstitutional act is not a law; it confers no
rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has
not been passed at all. The general rule is supported by Article 7 of the Civil Code, that laws are
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repealed only by subsequent ones, and their violation or non-observance shall not be excused by
disuse or custom or practice to the contrary. The doctrine of operative fact serves as an exception
to the aforementioned general rule which nullifies the effects of an unconstitutional law by
recognizing that the existence of a statute prior to a determination of unconstitutionality is an
operative fact and may have consequences which cannot always be ignored. The past cannot
always be erased by a new judicial declaration. The doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus,
it was applied to a criminal case when a declaration of unconstitutionality would put the accused
in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law
creating it. This case should not be included in the aforementioned exception as it was not the
fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents.
To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a
wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s
security of tenure which an employment contract embodies and actually profit from such violation
based on an unconstitutional provision of law.

4. PEOPLE OF THE PHILIPPINES vs. HON. DOMINGO PANIS

G.R. Nos. L-58674-77, July 11, 1990

Article 13(b) presumption. Recruitment and placement' refers to any act of canvassing, enlisting,
contracting, transporting, hiring, or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not. Provided,
that any person or entity which, in any manner, offers or promises for a fee employment to
two or more persons shall be deemed engaged in recruitment and placement. The proviso
was intended neither to impose a condition on the basic rule nor to provide an exception thereto
but merely to create a presumption. The presumption is that the individual or entity is engaged
in recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. " The number of
persons dealt with is not an essential ingredient of the act of recruitment and placement of workers.
Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and
placement even if only one prospective worker is involved. The proviso merely lays down a rule
of evidence that where a fee is collected in consideration of a promise or offer of employment to
two or more prospective workers, the individual or entity dealing with them shall be deemed to be
engaged in the act of recruitment and placement. The words "shall be deemed" create that
presumption or a prima facie evidence of engaging in recruitment and placement.

5. TRANS ACTION OVERSEAS CORPORATION vs. SECRETARY OF LABOR

G.R. No. 109583, September 5, 1997

Concurrent jurisdiction of POEA and SOLE to suspend or cancel license. A non-licensee or

non-holder of authority means any person, corporation or entity which has not been issued a valid
license or authority to engage in recruitment and placement by the SOLE, or whose license or
authority has been suspended, revoked or cancelled by the POEA or the Secretary. We rule that
the power to suspend or cancel any license or authority to recruit employees for overseas
employment is concurrently vested with the POEA and the Secretary. Moreover, the POEA
Revised Rules on the Schedule of Penalties was issued pursuant to Article 34 of LC which merely
amplified and particularized the various violations of the rules and regulations of the POEA and
clarified and specified the penalties therefore. Indeed, the questioned schedule of penalties
contains only a listing of offenses. It does not prescribe additional rules and regulations governing
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overseas employment but only detailed the administrative sanctions imposable by this Office for
some enumerated prohibited acts. Under the circumstances, the license of the respondent agency
was cancelled on the authority of Article 35 of the LC, and not pursuant to the 1987 POEA Revised
Rules on Schedule of Penalties.

6. REPUBLIC OF THE PHILIPPINES vs. PRINCIPALIA MANAGEMENT

G.R. No. 167639, April 19, 2006

Suspension of license by the POEA pending appeal with the SOLE. POEA would have no
authority to exercise its regulatory functions over Principalia because the matter had already been
brought to the jurisdiction of the DOLE. Principalia has been granted the license to recruit and
process documents for Filipinos interested to work abroad. POEA’s action of suspending
Principalia’s license before final adjudication by the DOLE would be premature and would amount
to a violation of the latter’s right to recruit and deploy workers. The trial court did not decree that
the POEA, as the granting authority of Principalia’s license to recruit, is not allowed to determine
Principalia’s compliance with the conditions for the grant, as POEA would have us believe. POEA
can determine whether the licensee has complied with the requirements. However, as the Order
of Suspension was pending appeal with the SOLE and until such time that the appeal is resolved
with finality by the DOLE, Principalia has a clear and convincing right to operate as a recruitment
agency.

7. SANTOSA B. DATUMAN v. FIRST COSMOPOLITAN MANPOWER AND PROMOTION

SERVICES G.R. No. 156029, November 14, 2008

Claims and liabilities arising from the implementation of POEA-approved Contract. The
signing of the "substitute" contracts with the foreign employer before the expiration of the POEA-
approved contract and any continuation of petitioner's employment beyond the original one-year
term, against the will of petitioner, are continuing breaches of the original POEA-approved
contract. Otherwise, it will open the floodgates to even more abuse of our overseas workers at the
hands of their foreign employers and local recruiters, since the recruitment agency could easily
escape its mandated solidary liability for breaches of the contract by colluding with their foreign
principals in substituting the approved contract with another upon the worker's arrival in the
country of employment. RA 8042 explicitly prohibits the substitution or alteration to the
prejudice of the worker of employment contracts already approved and verified by the
DOLE from the time of actual signing thereof by the parties up to and including the period
of the expiration of the same without the approval of the DOLE. Petitioner was forced to work
long after the term of her original POEA-approved contract, through the illegal acts of the foreign
employer. The subsequently executed side agreement which reduced the salary below the
amount approved by the POEA is void because it is against our existing laws, morals and public
policy. It cannot supersede the terms of the standard employment contract approved by the POEA.
The diminution in the salary of petitioner from US$370.00 to US$100 (BD 40.00) per month is void
for violating the POEA-approved contract which set the minimum standards, terms, and conditions
of her employment. Consequently, the solidary liability of respondent with petitioner's foreign
employer for petitioner's money claims continues although she was forced to sign another contract
in Bahrain. It is the terms of the original POEA-approved employment contract that shall govern
the relationship of petitioner with the respondent recruitment agency and the foreign employer.
Petitioner must be compensated for all months worked regardless of the supposed termination of
the original contract in April 1990. Respondent cannot disclaim liability for the acts of the foreign
employer on the allegation that it purportedly had no knowledge of, or participation in, the contract
unwillingly signed by petitioner abroad considering that respondent, by its own allegations, knew
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from the outset that the contract submitted to the POEA for approval was not to be the "real"
contract. Respondent blithely admitted to submitting to the POEA a contract stating that the
position to be filled by petitioner is that of "Saleslady" although she was to be employed as a
domestic helper since the latter position was not approved for deployment by the POEA at that
time. Respondent's evident bad faith and admitted circumvention of the laws and regulations on
migrant workers belie its protestations of innocence and put petitioner in a position where she
could be exploited and taken advantage of overseas, as what indeed happened to her in this case.

8. STOLT-NIELSEN TRANSPORTATION GROUP, INC. vs. SULPECIO MEDEQUILLO, JR.

G.R. No. 177498, January 18, 2012

Money claims for OFWs. Even without actual deployment, the perfected contract gives rise to
obligations on the part of petitioners. The POEA Standard Employment Contract provides that
employment shall commence "upon the actual departure of the seafarer from the airport or seaport
in the port of hire." We adhere to the terms and conditions of the contract so as to credit the valid
prior stipulations of the parties before the controversy started. Else, the obligatory force of every
contract will be useless. Even if by the standard contract employment commences only "upon
actual departure of the seafarer", this does not mean that the seafarer has no remedy in case of
non-deployment without any valid reason. Distinction must be made between the perfection of the
employment contract and the commencement of the employer-employee relationship. The
perfection of the contract, which in this case coincided with the date of execution thereof, occurred
when petitioner and respondent agreed on the object and the cause, as well as the rest of the
terms and conditions therein. Even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the
erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be
deployed as agreed upon, he would be liable for damages. The POEA Rules do not provide for
the award of damages to be given in favor of the employees. The claim provided by the same law
refers to a valid contractual claim for compensation or benefits arising from employer-employee
relationship within the terms and conditions of employment of seafarers. However, the absence
of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean
that the seafarer is precluded from claiming the same. We apply Section 10 of RA 8042 which
provides for money claims by reason of a contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.

9. THE PEOPLE OF THE PHILIPPINES vs. CAROL M. DELA PIEDRA

G.R. No. 121777, January 24, 2001

Void for Vagueness. An act will be declared void and inoperative on the ground of vagueness
and uncertainty, only upon a showing that the defect is such that the courts are unable to
determine, with any reasonable degree of certainty, what the legislature intended. An Act will not
be declared inoperative and ineffectual on the ground that it furnishes no adequate means to
secure the purpose for which it is passed, if men of common sense and reason can devise and
provide the means, and all the instrumentalities necessary for its execution are within the reach
of those entrusted therewith." That Section 13 (b) encompasses what appellant apparently
considers as customary and harmless acts such as " labor or employment referral"
("referring" an applicant, according to appellant, for employment to a prospective
employer) does not render the law overbroad.

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Illegal Recruitment may be for profit or not. That appellant did not receive any payment for the
promised or offered employment is of no moment. From the language of the statute, the act of
recruitment may be "for profit or not;" it suffices that the accused "promises or offers for a fee
employment" to warrant conviction for illegal recruitment. The testimonies of credible witnesses
meet the standard of proof beyond reasonable doubt that appellant committed recruitment and
placement. Considering that the two elements of lack of license or authority and the undertaking
of an activity constituting recruitment and placement are present, appellant, at the very least, is
liable for "simple" illegal recruitment. She is not, however, guilty of illegal recruitment in large scale
because there is no sufficient evidence proving that the offense was committed against three or
more persons.

10. ESTATE OF NELSON R. DULAY vs. ABOITIZ JEBSEN MARITIME, INC.

G.R. No. 172642, June 13, 2012

Interpretation or implementation of the said CBA under jurisdiction of VA. There is no

specific provision which provides for jurisdiction over disputes or unresolved grievances regarding
the interpretation or implementation of a CBA. Section 10 of R.A. 8042 simply speaks of "claims
arising out of an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral, exemplary and other
forms of damages." Articles 217(c) and 261 of the LC are very specific in stating that voluntary
arbitrators have jurisdiction over cases arising from the interpretation or implementation of
collective bargaining agreements. In the present case, the basic issue raised by Merridy Jane in
her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death
benefits due to the heirs of Nelson are concerned? The issue clearly involves the interpretation or
implementation of the said CBA. Thus, the specific or special provisions of the Labor Code govern.
Further, Rule VII, Section 7 of the IRR of RA 8042 states that for OFWs with collective bargaining
agreements, the case shall be submitted for voluntary arbitration in accordance with Articles 261
and 262 of the Labor Code. In the same manner, Section 29 of the prevailing Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels,
promulgated by POEA, provides that cases of claims and disputes arising from this employment,
the parties covered by a CBA shall submit the claim or dispute to the original and exclusive
jurisdiction of the voluntary arbitrator or panel of arbitrators. It is clear from the above that the
interpretation of the DOLE, Senate and the HRep, DFA and the POEA is that with respect to
disputes involving claims of Filipino seafarers wherein the parties are covered by a collective
bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary
arbitrator or panel of arbitrators. It is only in the absence of a collective bargaining agreement that
parties may opt to submit the dispute to either the NLRC or to voluntary arbitration.

11. PAUL V. SANTIAGO vs. CF SHARP CREW MANAGEMENT, INC.

G.R. No. 162419, July 10, 2007

Perfection of contract. Even before the start of any employer-employee relationship,

contemporaneous with the perfection of the employment contract was the birth of certain rights
and obligations, the breach of which may give rise to a cause of action against the erring party.
Neither the manning agent nor the employer can simply prevent a seafarer from being deployed
without a valid reason. Respondent’s act of preventing petitioner from departing the port of Manila
and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioner’s cause
of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner
and must therefore answer for the actual damages he suffered. The fact that the POEA Rules are
silent as to the payment of damages to the affected seafarer does not mean that the seafarer is
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precluded from claiming the same. The sanctions provided for non-deployment do not end with
the suspension or cancellation of license or fine and the return of all documents at no cost to the
worker. POEA does not provide for damages and money claims recoverable by aggrieved
employees because it is not the POEA, but the NLRC, which has jurisdiction over such
matters. Since the present petition involves the employment contract entered into by petitioner
for overseas employment, his claims are cognizable by the labor arbiters of the NLRC.

Seafarers are contractual employees. Respondent’s failure to deploy petitioner is not an act
designed to prevent the latter from attaining the status of a regular employee. Even if petitioner
was able to depart the port of Manila, he still cannot be considered a regular employee, regardless
of his previous contracts of employment with respondent. The Court ruled that seafarers are
considered contractual employees and cannot be considered as regular employees under the
Labor Code. Their employment is governed by the contracts they sign every time they are rehired
and their employment is terminated when the contract expires. The exigencies of their work
necessitate that they be employed on a contractual basis.

12. SAMEER OVERSEAS PLACEMENT AGENCY, INC. vs. JOY C. CABILES

G.R. No. 170139, August 5, 2014

Illegal Dismissal. The Contract of Employment entered into by and between the parties was
executed in the Philippines with the approval of the POEA, thus, LC applies (lex loci contractus -
the law of the place where the contract is made). The pre-determined standards that the employer
sets are the bases for determining the probationary employee’s fitness, propriety, efficiency, and
qualifications as a regular employee. Due process requires that the probationary employee be
informed of such standards at the time of his or her engagement so he or she can adjust his or
her character or workmanship accordingly. Proper adjustment to fit the standards will increase
one’s chances of being positively assessed for regularization by his or her employer. In this case,
petitioner merely alleged that respondent failed to comply with her foreign employer’s work
requirements and was inefficient in her work. There was also no showing that respondent was
sufficiently informed of the standards against which her work efficiency and performance were
judged.

Interest rate of placement fees. Section 10 of RA 8042 provides that unlawfully terminated
overseas workers are entitled to the reimbursement of his or her placement fee with an interest of
12% per annum. Since BSP circulars cannot repeal RA 8042, the issuance of Circular No. 799
does not have the effect of changing the interest on awards for reimbursement of placement fees
from 12% to 6%. This is despite Section 1 of Circular No. 799, which provides that the 6% interest
rate applies even to judgments. There is, therefore, an implied stipulation in contracts between
the placement agency and the overseas worker that in case the overseas worker is adjudged as
entitled to reimbursement of his or her placement fees, the amount shall be subject to a 12%
interest per annum. This implied stipulation has the effect of removing awards for
reimbursement of placement fees from Circular No. 799’s coverage. The same cannot be
said for awards of salary for the unexpired portion of the employment contract. These
awards are covered by Circular No. 799 because the law does not provide for a specific interest
rate that should apply. If judgment did not become final and executory before July 1, 2013 and
there was no stipulation in the contract providing for a different interest rate, other money claims
under Section 10 of RA No. 8042 shall be subject to the 6% interest per annum in accordance
with Circular No. 799. This means that respondent is also entitled to an interest of 6% per annum
on her money claims from the finality of this judgment.

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 13. INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. v. JOSE G. DE VERA
G.R. No. 205703, March 07, 2016

Application of foreign laws with labor contracts. The general rule is that Philippine laws apply
even to overseas employment contracts (Section 3, Article XIII). Even if the OFW has his
employment abroad, it does not strip him of his rights to security of tenure, humane conditions of
work and a living wage under our Constitution. As an exception, the parties may agree that a
foreign law shall govern the employment contract:
(1) it is expressly stipulated in the contract that a specific foreign law shall govern;
- If absent, apply the domestic labor laws in accordance with the principle of lex loci contractus.
(2) the foreign law invoked must be proven before the courts pursuant to rules on evidence;
- If absent, we apply the international law doctrine of processual presumption (presumption is
that foreign law is the same as ours).
(3) that the foreign law stipulated in the overseas employment contract must not be contrary
to law, morals, good customs, public order, or public policy of the Philippines; and
- If absent, Philippine laws govern. Article 17 (laws which have for their object, public order,
public policy and good customs shall not be rendered ineffective by laws of a foreign country;
Article 1306 (stipulations, clauses, terms and conditions in a contract must not be contrary to
law, morals, good customs, public order, or public policy).
(4) that the overseas employment contract must be processed through the POEA.
- If absent, Article 18 of the Labor Code is violated. In relation thereto, Section 4 of RA 8042
declares that the State shall only allow the deployment of overseas Filipino workers in countries
where the rights of Filipino migrant workers are protected. Unless processed through the
POEA, the State has no effective means of assessing the suitability of the foreign laws to our
migrant workers. If not scrutinized by the POEA, it definitely cannot be invoked as it is an
unexamined foreign law.

Petitioners were able to observe the second requisite as they were able to present the ESA. The
fourth requisite was also followed because Arriola's employment contract was processed through
the POEA. Granting arguendo that the labor contract expressly stipulated the applicability of
Canadian law, still, Arriola's employment cannot be governed by such foreign law because the
third requisite is not satisfied as some of the provisions of the ESA are contrary to the Constitution
and the labor laws of the Philippines. It does not require any ground for the early termination of
employment. Article 54 thereof only provides that no employer should terminate the employment
of an employee unless a written notice had been given in advance. The foreign employer is
endowed with the absolute power to end the employment of an employee even on the most
whimsical grounds. It likewise allows the employer to dispense with the prior notice of termination
to an employee. The employee under the ESA could be immediately dismissed without giving him
the opportunity to explain and defend himself. The provisions of the ESA are patently inconsistent
with the right to security of tenure.

14. SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. vs. NLRC

G.R. No. 161757, January 25, 2006

Theory of Imputed Knowledge. The finding of the CA that Sunace continually communicated
with the foreign "principal" and therefore was aware of and had consented to the execution of the
extension of the contract is misplaced. The message does not provide evidence that Sunace was
privy to the new contract executed after the expiration on February 1, 1998 of the original contract.
It was just an information given to the petitioner that the respondent already got her savings from
her foreign employer and that no deduction was made on her salary. It contains nothing about the
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extension or the petitioner’s consent thereto. The theory of imputed knowledge ascribes the
knowledge of the agent, Sunace, to the principal, employer Xiong, not the other way around. The
knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-
year employment contract extension, it cannot be said to be privy thereto. As such, it and its
"owner" cannot be held solidarily liable for any of Divina’s claims arising from the 2-year
employment extension. There was an implied revocation of its agency relationship with its foreign
principal when, after the termination of the original employment contract, the foreign principal
directly negotiated with Divina and entered into a new and separate employment contract in
Taiwan. Under Article 1924 of the New Civil Code, the agency is revoked if the principal directly
manages the business entrusted to the agent, dealing directly with third persons.

15. MAERSK-FILIPINAS CREWING, INC. v. TORIBIO C. AVESTRUZ

G.R. No. 207010, February 18, 2015

Substantial Evidence. The Court finds these e-mails sent by Captain Woodward which they claim
chronicled the relevant circumstances that eventually led to Avestruz’s dismissal to be
uncorroborated and self-serving, and therefore, do not satisfy the requirement of substantial
evidence as would sufficiently discharge the burden of proving that Avestruz was legally
dismissed. At the least, they could have offered in evidence entries in the ship’s official logbook
showing the infractions or acts of insubordination purportedly committed by Avestruz, the ship’s
logbook being the official repository of the day-to-day transactions and occurrences on board the
vessel. The contents of Captain Woodward’s e-mails do not establish that Avestruz’s conduct had
been willful, or characterized by a wrongful and perverse attitude. While rules of evidence are not
strictly observed in proceedings before administrative bodies, petitioners should have offered
additional proof to corroborate the statements. There is dearth of evidence to show that Avestruz
had been given a written notice of the charge against him, or that he was given the opportunity to
explain or defend himself. With respect to the monetary awards given to Avestruz, the Court finds
the same to be in consonance with Section 10 of RA 8042, the Court affirms the grant of attorney’s
fees of ten percent (10%) of the total award.

16. ELIZABETH M. GAGUI vs. SIMEON DEJERO and TEODORO R. PERMEJO

G.R. No. 196036, October 23, 2013

The liability of corporate directors and officers is not automatic. To make them jointly and
solidarily liable with their company, there must be a finding that they were remiss in directing the
affairs of that company, such as sponsoring or tolerating the conduct of illegal activities. To be
found jointly and solidarily liable, there must be a separate finding that she was remiss in directing
the affairs of the agency, resulting in the illegal dismissal of respondents. Examination of the
records would reveal that there was no finding of neglect on the part of the petitioner in directing
the affairs of the agency. In fact, respondents made no mention of any instance when petitioner
allegedly failed to manage the agency in accordance with law, thereby contributing to their illegal
dismissal. Petitioner is correct in saying that impleading her for the purpose of execution is
tantamount to modifying a decision that had long become final and executory. The fallo of the
1997 Decision by the NLRC only held "respondents Pro Agency Manila Inc., and Abdul Rahman
Al Mahwes to jointly and severally pay complainants x x x." By holding her liable despite not being
ordained as such by the decision, both the CA and NLRC violated the doctrine on immutability of
judgments.

9 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 17. ASSOCIATION OF MEDICAL CLINICS FOR OVERSEAS WORKERS (AMCOW) v. GCC
G.R. No. 207132, December 06, 2016

Role of the DOH. The prohibition against the referral decking system under Section 16, RA No.
10022, is a valid exercise of police power to prescribe regulations to promote the health, safety,
and general welfare of the people. The guarantee under Section 16 for OFWs to be given the
option to choose a quality healthcare service provider is guaranteed by the prohibition against the
decking practice and against monopoly practices in OFW health examinations. Section 16 likewise
requires employers to accept health examinations from any DOH-accredited health facility, a
refusal could lead to their temporary disqualification under pertinent rules to be formulated by the
POEA. Separately from the Section 16 prohibition against the referral decking system, RA No.
10022 also prohibits and penalizes the imposition of a compulsory exclusive arrangement
requiring OFWs to undergo health examinations only from specifically designated medical clinics,
institutions, entities or persons. Section 5 penalizes compulsory, exclusive arrangements by
imprisonment and fine and by the automatic revocation of the participating medical clinic's license.
If, under the law, the DOH can suspend, revoke, or refuse to renew the license of these
hospitals upon the finding that they violated any provision of law, it follows- as a
necessarily included lesser power - that the DOH can likewise order these clinics and their
association to cease and desist from practices that the law deems to be undesirable. While
the DOH erred when it issued its CDO letters without first giving GAMCA the opportunity to prove
whether the practice conducted by GAMCA is the same practice prohibited under RA No. 10022,
the DOH conclusion to so act did not constitute grave abuse of discretion that would have divested
it of jurisdiction. That GAMCA had previously questioned the DOH prohibition and had been given
ample opportunity to be heard when it filed an appeal before the OP, negate the conclusion that
GAMCA had been aggrieved by precipitate and unfair DOH action.

Principle of sovereign equality and independence not violated by the prohibition. In the
present case, GAMCA has not adduced any evidence, nor has it presented any argument showing
that the principle of sovereign equality and independence has developed into an international
custom shielding state agent from compliance with another state's domestic laws. GAMCA has
never proven in this case, too, that the GCC has extended its sovereign immunity to GAMCA. The
prohibition against the referral decking system applies to hospitals and clinics, as well as to OFW
employers, and does not seek to interfere with the GCC's visa requirement processes. RA 10022
prohibits hospitals and clinics in the Philippines from practicing the referral decking system, and
employers from requiring OFWs to procure their medical examinations from hospitals and clinics
practicing the referral decking system. The regulation applies to Philippine hospitals and
clinics, as well as to employers of OFWs. It does not apply to the GCCs and their visa
processes. That the regulation could affect the OFWs' compliance with the visa requirements
imposed by GCCs does not place it outside the regulatory powers of the Philippine government.
In the same manner, GCC states continue to possess the prerogative to apply their visa
requirements to any foreign national, including our OFWs, who seeks to enter their territory; they
may refuse to grant them entry for failure to comply with the referral decking system, or they may
adjust to the prohibition against the referral decking system that we have imposed. These
prerogatives lie with the GCC member-states and do not affect at all the legality of the prohibition
against the referral decking system.

10 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 18. JAKERSON G. GARGALLO v. DOHLE SEAFRONT CREWING (MANILA), INC.
G.R. No. 215551, August 17, 2016

Personal liability of a corporate officer. Section 10 of RA 8042 expressly provides for joint and
solidary liability of corporate directors and officers with the recruitment/placement agency for all
money claims or damages that may be awarded to OFWs. While a corporate director, trustee, or
officer who entered into contracts in behalf of the corporation generally cannot be held personally
liable for the liabilities of the latter, in deference to the separate and distinct legal personality of a
corporation from the persons composing it, personal liability of such corporate director,
trustee, or officer, along (although not necessarily) with the corporation, may validly attach
when he is made by a specific provision of law personally answerable for his corporate
action. In addition, Dohle Seafront is presumed to have submitted a verified undertaking by its
officers and directors that they will be jointly and severally liable with the company over claims
arising from an employer-employee relationship when it applied for a license to operate a
seafarer's manning agency.

19. PRINCESS TALENT CENTER PRODUCTION, INC v. DESIREE T. MASAGCA.

G.R. No. 191310, April 11, 2018

Extension of contract of OFW. It is undisputed that when respondent was dismissed from
employment and repatriated to the Philippines in June 2004, her original six-month Employment
Contract with SAENCO had already expired. Ideally, the extension of respondent's employment
should have also been reduced into writing and submitted/reported to the appropriate Philippine
labor authorities. Nonetheless, even in the absence of a written contract evidencing the six-month
extension of respondent's employment, the same is practically admitted by petitioners, subject
only to the defense that there is no proof of their knowledge of or participation in said extension
and so they cannot be held liable for the events that transpired between respondent and SAENCO
during the extension period. Petitioners presented nine vouchers to prove that respondent
received her salaries from SAENCO for nine months. Hence, respondent had been working for
SAENCO in Ulsan, South Korea, pursuant to her Employment Contract, extended for another six-
month period or until September 5, 2004, when she was dismissed and repatriated to the
Philippines by SAENCO in June 2004. Petitioners and SAENCO should not be allowed to escape
liability for a wrong they themselves participated in or were responsible for. Respondent is entitled
to an award of her salaries for the unexpired three months of her extended Employment Contract
which is subject to legal interest of 12% per annum from respondent's illegal dismissal.
Respondent also has the right to the reimbursement of her placement fee with interest of 12% per
annum from her illegal dismissal in June 2004 to the date this Decision becomes final and
executory. The award of attorney's fees to respondent is likewise justified. All of the foregoing
monetary awards in respondent's favor shall earn legal interest of 6% per annum from the time
this Decision becomes final and executory until fully satisfied.

20. EILEEN P. DAVID vs. GLENDA S. MARQUEZ

G.R. No. 209859

Venue of criminal action arising from illegal recruitment. Sec. 9 of RA 8042 fixed an
alternative venue from that provided in Section 15(a) of the Rules of Criminal Procedure, i.e., a
criminal action arising from illegal recruitment may also be filed where the offended party actually
resides at the time of the commission of the offense and that the court where the criminal action
is first filed shall acquire jurisdiction to the exclusion of other courts. The express provision of the
law is clear that the filing of criminal actions arising from illegal recruitment before the R TC of the
11 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
province or city where the offended party actually resides at the time of the commission of the
offense is allowed. It goes without saying that the dismissal of the case on a wrong ground, indeed,
deprived the prosecution, as well as the respondent as complainant, of their day in court.
Respondent resides in Manila, hence, the filing of the case before the RTC of Manila was proper.
Likewise, with the case of Estafa arising from such illegal recruitment activities, the outright
dismissal thereof due to lack of jurisdiction was not proper, considering that as per the allegations
in the Information, the same was within the jurisdiction of Manila. Double jeopardy does not exist
in this case. Inasmuch as the dismissal of the charges by the RTC was done without regard to
due process of law, the same is null and void. It is as if there was no acquittal or dismissal of the
case at all, and the same cannot constitute a claim for double jeopardy.

21. POWERHOUSE STAFFBUILDERS INTERNATIONAL, INC. v. ROMELIA REY

G.R. No. 190203, November 07, 2016

Solidary liability of principal and agency continues for entire period of employment. The
liability of the principal and the recruitment/placement agency for any and all claims under this
section shall be joint and several. Such liabilities shall continue during the entire period or duration
of the employment contract and shall not be affected by any substitution, amendment or
modification made locally or in a foreign country of the said contract. In this case, even if there
was transfer of accreditation by Catcher from Powerhouse to JEJ, Powerhouse's liability to
respondent employees remained intact because respondent employees are not privy to
such contract, and in their overseas employment contract approved by POEA, Powerhouse
is the recruitment agency of Catcher. To relieve Powerhouse from liability arising from the
approved overseas employment contract is to change the contract without the consent from the
other contracting party, respondent employees in this case.

22. HON. PATRICIA A. STO.TOMAS vs. REY SALAC et al.

G.R. No. 152642, November 13, 2012

Constitutionality of Sec. 6 of RA 8042. "Illegal recruitment" as defined in Section 6 is clear and

unambiguous and actually makes a distinction between licensed and non-licensed recruiters. By
its terms, persons who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers" without the appropriate government license or authority are guilty of illegal
recruitment whether or not they commit the wrongful acts enumerated in that section. On the other
hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the
appropriate government license or authority, are guilty of illegal recruitment only if they commit
any of the wrongful acts enumerated in Section 6.

Constitutionality of Sec. 7 of RA 8042. Manila RTC did not agree that the law can impose such
grave penalties upon what it believed were specific acts that were not as condemnable as the
others in the lists. But, in fixing uniform penalties for each of the enumerated acts under Section
6, Congress was within its prerogative to determine what individual acts are equally reprehensible,
consistent with the State policy of according full protection to labor, and deserving of the same
penalties. It is not within the power of the Court to question the wisdom of this kind of choice.
Notably, this legislative policy has been further stressed in July 2010 with the enactment of R.A.
10022 which increased even more the duration of the penalties of imprisonment and the amounts
of fine for the commission of the acts listed under Section 7.

Constitutionality of Sec. 9 of RA 8042. There is nothing arbitrary or unconstitutional in Congress

fixing an alternative venue for violations of Section 6 that differs from the venue established by the
12 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Rules on Criminal Procedure. Section 9, as an exception to the rule on venue of criminal actions
is, consistent with that law’s declared policy of providing a criminal justice system that protects
and serves the best interests of the victims of illegal recruitment.

Constitutionality of Sec. 10(2) of RA 8042. Pending adjudication of this case, that the liability of
corporate directors and officers is not automatic. To make them jointly and solidarily liable with
their company, there must be a finding that they were remiss in directing the affairs of that
company, such as sponsoring or tolerating the conduct of illegal activities. In the case of Becmen
and White Falcon, while there is evidence that these companies were at fault in not investigating
the cause of Jasmin’s death, there is no mention of any evidence in the case against them that
intervenors Gumabay, et al., Becmen’s corporate officers and directors, were personally involved
in their company’s particular actions or omissions in Jasmin’s case.

ARTICLES 22-81

23. CENTURY CANNING CORPORATION vs. COURT OF APPEALS

G.R. No. 152894, August 17, 2007

Prior approval of TESDA in apprenticeship agreements. RA 7796 which created the TESDA,
has transferred the authority over apprenticeship programs from the BLE of the DOLE to the
TESDA. Prior approval by the TESDA of the proposed apprenticeship program is a condition sine
qua non before an apprenticeship agreement can be validly entered into to ensure that only
employers in the highly technical industries may employ apprentices and only in apprenticeable
occupations. It is a preliminary step towards its final approval and does not instantaneously give
rise to an employer-apprentice relationship. Petitioner and Palad executed the apprenticeship
agreement on July 1997 wherein it was stated that the training would start on July 1997 and would
end approximately in December 1997. On 25 July 1997, petitioner submitted for approval its
apprenticeship program, which the TESDA subsequently approved on 26 September 1997.
Clearly, the apprenticeship agreement was enforced even before the TESDA approved
petitioner’s apprenticeship program. Thus, the apprenticeship agreement is void because it lacked
prior approval from the TESDA. Since Palad is not considered an apprentice because the
apprenticeship agreement was enforced before the TESDA’s approval of petitioner’s
apprenticeship program, Palad is deemed a regular employee performing the job of a "fish
cleaner." Clearly, the job of a "fish cleaner" is necessary in petitioner’s business as a tuna and
sardines factory. Under Article 280, an employment is deemed regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business
or trade of the employer. Petitioner failed to substantiate its claim that Palad was terminated for
valid reasons. Furthermore, Palad was not accorded due process.

24. MARITES BERNARDO et al. v. NLRC & FAR EAST BANK AND TRUST COMPANY
G.R. No. 122917, July 12, 1999

Equal opportunity for qualified disabled employees. The renewal of the contracts of the
handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial
and necessary to the bank. These facts show that they were qualified to perform the
responsibilities of their positions and their disability did not render them unqualified or unfit for the
tasks assigned to them. The Magna Carta for Disabled Persons mandates that
a qualified disabled employee should be given the same terms and conditions of
employment as a qualified able-bodied person. The fact that the employees were qualified
disabled persons necessarily removes the employment contracts from the ambit of Article 80.
13 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Moreover, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank. Petitioners performed these tasks for more than six months. As regular
employees, the petitioners are entitled to security of tenure; that is, their services may be
terminated only for a just or authorized cause. Because respondent failed to show such cause,
these petitioners are deemed illegally dismissed and therefore entitled to back wages and
reinstatement without loss of seniority rights and other privileges. Considering that the job of
money sorting is no longer available because it has been assigned back to the tellers to whom it
originally belonged, petitioners are hereby awarded separation pay in lieu of reinstatement. The
noble objectives of Magna Carta for Disabled Persons are not based merely on charity or
accommodation, but on justice and the equal treatment of qualified persons, disabled or
not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work.
The eloquent proof of this statement is the repeated renewal of their employment contracts. Why
then should they be dismissed, simply because they are physically impaired? The Court believes,
that, after showing their fitness for the work assigned to them, they should be treated and granted
the same rights like any other regular employees.

ARTICLE 82

25. ANGELINA FRANCISCO vs. NLRC

G.R. No. 170087, August 31, 2006

Economic reality test. In certain cases, the control test is not sufficient to give a complete picture
of the relationship between the parties, owing to the complexity of such a relationship where
several positions have been held by the worker. There are instances when, aside from the
employers power to control the employee with respect to the means and methods by which the
work is to be accomplished, economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving:

(1) the putative employers power to control the employee with respect to the means and methods
by which the work is to be accomplished; and
(2) the underlying economic realities of the activity or relationship.

This is especially appropriate where there is no written agreement or terms of reference to base
the relationship on; and due to the complexity of the relationship based on the various positions
and responsibilities given to the worker over the period of the latter’s employment. There is a need
to consider the existing economic conditions prevailing between the parties, in addition to the
standard of right-of-control like the inclusion of the employee in the payrolls, to give a clearer
picture in determining the existence of an employer-employee relationship based on an analysis
of the totality of economic circumstances of the worker.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity:
(1) the extent to which the services performed are an integral part of the employers business;
(2) the extent of the workers investment in equipment and facilities;
(3) the nature and degree of control exercised by the employer;
(4) the workers opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise;
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(6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in
that line of business.\

The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business. The touchstone of economic
reality in analyzing possible employment relationships is dependency. By analogy, the benchmark
of economic reality in analyzing possible employment relationships for purposes of the Labor Code
ought to be the economic dependence of the worker on his employer.

26. JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORP.

G.R. No. 138051. June 10, 2004

A. Selection and Engagement of Employee - ABS-CBN engaged SONZAs services to co-host

its television and radio programs because of SONZAs peculiar skills, talent and celebrity
status. Independent contractors often present themselves to possess unique skills, expertise or
talent to distinguish them from ordinary employees. The specific selection and hiring of
SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.

B. Payment of Wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of his
fees going to MJMDC. All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBNs employee, there would be no
need for the parties to stipulate on benefits such as SSS, Medicare and 13th month pay which the
law automatically incorporates into every employer-employee contract. Whatever benefits SONZA
enjoyed arose from contract and not because of an employer-employee relationship. SONZAs
talent fees, amounting to P317,000 monthly, are so huge and out of the ordinary that they indicate
more an independent contractual relationship rather than an employer-employee relationship.
Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such
huge talent fees for his services.

C. Power of Dismissal - For violation of any provision of the Agreement, either party
may terminate their relationship. ABS-CBN agreed to pay SONZAs talent fees as long as AGENT
and Jay Sonza shall faithfully and completely perform each condition of this Agreement. Even if it
suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN
remained obligated to pay SONZAs talent fees during the life of the Agreement. This circumstance
indicates an independent contractual relationship between SONZA and ABS-CBN. Whether
SONZA rescinded the Agreement or resigned from work does not determine his status as
employee or independent contractor.

D. Power of Control - SONZA is not an employee but an independent contractor. To perform

his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBNs control. SONZA did not have to render
eight hours of work per day. ABS-CBN could not dictate the contents of SONZAs script. However,
the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear
implication is that SONZA had a free hand on what to say or discuss in his shows provided he did
not attack ABS-CBN or its interests. ABS-CBN merely reserved the right to modify the program
15 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
format and airtime schedule and its sole concern was the quality of the shows and their standing
in the ratings. ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the
obligation to continue paying in full SONZAs talent fees, did not amount to control over the means
and methods of the performance of SONZAs work. ABS-CBN could not terminate or discipline
SONZA even if the means and methods of performance of his work did not meet ABS-CBNs
approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work,
whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs
talent fees in full until the expiry of the Agreement. Even though ABS-CBN provided SONZA with
the place of work and the necessary equipment, SONZA was still an independent contractor since
ABS-CBN did not supervise and control his work. The Agreement does not require SONZA to
comply with the rules and standards of performance prescribed for employees of ABS-CBN. The
code of conduct imposed on SONZA under the Agreement refers to the Television and Radio
Code of the KBP, which has been adopted as its Code of Ethics. Clearly, the rules and standards
of performance referred to in the Agreement are those applicable to talents and not to employees
of ABS-CBN.

27. BITOY JAVIER vs. FLY ACE CORPORATION

G.R. No. 192558, February 12, 2012

Need for substantial evidence. Petitioner needs to show by substantial evidence that he was
indeed an employee of the company against which he claims illegal dismissal. It is incumbent
upon the Court to determine whether the party on whom the burden to prove lies was able to
hurdle the same. No particular form of evidence is required to prove the existence of such
employer-employee relationship. Any competent and relevant evidence to prove the relationship
may be admitted. The substantiality of the evidence depends on its quantitative as well as
its qualitative aspects.

Payment by the piece is just a method of compensation and does not define the essence
of the relation. Payment on a piece-rate basis does not negate regular employment. The term
wage is in Article 97 as remuneration or earnings, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is
just a method of compensation and does not define the essence of the relations. Nor does the fact
that the petitioner is not covered by the SSS affect the employer-employee relationship.

28. SAN MIGUEL EMPLOYEES UNION v. JUDGE BERSAMIRA

G.R. No. 87700 June 13, 1990

Labor dispute. A labor dispute includes any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee. While it is
SanMig's submission that no employer-employee relationship exists between itself, on the one
hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" provided the controversy concerns, among others, the terms and
conditions of employment or a "change" or "arrangement" thereof. Put differently, and as defined
by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and defendants
do not stand in the proximate relation of employer and employee. The claim of SanMig that the
action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to
keep the case within the jurisdictional boundaries of regular Courts. That claim for damages is
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interwoven with a labor dispute existing between the parties and would have to be
ventilated before the administrative machinery established for the expeditious settlement
of those disputes. To allow the action filed below to prosper would bring about "split jurisdiction"
which is obnoxious to the orderly administration of justice

29. RAUL G. LOCSIN and EDDIE B. TOMAQUIN vs. PLDT

G.R. No. 185251, October 2, 2009

Power of control despite termination of agreement. In the ordinary course of things,

responsible business owners or managers would not allow security guards of an agency with
whom the owners or managers have severed ties with to continue to stay within the business
premises. Upon the termination of the agreement with the security agency, the agency’s
undertaking of liability has already been terminated. In the event of an accident or damage caused
by such security guards, it would be the business owners who would be opening themselves up
to liability for acts of security guards over whom the owners or managers allegedly have no control.
It would seem that SSCP was paying petitioners salaries while securing respondents premises
despite the termination of their Agreement. Obviously, it would only be respondent that would
benefit from such a situation. And it is seriously doubtful that a security agency that was
established for profit would allow its security guards to secure respondents premises when the
Agreement was already terminated. Reason dictates that we conclude that petitioners remained
at their post under the instructions of respondent and that it dictated upon the petitioners perform
their regular duties to secure the premises during operating hours. This is sufficient to establish
the existence of an employer-employee relationship. Such power of control has been explained
as the right to control not only the end to be achieved but also the means to be used in reaching
such end. Evidently, respondent having the power of control over petitioners must be considered
as petitioner’s employer from the termination of the Agreement onwards as this was the only time
that any evidence of control was exhibited by respondent over petitioners. Thus, as aptly declared
by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent,
including due process requirements in the termination of their services.

30. PEOPLE’S BROADCASTING SERVICE vs. SOLE

G.R. No. 179652, March 6, 2012

Jurisdiction of RD under Art. 128 and 129 of LC. No limitation in the law was placed upon the
power of the DOLE to determine the existence of an ER-EE relationship. No procedure was laid
down where the DOLE would only make a preliminary finding, that the power was primarily held
by the NLRC. The law did not say that the DOLE would first seek the NLRCs determination of the
existence of an employer-employee relationship, or that should the existence of the ER-EE
relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the
power to determine whether or not an ER-EE relationship exists, and from there to decide whether
or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended
by RA 7730. The expanded visitorial and enforcement power of the DOLE by RA 7730 would be
rendered nugatory if the alleged employer could, by the simple expedient of disputing the
employer-employee relationship, force the referral of the matter to the NLRC. It is precisely the
DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same
does successfully refute the existence of an ER-EE relationship.

Complaint filed in DOLE + labor standards/legislation + finding by DOLE of ER-EE relationship =

DOLE to the exclusion of the NLRC.
Finding by DOLE of non-existence of ER-EE relationship = NLRC.
17 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Complaint filed in DOLE + claim for reinstatement = Labor Arbiter, under Art. 217(3)
Complaint filed in NLRC + employer-employee relationship = DOLE.
The findings of the DOLE, however, may still be questioned through a petition for certiorari under
Rule 65 of the Rules of Court.

31. ERNESTO G. YMBONG vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 184885, March 7, 2012

Management Prerogative. So long as a company’s management prerogatives are exercised in

good faith for the advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, this
Court will uphold them. In the instant case, ABS-CBN validly justified the implementation of Policy
No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility
and freeing itself from any appearance of impartiality so that the confidence of the viewing and
listening public in it will not be in any way eroded. Even as the law is solicitous of the welfare of
the employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied. Under the "Fair Election Act," any mass media columnist,
commentator, announcer, reporter, on-air correspondent or personality who is a candidate for any
elective public office or is a campaign volunteer for or employed or retained in any capacity by any
candidate or political party shall be deemed resigned, if so required by their employer. Ymbong is
deemed resigned when he ran for councilor. Ymbong’s overt act of running for councilor of Lapu-
Lapu City is tantamount to resignation on his part. He was separated from ABS-CBN not because
he was dismissed but because he resigned. Since there was no termination to speak of, the
requirement of due process in dismissal cases cannot be applied to Ymbong. Thus, ABS-CBN is
not duty-bound to ask him to explain why he did not tender his resignation before he ran for public
office as mandated by the subject company policy.

32. PROFESSIONAL SERVICES, INC. vs. CA and SPS. AGANA

G.R. No. 126297

For purposes of allocating responsibility in medical negligence cases, an employer-

employee relationship in effect exists between hospitals and their attending and visiting
physicians. Hospitals exercise significant control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises. They are required to submit proof of completion
of residency, their educational qualifications. While consultants are not, technically employees, a
point which respondent hospital asserts in denying all responsibility for the patient’s condition, the
control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks
of an er-ee relationship, with the exception of the payment of wages. In assessing whether such
a relationship in fact exists, the control test is determining.

General Rule: A hospital is not liable for the negligence of an independent contractor-physician.
Exception: Doctrine of Apparent Authority - if the physician is the ostensible agent of the hospital.

1. Hospitals manifestations - an inquiry whether the hospital acted in a manner which would
lead a reasonable person to conclude that the individual who was alleged to be negligent was an
employee or agent of the hospital. In this regard, the hospital need not make express
representations to the patient that the treating physician is an employee of the hospital; rather a
representation may be general and implied.

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2. Patient’s reliance - it is sometimes characterized as an inquiry on whether the plaintiff acted
in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and
prudence.

Doctrine of corporate responsibility. The duty of providing quality medical service is no longer
the sole prerogative and responsibility of the physician. This is because the modern hospital now
tends to organize a highly-professional medical staff whose competence and performance need
also to be monitored by the hospital commensurate with its inherent responsibility to provide
quality medical care. Such responsibility includes the proper supervision of the members of its
medical staff. Accordingly, the hospital has the duty to make a reasonable effort to monitor and
oversee the treatment prescribed and administered by the physicians practicing in its premises.

33. SOUTH EAST INT’L. RATTAN, INC. vs. JESUS J. COMING

G.R. No. 186621, March 12, 2014

The fact that a worker was not reported as an employee to the SSS is not conclusive proof
of the absence of employer-employee relationship. Otherwise, an employer would be
rewarded for his failure or even neglect to perform his obligation. Nor does the fact that
respondent’s name does not appear in the payrolls and pay envelope records submitted by
petitioners negate the existence of employer-employee relationship. For a payroll to be utilized to
disprove the employment of a person, it must contain a true and complete list of the employee. (1)
Mayol Certification: While the latter claims to have respondent under his employ in 1997-1999,
respondent’s services were not regular and works only if he wants to. (2) Apondar’s Certification:
Respondent worked for him since 1999 through his brother Vicente as "sideline" but only after
regular working hours and "off and on" basis. Assuming these were true, these do not foreclose
respondent’s regular or full-time employment with SEIRI. Further, petitioners’ admission that the
five affiants who attested to respondent’s employment with SEIRI are its former disgruntled
workers of SEIRI with an axe to grind against petitioners is binding upon them. It suggests that
respondent was employed by SEIRI’s suppliers, Mayol and Apondar but no proof as to the latter’s
status as independent contractors; clearly, petitioners failed to discharge their burden of proving
their own affirmative allegation. There is thus no showing that the five former employees of SEIRI
were motivated by malice, bad faith or any ill-motive in executing their affidavit supporting the
claims of respondent.

34. BERNARD A. TENAZAS vs. R. VILLEGAS TAXI TRANSPORT and ROMUALDO

VILLEGAS
G.R. No. 192998, April 2, 2014

It is only when reinstatement is no longer feasible that the payment of separation pay is
ordered in lieu thereof. For instance, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship between the employer and the
employee has been unduly strained by reason of their irreconcilable differences, it would be more
prudent to order payment of separation pay instead of reinstatement. This doctrine of strained
relations, however, should not be used recklessly or applied loosely nor be based on impression
alone. It bears to stress that reinstatement is the rule and, for the exception of strained relations
to apply, it should be proved that it is likely that if reinstated, an atmosphere of antipathy and
antagonism would be generated as to adversely affect the efficiency and productivity of the
employee concerned.

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Doctrine of Strained Relations. Strained relations must be demonstrated as a fact, however, to
be adequately supported by evidence—substantial evidence to show that the relationship between
the employer and the employee is indeed strained as a necessary consequence of the judicial
controversy. A bare claim of strained relations by reason of termination is insufficient to warrant
the granting of separation pay. Likewise, the filing of the complaint by the petitioners does not
necessarily translate to strained relations between the parties. As a rule, no strained relations
should arise from a valid and legal act asserting one’s right. Although litigation may also engender
a certain degree of hostility, the understandable strain in the parties’ relation would not necessarily
rule out reinstatement which would, otherwise, become the rule rather the exception in illegal
dismissal cases.

35. GREGORIO V. TONGKO vs. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.)
G.R. No. 167622, November 7, 2008

ER-EE relationship between managers and insurance agents. An employer-employee

relationship exists where the person for whom the services are performed reserves the right to
control not only the end to be achieved but also the means to be used in reaching such end. An
employer may terminate the services of an employee for just cause and this must be supported
by substantial evidence. If the specific rules and regulations that are enforced against insurance
agents or managers are such that would directly affect the means and methods by which such
agents or managers would achieve the objectives set by the insurance company, they are
employees of the insurance company. In the instant case, Manulife had the power of control over
Tongko that would make him its employee. He is required to comply with three (3) requirements:
(1) compliance with the regulations and requirements of the company; (2) maintenance of a level
of knowledge of the companys products that is satisfactory to the company; and (3) compliance
with a quota of new businesses. Among the company regulations of Manulife are the different
codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and
Manulife Financial Code of Conduct Agreement, which demonstrate the power of control
exercised by the company over Tongko. The fact that Tongko was obliged to obey and comply
with the codes of conduct was not disowned by respondents. Thus, with the company regulations
and requirements alone, the fact that Tongko was an employee of Manulife may already be
established. Certainly, these requirements controlled the means and methods by which Tongko
was to achieve the companys goals. More importantly, Manulife’s evidence establishes the fact
that Tongko was tasked to perform administrative duties that establishes his employment with
Manulife.

36. TELEVISION AND PRODUCTION EXPONENTS, INC. vs. CARPIO MORALES

G.R. No. 167648, January 28, 2008

Independent Contractor vs. Talent. The Memorandum informing respondent of the

discontinuance of his service proves that TAPE had the power to dismiss respondent. Control is
manifested in the bundy cards submitted by respondent in evidence. He was required to report
daily and observe definite work hours. The theory of private respondents that petitioner is an
independent contractor runs counter to their very own allegation that petitioner is a talent or a
program employee. An independent contractor is not an employee of the employer, while a talent
or program employee is an employee. The only difference between a talent or program employee
and a regular employee is the fact that a regular employee is entitled to all the benefits that are
being prayed for. This is the reason why private respondents try to seek refuge under the concept
of an independent contractor theory. For if petitioner were indeed an independent contractor,
private respondents will not be liable to pay the benefits prayed for in petitioner’s complaint. More
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importantly, respondent had been continuously under the employ of TAPE from 1995 until his
termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had
been performing work that is necessary or desirable to the usual business of TAPE, respondent
is still considered a regular employee under Article 280.
37. ENCYCLOPEDIA BRITANNICA (PHILIPPINES) vs. NLRC
G.R. No. 87098. November 4, 1996

The different memoranda were merely guidelines on company policies which the sales
managers follow and impose on their respective agents. In petitioner’s business of selling
encyclopedias and books, the marketing of these products was done through dealership
agreements. The sales operations were primarily conducted by independent authorized agents
who did not receive regular compensations but only commissions based on the sales of the
products. These independent agents hired their own sales representatives, financed their own
office expenses, and maintained their own staff. Thus, there was a need for the petitioner to issue
memoranda to private respondent so that the latter would be apprised of the company policies
and procedures. Nevertheless, private respondent Limjoco and the other agents were free to
conduct and promote their sales operations. The periodic reports to the petitioner by the agents
were but necessary to update the company of the latters performance and business income. While
it was true that the petitioner had fixed the prices of the products for reason of uniformity and
private respondent could not alter them, the latter, nevertheless, had free rein in the means and
methods for conducting the marketing operations. He selected his own personnel and the only
reason why he had to notify the petitioner about such appointments was for purpose of deducting
the employee’s salaries from his commissions.

38. ATOK BIG WEDGE COMPANY, INC. v. JESUS P. GISON

G.R. No. 16951, August 8, 2011

The mere issuance of memoranda does not establish an Employer-Employee relationship.

An employer-employee relationship is apparently absent in the case at bar. Respondent was not
required to report everyday during regular office hours of petitioner. Respondent's monthly retainer
fees were paid to him either at his residence or a local restaurant. Petitioner did not prescribe the
manner in which respondent would accomplish any of the tasks in which his expertise as a liaison
officer was needed; respondent was left alone and given the freedom to accomplish the tasks
using his own means and method. Respondent was assigned tasks to perform, but petitioner did
not control the manner and methods by which respondent performed these tasks. Petitioner hired
him in a limited capacity only and that there will be no employer-employee relationship between
them. Respondent was well aware of the agreement that he was hired merely as a liaison or
consultant of the petitioner and he agreed to perform tasks for the petitioner on a temporary
employment status only. However, respondent anchors his claim that he became a regular
employee of the petitioner based on his contention that the temporary aspect of his job and its
limited nature could not have lasted for eleven years unless some time during that period, he
became a regular employee of the petitioner by continually performing services for the company.
Any agreement may provide that one party shall render services for and in behalf of another, no
matter how necessary for the latter's business, even without being hired as an employee. Hence,
respondent's length of service and petitioner's repeated act of assigning respondent some tasks
to be performed did not result to respondent's entitlement to the rights and privileges of a regular
employee.

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 39. THELMA DUMPIT-MURILLO vs. COURT OF APPEALS
G.R. No. 164652, June 8, 2007

The assertion that a talent contract exists does not necessarily prevent a regular
employment status. The practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law. The assertion that a
talent contract exists does not necessarily prevent a regular employment status. The duties of
Dumpit-Murillo as enumerated in her employment contract indicate that ABC had control over the
work of petitioner. Aside from control, ABC also dictated the work assignments and payment of
her wages. ABC also had the power to dismiss.

40. JOSE MEL BERNARTE vs. PHILIPPINE BASKETBALL ASSOCIATION (PBA)

G.R. No. 192084, September 14, 2011

Referees are not employees. To determine the existence of an employer-employee relationship,

case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers’ power
to control the employee on the means and methods by which the work is accomplished. The so-
called control test is the most important indicator of the presence or absence of an employer-
employee relationship. Once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an infraction was committed, and the PBA
cannot overrule them once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot
and do not determine which calls to make or not to make and cannot control the referee when he
blows the whistle because such authority exclusively belongs to the referees. The very nature of
petitioner’s job of officiating a professional basketball game undoubtedly calls for freedom of
control by respondents.

41. ANGEL JARDIN vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 119268. February 23, 2000

Er-ee relationship between taxi drivers and operators. In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control over the latter.
The management of the business is in the owner's hands. The owner as holder of the certificate
of public convenience must see to it that the driver follows the route prescribed by the franchising
authority and the rules promulgated as regards its operation. We have applied by analogy the
abovestated doctrine to the relationships between bus owner/operator and bus conductor, auto-
calesa owner/operator and driver, and recently between taxi owners/operators and taxi drivers.
Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they
perform activities which are usually necessary or desirable in the usual business or trade of their
employer.

42. PEDRO CHAVEZ vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 146530. January 17, 2005

The employment status of a person is defined and prescribed by law and not by what the
parties say it should be. While an independent contractor enjoys independence and freedom
from the control and supervision of his principal, an employee is subject to the employer’s power
to control the means and methods by which the employees work is to be performed and
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accomplished. Respondents exercised control over the means and methods by which the
petitioner accomplished his work as truck driver. Evidently, he did not possess substantial
capitalization or investment in the form of tools, machinery and work premises. Moreover, the
petitioner performed the delivery services exclusively for the respondent company for a continuous
and uninterrupted period of ten years. The contract of service to the contrary notwithstanding, the
facts establish the existence of an employer-employee relationship between the respondent
company and the petitioner. It bears stressing that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in a contract and providing therein that
the employee is an independent contractor when, as in this case, the facts clearly show otherwise.

43. COCA COLA BOTTLERS (PHILS.) INC./ERIC MONTINOLA vs. DR. DEAN N. CLIMACO
G.R. No. 146881, February 5, 2007

The issuance by the principal of guidelines does not establish control by principal. The
Court, in determining the existence of an employer-employee relationship, has invariably adhered
to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called
“control test”, considered to be the most important element. The Comprehensive Medical Plan
which contains the respondents objectives, duties and obligations, does not tell respondent how
to conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of the company, in each case. Petitioner company, through the Comprehensive
Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not
control the means and methods by which respondent performed his assigned tasks. It is
precisely because the company lacks the power of control that the contract provides that
respondent shall be directly responsible to the employee concerned and their dependents
for any injury, harm or damage caused through professional negligence, incompetence or
other valid causes of action.

44. MELENCIO GABRIEL vs. NELSON BILON, ANGEL BRAZIL AND ERNESTO PAGAYGAY
G.R. No. 146989, February 7, 2007

The relationship between jeepney owners/operators and jeepney drivers under the
boundary system is that of employer-employee and not of lessor-lessee because in the
lease of chattels the lessor loses complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be responsible for the damages to
the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercises
supervision and control over the latter. The fact that the drivers do not receive fixed wages but get
only that in excess of the so-called boundary that they pay to the owner/operator is not sufficient
to withdraw the relationship between them from that of employer and employee. Thus, private
respondents were employees because they had been engaged to perform activities which were
usually necessary or desirable in the usual business or trade of the employer.

45. ALFREDO B. FELIX vs. DR. BRIGIDA BUENASEDA

G.R. No. 109704, January 17, 1995

A residency or resident physician position in a medical specialty is never a permanent one.

Residency connotes training and temporary status. It is the step taken by a physician right after
post-graduate internship (and after hurdling the Medical Licensure Examinations) prior to his
recognition as a specialist or sub-specialist in a given field.

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 46. ARIEL L. DAVID (YIELS HOG DEALER) vs. JOHN G. MACASIO
G.R. No. 195466, July 2, 2014

Entitlement of field personnel to SIL, holiday pay and 13th month pay. Engagement in a
“pakyaw” or task basis does not negate the existence of employer-employee relationship.
Engagement in “pakyaw” or task basis does not characterize the relationship between the parties
whether employment or independent contractorship. It only determines the manner of calculation
of the wages due to the employee which, is in this case, is the quantity or quality of work done.
The payment of an employee on task or pakyaw basis alone is insufficient to exclude one
from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore
validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82
from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the
determination of excluded workers who are paid by results from the coverage of Title I is
determined by the Secretary of Labor in appropriate regulations. Based on the definition of field
personnel under Article 82, Macasio does not fall under the definition of "field personnel."
The CA’s finding is supported by the established facts of this case: first, Macasio regularly
performed his duties at David’s principal place of business; second, his actual hours of work could
be determined with reasonable certainty; and, third, David supervised his time and performance
of duties. Since Macasio cannot be considered a "field personnel," then he is not exempted from
the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task basis. Unlike the IRR
of the Labor Code on holiday and SIL pay, Section 3(e) of the IRR of PD No. 851 exempts
employees "paid on task basis" without any reference to "field personnel." This could only mean
that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the
exemption from its coverage with the requirement that the task worker be a "field personnel" at
the same time.

47. NELSON V. BEGINO vs. ABS-CBN CORPORATION

GR. No. 199166, April 20, 2015

Exclusivity Clause and Prohibitions in talent contracts are indicative of control by the
employer if it does not concern well-known television and radio personality who can legitimately
be considered as talent and compensated as such. Notwithstanding the nomenclature of their
Talent Contracts and/or Project Assignment Forms and the terms and condition embodied therein,
petitioners are regular employees of ABS-CBN because they perform functions necessary and
essential to ABS-CBN’s business. Respondents’ repeated hiring of petitioners for its long-running
news program positively indicates that the latter were ABS-CBN’s regular employees.

48. CHEVRON (PHILS.), INC. v. VITALIANO C GALIT

G.R. No. 186114, October 07, 2015

Anent the power of control, it is settled that such power merely calls for the existence of
the right to control and not necessarily the exercise thereof. In the' present case, the Job
Contract between petitioner and SJS clearly provided that SJS "shall retain the right to control the
manner and the means of performing the work, with petitioner having the control or direction only
as to the results to be accomplished." The work performed, which is the "scooping of slop of oil
water separator," has no direct relation to petitioner's business, which is the importation, refining
and manufacture of petroleum products. It essentially consists of janitorial services, may be
incidental or desirable to the main activity but it is not necessary and directly related to it. SJS
presented evidence to show that it had an independent business by paying business taxes and
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fees and that it was registered as an employer with the SSS. Moreover, there was no evidence to
show that SJS and its employees were ever subject to the control of petitioner.

49. MANILA MEMORIAL PARK CEMETERY v. EZARD D. LLUZ

G.R. No. 208451, February 03, 2016

Labor-only contracting; Principal as direct employer. There is "labor-only" contracting where

the person supplying workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the
principal business of such employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him. Contracting arrangements for the
performance of specific jobs or services under the law and its implementing rules are allowed.
However, contracting must be made to a legitimate and independent job contractor since labor
rules expressly prohibit labor-only contracting. In the present case, Manila Memorial entered into
a Contract of Services with Ward Trading, a single proprietorship owned by Emmanuel Mayor
Ward with business address in Las Pinas City. A closer look at the Contract of Services reveals
that Ward Trading does not have substantial capital or investment in the form of tools, equipment,
machinery, work premises and other materials since it is Manila Memorial which owns the
equipment used in the performance of work needed for interment and exhumation services.

50. DIAMOND FARMS, INC. vs. SOUTHERN PHILIPPINES FEDERATION OF LABOR

G.R. Nos. 173254-55 & 173263

Existence of labor-only contracting. There is no evidence showing that respondent-contractors

are independent contractors. The respondent-contractors, DFI, and DARBMUPCO did not offer
any proof that respondent-contractors were not engaged in labor-only contracting. DFI should
have presented proof showing that respondent-contractors carry on an independent business and
have sufficient capitalization. DFI is the principal. It is DFI which hired the individual who in turn
hired their own men to work in the land of DARBMUPCO. DFI admits these respondent-
contractors worked under the direction and supervision of the DFI managers and personnel. DFI
paid the respondent-contractors for the services rendered in the plantation and they, in turn, pay
their workers after they received payment from DFI. DARBMUPCO did not have anything to do
with the hiring, supervision and payment of the wages of the workers-respondents thru the
contractors-respondents. DFI does not deny that it engaged the services of the respondent-
contractors. It does not dispute the claims of respondent-contractors that they sent their billing to
DFI for payment; and that DFI’s managers and personnel are in close consultation with the
respondent-contractors. That DARBMUPCO owns the awarded plantation where the respondent-
contractors and respondent-workers were working is immaterial. This does not change the
situation of the parties. As correctly found DFI, as the principal, hired the respondent-contractors
and the latter, in turn, engaged the services of the respondent-workers.

51. SUMIFRU (PHILIPPINES) CORP. vs. NAMASUFA-NAFLU-KMU

G.R. No. 202091

Existence of element of control. Sumifru gave instructions to the workers on how to go about
their work, what time they were supposed to report for work, required monitoring sheets as they
went about their jobs, and provided the materials used in the packing plant. Element of control
was present because Sumifru required monitoring sheets and imposed disciplinary actions for
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non-compliance with "No Helmet - No Entry" "No ID - No Entry" policies. The findings of facts of
the DOLE Secretary and the Med-Arbiter were supported by substantial evidence, even went
further and itself reviewed the records - to arrive, as it did arrive, at the same conclusion reached
by the DOLE Secretary and Med-Arbiter: that is, that Sumifru exercised control over the workers
in PP 90.

52. WESLEYAN UNIVERSITY-PHILIPPINES v. GUILLERMO T. MAGLAYA

G.R. No. 212774, January 23, 2017

One who is included in the by-laws of a corporation in its roster of corporate officers is an
officer of said corporation and not a mere employee. It is apparent from the By-laws of WUP
that the president was one of the officers of the corporation, and was an honorary member of the
Board. He was appointed by the Board and not by a managing officer of the corporation. The
alleged "appointment" of Maglaya instead of "election" as provided by the by-laws neither convert
the president of university as a mere employee, nor amend its nature as a corporate officer. A
corporate officer's dismissal is always a corporate act, or an intracorporate controversy which
arises between a stockholder and a corporation, and the nature is not altered by the reason or
wisdom with which the Board of Directors may have in taking such action. The issue of the alleged
termination involving a corporate officer, not a mere employee, is not a simple labor problem but
a matter that comes within the area of corporate affairs and management and
is a corporate controversy in contemplation of the Corporation Code.

53. NESTLE PHILIPPINES, INC. v. BENNY A. PUEDAN, JR.

G.R. No. 220617, January 30, 2017

Seller/Buyer under distributorship agreement, not employer-employee. The Distributorship

Agreement reveals that the relationship of NPI and ODSI is not that of a principal and a contractor
(regardless of whether labor-only or independent), but that of a seller and a buyer/re-seller. NPI
agreed to sell its products to ODSI at discounted prices, which in turn will be re-sold to identified
customers, ensuring in the process the integrity and quality of the said products based on the
standards agreed upon by the parties. The reselling activities properly pertain to ODSI, whose
principal business consists of the "buying, selling, distributing, and marketing goods and
commodities of every kind" and "entering into all kinds of contracts for the acquisition of such
goods and commodities." The Agreement hardly demonstrate control on the part of NPI over the
means and methods by which ODSI performs its business, nor were they intended to dictate how
ODSI shall conduct its business as a distributor. It does not operate to control or fix the
methodology on how ODSI should do its business as a distributor of NPI products, but merely
provide rules of conduct or guidelines towards the achievement of a mutually desired result - which
in this case is the sale of NPI products to the end consumer. The imposition of minimum standards
concerning sales, marketing, finance and operations are nothing more than an exercise of sound
business practice to increase sales and maximize profits.

54. RAMIL R. VALENZUELA v. ALEXANDRA MINING AND OIL VENTURES, INC.

G.R. No. 222419, October 05, 2016

Company driver as employee. Valenzuela was an employee of AMOVI as evidenced by the

identification card and payslips stating the company as his employer. Utilizing the four-fold test of
employer-employee relationship, the result would show that Valenzuela was under the control of
AMOVI. Valenzuela was hired and was issued an identification card showing that he was an
employee. He was likewise included in the payroll of AMOVI, although it was claimed that it was
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merely "for convenience." The power to discipline and to dismiss is present, and it was exercised
by Cesar as President of AMOVI which incidentally is a family corporation. Further, there is control
as Valenzuela had no choice as to who his passengers would be. He was a company driver who
was required to render service to the President of the Corporation, including his nuclear family. It
was them who controlled and dictated the manner by which he performed his job. There was no
evidence of dismissal as it is clear from Cesar's own admission that Valenzuela was
unceremoniously dismissed from service. He asseverated that as a family driver, Valenzuela's
service may be terminated at will by his employer. Thus, there is implied admission that he indeed
terminated Valenzuela out of his own volition, without sufficient ground and notice.

55. HSY MARKETING LTD. vs. VIRGILIO O. VILLASTIQUE

GR. No. 219569, August 17, 2016

Company driver not a field personnel. Respondent is not a field personnel because of the
nature of his job as a company driver. Expectedly, respondent is directed to deliver the goods at
a specified time and place and he is not given the discretion to solicit, select, and contact
prospective clients. Respondent claimed that he was required to report for work from 8:00 a.m.
to 8:00 p.m. Respondent was under the control and supervision of petitioners. He is a regular
employee whose task is usually necessary and desirable to the usual trade and business of the
company. Company drivers who are under the control and supervision of management officers
are regular employees entitled to benefits including service incentive leave pay. " Petitioner, as
the employer of respondent, and having complete control over the records of the company,
could have easily rebutted the said monetary claim against it by presenting the vouchers or
payrolls showing payment of the same. However, since petitioner opted not to lift a finger in
providing the required documentary evidence, the ineluctable conclusion that may be derived
therefrom is that it never paid said benefit and must, perforce, be ordered to settle its obligation
to respondent.

ARTICLE 95

56. AUTO BUS TRANSPORT SYSTEMS, INC. vs. ANTONIO BAUTISTA

G.R. No. 156367, May 16, 2005

Grant of SIL. The grant of SIL applies only to those employees not explicitly excluded by Section
1 of Rule V. It does not apply to employees classified as "field personnel." "Other employees
whose performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which SIL shall not be granted. Rather, it serves as an amplification
of the interpretation of the definition of field personnel under the LC as those "whose actual hours
of work in the field cannot be determined with reasonable certainty." The same is true with respect
to the phrase "those who are engaged on task or contract basis, purely commission basis." Hence,
employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under
the classification of field personnel. The definition of a "field personnel" is not merely concerned
with the location where the employee regularly performs his duties but also with the fact that the
employee’s performance is unsupervised by the employer. It is necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by the employer. An inquiry
must be made as to whether or not the employee’s time and performance are constantly
supervised by the employer.
27 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Prescriptive Period of SIL. In the computation of the 3-year prescriptive period, a determination
must be made as to the period when the act constituting a violation of the workers’ right to the
benefits being claimed was committed. In cases of nonpayment of allowances and other monetary
benefits, if it is established that the benefits being claimed have been withheld from the employee
for a period longer than 3 years, the amount pertaining to the period beyond the period is therefore
barred by prescription. The amount that can only be demanded by the aggrieved employee shall
be limited to the amount of the benefits withheld within 3 years before the filing of the complaint.
It can be deduced that the cause of action of an entitled employee to claim his service incentive
leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent
if the employee did not make use of said leave credits but instead chose to avail of its
commutation. If the employee wishes to accumulate his leave credits and opts for its commutation
upon his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to pay such
amount at the time of his resignation or separation from employment. The prescriptive period
commences, not at the end of the year when the employee becomes entitled to the commutation
of his service incentive leave, but from the time when the employer refuses to pay its monetary
equivalent after demand of commutation or upon termination of the employee’s services.

ARTICLE 97

57. JOSE SONGCO vs. NLRC and F.E. ZUELLIG (M), INC.
G.R. No. L-50999 March 23, 1990

Commissions as part of wage or salary. Commissions were in the form of incentives or

encouragement, so that the petitioners would be inspired to put a little more industry on the jobs
particularly assigned to them, still these commissions are direct remuneration services rendered
which contributed to the increase of income of Zuellig. Commission is the recompense,
compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the amount of his transactions or on the
profit to the principal. The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that commission are part of wage
or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary
but depend on commissions and allowances or commissions alone, are part of wage or salary
and although an er-ee relationship exists. If we adopt the opposite view that commissions, do
not form part of wage or salary, then, in effect, we will be saying that this kind of salesmen do not
receive any salary and therefore, not entitled to separation pay in the event of discharge from
employment. Will this not be absurd? Since the commissions in the present case were earned by
actual market transactions attributable to petitioners, these should be included in their separation
pay. In the computation thereof, what should be taken into account is the average commissions
earned during their last year of employment.

58. LIDUVINO M. MILLARES v. NLRC and PAPER INDUSTRIES CORPORATION

G.R. No. 122827. March 29, 1999

When an employer customarily furnishes his employee board, lodging or other facilities,
the fair and reasonable value thereof, as determined by the SOLE, is included in "wage." In
order to ascertain whether the subject allowances form part of petitioner's "wages," we divide the
discussion on the following - "customarily furnished;" "board, lodging or other facilities;" and, "fair
and reasonable value as determined by the Secretary of Labor." "Customary" is founded on long-
28 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
established and constant practice13connoting regularity. The receipt of an allowance on a monthly
basis does not ipso facto characterize it as regular and forming part of salary because the nature
of the grant is a factor worth considering. In case at bar, the subject allowances were
temporarily, not regularly, received by petitioners because once a vacancy occurs in the
company-provided housing accommodations, the employee concerned transfers to the
company premises and his housing allowance is discontinued. On the other hand, the
transportation allowance is in the form of advances for actual transportation expenses
subject to liquidation given only to employees who have personal cars. The Bislig allowance
is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte. Once
the officer is transferred outside Bislig, the allowance stops. Petitioners' allowances do not
represent such fair and reasonable value as determined by the proper authority simply because
the Staff/Manager's allowance and transportation allowance were amounts given by respondent
company in lieu of actual provisions for housing and transportation needs whereas the Bislig
allowance was given in consideration of being assigned to the hostile environment then prevailing
in Bislig. Such subject allowances did not form part of petitioners' wages.

59. SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON vs. NLRC
G.R. No. 172161, March 2, 2011

Facilities vs. Supplements. Section 1 of DOLE Memorandum Circular No. 2 provides that an
employer may provide subsidized meals and snacks to his employees provided that the subsidy
shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the
employer may deduct from the wages of the employees not more than 70% of the value of the
meals and snacks enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned. Moreover, before the value of facilities can be
deducted from the employees’ wages, the following requisites must all be attendant: first, proof
must be shown that such facilities are customarily furnished by the trade; second, the provision
of deductible facilities must be voluntarily accepted in writing by the employee; and finally,
facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions
from employees’ wages. SLL failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employee’s salaries. It also failed to provide
proof of the employees’ written authorization, much less show how they arrived at their valuations.
At any rate, it is not even clear whether private respondents actually enjoyed said facilities. The
benefit or privilege given to the employee which constitutes an extra remuneration above and over
his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of
the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or
item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case
at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency
and health of its workers while they were working at their respective projects.

ARTICLE 100

60. AMERICAN WIRE & CABLE DAILY RATED EMPLOYEES UNION vs. AMERICAN WIRE
G.R. No. 155059. April 29, 2005

Bonus not in CBA, not demandable. The benefits/entitlements subjects of the instant case are
all bonuses which were given by the private respondent out of its generosity and munificence. The
additional 35% premium pay for work done during selected days of the Holy Week and Christmas
season, the holding of Christmas parties with raffle, and the cash incentives given together with
the service awards are all in excess of what the law requires each employer to give its employees.
29 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Since they are above what is strictly due to the members of petitioner-union, the granting of the
same was a management prerogative, which, whenever management sees necessary, may be
withdrawn, unless they have been made a part of the wage or salary or compensation of the
employees. But, can these bonuses be considered part of the wage or salary or compensation
making them enforceable obligations? The Court does not believe so. For a bonus to be
enforceable, it must have been promised by the employer and expressly agreed upon by the
parties, or it must have had a fixed amount and had been a long and regular practice on the
part of the employer. The benefits/entitlements in question were never subjects of any express
agreement between the parties. They were never incorporated in the CBA. The records reveal
that these benefits/entitlements have not been subjects of any express agreement between
the union and the company, and have not yet been incorporated in the CBA. In fact, the
petitioner has not denied having made proposals with the private respondent for the service award
and the additional 35% premium pay to be made part of the CBA. The Christmas parties and its
incidental benefits, and the giving of cash incentive together with the service award cannot be said
to have fixed amounts. What is clear from the records is that over the years, there had been a
downtrend in the amount given as service award. To be considered a "regular practice," the
giving of the bonus should have been done over a long period of time, and must be shown
to have been consistent and deliberate. The downtrend in the grant of these two bonuses over
the years demonstrates that there is nothing consistent about it. Notwithstanding that the subject
35% premium pay was deliberately given and the same was in excess of that provided by the law,
the same however did not ripen into a company practice on account of the fact that it was only
granted for two (2) years and with the express reservation from respondent corporation’s owner
that it cannot continue to rant the same in view of the company’s current financial situation.

61. TSPIC CORPORATION vs. TSPIC EMPLOYEES UNION (FFW)

G.R. No. 163419, February 13, 2008

An erroneously granted benefit may be withdrawn without violating the prohibition against
non-diminution of benefits. TSPIC granted the salary increases under the condition that any
wage order that may be subsequently issued shall be credited against the previously granted
increase. As long as an employee is qualified to receive the 12% increase in salary, the employee
shall be granted the increase; and as long as an employee is granted the 12% increase, the
amount shall be credited against any wage order issued after WO No. 7. Respondents should not
be allowed to receive benefits from the CBA while avoiding the counterpart crediting provision.
They have received their regularization increases under Art. X, Sec. 2 of the CBA and the yearly
increase for the year 2001. They should not then be allowed to avoid the crediting provision which
is an accompanying condition. Charging the overpayments made to the 16 respondents through
staggered deductions from their salaries does not constitute diminution of benefits. The
overpayment of its employees was a result of an error. This error was immediately rectified by
TSPIC upon its discovery. An erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits. Here, no vested right accrued to individual
respondents when TSPIC corrected its error by crediting the salary increase for the year 2001
against the salary increase granted under WO No. 8, all in accordance with the CBA. Hence, any
amount given to the employees in excess of what they were entitled to may be legally deducted
by TSPIC from the employees’ salaries. It was also compassionate and fair that TSPIC deducted
the overpayment in installments over a period of 12 months starting from the date of the initial
deduction to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to
individual respondents any amount deducted from their salaries which was in excess of what
TSPIC is legally allowed to deduct from the salaries.

30 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 62. LEPANTO CERAMICS, INC. v. LEPANTO CERAMICS EMPLOYEES ASSOCIATION
G.R. No. 180866, March 2, 2010

Given that the bonus in this case is integrated in the CBA, the same partakes the nature of
a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus
due to respondent Association has become more than just an act of generosity on the part of the
petitioner but a contractual obligation it has undertaken. A reading of the provision of the CBA
reveals that the same provides for the giving of a "Christmas gift package/bonus" without
qualification. Terse and clear, the said provision did not state that the Christmas package shall be
made to depend on the petitioners financial standing. The records are also bereft of any showing
that the petitioner made it clear during CBA negotiations that the bonus was dependent on any
condition. Indeed, if the petitioner and Association intended that the P3,000.00 bonus would be
dependent on the company earnings, such intention should have been expressed in the CBA.
Petitioner cannot insist on business losses as a basis for disregarding its undertaking. It is
manifestly clear that petitioner was very much aware of the imminence and possibility of business
losses owing to the 1997 financial crisis. In 1998, petitioner suffered a net loss yet it gave
a P3,000.00 bonus to the members of the respondent Association. All given, business losses are
a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any
benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded
on the constitutional mandate to protect the rights of workers and to promote their welfare and to
afford labor full protection.

63. EASTERN TELECOMMUNICATIONS vs. EASTERN TELECOMS UNION

G.R. No. 185665, February 8, 2012

A reading of the provision of the CBA reveals that the same provides for the giving of 14th,
15th and 16th month bonuses without qualification. The wording of the provision does not
allow any other interpretation. There were no conditions specified in the CBA Side Agreements
for the grant of the benefits contrary to the claim of ETPI that the same is justified only when there
are profits earned by the company. Terse and clear, the said provision does not state that the
subject bonuses shall be made to depend on the ETPI’s financial standing or that their payment
was contingent upon the realization of profits. Neither does it state that if the company derives no
profits, no bonuses are to be given to the employees. In fine, the payment of these bonuses
was not related to the profitability of business operations. In the absence of any proof that
ETPI’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the
Side Agreements voluntarily, that it had full knowledge of the contents thereof and that it was
aware of its commitment under the contract. Verily, by virtue of its incorporation in the CBA Side
Agreements, the grant of bonuses has become more than just an act of generosity on the part of
ETPI but a contractual obligation it has undertaken. Moreover, the continuous conferment of
bonuses evidently negates its argument that the giving of the subject bonuses is a management
prerogative. ETPI cannot insist on business losses as a basis for disregarding its undertaking. It
is manifestly clear that although it incurred business losses in the year 2000, it continued to
distribute bonuses for said year. The parties to the contract must be presumed to have assumed
the risks of unfavorable developments. It is, therefore, only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor. In the case at bench, the Court
determines that ETPI’s claimed depressed financial state will not release it from the binding effect
of the 2001-2004 CBA Side Agreement. The considerable length of time (27 years) ETPI has been
giving the special grants to its employees indicates a unilateral and voluntary act on its part to
continue giving said benefits knowing that such act was not required by law. Accordingly, a
31 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
company practice in favor of the employees has been established and the payments made by
ETPI pursuant thereto ripened into benefits enjoyed by the employees.

ARTICLE 106

64. GSIS vs. NLRC

G.R. No. 180045, November 17, 2010

The fact that there is no actual and direct employer-employee relationship between
petitioner and respondents does not absolve the former from liability for the latter’s
monetary claims. When petitioner contracted DNL Security’s services, petitioner became an
indirect employer of respondents, pursuant to Article 107 of the Labor Code. Petitioner’s liability
covers the payment of respondents’ salary differential and 13th month pay during the time they
worked for petitioner. In addition, petitioner is solidarily liable with DNL Security for respondents’
unpaid wages from February 1993 until April 20, 1993. While it is true that respondents continued
working for petitioner after the expiration of their contract, based on the instruction of DNL Security,
petitioner did not object to such assignment and allowed respondents to render service. Thus,
petitioner impliedly approved the extension of respondents’ services. Petitioner cannot be allowed
to deny its obligation to respondents after it had benefited from their services. So long as the work,
task, job, or project has been performed for petitioner’s benefit or on its behalf, the liability accrues
for such services. The principal is made liable to its indirect employees because, after all, it can
protect itself from irresponsible contractors by withholding payment of such sums that are due the
employees and by paying the employees directly, or by requiring a bond from the contractor or
subcontractor for this purpose. Petitioner’s liability, however, cannot extend to the payment
of separation pay. An order to pay separation pay is invested with a punitive character,
such that an indirect employer should not be made liable without a finding that it had
conspired in the illegal dismissal of the employees.

65. JOEB M. ALIVIADO vs. PROCTER & GAMBLE PHILS., INC., AND PROMM-GEM INC.
G.R. No. 160506, June 06, 2011

Valid contracting/subcontracting and labor-only contracting. In the instant case,

the financial statements of Promm-Gem show that it has authorized capital stock, own warehouse
and office space, vehicles which were used for its promotional/ merchandising business, and other
clients aside from P&G. It supplied its complainant-workers with the uniforms and relevant
materials, and already considered the complainants working under it as its regular, not merely
contractual or project, employees. This negates - on the part of Promm-Gem - bad faith and intent
to circumvent labor laws which factors have often been tipping points that lead the Court to strike
down the employment practice or agreement concerned as contrary to public policy, morals, good
customs or public order. Promm-Gem cannot be considered as a labor-only contractor. On the
other hand, SAPS - having a paid-in capital of only P31,250 - has no substantial capital. It had 6-
month contracts with P&G. Yet SAPS failed to show that it could complete the 6-month contracts
using its own capital and investment. Its capital is not even sufficient for one month's payroll.
SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it
to generate its needed revenue to sustain its operations independently. Substantial capital refers
to capitalization used in the performance or completion of the job, work or service contracted
out. Furthermore, the petitioners have been charged with the merchandising and promotion of
the products of P&G, an activity that has already been considered by the Court as doubtlessly
directly related to the manufacturing business, which is the principal business of
P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited
32 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
are performing activities which are directly related to the principal business of P&G, we find that
the former is engaged in "labor-only contracting".

66. MANDAUE GALLEON TRADE, INC. vs. VICENTE ANDALES, RESTITUTA SOLITANA
G.R. No. 159668, March 7, 2008

Solidary liability in case of labor-only contracting. Respondents' work as weavers, grinders,

sanders and finishers is directly related to MGTI's principal business of rattan furniture
manufacturing. Where the employees are tasked to undertake activities usually desirable or
necessary in the usual business of the employer, the contractor is considered as a "labor-only"
contractor and such employees are considered as regular employees of the employer. MGTI was
unable to present any proof that its contractors had substantial capital. There was no evidence
pertaining to the contractors' capitalization; nor to their investment in tools, equipment or
implements actually used in the performance or completion of the job, work, or service that they
were contracted to render. The contractors are "labor-only" contractors since they do not have
substantial capital or investment which relates to the service performed and respondents
performed activities which were directly related to MGTI's main business. MGTI, the principal
employer, is solidarily liable with the labor-only contractors, for the rightful claims of the
employees. Under this set-up, "labor-only" contractors are deemed agents of the principal, MGTI,
and the law makes the principal responsible to the employees of the "labor-only" contractor as if
the principal itself directly hired or employed the employees. In prohibiting "labor-only" contracting
and creating an employer-employee relationship between the principal and the supposed
contractor's employees, the law intends to prevent employers from circumventing labor laws
intended to protect employees.

67. SPIC N' SPAN SERVICES CORPORATION vs. GLORIA PAJE, LOLITA GOMEZ
G.R. No. 174084, August 25, 2010

Lack of substantial capital, labor-only contracting. Nothing on record indicates the reason for
the respondents’ termination from employment, although the fact of termination was never
disputed. Swift denied liability on the basis of its contract with SNS. The contract was not
presented before the Labor Arbiter, although Swift averred that under the contract, SNS would
supply promo girls, merchandisers and other promotional personnel to handle all promotional
aspects and merchandising strategy of Swift. We can assume, for lack of proof to the contrary,
that the respondents’ termination from employment was illegal since neither SNS nor Swift, as
employers, presented any proof that their termination from employment was legal. The parties
failed to attach a copy of the agreement entered into between SNS and Swift. Neither did they
attach a copy of the financial statement of SNS. Thus, we are constrained to rule on the issue
involved on the basis of the findings of both the LA and the NLRC. First, the agreement between
SNS and Swift shows that the latter exercised control over the promo girls and/or merchandisers
through the services of coordinators. Second, it cannot be said that SNS has substantial capital.
Third, the duties of the petitioners were directly related, necessary and vital to the day-to-day
operations of Swift. Lastly, the uniform and identification cards used by the petitioners were subject
to the approval of Swift.

33 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 ARTICLE 110

68. DBP vs. NLRC

GR No. 10831, March 1, 1995

A declaration of bankruptcy or a judicial liquidation must be present before the worker's

preference may be enforced. To hold Art. 110 to be applicable also to extrajudicial proceedings
would be putting the worker in a better position than the State which could only assert its own prior
preference in case of a judicial proceeding. RA 6715 amending Art. 110 expanded the concept of
"worker preference" to cover not only unpaid wages but also other monetary claims to which even
claims of the Government must be deemed subordinate. It (worker preference) will find application
when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the
"claims of the Government and other creditors" may be paid. But, for an orderly settlement of a
debtor's assets, all creditors must be convened, their claims ascertained and inventoried,
and thereafter the preferences determined. In the present case, there is as yet no declaration
of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to enforce the
worker's preference. A preference applies only to claims which do not attach to specific properties.
A lien creates a charge on a particular property. The right of first preference as regards unpaid
wages recognized by Article 110 does not constitute a lien on the property of the insolvent
debtor in favor of workers. It is but a preference of credit in their favor, a preference in
application. It is a method adopted to determine and specify the order in which credits should be
paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference
in the discharge of the funds of the judgment debtor. Claims for unpaid wages do not fall at all
within the category of specially preferred claims established under Articles 2241 and 2242 of the
Civil Code, except to the extent that such claims for unpaid wages are already covered by Article
2241, number 6: "claims for laborers: wages, on the goods manufactured or the work done;" or by
Article 2242, number 3, "claims of laborers and other workers engaged in the construction
reconstruction or repair of buildings, canals and other works… To the extent that claims for unpaid
wages fall outside the scope of Article 2241, number 6, and 22421 number 3, they would come
within the ambit of the category of ordinary preferred credits under Article 2244.

ARTICLE 111

69. HOEGH FLEET SERVICES PHILS., INC. vs. BERNARDO M. TURALLO

G.R. No. 230481, July 26, 2017

A closer reading of Article 111, which fixes the limit on amount of attorney’s fees a party
may recover, would lead us to the conclusion that the 10 percent only serves as the
maximum of the award that may be granted. Article 111 does not prevent the NLRC from fixing
an amount lower than the 10% ceiling prescribed by the article when the circumstances warrant
it. There are two commonly accepted concepts of attorney's fees, the so-called ordinary and
extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a
lawyer by his client for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with the client. In its
extraordinary concept, attorney's fees are deemed indemnity for damages ordered by the court to
be paid by the losing party in a litigation. The instances where these may be awarded are those
enumerated in Article 2208, specifically par. 7 thereof which pertains to actions for recovery of
wages, and is payable not to the lawyer but to the client, unless they have agreed that the award
shall pertain to the lawyer as additional compensation or as part thereof. The extraordinary
concept of attorney's fees is the one contemplated in Article 111 of the Labor Code. This is
34 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
awarded by the court to the successful party to be paid by the losing party as indemnity for
damages sustained by the former in prosecuting, through counsel, his cause in court. Clearly,
Turallo incurred legal expenses after he was forced to file an action to recover his disability
benefits, but the court agrees that attorney's fees should be reduced, not to US$1,000.00,
however, but to five percent (5%) of the total monetary award.

ARTICLE 113

70. SHS PERFORATED MATERIALS, INC. v. MANUEL F. DIAZ

G.R. No. 185814, October 13, 2010

Absent a showing that the withholding of complainant’s wages falls under the exceptions
provided in Article 113, the withholding is thus unlawful. Management prerogative refers to
the right of an employer to regulate all aspects of employment, however, it cannot be understood
to include the right to temporarily withhold salary/wages without the consent of the employee.
Although it cannot be determined with certainty (because of insufficient evidence) whether
respondent worked for the entire period from November 16 to November 30, for petitioner’s failure
to satisfy their burden of proof, respondent is presumed to have worked during the period in
question and is, accordingly, entitled to his salary. There is, likewise, constructive dismissal. What
made it impossible, unreasonable or unlikely for respondent to continue working for SHS was the
unlawful withholding of his salary. Respondent prepared and served his resignation letter right
after he was informed that his salary was being withheld. It would be absurd to require respondent
to tolerate the unlawful withholding of his salary for a longer period before his employment can be
considered as so impossible, unreasonable or unlikely as to constitute constructive dismissal.
Even granting that the withholding of respondent’s salary on November 30, 2005, would not
constitute an unlawful act, the continued refusal to release his salary after the payroll period was
clearly unlawful. The petitioners claim that they prepared the check ready for pick-up cannot undo
the unlawful withholding.

ARTICLE 118

71. NORMAN PANALIGAN vs. PHYVITA ENTERPRISES CORPORATION

G.R. No. 202086, June 21, 2017

Termination as retaliatory measure to coerce withdrawal of complaint. Taking into

consideration the fact that the DOLE-NCR conducted an inspection of the respondent's premises
on April 13, 2005 as a result of the labor complaint filed by PANALIGAN, and PANALIGAN et al.
were implicated in the alleged January 25, 2005 theft incident only thereafter, a reasonable
inference can be made that PANALIGAN, et al.'s, termination of employment may have
been indeed a retaliatory measure designed to coerce them into withdrawing their
complaint for underpayment of wages and nonpayment of other labor standard benefits.
There is no question that PANALIGAN, et al., occupied positions that are reposed with trust and
confidence. Jurisprudence states that the job of a roomboy or chambermaid in a hotel is clearly of
such a nature as to require a substantial amount of trust and confidence on the part of the
employer. There is merit as well in PHYVITA's assertion that the dismissal of its criminal complaint
does not necessarily exonerate PANALIGAN, et al., from a charge of loss of trust and confidence.
However, even with the lower burden of proof in labor cases, there is a dearth of substantial
evidence to support a finding that PANALIGAN, et al., were indeed guilty of a willful breach of their
employer's trust. We are constrained to conclude that there is no just and valid cause to terminate

35 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
the employment of PANALIGAN, et al., for loss of trust and confidence or even for serious
misconduct.

ARTICLE 124

72. P.I. MANUFACTURING vs. P.I. SUPERVISORS AND FOREMAN ASSOCIATION

GR. No. 167217, February 4, 2008

Wage distortion cured by the CBA. While the implementation of R.A. No. 6640 resulted in a
wage distortion, such distortion was cured or remedied by the 1987 CBA which increased the
monthly salaries of the supervisors by P625.00 and the foremen, by P475.00. These increases re-
established and broadened the gap, not only between the supervisors and the foremen, but also
between them and the rank-and-file employees. The P625.00/month means P24.03 increase per
day for the supervisors, while the P475.00/month means P18.26 increase per day for the foremen.
Clearly, the gap between the wage rates of the supervisors and those of the foremen was
inevitably re-established which is more than a substantial compliance with R.A. No. 6640. The
CBA wage increases almost doubled that of the P10.00 increase mandated for those earning
below minimum wage under RA 6640. Only three (3) of them are receiving wage
rates below P100.00, thus, entitled to such increase. Now, to direct petitioner to grant an across-
the-board increase to all of them, regardless of the amount of wages they are already receiving,
would be harsh and unfair to the former.

73. BANKARD EMPLOYEES UNION-WORKERS v. NLRC and BANKARD, INC.

G.R. NO. 140689. February 17, 2004

Wage distortion; elements: (1.) An existing hierarchy of positions with corresponding salary
rates; (2) A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one; (3) The elimination of the distinction between the two
levels; and (4) The existence of the distortion in the same region of the country. There is no
hierarchy of positions between the newly hired and regular employees of Bankard, hence,
the first element of wage distortion is wanting. While seniority may be a factor in determining
the wages of employees, it cannot be made the sole basis in cases where the nature of their work
differs. For purposes of determining the existence of wage distortion, employees cannot create
their own independent classification and use it as a basis to demand an across-the-board increase
in salary. The third element is also wanting as even assuming that there is a decrease in the
wage gap between the pay of the old employees and the newly hired employees, said
gap is not significant as to obliterate or result in severe contraction of the intentional
quantitative differences in the salary rates between the employee group. The classification
under the wage structure is based on the rank of an employee, not on seniority. For this reason,
wage distortion does not appear to exist. Petitioner cannot legally obligate Bankard to correct the
alleged wage distortion as the increase in the wages and salaries of the newly-hired was not due
to a prescribed law or wage order. Article 124 should be construed and correlated in relation to
minimum wage fixing, the intention of the law being that in the event of an increase in minimum
wage, the distinctions embodied in the wage structure based on skills, length of service, or other
logical bases of differentiation will be preserved. If the compulsory mandate under Article 124 to
correct wage distortion is applied to voluntary and unilateral increases by the employer in fixing
hiring rates which is inherently a business judgment prerogative, then the hands of the employer
would be completely tied even in cases where an increase in wages of a particular group is justified
due to a re-evaluation of the high productivity of a particular group, or as in the present case, the
need to increase the competitiveness of Bankard’s hiring rate. The mere factual existence of wage
36 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other
source of obligation which requires its rectification.

13TH MONTH PAY

74. CENTRAL AZUCARERA DE TARLAC vs. CENTRAL AZUCARERA DE TARLAC

LABOR UNION-NLU
G.R. No. 188949, July 26, 2010

The practice of petitioner in giving 13th-month pay based on the employees' gross annual
earnings which included the basic monthly salary, premium pay, night shift differential pay
and holiday pay continued for almost thirty (30) years and has ripened into a company
policy or practice which cannot be unilaterally withdrawn. No doubtful or difficult question of
law is involved in this case. The guidelines set by the law are not difficult to decipher. The
voluntariness of the grant of the benefit was manifested by the number of years the employer had
paid the benefit to its employees. Petitioner only changed the formula in the computation of the
13th-month pay after almost 30 years and only after the dispute between the management and
employees erupted. This act of petitioner in changing the formula at this time cannot be
sanctioned, as it indicates a badge of bad faith. Petitioner cannot use the argument that it is
suffering from financial losses to claim exemption from the coverage of 13th-month pay because
distressed employers shall qualify for exemption from the requirement only upon prior
authorization by the SOLE.

ARTICLE 128

75. MRS. ALBERTA YANSON vs. SECRETARY OF LABOR

G.R. No. 159026, February 11, 2008

Strict requirement as to appeal bond. Article 128(b) deliberately employed the word "only" in
reference to the requirements for perfection of an appeal in labor standards cases. "Only"
commands a restrictive application, giving no room for modification of said requirements. The
rationale behind the stringency of such requirement is that the employer-appellant may choose
between a cash bond and a surety bond. Hence, limitations in his liquidity should pose no obstacle
to his perfecting an appeal by posting a mere surety bond. The Secretary has no authority to
accept an appeal under a reduced bond. Moreover, another reason why appeal was not perfected
was because petitioner was put on actual notice not only of the existence of the Compliance Order
but also of the summary investigation of her establishment. It behooves her to file a timely appeal
to public respondent or object to the conduct of the investigation. Petitioner did neither, opting
instead to sit idle and wait until the following year to question the investigation and resultant order,
in the guise of opposing the writ of execution through a motion. Such appeal already went beyond
the ten-day period.

76. NESTOR J. BALLADARES vs. PEAK VENTURES CORPORATION

G.R. No. 161794, June 16, 2009

Visitorial and Enforcement Power of RD; exception under Article 128(b). Petitioners’
complaint involved underpayment of wages and other benefits. In order to verify the allegations in
the complaint, DOLE conducted an inspection, which yielded proof of violations of labor standards.
By the nature of the complaint and from the result of the inspection, the authority of the DOLE,
under Article 128, came into play regardless of the monetary value of the claims involved. The
37 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Secretary of Labor or his duly authorized representatives is now empowered to hear and decide,
in a summary proceeding, any matter involving the recovery of any amount of wages and other
monetary claims arising out of employer-employee relations at the time of the inspection, even if
the amount of the money claim exceeds ₱5k. While it is true that under Articles 129 and 217,
the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money
claims of each employee exceed ₱5k, said provisions of law do not contemplate nor cover
the visitorial and enforcement powers of the SOLE. Such provision explicitly excludes from its
coverage Articles 129 and 217 thereby retaining and further strengthening the power of the
Secretary of Labor or his duly authorized representatives to issue compliance orders to give effect
to the labor standards provisions of said Code and other labor legislation based on the findings of
labor employment and enforcement officer or industrial safety engineer made in the course of
inspection. However, if the labor standards case is covered by the exception clause in Article
128 (b), then the Regional Director will have to endorse the case to the appropriate Arbitration
Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction,
the following elements must be present: (a) that the employer contests the findings of the labor
regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a
need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal
course of inspection. The rules also provide that the employer shall raise such objections during
the hearing of the case or at any time after receipt of the notice of inspection results. In this case,
EBVSAI did not contest the findings and the pieces of evidence presented were verifiable in the
normal course of inspection because all the employment records of the employees should be kept
and maintained in or about the premises of the workplace. No reason to divest RD of jurisdiction.

77. ALLIED INVESTIGATION BUREAU v. SOLE

G.R. No. 122006, November 24, 1999

Visitorial and Enforcement Power of RD; appeal. In the case at bar, the Office of RD conducted
inspection visits at petitioner’s establishment in accordance with the Art. 128. In the course of said
inspection, several violations of the labor standard provisions of the Labor Code were discovered
and reported. It was on the bases of this findings (which petitioner did not contest), that RD issued
the assailed Order for petitioner to pay private respondents the respective wage differentials due
them. Clearly, as the duly authorized representative of respondent Secretary of Labor, and in the
lawful exercise of the Secretary’s visitorial and enforcement powers under Article 128 of the Labor
Code, RD had jurisdiction to issue his impugned Order. Article 128 of the Labor Code likewise
explicitly provides that in case an order issued by the duly authorized representative of the SOLE
involves a monetary award, an appeal by the employer may be perfected only upon posting
of a cash or surety bond in an amount equivalent to the monetary award in the order
appealed from. Since the Order appealed from involves a monetary award, an appeal by
petitioner may be perfected only upon posting of a cash or surety bond issued by a reputable
bonding company duly accredited by SOLE in the amount equivalent to the monetary award in the
Order appealed from. It is undisputed that petitioner did not post a cash or surety bond when it
filed its appeal with the Office of Secretary. No perfect appeal on time, hence, Order became final.

78. PLACIDO O. URBANES, JR. vs. SOLE

G.R. No. 122791, February 19, 2003

Where no employer-employee relationship exists between the parties and no issue is

involved which may be resolved by reference to the LC, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that has jurisdiction.
Respondent is not seeking any relief under the LC but seeks payment of a sum of money and
38 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
damages on account of petitioner’s alleged breach of its obligation under their Guard Service
Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the
regular courts. While the resolution involves the application of labor laws, reference to the labor
code was only for the determination of the solidary liability of the petitioner to the respondent
where no employer-employee relation exists. Even if petitioner filed the complaint on his and also
on behalf of the security guards, the relief sought has to do with the enforcement of the contract
between him and the SSS. The controversy subject of the case is a civil dispute, the proper forum
is the civil courts.

The Wage Orders are explicit that payment of the increases are "to be borne" by the
principal or client. "To be borne", however, does not mean that the principal, PTSI, would directly
pay the security guards the wage and allowance increases because there is no privity of contract
between them. The security guards’ contractual relationship is with their immediate employer,
EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages. On
the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the
former availed of the security services provided by the latter. In return, the security agency collects
from its client payment for its security services. This payment covers the wages for the security
guards and also expenses for their supervision and training, the guards’ bonds, firearms with
ammunitions, uniforms and other equipment, accessories, tools, materials and supplies necessary
for the maintenance of a security force. The security guards’ immediate recourse for the payment
of the increases is with their direct employer, EAGLE. However, in order for the security agency
to comply with the new wage and allowance rates it has to pay the security guards, the Wage
Orders made specific provision to amend existing contracts for security services by allowing the
adjustment of the consideration paid by the principal to the security agency concerned. What the
Wage Orders require, therefore, is the amendment of the contract as to the consideration to cover
the service contractor’s payment of the increases mandated. In the end, therefore, ultimate liability
for the payment of the increases rest with the principal. Under the Labor Code, in case the agency
fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE. Should
EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the
increases payable to the security guards.

ARTICLE 134

79. ZIALCITA VS. PAL

Case No. RO4-3-3398-76, February 20, 1977 (Office of the President Decision)

Invalid stipulation against marriage. Article 132 enjoins the Secretary to establish standards
that will ensure the safety and health of women employees and in appropriate cases shall by
regulation require employers to determine appropriate minimum standards for termination in
special occupations, such as those of flight attendants, but that is precisely the factor that militates
against the policy of employer. The standards have not yet been established, nor has the
Secretary of Labor issued any regulation affecting flight attendants. It is logical to presume that,
in the absence of said standards or regulations which are as yet to be established, the policy of
PAL against marriage is patently illegal. In a vain attempt to give meaning to its position,
respondent went as far as invoking the provisions of the Civil Code on the preservation of marriage
as an inviolable social institution and the family as a basic social institution, respectively, as bases
for its policy of non-marriage. Respondent predicates absence of a flight attendant from her home
for long periods of time as contributory to an unhappy married life. This is not based on actual
conditions, considering that, in this modern world, sophisticated technology has narrowed the

39 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
distance from one place to another. Moreover, the employer overlooked the fact that married flight
attendants can program their lives to adapt to prevailing circumstances and events. Article 136 is
not intended to apply only to women employed in ordinary occupations, or it should have
categorically expressed so.

80. DUNCAN ASSOC. OF DETAILMAN-PTGWO vs. GLAXO WELLCOME PHILIPPINES

G.R. No. 162994, September 17, 2004

Valid stipulation against marriage. We held that Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information
from competitors. We considered the prohibition against personal or marital relationships with
employees of competitor companies upon Glaxo’s employees reasonable under the
circumstances because relationships of that nature might compromise the interests of Glaxo. In
laying down the assailed company policy, we recognized that Glaxo only aims to protect its
interests against the possibility that a competitor company will gain access to its secrets and
procedures.

81. STAR PAPER CORPORATION vs. RONALDO D. SIMBOL

G.R. No. 164774, April 12, 2006

Bona fide occupational qualification. The term "marital status" encompassed the identity,
occupation and employment of one's spouse. The no-spouse employment policies was struck
down by US courts as it violates the marital status provision because it arbitrarily discriminates
against all spouses of present employees without regard to the actual effect on the individual's
qualifications or work performance. The policy is invalid for failure of the employer to present
any evidence of business necessity other than the general perception that spouses in the
same workplace might adversely affect the business. Since the finding of a bona fide
occupational qualification justifies an employer’s no-spouse rule, the exception is interpreted
strictly and narrowly. There must be a compelling business necessity for which no alternative
exists other than the discriminatory practice. The employer must prove two factors: (1) that the
employment qualification is reasonably related to the essential operation of the job involved; and,
(2) that there is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job. No reasonable business
necessity in the case at bar. Respondents were hired after they were found fit for the job, but were
asked to resign when they married a co-employee. Petitioners failed to show how the marriage
could be detrimental to its business operations. The policy is premised on the mere fear that
employees married to each other will be less efficient. If we uphold the questioned rule without
valid justification, the employer can create policies based on an unproven presumption of a
perceived danger at the expense of an employee’s right to security of tenure. The protection given
to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the
legislature’s silence that married persons are not protected under our Constitution and declare
valid a policy based on a prejudice or stereotype. Thus, for failure of petitioners to present
undisputed proof of a reasonable business necessity, we rule that the questioned policy is an
invalid exercise of management prerogative.

40 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 82. PT&T v. NLRC
G.R. No. 118978, May 23, 1997

The policy of not accepting or considering as disqualified from work any woman worker
who contracts marriage runs afoul of the test of, and the right against, discrimination,
afforded all women workers by our labor laws and by no less than the Constitution. Contrary
to petitioner’s assertion that it dismissed private respondent from employment on account of her
dishonesty, the record discloses clearly that her ties with the company were dissolved principally
because of the company’s policy that married women are not qualified for employment in PT&T,
and not merely because of her supposed acts of dishonesty. Petitioner’s policy is not only in
derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free
from any kind of stipulation against marriage in connection with her employment, but it likewise
assaults good morals and public policy, tending as it does to deprive a woman of the freedom to
choose her status, a privilege that by all accounts inheres in the individual as an intangible and
inalienable right. Hence, while it is true that the parties to a contract may establish any
agreements, terms, and conditions that they may deem convenient, the same should not be
contrary to law, morals, good customs, public order, or public policy. Carried to its logical
consequences, it may even be said that petitioner’s policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of marriage.

SEXUAL HARASSMENT

83. MA. LOURDES T. DOMINGO vs. ROGELIO I. RAYALA

G.R. No. 155831, February 18, 2008

Creating an intimidating, hostile or offensive environment for the employee is sufficient.

Rayala’s culpability is not to be determined solely on the basis of Section 3, RA 7877, because he
is charged with the administrative offense, not the criminal infraction, of sexual harassment. Yet,
even if we were to test Rayala’s acts strictly by the standards set in Section 3, he would still be
administratively liable. It is true that this provision calls for a "demand, request or requirement of
a sexual favor." But it is not necessary that the demand, request or requirement of a sexual favor
be articulated in a categorical oral or written statement. It may be discerned, with equal certitude,
from the acts of the offender. Holding and squeezing Domingo’s shoulders, running his fingers
across her neck and tickling her ear, having inappropriate conversations with her, giving her
money allegedly for school expenses with a promise of future privileges, and making statements
with unmistakable sexual overtones – all these acts of Rayala resound with deafening clarity the
unspoken request for a sexual favor. Likewise, contrary to Rayala’s claim, it is not essential that
the demand, request or requirement be made as a condition for continued employment or for
promotion to a higher position. It is enough that the respondent’s acts result in creating an
intimidating, hostile or offensive environment for the employee. That the acts of Rayala
generated an intimidating and hostile environment for Domingo is clearly shown by the common
factual finding that Domingo reported the matter to an officemate and, after the last incident, filed
for a leave of absence and requested transfer to another unit. The administrative charges against
Rayala were for violation of RA 7877 and whether the crime of sexual harassment is malum in
se or malum prohibitum is immaterial. (Note: Under AO 250, sexual harassment amounts to
disgraceful and immoral conduct. Thus, any finding of liability for sexual harassment may also be
the basis of culpability for disgraceful and immoral conduct.)

41 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 84. PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION vs. NLRC
G.R. No. 124617, April 28, 2000

The gravamen of the offense in sexual harassment is not the violation of the employee's
sexuality but the abuse of power by the employer. Any employee, male or female, may
rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time
period within which he or she is expected to complain through the proper channels. The time to
do so may vary depending upon the needs, circumstances, and more importantly, the emotional
threshold of the employee. Private respondent admittedly allowed four (4) years to pass before
finally coming out with her employer's sexual impositions. Not many women, especially in this
country, are made of the stuff that can endure the agony and trauma of a public, even corporate,
scandal. If petitioner corporation had not issued the third memorandum that terminated the
services of private respondent, we could only speculate how much longer she would keep her
silence. Moreover, few persons are privileged indeed to transfer from one employer to another.
The dearth of quality employment has become a daily "monster" roaming the streets that one may
not be expected to give up one's employment easily but to hang on to it, so to speak, by all
tolerable means. Perhaps, to private respondent's mind, for as long as she could outwit her
employer's ploys she would continue on herb and consider them as mere occupational hazards.
This uneasiness in her place of work thrived in an atmosphere of tolerance for four (4) years, and
one could only imagine the prevailing anxiety and resentment, if not bitterness, that beset her all
that time. But William Chua faced reality soon enough. Since he had no place in private
respondent's heart, so must she have no place in his office. So, he provoked her, harassed her,
and finally dislodged her; and for finally venting her pent-up anger for years, he "found" the perfect
reason to terminate her. Anxiety was gradual in the five (5)-year employment. It began when her
plant manager showed an obvious partiality for her which went out of hand when he started to
make it clear that he would terminate her services if she would not give in to his sexual advances.
Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an
employee's spirit in her capacity for advancement. It affects her sense of judgment; it changes her
life. Petitioners should also be made to pay her moral damages, plus exemplary damages, for the
oppressive manner with which petitioners affected her dismissal from the service, and to serve as
a forewarning to lecherous officers and employers who take undue advantage of their ascendancy
over their employees.

ARTICLE 139

85. APEX MINING CO., INC. vs. NLRC

G.R. No. 94951, April 22, 1991

Laundrywoman in staffhouse, not a househelper. The term “househelper” under Rule XIII,
Section 1(b), Book 3 of the Labor Code covers family drivers, domestic servants, laundry women,
yayas, gardeners, houseboys and other similar househelpers. The definition cannot be interpreted
to include househelper or laundry woman working in staffhouses of a company who attends to the
needs of the company’s guests and other persons availing of said facilities. By the same token, it
cannot be considered to extend to the driver, houseboy, or gardener exclusively working in the
company, the staffhouses and its premises. The criterion is the personal comfort and enjoyment
of the family of the employer in the home of said employer. While the nature of the work of a
househelper, domestic servant or laundry woman in a home or in a company staffhouse may be
similar in nature, the difference in their circumstances is that in the former instance they are
actually serving the family while in the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other agricultural or similar pursuit, service
42 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
is being rendered in the staffhouses or within the premises of the business of the employer. In
such instances, they are employees of the company or employer in the business concerned
entitled to the privileges of a regular employee.

BOOK IV

CASES ON COMPENSABILITY
(AZUCENA)

86. BELARMINO vs. EMPLOYEE’S COMPENSATION COMMISSION

G.R. No. 90104, May 11, 1990

The condition of the classroom floor caused Mrs. Belarmino to slip and fall and suffer injury
as a result. The fall precipitated the onset of recurrent abdominal pains which culminated in the
premature termination of her pregnancy with tragic consequences to her. Her fall on the classroom
floor brought about her premature delivery which caused the development of septicemia post
partum which resulted in death. Her fall was the proximate or responsible cause that set in motion
an unbroken chain of events, leading to her demise. Mrs. Belarmino’s fall was the primary injury
that arose in the course of her employment as a classroom teacher; hence, all the medical
consequences flowing from it, her recurrent abdominal pains, the premature delivery of her baby,
her septicemia post partum, and death, are compensable. True, that if she had delivered her baby
under sterile conditions in a hospital operating room and attended by specially trained doctors and
nurses, she probably would not have suffered lacerations and contracted the fatal infection. But
the court may take judicial notice of the meager salaries that government pays its school teachers.
Forced to live on the margin of poverty, they are unable to afford expensive hospital care. Penury
compelled the deceased to scrimp by delivering her baby at home instead of in a hospital.

87. HINOGUIN vs. EMPLOYEES COMPENSATION COMMISSION

G.R. No. 8430, April 17,1989

24-Hour Doctrine. The death of Sgt. Hinoguin that resulted from his being hit by an accidental
discharge of his companion’s rifle arose out of and in the course of his employment as a soldier
on active duty status in the AFP and, hence, compensable. The concept of a “workplace” cannot
always be literally applied to a soldier on active duty status. A soldier must go where his company
is stationed. Sgt. Hinoguin and his companions had permission to proceed to Aritao. A place which
soldiers have secured lawful permission to be at cannot be very different from a place where they
are required to go by their commanding officer. Hinoguin and his companions were not on vacation
leave. They are authorized to carry their firearms with which they were to defend themselves if
NPA elements happen to attack them.

The Line of Duty Board of Officers had already determined that Hinoguin’s death occurred “in line
of duty.” A soldier on active duty status is really on duty 24 hours a day. He is subject to call and
to orders of his superior at all times, except when he is on vacation leave status. The work-
connected character of his injury and death was not precluded by the simple circumstance that he
was on an overnight pass. He did not effectively cease performing “official functions” because he
was granted a pass. While going to a fellow soldier’s home for a few hours for a meal and some
drinks was not a specific military duty, he was, nonetheless, in the course of performance of official
functions. A soldier should be presumed to be on official duty unless he is shown to have clearly
and unequivocally put aside that status or condition temporarily by, e.g., going on an approved
vacation leave. Even vacation leave may be preterminated by superior officers. A soldier in the
43 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Armed Forces must accept certain risks, e.g., that he will be fired upon by forces hostile to the
State or the Government. That is not, of course, the only risk that he is compelled to accept by the
very nature of his occupation or profession as a soldier. Most of the persons around him are
necessarily also members of the Armed Forces who carry firearms, too. A soldier must also
assume the risk of being accidentally fired upon by his fellow soldiers. This is reasonably regarded
as a hazard inherent in his employment as a soldier.

88. GSIS v. CA and F. Alegre

G.R. No. 128524, April 20, 1999

Non-applicability of 24-Hour Doctrine. While we agree that policemen, like soldiers, are at the
beck and call of public duty as peace officers and technically on duty round-the-clock, the same
does not justify the grant of compensation benefits for the death of SPO2 Alegre based on the
facts disclosed by the records. Obviously, the matter SPO2 Alegre was attending to at the time he
met his death, that of ferrying passengers for a fee, was intrinsically private and unofficial in nature
proceeding as it did from no particular directive or permission of his superior officer. In the absence
of such prior authority or peacekeeping nature of the act attended to by the policeman at the time
he died even without the explicit permission or directive of a superior officer, as in the case of
P/Sgt. Alvaran, there is no justification for holding that SPO2 Alegre met the requisites set forth in
the ECC guidelines. That he may be called upon at any time to render police work as he is
considered to be on a round-the-clock duty and was not on an approved vacation leave will not
change the conclusion arrived at considering that he was not placed in a situation where he was
required to exercise his authority and duty as a policeman. In fact, he was refusing to render one,
pointing out that he already complied with duty detail. At any rate, the 24-hour duty doctrine, as
applied to policemen and soldiers, serves more as an after-the-fact validation of their acts to place
them within the scope of the guidelines rather than a blanket license to benefit them in all situations
that may give rise to their deaths. In other words, the 24-hour duty doctrine should not be
sweepingly applied to all acts and circumstances causing the death of a police officer but only to
those which, although not on official line of duty, are nonetheless, basically police service in
character.

89. VALERIANO vs. EMPLOYEES COMPENSATION COMMISSION AND GSIS

G.R. No. 136200, June 8, 2000

24-hour doctrine not applied to firetruck driver. Petitioner Valeriano was not able to
demonstrate solidly how his job as a firetruck driver was related to the injuries he had suffered.
That he sustained the injuries after pursuing a purely personal and social function — having dinner
with some friends — is clear from the records of the case. His injuries were not acquired at his
work place; nor were they sustained while he was performing an act within the scope of his
employment or in pursuit of an order of his superior. Thus, his injuries and consequent disability
were not work-connected and thus, not compensable. The circumstances in the present case do
not call for the application of Hinoguin and Nitura. Following the rationalization in GSIS vs. Alegre,
the 24-hour-duty doctrine cannot be applied to petitioner’s case, because he was neither at his
assigned work place nor in pursuit of the orders of his superiors when he met an accident. But the
more important justification for the Court’s stance is that he was not doing an act within his duty
and authority as a firetruck driver, or any other act of such nature, at the time he sustained his
injuries. There is no any reasonable connection between his injuries and his work as a firetruck
driver.

44 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 90. ILOILO DOCK & ENG’G. CO. vs. WCC
G.R. No. L-26341, November 27, 1978

Direct premises rule; exceptions. The point where Pablo was shot was barely twenty meters
away from the main IDECO gate, certainly nearer than a stone’s throw therefrom. The spot is
immediately proximate to the IDECO’s premises. Considering this fact, and the further facts that
Pablo has just finished overtime work at the time, and was killed barely two minutes after dismissal
from work, the Ampil case is applicable - that the place where the employee was injured being
“immediately proximate to his place of work, the accident in question must be deemed to have
occurred within the zone of his employment and therefore arose out of and in the course thereof.”
Employment includes not only the actual doing of the work, but a reasonable margin of time and
space necessary to be used in passing to and from the place where the work is to be done. If the
employee be injured while passing, with the express or implied consent of the employer, to or from
his work by a way over the employer’s premises, or over those of another in such proximity and
relation as to be in practical effect a part of the employer’s premises, the injury is one arising out
and in the course of the employment as much as though it had happened while the employee was
engaged in his work at the place of its performance. In other words, the employment may begin
in point of time before the work is entered upon and in point of space before the place where the
work is to be done is reached. Probably, as a general rule, employment may be said to begin
when the employee reaches the entrance to the employer’s premises where the work is to be
done; but it is clear that in some cases the rule extends to include adjacent premises used by the
employee as a means of ingress and egress with the express or implied consent of the employer.

91. ALANO v. ECC

G.R. No. L-48594, March 16, 1988

Non-deviation from usual route. Dedication was a school principal whose tour of duty was from
7:30 a.m. to 5:30 p.m. While waiting for a ride at a public plaza on her way to school, she was
bumped and run over by a speeding bus which caused her death. The deceased died while going
to her place of work. She was at the place where her job necessarily required her to be if she was
to reach her place of work on time. There was nothing private or personal about her being at the
place of the accident. She was there because her employment required her to be there. The GSIS,
as the ultimate implementing agency of the Employees’ Compensation Commission, is ordered to
pay the claimants.

92. LAZO vs. EMPLOYEES’ COMPENSATION COMMISSION

G.R. No. 78617, June 18, 1990

Employment includes not only the actual doing of the work, but a reasonable margin of
time and space necessary to be used in passing to and from the place where the work is
to be done. Lazo left his station at the Central Bank several hours after his regular time off,
because the reliever did not arrive, and so he was asked to go on overtime. After permission to
leave was given, he went home. There is no evidence that he deviated from his usual, regular
homeward route or that interruptions occurred in the journey. If the employee be injured while
passing, with the express or implied consent of the employer, to or from his work by a way over
the employer’s premises, or over those of another in such proximity and relation as to be in
practical effect a part of the employer’s premises, the injury is one arising out of and in the course
of the employment as much as though it had happened while the employee was engaged in his
work at the place of its performance.

45 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 93. NFD INTERNATIONAL MANNING AGENTS vs. ILLESCAS NFD
G.R. No. 183054, September 29, 2010

“Accident” is an unintended and unforeseen injurious occurrence; something that does not occur
in the usual course of events or that could not be reasonably anticipated, that which happens by
chance or fortuitously, without intention and design, and which is unexpected, unusual and
unforeseen. The word may be employed as denoting a calamity, casualty, catastrophe, disaster,
an undesirable or unfortunate happening; any unexpected personal injury resulting from any
unlooked for mishap or occurrence; any unpleasant or unfortunate occurrence, that causes injury,
loss, suffering or death; some untoward occurrence aside from the usual course of events. The
Court holds that the snap on the back of respondent was not an accident, but an injury sustained
by respondent from carrying the heavy basketful of fire hydrant caps, which injury resulted in his
disability. The injury cannot be said to be the result of an accident, that is, an unlooked for mishap,
occurrence, or fortuitous event, because the injury resulted from the performance of a duty.
Although respondent may not have expected the injury, yet, it is common knowledge that carrying
heavy objects can cause back injury, as what happened in this case. Hence, the injury cannot be
viewed as unusual under the circumstances, and is not synonymous with the term “accident” as
defined above. Although the disability of respondent was not caused by an accident, his disability
is still compensable under Article 13 of the CBA which provides that a seafarer/officer who is
disabled as a result of any injury, and who is assessed as less than 50% permanently disabled,
but permanently unfit for further service at sea in any capacity, shall also be entitled to a 100%
compensation.

94. MENEZ vs. EMPLOYEES’ COMPENSATION COMMISSION

G.R. No. L-48488, April 25, 1980

Occupational Disease is one ‘which results from the nature of the employment, and by nature is
meant conditions to which all employees of a class are subject and which produce the disease as
a natural incident of a particular occupation, and attach to that occupation a hazard which
distinguishes it from the usual run of occupations and is in excess of the hazard attending the
employment in general.’ To be occupational, the disease must be one due wholly to causes and
conditions which are normal and constantly present and characteristic of the particular occupation;
that is, those things which science and industry have not yet learned how to eliminate. Every
worker in every plant of the same industry is alike constantly exposed to the danger of contracting
a particular occupational disease.

Rheumatoid arthritis and pneumonitis can be considered as occupational disease. All public high
school teachers, like herein petitioner, admittedly are the most underpaid but overworked
employees of the government, and are subject to emotional strains and stresses, dealing as they
do with intractable teenagers, especially young boys, and harassed as they are by various extra-
curricular or nonacademic assignments, aside from preparing lesson plans until late at night, if
they are not badgered by very demanding superiors. In this case, her emotional tension is
heightened by the fact that the high school in which she teaches is situated in a tough area —
Binondo District, which is inhabited by thugs and other criminal elements and further aggravated
by the heavy pollution and congestion therein as well as the stinking smell of the dirty Estero de
la Reina nearby. Women are most vulnerable to such unhealthy conditions. The pitiful situation of
all public school teachers is further accentuated by poor diet, for they can ill-afford nutritious food.
But even if rheumatoid arthritis and pneumonitis are not occupational diseases, there is ample
proof that petitioner contracted such ailments by reason of her occupation as a public high school
teacher due to her exposure to the adverse working conditions above-mentioned. Indisputably,
46 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
petitioner contracted pneumonitis and/or bronchiectasis with hemoptysis and rheumatoid arthritis
on January 27, 1975 after being drenched and the consequent ‘chilling during the course of
employment which are permanent and recurring in nature and work-connected.’ Undoubtedly,
petitioner’s ailments thus become compensable under the New Labor Code since under Rule III,
Section 1(c) of its Implementing Rules, ‘only sickness or injury which occurred on or after January
1975 and the resulting disability or death shall be compensable under these Rules.’

95. CLEMENTE vs. GSIS

G.R. No. 4721, July 31, 1987

Work increased risk of contracting disease. The husband of claimant worked in a skin clinic.
As janitor of the clinic, he was exposed to different carriers of viral and bacterial diseases. He had
to clean the clinic itself where patients with different illnesses come and go. He had to put in order
the hospital equipment that had been used. He had to dispose of garbage and wastes that
accumulated in the course of each working day. He was the employee most exposed to the
dangerous concentration of infected materials, and, not being a medical practitioner, least likely
to know how to avoid infection. The working conditions of claimant’s husband increased the risk
of his contracting the ailments, i.e., nephritis, leprosy, etc.

96. NARAZO vs. EMPLOYEES’ COMPENSATION COMMISSION

G.R. No. 80157, February 6, 1990

Illness aggravated by working habits. The nature of the work of the deceased as Budget
Examiner dealt with the detailed preparation of the budget, financial reports and review and/or
examination of the budget of other provincial and municipal offices. Full concentration and
thorough study of the entries of accounts in the budget and/or financial reports were necessary,
such that the deceased had to sit for hours, and more often than not, delay and even forego
urination in order not to interrupt the flow of concentration. In addition, tension and pressure must
have aggravated the situation. The cause of death of petitioner’s husband is work-connected, i.e.,
the risk of contracting the illness was aggravated by the nature of the work. From human
experience, prolonged sitting down and putting off urination result in stagnation of the urine. This
encourages the growth of bacteria in the urine, and affects the delicate balance between bacterial
multiplication rates and the host defense mechanisms. Delayed excretion may permit the retention
and survival of microorganisms which multiply rapidly, and infect the urinary tract. These are
predisposing factors to pylonephritis and uremia. Thus, while we may concede that these illnesses
are not directly caused by the nature of the duties of a teacher, the risk of contracting the same is
aggravated by their working habits necessitated by demands of job efficiency.

97. LIMBO vs. EMPLOYEES’ COMPENSATION COMMISSION and SSS

G.R. No. 146891, July 30, 2002

Compensability of sickness. Under the Amended Rules on Employees’ Compensation, “for the
sickness and the resulting disability to be compensable, the sickness must be the result of an
occupational disease listed under these Rules with the conditions set therein satisfied; otherwise,
proof must be shown that the risk of contracting the disease is increased by the working
conditions.” Concededly, “end-stage renal disease secondary to uric acid nephropathy” is not
among the Occupational Diseases under the Amended Rules. This, however, would not
automatically bar petitioner’s claim for as long as he could prove that the risk of contracting the
illness was increased by his working conditions.

47 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
Petitioner’s job description showed that he was responsible for the following:
(1) Territory’s collection, merchandising, market hygiene and promotion goals;
(2) Nestle’s principal satisfaction provider to the company’s customers and business
partners, government and other significant entities;
(3) Principal Liason of the territory with the National Sales Manager, Areas Sales
Manager and other Nestle units;
(4) Leads and manages territory sales force and 3rd party support.

Considering the workload and areas of responsibility of petitioner in this case, it is not unlikely for
him to develop hypertension, which in turn led to uremia. It should be stressed that in determining
whether a disease is compensable, it is enough that there exists a reasonable work connection.
It is sufficient that the hypothesis on which the workmen’s claim is based is probable since
probability, not certainty, is the touchstone.

98. RARO vs. EMPLOYEES’ COMPENSATION COMMISSION

G.R. No. 58445, April 27, 1989

Compensability of cancer ailments. It is not correct to say that all cancers are not compensable.
The list of occupational diseases prepared by the Employees’ Compensation Commission
includes some cancers as compensable. There is no arbitrariness in the Commission’s allowing
vinyl chloride workers or plastic workers to be compensated for brain cancer. There are certain
cancers which are reasonably considered as strongly induced by specific causes. Heavy doses
of radiation as in Chernobyl, USSR, cigarette smoke over a long period for lung cancer, certain
chemicals for specific cancers, and asbestos dust, among others, are generally accepted as
increasing the risks of contracting specific cancers. What the law requires for others is proof.
Cancer is a disease of still unknown origin which strikes people in all walks of life, employed or
unemployed. Unless it be shown that a particular form of cancer is caused by specific working
conditions (e.g., chemical fumes, nuclear radiation, asbestos dust, etc.), the Court cannot
conclude that it was the employment which increased the risk of contracting the disease. For the
guidance of the administrative agencies and practicing lawyers concerned, this decision
supersedes other contrary decisions.

99. NAESS SHIPPING PHIL. Vs. NLRC

G.R. No. 73441, September 4, 1987

No law or rule would make it illegal for an employer to assume the obligation to pay death
benefits in favor of his employee in their contract of employment. Since NAESS freely bound
itself to a contract which on its face makes it unqualifiedly liable to pay compensation benefits for
Dublin’s death while in its service, regardless of whether or not it intended to make itself the
insurer, in the legal sense, of Dublin’s life, NAESS cannot escape liability. The argument — that
to compel payment of death benefits would amount not only to rewarding the act of murder or
homicide, but also inequitably places on NAESS the twin burdens of compensating both the killer
and his victim, who allegedly had also been employed under a contract with a similar death
benefits clause — confuses the legal implications and effects of two distinct and independent
agreements. It carries within itself the seeds of its own refutation. Entitlement of Dublin to death
benefits resulted from his death while serving out his contract of employment. It was not a
consequence of his killing of Fernandez. If the latter’s death is also compensable, that is due to
the solitary fact of his death while covered by a similar contract, not precisely to the fact that he
met death at the hands of Dublin. That both deaths may be related by abuse and effect and

48 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
NAESS is the single obligor liable for compensation in both cases must, insofar as factual and
legal basis of such liability is concerned, be regarded as purely accidental circumstances.

According to American authorities, suicide is compensable in the following cases:

(a) When it results from insanity resulting from compensable work injury or disease;
(b) When it occurs during a delirium resulting from compensable disease.

Self-destruction is not presumed. In cases where compensation is sought for a violent death due
to accident, our courts have refused so far to impute to the victim an intention to end his life. The
laborer is presumed to take the necessary precautions to avoid injury to himself, unless an
intention is attributed to him to end his life. That presumption is based on the instinct of self-
preservation.

100. SOLIDUM vs. GSIS

ECC Case No. 4061, promulgated on November 23, 1988

Notorious Negligence. Solidum, who was then resting after a patrol mission, jokingly challenged
his comrades to a duel, but they all ignored him. Pointing the muzzle of his loaded rifle at his
temple and, saying “Bahala na,” Solidum squeezed the trigger. He died instantly. The System
pointed out that the deceased was not performing his duties as a soldier when the accident
occurred. Moreover, it said, the deceased’s death was caused by his notorious negligence and
not by an accident or by “an act of God.” The deceased pointed the muzzle of his rifle to himself
and squeezed its trigger causing his death. Such an act, we believe, constitutes notorious
negligence. The employees’ compensation program under which the appellant seeks relief is
designed to compensate only the working men who are victims of work-connected injuries and
other contingencies. In the case before us, the contingency did not arise out of and in the course
of employment, and therefore is not compensable.

101. QUIZON vs. GSIS

ECC Case No. 3015, promulgated on October 26, 1987

Notorious negligence is something more than simple or contributory negligence. The

solider asked permission from his unit to test the dynamite they had earlier confiscated but
accidentally ignited the fuse of the dynamite, causing it to explode prematurely. He belonged to
the Ranger Training Group whose primary mission is to develop selected soldiers in the field of
specialized small unit tactics, particularly on weapons, explosives, and hand-to-hand combat,
among others. Thus, testing a dynamite was part of the deceased’s training as a ranger. There
was indeed negligence on the part of the deceased soldier. However, his negligence was not
notorious as perceived by the respondent. Notorious negligence is something more than simple
or contributory negligence. It signifies a deliberate act of the employee to disregard his own
personal safety. Disobedience to rules does not in itself constitute notorious negligence, if no
intention can be attributed to the injured to end his life. Thus, in line with the principle of liberally
construing compensation law, to attain its purpose for which it was enacted, the correct view to be
followed is that no man in his right senses would deliberately court death. The presumption then
to be adopted is that any person by his instinct of self-preservation wants to avoid such danger
unless an intention is attributed to him to end his life. Considering the soldier’s training on
explosives as a ranger, his desire to test the confiscated dynamite is but a natural reaction on his
part to the extent that he even ignored the advice of his colleague against his plan. Unfortunately,
the dynamite exploded prematurely causing his instant death.

49 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 102. GSIS v. CA and R. BALAIS
G.R. No. 117572, January 29, 1998

Permanent total disability. While it is true that the degree of private respondent’s physical
condition at the time of her retirement was not considered as permanent total disability, yet, it
cannot be denied that her condition subsequently worsened after her head operation and
consequent retirement. In fact, she suffered afterwards from some ailments like headaches,
dizziness, weakness, inability to sleep properly, inability to walk without support and failure to
regain her memory. All these circumstances ineluctably demonstrate the seriousness of her
condition, contrary to the claim of petitioner. More than that, it was also undisputed that private
respondent was made to take her medication for life.

“A person’s disability may not manifest fully at one precise moment in time but rather over a period
of time. It is possible that an injury which at first was considered to be temporary may later on
become permanent or one who suffers a partial disability becomes totally and permanently
disabled from the same cause.” Private respondent’s persistent illness indeed forced her to retire
early which, in turn, resulted in her unemployment, and loss of earning capacity. Disability is
intimately related to one’s earning capacity. Permanent total disability means disablement of an
employee to earn wages in the same kind of work, or work of a similar nature that she was trained
for or accustomed to perform, or any kind of work which a person of her mentality and attainment
could do. It does not mean state of absolute helplessness, but inability to do substantially all
material acts necessary to prosecution of an occupation for remuneration or profit in substantially
customary and usual manner. It is the lack of ability to follow continuously some substantially
gainful occupation without serious discomfort or pain and without material injury or danger to life.
The loss of one’s earning capacity determines the disability compensation one is entitled to.

103. CENTRAL AZUCARERA DON PEDRO vs. C. DE LEON

G.R. No. L-10036, December 28, 1957

An injured laborer’s incapacity for work is not to be measured solely by the wages he
receives, or his earning, after the injury, since the amount of such wages or earnings may
be affected by various extraneous matters or factors. The alleged new employment does not
appear to have been duly established and, indeed, even supposing it to be true, that fact would
not in itself necessarily affect the laborer’s claim for compensation for a permanent partial
disability. There are a number of possible explanations of the fact that an employee who receives
higher wages after an injury than what he earned before may still have suffered an impairment of
earning capacity. Thus, it may indicate: (1) that the employee is the beneficiary of a mere gratuity
and does not actually ‘earn’ his wages; (2) that the employee, by education and training, has fitted
himself for more remunerative employment; (3) that the employee works longer hours than he did
before his injury, his hourly remuneration having increased; (4) that a general change in wage
scales has taken place for the type of work or in the industry; (5) that the new wages are intended
as an inducement to him to refrain from pursuing a claim; (6) that the employee, before his injury,
was younger or a minor; (7) that the employment in which the employee was employed after the
injury was of uncertain duration.”

50 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 CASES ON COMPENSABILITY
(SYLLABUS)

104. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) vs. COURT OF APPEALS

G.R. No. 124208, January 28, 2008

Impossibility of compliance with required evidence. Petitioners’ failure to present positive

evidence of a causal relation of the illness and his working conditions is due to the pure and
simple lack of available proof to be offered in evidence. Verily, to deny compensation to
osteosarcoma victims who will definitely be unable to produce a single piece of proof to that effect,
is unrealistic, illogical and unfair. At the very least, on a very exceptional circumstance, the rule
on compensability should be relaxed and be allowed to apply to such situations. To disallow the
benefit will even more add up to the sufferings, this time, for the ignorance of the inability of
mankind to discover the real truth about cancer. To allow the presumption of compensability to
Osteosarcoma victims, will not adversely prejudice such state policy as it will give more meaning
to the very purpose and essence of the State Insurance Fund. We believe that in the meantime
that osteosarcoma’s cause and origin are not yet unearthed, the benefit of the doubt should be
resolved in favor of the claim. The requirement is impossible to comply with, given the present
state of scientific knowledge. The obligation to present such as an impossible evidence must,
therefore, be deemed void. Respondent is entitled to compensation, consistent with the social
legislation’s intended beneficial purpose.

105. DOMINGA A. SALMONE vs. ECC and SSS

G.R. No. 142392, September 26, 2000

No proof of causal relation if listed as occupational disease. Cardiovascular disease is listed

as compensable occupational disease provided that substantial evidence is adduced to prove any
of the following conditions:
• If the heart disease was known to have been present during employment, there must be
proof that an acute exacerbation clearly precipitated by the unusual strain by reason of the
nature of his work.
• The strain of work that brings about an acute attack must be of sufficient severity and
must be followed within twenty four (24) hours by the clinical signs of a cardiac insult
to constitute causal relationship.
• If a person who was apparently asymptomatic before subjecting himself to strain of work
showed signs and symptoms of cardiac injury during the performance of his work
and such symptoms and signs persisted, it is reasonable to claim a causal relationship.

In this case, petitioner has shown by uncontroverted evidence that in the course of her
employment, due to work related stress, she suffered from severe chest pains which caused her
to take a rest, per physician's advice, and ultimately to resign from her employment. She was
diagnosed as suffering from "atherosclerotic heart disease, atrial fibrillation, cardiac arrhythmia"
which, as heretofore stated, is included within the term cardiovascular diseases. Cardiovascular
diseases, which, include atherosclerotic heart disease, atrial fibrillation, cardiac arrhythmia, are
listed as compensable occupational diseases in the Employees' Compensation Commission,
hence, no further proof of casual relation between the disease and claimant's work is necessary.

51 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 106. LEGAL HEIRS OF THE LATE EDWIN B. DEAUNA vs. FIL-STAR MARITIME
G.R. No. 191563, June 20, 2012

Benefits under the CBA. According to petitioners, the CBA merely focuses on the fact of death
occurring during the term of a seafarer's employment, regardless of its cause. If death occurs
beyond the term of a seafarer's employment, compensation should still be awarded as long as a
connection can be established between the causes of repatriation and death. Under the
IBF/AMOSUP/IMMAJ CBA provisions, Edwin's death a little more than a year from his
repatriation can still be considered as one occurring while he was still under the
respondents' employ. Body weakness, head heaviness, drowsiness and dis-orientedness are
among the symptoms associated with GBM exhibited by Edwin since October 2004 while he was
still on board and even when the latter was repatriated. The symptoms previously referred to were
the cause of Edwin's repatriation more or less than a month before his contract was about to
expire. About a month after repatriation, Dr. Mercado found that Edwin was afflicted with GBM
and that the tumor had been progressively growing for months. Further, the medical report for the
monthly expenses for Edwin's chemotherapy and advising the latter to come back was an implied
admission that medical assistance and sick pay should indeed be extended to Edwin even beyond
the 130-day period prescribed by Articles 25 and 26. Since Edwin's death is reasonably connected
to the cause of his repatriation, within the purview of the IBF/AMOSUP/IMMAJ CBA, he indubitably
died while under the respondents' employ, thus, entitling the petitioners to death benefits.

107. ROBERTO D. DEBAUDIN vs. SSS and ECC

G.R. No. 148308, September 21, 2007

Establishing compensability of a non-occupational disease. Reasonable proof of work-

connection and not direct causal relation is required. It is enough that the hypothesis on which the
workmen's claim is based is probable. Probability, not the ultimate degree of certainty, is the test
of proof in compensation proceedings since in carrying out and interpreting the provisions of the
Labor Code and its IRR are the primordial and paramount consideration is the employees' welfare.
Petitioner’s chronic open angle glaucoma is not listed as an occupational disease. Perusal of the
records reveals petitioner’s failure to adduce any proof of a reasonable connection between his
work as a seaman and the chronic open angle glaucoma he had contracted. At the most, he
merely claims that he performed odd jobs without fail – cleaning chemical-spill-oil on deck, slat
dislodging, and spraying naphtha chemical and washing dirt and rusts inside the tank – strenuous
tasks which according to him required climbing, bending over and running for so many times.
Petitioner presented no competent medical history, records or physician’s report to objectively
substantiate the claim that there is a reasonable nexus between his work and his ailment. To
easily attribute to the "physical and emotional strains" allegedly attendant in petitioner’s job as a
seaman the chronic open angle glaucoma he is currently suffering is evidently to oversimplify an
otherwise complex fact-finding process that should have taken place to determine the true cause
of the ailment.

108. PABLO A. AUSTRIA vs. COURT OF APPEALS

G.R. No. 146636, August 12, 2002

Conversion from PPD to PTD. The test of whether or not an employee suffers from ‘permanent
total disability’ is a showing of the capacity of the employee to continue performing his work
notwithstanding the disability he incurred. If by reason of the injury or sickness he sustained, the
employee is unable to perform his customary job for more than 120 days and he does not come
within the coverage of Rule X (TTD), then the said employee undoubtedly suffers from ‘permanent
52 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
total disability’ regardless of whether or not he loses the use of any part of his body. Petitioner has
been employed as bag piler for twenty (20) years at the Central Azucarera de Tarlac. His duties
require him to carry heavy loads of refined sugar and to perform other manual work. Since his
work obviously taxes so much on his back, his illness which affects his lumbar spine renders him
incapable of doing his usual work as bag piler. Hence, his disability to perform his regular duties
may be considered total and permanent. There is nothing in the law that prohibits the conversion
of permanent partial disability benefit to permanent total disability benefit if it is shown that the
employee’s ailment qualifies as such. Furthermore, the grant of permanent total disability benefit
to an employee who was initially compensated for permanent partial disability but is found to be
suffering from permanent total disability would not be prejudicial to the government to give it
reason to deny the claim. This is to provide meaningful protection to the working class against the
hazards of disability, illness and other contingencies resulting in the loss of income.

109. ALEXANDER B. GATUS vs. SOCIAL SECURITY SYSTEM

G.R. No. 174725, January 26, 2011

Substantial evidence for non-occupational diseases. Gatus was diagnosed to have suffered
from CAD,Triple Vessel and Unstable Angina, diseases or conditions falling under the category of
Cardiovascular Diseases which are not considered occupational diseases, hence, he was
expected to show that the illness or the fatal disease was caused by his employment and the risk
of contracting the disease was increased or aggravated by the working conditions. Gatus did not
discharge the burden of proof imposed under the Labor Code to show that his ailment was work-
related. While he might have been exposed to various smoke emissions at work for 30 years, he
did not submit satisfactory evidence proving that the exposure had contributed to the development
of his disease or had increased the risk of contracting the illness. Neither did he show that the
disease had progressed due to conditions in his job as a factory worker. In fact, he did not present
any physician’s report in order to substantiate his allegation that the working conditions had
increased the risk of acquiring the cardiovascular disease.

110. REPUBLIC OF THE PHILIPPINES vs. PEDRO MARIANO

G.R. No. 139455, March 28, 2003

Ailment in course of employment. While it is true that Parkinson’s disease is not included in the
list of compensable diseases under the law then prevailing, it was found by the Court of Appeals
that the conditions prevailing at LGP largely led to the progression of the ailment. The respondent’s
functions entailed constant exposure to hazardous or toxic chemicals such as carbon disulfate,
carbon monoxide, or manganese. As the ECC itself admitted in its judgment, the exposure to
these toxic substances is among the possible causes of this disease. Where it was established
that the claimant’s ailment occurred during and in the course of his employment, it must
be presumed that the nature of the claimant’s employment is the cause of the disease.

111. SOCIAL SECURITY COMMISSION v. EDNA A. AZOTE

G.R. No. 209741, April 15, 2015

Legal spouse as beneficiary. The law in force at the time of Edgardo’s death was RA 8282. As
a social security program of the government, Section 8 (e) and (k) of the said law expressly
provides that only the legal spouse of the deceased-member is qualified to be the beneficiary of
the latter’s SS benefits. In this case, there is a concrete proof that Edgardo contracted an earlier
marriage with another individual as evidenced by their marriage contract. Edgardo even
acknowledged his married status when he filled out the 1982 Form E-4 designating Rosemarie as
53 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
his spouse. Edna, without doubt, failed to establish that there was no impediment or that the
impediment was already removed at the time of the celebration of her marriage to
Edgardo. Considering that Edna was not able to show that she was the legal spouse, she would
not qualify under the law to be the beneficiary of the death benefits of Edgardo. Although an SSS
member is free to designate a beneficiary, the designation must always conform to the statute.

112. MARLOW NAVIGATION PHILIPPINES, INC. vs. HEIRS OF RICARDO S. GANAL

G.R. No. 220168

Deliberate jumping overboard not compensable. The death of Ganal took place in the course
of his employment, in that it happened at the time and at the place where he was working.
However, the accident which produced this tragic result did not arise out of such employment. The
occasion where Ganal took alcoholic beverages was a grill party he attended not because he was
performing his duty as a seaman, but was doing an act for his own personal benefit. Even if the
Court were to adopt a liberal view and consider the grill party as incidental to Ganal's work as a
seaman, his death during such occasion may not be considered as having arisen out of his
employment as it was the direct consequence of his decision to jump into the water without
coercion nor compulsion from any of the ship officers or crew members. The hazardous nature of
this act was not due specially to the nature of his employment. It was a risk to which any person
on board the MV Stadt Hamburg, such as a passenger thereof or an ordinary visitor, would have
been exposed had he, likewise, jumped into the sea, as Ganal had. Petitioners took the necessary
precautions when: (1) the ship captain advised Ganal to proceed to his cabin and take a rest; (2)
Ganal was assisted by no less than three crew members who tried to persuade him to return to
his cabin; (3) Crew members tried to restrain him. His refusal to be escorted to his cabin, that he
resisted efforts by crew to restrain him and jumped without hesitation or warning does not prove
that he was not in full possession of his faculties as to characterize his acts as involuntary or
unintentional. His act of jumping overboard was not connected with the performance of his duties
as ship oiler. Ganal's act of intentionally jumping overboard, while in a state of intoxication, could
be considered as a deliberate and willful act on his own life which is directly attributable to him.

113. MAGSAYSAY MARITIME CORPORATION VS. OBERTO S. LOBUSTA

G.R. No. 177578, January 25, 2012

Non-declaration of unfitness during the 240-day period. Lobusta was first examined by the
Pulmonologist and Orthopedic Surgeon, and the maximum 240-day medical-treatment period
expired, but no declaration was made that Lobusta is fit to work. Nor was there a declaration of
the existence of Lobusta’s permanent disability. He was still prescribed medications. On
Lobusta’s other ailment, Dr. Roa’s clinical summary also shows that Lobusta was still unfit to
resume his normal work as a seaman due to the persistence of his symptoms. But neither did
Dr. Roa declare the existence of Lobusta’s permanent disability. Again, the maximum 240-day
period had already expired. May 22, 1998 to December 16, 1999 is 19 months or 570 days.
In Remigio, unfitness to work for 11-13 months was considered permanent total disability. So it
must be in this case. And Dr. David’s much later report that Lobusta “ought not to be considered
fit to return to work as an Able Seaman” validates that his disability is permanent and total. It
was found that Lobusta was not able to work again as a seaman and that his disability is
permanent “as he has been unable to work since 14 May 1998 to the present or for more than
120 days.” This period is more than eight years. Thus, we affirm the award to Lobusta of
US$60,000 as permanent total disability benefits.

54 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 114. SEAPOWER SHIPPING ENT., INC. v. HEIRS OF WARREN M. SABANAL
G.R. No. 198544, June 19, 2017

Insanity as counter-defense. Under the POEA-SEC, the employer is generally liable for death
compensation benefits when a seafarer dies during the term of employment. This rule, however,
is not absolute. Part II, Section C(6) of the POEA-SEC exempts the employer from liability if it can
successfully prove that the seafarer's death was caused by an injury directly attributable to his
deliberate or willful act. Seapower submitted the ship log entries and master's report to prove that
Sabanal suddenly jumped overboard the MT Montana. The Labor Arbiter, NLRC, and Court of
Appeals all agree that the evidence presented sufficiently establish that Sabanal indeed jumped
into the sea. Elvira did not present any evidence to support her claim that Sabanal was already
insane when he jumped overboard. She only relied on the strange behavior of Sabanal as detailed
by the ship captain in the ship log and master's report. However, while such behavior may be
indicative of a possible mental disorder, it is insufficient to prove that Sabanal had lost full control
of his faculties. In order for insanity to prosper as a counter-defense, the claimant must
substantially prove that the seafarer suffered from complete deprivation of intelligence in
committing the act or complete absence of the power to discern the consequences of his action.
Mere abnormality of the mental faculties does not foreclose willfulness. In fact, the ship log shows
Sabanal was still able to correct maps and type the declarations of the crew hours before he
jumped overboard. The captain observed that Sabanal did not appear to have any problems while
performing these simple tasks, while the sailor-on-guard reported that Sabanal did not show any
signs of unrest immediately before the incident. These circumstances, coupled with the legal
presumption of sanity, tend to belie Elvira's claim. Further, there was no negligence on the part of
the employer. As soon as the ship captain became aware of Sabanal 's unusual behavior, he
immediately assigned other sailors to specifically watch over Sabanal. At the time he jumped
overboard, the crew then immediately undertook rescue maneuvers, throwing life buoys into the
sea, turning the ship, and lowering the life boats.

115. GSIS vs. APOLINARIO C. PAUIG

G.R. No. 210328, January 30, 2017

Creditable period of service for GSIS retirement. Pauig claims that his casual and temporary
service in the government from February 12, 1964 to July 18, 1977 should be credited for the
purpose of computing his retirement benefits. In certain cases, the Court allowed the claimants to
avail of their retirement benefits although no deductions were made from their salaries during the
disputed periods when they were paid on a per diem basis. However, unlike in the case at bar,
deductions were actually made from claimant's fixed salary before and after the short controversial
period. Here, the primordial reason why there were no deductions during those fourteen
(14) years was because Pauig was not yet a GSIS member at that time. There was thus no
legal obligation to pay the premium as no basis for the remittance of the same existed. And since
only periods of service where premium payments were actually made and duly remitted to the
GSIS shall be included in the computation of retirement benefits, said disputed period of fourteen
(14) years must corollarily be removed from Pauig's creditable service. The language of the
retirement law is clear. Pauig's casual and temporary service must necessarily be excluded from
the creditable period of service for retirement purposes.

55 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 116. C.F. SHARP CREW MANAGEMENT, INC. v. RHUDEL A. CASTILLO
G.R. No. 208215, April 19, 2017

Non-observance of third doctor referral provision. The conflicting findings of the company's
doctor and the seafarer's physician often stir suits for disability compensation. As an extrajudicial
measure of settling their differences, the POEA-SEC gives the parties the option of agreeing jointly
on a third doctor whose assessment shall break the impasse and shall be the final and binding
diagnosis. In the instant case, respondent did not seek the opinion of a third doctor. Based on
jurisprudence, the findings of the company-designated physician prevail in cases where the
seafarer did not observe the third-doctor referral provision in the POEA-SEC. However, if the
findings of the company-designated physician are clearly biased in favor of the employer, then
courts may give greater weight to the findings of the seafarer's personal physician. Clear bias on
the part of the company-designated physician may be shown if there is no scientific relation
between the diagnosis and the symptoms felt by the seafarer, or if the final assessment of the
company designated physician is not supported by the medical records of the seafarer.
Respondent has been under the care and supervision of the company physicians since his
repatriation or almost five (5) months. The medical attention they had given the respondent
undeniably enabled them to acquire familiarity and detailed knowledge of the latter's medical
condition. On the other hand, the certification of Dr. Vicaldo was replete with details justifying the
conclusion that the illness of respondent is work-related - he only saw respondent once, and
neither performed any sort of diagnostic test or examination nor alleged how he examined and
treated and arrived at his conclusion. Such a bare statement that "His illness is considered work-
aggravated/related", without any explanation as to the same, much less how such conclusion was
arrived at, could not even begin to prove that complainant's illness is work-related, much less
overcome the findings of the company-designated physicians which were arrived at after a
considerable period of treatment.

117. HENRY DIONIO v. TRANS-GLOBAL MARITIME AGENCY, INC.

G.R. No. 217362, November 19, 2018

Assessment of company-designated physician not ipso facto conclusive. Non-compliance

with the requirement of referral to a third-party physician is tantamount to violation of the terms
under the POEA-SEC, and without a binding third-party opinion, the findings of the company-
designated physician shall prevail over the assessment made by the seafarer's doctor. However,
non-referral of the conflicting findings to a third doctor does not ipso facto render the conclusions
of the company-designated physician conclusive and binding on the courts. Dionio was treated by
the company-designated doctor, and before the lapse of the 120-day period, the company doctor
issued a Medical Report suggesting a disability grading of Grade 10. His allegation that he was
unable to work for 257 days is uncontroverted as respondents merely argued that it is immaterial
whether or not a seafarer actually returned to work within 120 days or even 240 days, since he
was already assessed with Grade 10 disability within the 120-day period. While much weight is
given to the company-doctor's assessment, in view of the seafarer's failure to initiate the referral
to a third doctor, the Court is not bound to accept, in its entirety, the company doctor's findings,
where the circumstances surrounding the fit-to-work assessment show otherwise. In this case,
while Dionio did not initiate the referral to a third doctor, the assessment of the medical certificate
issued by the company doctor itself shows that Dionio's claim for permanent and total disability is
in order.

56 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 118. JOSE JOHN C. GUERRERO v. PHILIPPINE TRANSMARINE CARRIERS, INC.
G.R. No. 222523, October 03, 2018

Need for substantial evidence to counter company-designated physician. Work-relatedness

of an injury or illness means that the seafarer's injury or illness has a possible connection to one's
work, and thus, allows the seafarer to claim disability benefits therefor. Unfortunately, Guerrero
utterly failed to prove a reasonable connection between his work as a Casino Dealer and his
alleged lumbar disc injury. Guerrero's contentions that his disability is permanent and total
because Dr. Catbagan, the company-designated physician, failed to issue a medical certificate as
to his fitness for work resumption or disability within the 240-day maximum period, and because
his chosen physician, Dr. Garcia, issued a medical certificate finding him unfit for further service
as a seafarer, would not advance his cause against the respondents. Further, the Court finds that
the declaration of Dr. Garcia in the medical certificate that Guerrero is "UNFIT for further sea
service in whatever capacity as a SEAFARER" leaves much to be desired. Said medical
certification was not supported by any relevant and necessary diagnostic tests and/or procedures.
Dr. Garcia issued the medical certificate on the very same day that he was consulted by Guerrero
based on a single medical report which outlined the alleged findings and medical history of
Guerrero despite the fact that said physician examined Guerrero only once. At best, Dr. Garcia's
medical certificate was merely concerned on the examination of Guerrero for purposes of
diagnosis and treatment and not for the determination of whether the latter incurred a disability.
The medical certificate issued by Dr. Garcia and the alleged failure of Dr. Catbagan to issue the
pertinent medical certificate within the maximum period of 240 days, are of no use and will not
give Guerrero that cause of action he sorely lacked at the time he filed his complaint. His injury is
not work-related, hence, not compensable.

119. PHILIPPINE HAMMONIA SHIP AGENCY v. FERDINAND Z. ISRAEL

G.R. No. 200258, October 03, 2018

Harmonizing the 120-day and 240-day periods.

(1) The company-designated physician must issue a final medical assessment on the
seafarer's disability grading within a period of 120 days from the time the seafarer reported
to him.
(2) If the company-designated physician fails to give his assessment within the period of 120
days, without any justifiable reason, then the seafarer's disability becomes permanent and
total.
(3) If the company-designated physician fails to give his assessment within the period of 120
days with a sufficient justification (e.g., seafarer required further medical treatment or
seafarer was uncooperative), then the period of diagnosis and treatment shall be extended
to 240 days. The employer has the burden to prove that the company designated physician
has sufficient justification to extend the period.
(4) If the company-designated physician still fails to give his assessment within the extended
period of 240 days, then the seafarer's disability becomes permanent and total, regardless
of any justification. Certainly, the company-designated physician must perform some
significant act before he can invoke the exceptional 240-day period under the IRR. It is only
fitting that the company-designated physician must provide a sufficient justification to
extend the original 120-day period. Otherwise, under the law, the seafarer must be granted
the relief of permanent and total disability benefits due to such non-compliance.

To become effective, such assessment must be issued within the bounds of the authorized 120-
day period or the properly extended 240-day period.
57 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 (1) that mere inability to work for a period of 120 days does not entitle a seafarer to permanent
and total disability benefits;
(2) that the determination of the fitness of a seafarer for sea duty is within the province of the
company-designated physician, subject to the periods prescribed by law;
(3) that the company-designated physician has an initial 120 days to determine the fitness or
disability of the seafarer; and
(4) that the period of treatment may only be extended to 240 days if a sufficient justification
exists such as when further medical treatment is required or when the seafarer is
uncooperative.

Although the company-designated doctors and respondent's physician differ in their assessments
of the degree of respondent's disability, both found that respondent was unfit for sea-duty due to
respondent's need for regular medical check-ups and treatment which would not be available if he
were at sea. There is no question in our mind that respondent's disability was total.
The company-designated physician still failed to make a determination of respondent's disability
within the period prescribed by law, i.e., 120 days. Dr. Lim and Dr. Cruz-Balbon did not give a
medical diagnosis within the 120-day period that could justify the extension of respondent's
treatment to 240 days. Dr. Cruz-Balbon declared respondent "Fit to Resume Sea Duties" only
after the lapse of 142 days. Dr. Lim and/or Dr. Cruz-Balbon did not offer any plausible reason for
their failure to comply with the 120-day rule, hence, respondent's disability became permanent
and total.

120. C.F. SHARP CREW MANAGEMENT, INC. v. JOWELL P. SANTOS

G.R. No. 213731, August 01, 2018

Extent of disability based on grading. While a seafarer is entitled to TTD benefits during his
treatment period, it does not follow that he should likewise be entitled to PTD benefits when his
disability was assessed by the company-designated physician after his treatment. He may be
recognized to have permanent disability because of the period he was out of work and could not
work, but the extent of his disability (whether total or partial) is determined, not by the number of
days that he could not work, but by the disability grading the doctor recognizes based on
his resulting incapacity to work and earn his wages. It is the doctor's findings that should prevail
as he or she is equipped with the proper discernment, knowledge, experience and expertise on
what constitutes total or partial disability. The physician's declaration serves as the basis for the
degree of disability that can range anywhere from Grade 1 to Grade 14. Notably, this is a serious
consideration that cannot be determined by simply counting the number of treatment lapsed days.
The timely medical assessment of a company-designated physician is given great significance by
the Court to determine whether a seafarer is entitled to disability benefits. The company-
designated physicians suitably gave their medical assessment of respondent's disability before
the lapse of the 120-day period. It was even unnecessary to extend the period of medical
assessment to 240 days. After rigorous medical diagnosis and treatments, the company
designated physicians found that respondent only had a partial disability and gave a Grade 12
disability rating.

121. MAGSAYSAY MOL MARINE, INC. v. MICHAEL PADERES ATRAJE

G.R. No. 229192, July 23, 2018

Complete and definite assessment required for disability benefits. Under the POEA-SEC, it
is the primary responsibility of the company-designated doctor to determine the disability grading
or fitness to work of seafarers. To be conclusive, the medical assessment or report of the
58 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
company-designated physician must be complete and definite to give the seafarer proper
disability benefits and to truly reflect the true extent of the sickness or injuries of the seafarer and
his or her capacity to resume work. Otherwise, the disability benefits awarded might not be
commensurate with the prolonged effects of the injuries suffered. Furthermore, while the
assessment of the company-designated physician vis a vis the schedule of disabilities under the
POEA-SEC is the basis for compensability of a seafarer's disability, it is still subject to the periods
prescribed in the law. Here, the company-designated physicians clearly breached their duty to
provide a definite assessment. While the records show that reports were regularly issued to update
respondent's medical condition, the particular treatment administered, and the medicines
prescribed to him, they were correspondences between the company-designated physicians and
petitioners only. There was no indication that respondent was furnished these reports.
Significantly, the interim disability rating of Grade 10 does not fully assess respondent's condition
and cannot provide sufficient basis for the award of disability benefits in his favor. Evidently, his
illnesses disabled him to continue his job on board the vessel.

122. LORNA B. DIONIO v. ND SHIPPING AGENCY AND ALLIED SERVICES, INC.

G.R. No. 231096, August 15, 2018

Required submission to PEME after repatriation; exceptions. A seafarer claiming disability

benefits is required to submit himself to a post-employment medical examination (PEME) by a
company-designated physician within 3 working days from repatriation. Failure to comply with
such requirement results in the forfeiture of the seafarer's claim for disability benefits. There are,
however, exceptions to the rule: (1) when the seafarer is incapacitated to report to the employer
upon his repatriation; and (2) when the employer inadvertently or deliberately refused to
submit the seafarer to a post-employment medical examination by a company-designated
physician. Moreover, it is the burden of the employer to prove that the seafarer was referred to a
company-designated doctor. In this case, ND Shipping did not heed his request for an extended
medical check-up at the ship owner's expense and the company-designated physician did not
conduct the said medical examination. He was forced to seek medical assistance at his own
expense elsewhere. Since respondents unreasonably denied the request to be referred to the
company-designated physician at the former's expense, in spite of his timely reporting, they should
be held liable. Respondents, likewise, failed to overcome the said disputable presumption of the
work-related illness. Further, the release, waiver and quitclaim did not state the specific
consideration that Gil received from respondents. Gil was in a worsening and hapless condition
when he signed the said waiver. He was not even given any medical assistance. Thus, he had no
other option but to sign the document in favor of respondents in order to receive a meager
compensation for his medical needs.

123. ABOSTA SHIPMANAGEMENT CORP. V. DANTE C. SEGUI

G.R. No. 214906, January 16, 2019

Non-issuance of assessment within 120 days. To strike a balance between the two conflicting
interests of the seafarer and its employer, the rules methodically took in consideration the
applicability of both the 120-day period under the Labor Code and the 240-day period under the
IRR. The medical assessment of the company-designated physician is not the alpha and the
omega of the seafarer's claim for permanent and total disability. To become effective, the
assessment must be issued within the bounds of the authorized 120-day period or the
properly extended 240-day period. During Segui's repatriation and immediate referral to the
company-designated physician until the 120-day period, the latter did not issue a medical
assessment on Segui's disability grading. It was only on the 219th day when Segui reached the
59 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
maximum medical cure, that the company-designated physician issued a disability rating of
"Grade 8 disability - moderate rigidity or 2/3 loss of motion or lifting power of the trunk." Notably,
the company-designated physician did not determine Segui's fitness to work. Clearly, there was
non-compliance with rules on claim for total and permanent disability benefits cited in
the Elburg case. The company-designated physician failed to issue a medical assessment within
the 120-day period from the time Segui reported to him, and there was no justifiable reason for
such failure. Likewise, there was no sufficient justification to extend the 120-day period to 240
days. Thus, Segui's disability becomes permanent and total, and entitles him to permanent and
total disability benefits under his contract and the CBA.

124. EDGAR L. TORILLOS VS. EASTGATE MARITIME CORPORATION

G.R. No. 216165

Not compensable under CBA, but under POEA-SEC. There was no evidence to show that
Torillos met an accident on board the vessel that caused his injury. There was no accident report
or any medical report issued indicating that Torillos figured in an accident while on board. The
grant of disability benefits under the IBF JSU/AMOSUP-IMMAJ CBA is confined only to "accident
whilst in the employment of the Company regardless of fault, including accidents occurring while
travelling to or from the ship, and whose ability to work as a seafarer is reduced as a result thereof,
but excluding permanent disability due to willful acts.” Torillos failed to prove by substantial
evidence that his disability was caused by an accident, hence, there is no basis in awarding him
disability benefits under the CBA. His entitlement to disability benefits is therefore governed by
the POEA-SEC and relevant labor laws which are deemed written in the contract of employment
with Eastgate. The illness was compensable based on the PEME conducted on Torillos which
found him fit to work. His illness was aggravated by his work as chief cook whose duties involved
heavy manual labor such as carrying the heavy provisions of the ship, preparation and serving of
all meals.

Premature filing for PTD benefits. Upon his repatriation, Torillos was given medical attention by
the company-designated physicians. He was subjected to rigorous medical examinations, was
prescribed medications and was put on therapy to address his condition. Dr. Cruz issued a medical
opinion stating that Torillos' lumbar spondylosis will require further treatment. As such, he gave
an interim assessment of Grade 8. Thereafter, Torillos continuously received medical treatment
from the company-designated physicians. However, 141 days since repatriation, Torillos filed a
complaint for total and permanent disability benefits. Evidently, it was premature for him at this
time to invoke his claim for total and permanent disability inasmuch as the 240-day period had not
yet lapsed. At the time he filed his complaint, he was still under temporary total disability.
Instead of continuing his treatment which is still within the 240-day period allowed for the company-
designated physician to evaluate his condition, he filed a case for total and permanent disability
benefits despite the absence of a definite finding from the company-designated physician. He was
armed only with the interim assessment of the company-designated physician which did
not give him the cause of action for his claim. It was only after the filing of such complaint that
he sought the opinion of his own physician, Dr. Cadag. As such, the complaint should have been
dismissed for lack of cause of action. From the foregoing, Torillos had no cause of action for total
and permanent disability claim. At most, he is only qualified to claim partial permanent disability
benefits equivalent to Grade 8 disability rating under the POEA-SEC, as reflected in Dr. Cruz' last
assessment report.

60 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 125. OSCAR M. PARINGIT VS. GLOBAL GATEWAY CREWING SERVICES
G.R. No. 217123, February 06, 2019

Work aggravated illness. Petitioner took medication to normalize his high blood pressure, but
the working conditions and mandatory diet aboard the vessel made it difficult and nearly
impossible for him to maintain a healthy lifestyle. He stressed that he and the other seafarers were
served mostly high-fat, high-cholesterol, and low-fiber food aboard the vessel. Furthermore, his
work as Chief Mate carried considerable stress and required him to stay up for long stretches of
time, up to the early hours of the morning. The LA found that petitioner, despite being
hypertensive, was declared fit to work in his pre-employment medical examination. Moreover, the
poor food choices in his workplace led or contributed to his heart disease. The complainant was
declared fit to work prior to embarkation, hence, there is no other conclusion than that he
developed or his illnesses were triggered or aggravated on board and his working conditions
precipitated his unknown illnesses. His diseases which are congestive heart failure, hypertensive
cardiovascular disease, valvular heart disease are work-related or aggravated because the fats
and chemicals in frozen and preserved meats congested his arteries. His stress caused peptic
ulcer to the Complainant. Clearly, complainant's illnesses are work-related/aggravated.

Delay caused by employer. Dr. Quetulio recommended petitioner to undergo open-heart

surgery, but respondent Global Gateway failed or refused to act on this. Petitioner had to undergo
an open-heart surgery before Dr. Quetulio could properly assess his condition and issue a
disability assessment. Unfortunately, Dr. Quetulio had reached an impasse with her management
of petitioner's case. Respondent Global Gateway's silence meant that she could neither
issue the required disability assessment within the 120-day period nor extend the period
to 240 days to further evaluate and treat petitioner. Dr. Quetulio's failure to timely issue a
disability assessment was due to respondent Global Gateway, not because petitioner impliedly
refused treatment due to his supposed inclination toward an alternative treatment. Here, the
compensability of petitioner's condition is clear; however, instead of fulfilling its responsibilities,
respondent Global Gateway delayed his treatment and raised technical procedural barriers that
were clearly unwarranted. The POEA Standard Employment Contract spells out the conditions for
compensability. Here, the compensability of petitioner's condition is clear; however, instead of
fulfilling its responsibilities, respondent Global Gateway delayed his treatment and raised technical
procedural barriers that were clearly unwarranted.

126. JEBSENS MARITIME, INC. v. JESSIE D. ALCIBAR

G.R. No. 221117, February 20, 2019

Absence of PEME will not bar claim of benefit if employer waived their right. He complied
with the requirements of the POEA Standard Employment Contract and the CBA. Alcibar willingly
submitted himself to a post-employment medical examination by petitioners' company-designated
physician when he arrived in the Philippines. However, it was petitioners which waived their right
to examine Alcibar since petitioners did not schedule Alcibar for PEME after his request upon his
repatriation. It was petitioners' fault that there was no declaration on the part of company-
designated physician regarding Alcibar's illness. By failing to schedule Alcibar for a PEME,
they waived their right to use the declaration of their designated physician as basis for rejecting
Alcibar's disability claim. Therefore, the defense of the absence of a PEME on the part of Alcibar
is not a defense available to petitioners because it was through petitioners' fault that the provisions
of the POEA Standard Employment Contract and the CBA were not observed. Colon cancer is a
compensable work-related disease. It is likewise work-related as established by substantial
evidence. During the performance of his duties as a seaman, he was suffering from internal
61 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
hemorrhoids, a disease aggravated by the poor dietary provisions given to him while on board
petitioners' vessel. To reiterate, the absence of the post-employment medical examination
requirement, having been waived by petitioners by failing to schedule Alcibar for a medical
examination, will not bar the disability claim of Alcibar who has established that his colon cancer,
or the aggravation thereof, was work-related.

SSS LAW

127. SOCIAL SECURITY COMMISSION vs. TERESA G. FAVILA

G.R. No. 170195, March 28, 2011

Requirements for spouse to claim benefits under RA 1161. The law in force at the time of
Florante’s death was RA 1161. Section 8 (e) and (k) of said law provides that for a spouse to
qualify as a primary beneficiary, he/she must not only be a legitimate spouse but also a dependent,
that is, one who is dependent upon the member for support. In this case, Teresa’s alleged affair
with another man was not sufficiently established. Findings reveal that it was Florante who was in
fact living with a common law wife, Susan and their three minor children at the time of his death.
However, Teresa is not entitled to the death benefits accruing on account of Florante’s death.
Aside from Teresa’s bare allegation that she was dependent upon her husband for support and
her misplaced reliance on the presumption of dependency by reason of her valid and then
subsisting marriage with Florante, Teresa has not presented sufficient evidence to discharge her
burden of proving that she was dependent upon her husband for support at the time of his death.
She could have done this by submitting affidavits of reputable and disinterested persons who have
knowledge that during her separation with Florante, she does not have a known trade, business,
profession or lawful occupation from which she derives income sufficient for her support and such
other evidence tending to prove her claim of dependency. In the memo of SSS, she only pertained
to the fact that she never remarried nor cohabited with another man. What is clear is that she and
Florante had already been separated for about 17 years prior to the latter’s death as Florante was
in fact, living with his common law wife when he died. Suffice it to say that "whoever claims
entitlement to the benefits provided by law should establish his or her right thereto by substantial
evidence." Hence, for Teresa’s failure to show that despite their separation she was dependent
upon Florante for support at the time of his death, Teresa cannot qualify as a primary beneficiary.

128. ROMARICO J. MENDOZA vs. PEOPLE OF THE PHILIPPINES

G.R. No. 183891, August 3, 2010

Remittance of contribution to the SSS under Section 22(a) of the Social Security Act is
mandatory. No discretion or alternative is granted respondent Commission in the enforcement of
the law’s mandate that the employer who fails to comply with his legal obligation to remit the
premiums to the System within the prescribed period shall pay a penalty of three 3% per
month. The prescribed penalty is evidently of a punitive character, provided by the legislature to
assure that employers do not take lightly the State’s exercise of the police power in the
implementation of the Republic’s declared policy ‘to develop, establish gradually and perfect a
social security system which shall be suitable to the needs of the people throughout the Philippines
and (to) provide protection to employers against the hazards of disability, sickness, old age and
death.’In this concept, good faith or bad faith is rendered irrelevant, since the law makes no
distinction between an employer who professes good reasons for delaying the remittance of
premiums and another who deliberately disregards the legal duty imposed upon him to make such
remittance. From the moment the remittance of premiums due is delayed, the penalty immediately
attaches to the delayed premium payments by force of law. Failure to comply with the law being
62 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
malum prohibitum, intent to commit it or good faith is immaterial. The provision of the law being
clear and unambiguous, petitioner’s interpretation that a "proprietor," as he was designated in the
Information, is not among those specifically mentioned under Sec. 28(f) as liable, does not lie. For
the word connotes management, control and power over a business entity. The term "managing
head" in Section 28(f) is used, in its broadest connotation, not to any specific organizational or
managerial nomenclature. To heed petitioner’s reasoning would allow unscrupulous businessmen
to conveniently escape liability by the creative adoption of managerial titles.

129. YOLANDA SIGNEY vs. SOCIAL SECURITY SYSTEM

G.R. No. 173582, January 28, 2008

Illegitimate children as beneficiaries. In the case at bar, the existence of a prior subsisting
marriage between the deceased and Editha is supported by substantial evidence. Petitioner, who
has fully availed of her right to be heard, only relied on the waiver of Editha and failed to present
any evidence to invalidate or otherwise controvert the confirmed marriage certificate registered.
She did not even try to allege and prove any infirmity in the marriage between the deceased and
Editha. Whoever claims entitlement to the benefits provided by law should establish his or her
right thereto by substantial evidence. Since petitioner is disqualified to be a beneficiary and
because the deceased has no legitimate child, it follows that the dependent illegitimate minor
children of the deceased shall be entitled to the death benefits as primary beneficiaries. The SSS
Law is clear that for a minor child to qualify as a "dependent, " the only requirements are that
he/she must be below 21 years of age, not married nor gainfully employed. In this case, had the
legitimate child of the deceased and Editha survived and qualified as a dependent under the SSS
Law, Ginalyn and Rodelyn would have been entitled to a share equivalent to only 50% of the share
of the said legitimate child. Since the legitimate child of the deceased predeceased him, Ginalyn
and Rodelyn, as the only qualified primary beneficiaries of the deceased, are entitled to 100% of
the benefits.

130. SOCIAL SECURITY SYSTEM vs. TERESITA JARQUE VDA. DE BAILON

G.R. No. 165545, March 24, 2006

Non-filing for annulment of subsequent marriage upon reappearance. The two marriages
involved herein having been solemnized prior to the effectivity of the Family Code, the applicable
law to determine their validity is the Civil Code. Under the Civil Code, a subsequent marriage
contracted during the lifetime of the first spouse is illegal and void ab initio unless the prior
marriage is first annulled or dissolved or contracted under any of the three exceptional
circumstances. It bears noting that the marriage under any of these exceptional cases is deemed
valid "until declared null and void by a competent court." It follows that the onus probandi in these
cases rests on the party assailing the second marriage. In the case at bar, Alice had been absent
for 15 consecutive years when Bailon sought the declaration of her presumptive death, which
judicial declaration was not even a requirement then for purposes of remarriage. Under the Civil
Code, a subsequent marriage being voidable, it is terminated by final judgment of annulment in a
case instituted by the absent spouse who reappears or by either of the spouses in the subsequent
marriage. Consequently, such marriages can be assailed only during the lifetime of the parties
and not after the death of either, in which case the parties and their offspring will be left as if the
marriage had been perfectly valid. Upon the death of either, the marriage cannot be impeached,
and is made good ab initio. In the case at bar, as no step was taken to nullify, in accordance with
law, Bailon’s and respondent’s marriage prior to the former’s death in 1998, respondent is rightfully
the dependent spouse-beneficiary of Bailon.

63 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
 GSIS LAW

131. GERSIP ASSOCIATION, INC. vs. GOVERNMENT INSURANCE SERVICE SYSTEM

G.R. No. 189827, October 16, 2013

Beneficiaries are entitled only to proportionate share of earnings from the trust fund. A
Trust Agreement was executed between respondent and the Committee. The latter was tasked to
administer, manage and invest the Fund, out of which it shall pay the benefits due to members or
their beneficiaries in accordance with the policies, rules and regulations approved by respondent.
Respondent intended to establish a trust fund from the employees’ contributions (5% of monthly
salary) and its own contributions (45% of each member’s monthly salary and all unremitted
Employees Welfare contributions). We cannot accept petitioners’ submission that respondent
could not impose terms and conditions on the availment of benefits from the Fund on the ground
that members already own respondent’s contributions from the moment such was remitted to their
account. Petitioners as beneficiaries of the Fund contend that they became co-owners of the
entire Fund including respondent’s contributions and its accumulated earnings. However, while
respondent’s monthly contributions are credited to the account of each member, and the
same were received by petitioners upon their retirement, they were entitled to only a
proportionate share of the earnings thereon. We find nothing illegal or anomalous in the
creation of the GRF to address certain contingencies and ensure the Fund’s continuing viability.
Petitioners’ right to receive retirement benefits under the Plan was subject to well-defined rules
and regulations that were made known to and accepted by them when they applied for
membership in the Fund. Petitioners have the right to demand for an accounting of the Fund
including the GRF. The Committee is required to prepare an annual report showing the income
and expenses and the financial condition of the Fund as of the end of each calendar year. No
allegation or evidence that the Committee failed to comply with the submission of such annual
report, or that such report was not made available to members.

132. GOVERNMENT SERVICE INSURANCE SYSTEM vs. FERNANDO P. DE LEON

G.R. No. 186560, November 17, 2010

Applicability of RA 910. This case involves a former government official who, after honorably
serving office for 44 years, was comfortably enjoying his retirement in the relative security of a
regular monthly pension, but found himself abruptly denied the benefit and left without means of
sustenance. Respondent was able to establish that he has a clear legal right to the reinstatement
of his retirement benefits. In stopping the payment of respondent’s monthly pension, GSIS relied
on the memorandum of the DBM, based on the Chief Presidential Legal Counsel’s opinion that
respondent, not being a judge, was not entitled to retire under R.A. No. 910. Respondent’s
disqualification from receiving retirement benefits under R.A. No. 910 does not mean that
he is disqualified from receiving any retirement benefit under any other existing retirement
law. Prior to the effectivity of R.A. No. 8291, retiring government employees who were not entitled
to the benefits under R.A. No. 910 had the option to retire under either of two laws: Commonwealth
Act No. 186, as amended by R.A. No. 660, or P.D. No. 1146. Respondent implicitly indicated his
preference to retire under P.D. No. 1146, since this law provides for higher benefits, and because
the same was the latest law at the time of his retirement in 1992. Respondent had complied with
the requirements at the time of his retirement and GSIS does not dispute this. Respondent is
entitled to receive the benefits provided under Section 12 of the same law as to Old-Age Pension.
To grant respondent these benefits does not equate to double retirement. Since respondent has
been declared ineligible to retire under R.A. No. 910, GSIS should simply apply the proper
retirement law to respondent’s claim, in substitution of R.A. No. 910. In this way, GSIS would be
64 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO
faithful to its mandate to administer retirement laws in the spirit in which they have been enacted,
i.e., to provide retirees the wherewithal to live a life of relative comfort and security after years of
service to the government. Respondent will not receive --- and GSIS is under no obligation to give
him --- more than what is due him under the proper retirement law.

Vested rights where pension is part of terms of employment. In a pension plan where
employee participation is mandatory, the prevailing view is that employees have contractual or
vested rights in the pension where the pension is part of the terms of employment. The reason for
providing retirement benefits is to compensate service to the government. Retirement benefits to
government employees are part of emolument to encourage and retain qualified employees in the
government service. Retirement benefits to government employees reward them for giving the
best years of their lives in the service of their country. Where the employee retires and meets the
eligibility requirements, he acquires a vested right to benefits that is protected by the due process
clause. Retirees enjoy a protected property interest whenever they acquire a right to immediate
payment under pre-existing law. Thus, a pensioner acquires a vested right to benefits that have
become due as provided under the terms of the public employees’ pension statute. No law can
deprive such person of his pension rights without due process of law, that is, without notice and
opportunity to be heard. Retirement benefits are a form of reward for an employee’s loyalty and
service to the employer, and are intended to help the employee enjoy the remaining years of his
life, lessening the burden of having to worry about his financial support or upkeep. A pension
partakes of the nature of "retained wages" of the retiree for a dual purpose: to entice competent
people to enter the government service; and to permit them to retire from the service with relative
security, not only for those who have retained their vigor, but more so for those who have been
incapacitated by illness or accident. Surely, giving respondent what is due him under the law is
not unjust enrichment.

133. GOVERNMENT SERVICE INSURANCE SYSTEM vs. MARILOU ALCARAZ

G.R. No. 187474, February 06, 2013

Work aggravated illness; entitled to benefits. Bernardo died after almost three decades of
service with the MMDA. His death occurred within his employer’s premises, at the basement of
the MMDA building while he was at work. While diabetes mellitus was indeed a complicating factor
in Bernardo’s health condition and indisputably aggravated his heart problem, we cannot discount
other employment factors, mental and physical, that had been indisputably present; they
contributed, if not as a direct cause of the heart condition itself, as aggravation that worsened and
hastened his fatal myocardial infarction. Resolution No. 432 provides that a heart disease is
compensable if it was known to have been present during employment, there must be proof that
an acute exacerbation was clearly precipitated by the unusual strain by reason of the nature of his
work. The nature of Bernardo’s duties and the conditions under which he worked were such as to
eventually cause the onset of his myocardial infarction. The stresses, the strain, and the exposure
to street pollution and to the elements that Bernardo had to bear for almost 29 years are all too
real to be ignored. They cannot but lead to a deterioration of health particularly with the
contributing factors of diabetes and pulmonary disease. Bernardo had in fact been a walking time
bomb ready to explode towards the end of his employment days. Records show that the
debilitating effect of Bernardo’s working conditions on his health manifested itself several months
before his death.

65 CASE DOCTRINES: LABOR LAW REVIEW || ATTY. JOYRICH M. GOLANGCO LLEDO || SOBERANO